This FarmTogether Review will help you learn more about FarmTogether's investment offerings, including how the alternative investments on FarmTogether are structured, and what your potential returns might be. You can read more about the criteria we use to review investment platforms here.
Founded in 2017, FarmTogether 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 FarmTogether is joining what is definitely a novel niche – equity investments in farmland. They currently only offer Reg D investments to accredited investments in US farmland.
Types of investments FarmTogether offers
Currently FarmTogether 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. Target hold periods vary by investment, but ranges from 5-10 years for currently active investment opportunities as of the time of this writing.
What do you get when investing with FarmTogether?
When you invest through FarmTogether, as with many real estate crowdfunding investment platforms, what you actually receive is a membership interest in what’s known as a special purpose entity, typically an LLC created specifically for the investment. The LLC in turn is what actually holds title to the property. For each investment you make with FarmTogether, you’ll receive a separate K1 at tax time to report your share of the income received by the LLC.
How does FarmTogether make money?
FarmTogether charges a fee of 1% of the initial investment amount and then an additional 1% annual management fee. Note also that FarmTogether operates a subsidiary (FarmTogether Management, LLC) which is paid to manage the property (typically by subcontracting). Investors should review the specifics of an offering to be sure they understand any and all fees involved.
Potential returns and cashflow
Projected returns vary by investment, but the company says investors can expect returns of 9-14%. Some of that comes from quarterly rental payments, with the remainder coming from projected appreciation at the time of sale. It’s worth noting that FarmTogether reports plans to offer investors a secondary market for early liquidity.
Breadth of offerings on FarmTogether
As of this writing, there is only one “regular” active investment opportunity offered by FarmTogether. There are two additional offerings, though one is for an entire farm, and the other is listed as a “Partner Deal” seeking funding for “one yet undetermined property”.
FarmTogether does not list any affiliation with a broker-dealer. Projects to date have been offered under SEC Reg D, and so are limited to accredited investors. Given the absence of a broker-dealer, it would be nice if FarmTogether shared more details about their due diligence process and criteria beyond just “We are committed to offering only investments that meet our stringent criteria.”
This review was first published on 11 February 2020.