Founded in 2018, AcreTrader is a relatively new entrant to the real estate investment crowdfunding ecosystem. In an increasingly crowded landscape, platforms need something unique to stand out, and AcreTrader definitely has a novel niche – equity investments in farmland. While they currently only offer Reg D investments to accredited investments, according to the company they intend to offer Reg A+ investment in the future open to any investor.'
Types of investments AcreTrader offers
Currently AcreTrader offers only one type of investment: US farmland. Investors buy fractional interests in income-producing farmland (the income is from the rent farmers pay for use of the land), and benefit from any appreciation in the land. Hold periods range from 5-20 years depending on the offering, though notably AcreTrader intends to offer a secondary market for selling shares ahead of the project terminal date.
What do you get when investing with AcreTrader?
When you invest through AcreTrader, as with many crowdfunding investment platforms, what you actually receive is a membership interest in an entity created specifically for the investment. That entity in turn is what actually holds title to the property. Each share represents 1/10th of an acre of the farmland.
How does AcreTrader make money?
There is a 0.75% annual fee (based on the value of the land), in addition to various administration and closing fees at the time of the initial investment. AcreTrader states their primary revenue fee is what they charge the seller of the land (which in the case of investors, presumably is the entity that owns the land when the terminal date arrives). Investors should review the specifics of an offering to be sure they understand any and all fees involved.
Potential returns and cashflow
AcreTrader says the rental yield on properties is typically 3-5%, with an additional 7-9% in appreciation. Investors looking for cash flow should note the rental yields are paid annually (apparently most farm rents are paid annually).
Breadth of offerings on AcreTrader
As of this writing, there are 3 open projects listed on the AcreTrader site, with 1 past investment. Prospective investors should note that AcreTrader is a relatively new platform.
Regulatory framework and due diligence expectations
AcreTrader has a contractual affiliation with North Capital Private Securities, a Broker-Dealer registered with the SEC (you can see their entry in FINRA’s Broker Check service here). That means that when you invest with AcreTrader, the security you are technically purchasing is via North Capital. Broker-dealers are subject to specific due-diligence requirements to ensure an investment is “suitable” for their registered customers, or they can face fines and civil action. (That does not of course provide any guarantees about investment return or performance!)
So while a broker-dealer platform (or one that has a contractual affiliation with the one, the way AcreTrader works with North Capital) will typically disclaim that they do not offer formal financial advice (even though they are entitled to), you can still expect that the investments they offer have been thoroughly screened, including thing like criminal background checks on key executives and a detailed review of financial statements. You should of course do your own due diligence (including research outside of what you find on the platform.) There’s more about broker-dealers and other platform types over on our blog.