American Farm Investors Review 2023: Best Resource For Farmland Investing?

Farmland as an investment has long been overlooked. However, with strong returns and low correlation to the market, it has proven itself to be a high-performing asset class.

Unfortunately, purchasing a farm outright can represent a large capital investment as well as a lengthy and cumbersome process. Perhaps there is a better way?

In this article, we provide a complete American Farm Investors review. Let's dive in and understand what makes this company unique!

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What Is American Farm Investors?

Located in Central Kentucky, American Farm Investors has created syndicated farm investments that help clients invest in one of America’s most profitable resources; farmland.

The company researches and pinpoints profitable farms, purchases them with its own equity as well as investor funds, and manages them efficiently with the goal to maximize potential. By partnering with American Farm Investors, ownership of this valuable asset class becomes a reality.

The corporation helps people and institutions invest in profitable farmland through real ownership with minimal risk to the investor. For these reasons and many more, farmland has become a hot investment vehicle over the past decade, and the competition to find quality investment-grade properties has skyrocketed. AFI can place large amounts of capital into productive properties.

Clients are able to invest in projects using 401K and IRA funds, or cash investment. What’s more, its deals are 100% equity with no debt.

AFI’s initial target rate of return on a farm is 2-5% annually, which should increase over time as farm rental prices go up. That return is strictly cash flow to the investors.  As an investor, you will receive a check every single year.

Why Buy Farmland?

Whether through AFI or another investing corporation, farmland can be a fantastic addition to your portfolio.

Farms are a tangible asset that historically have not lost value with ups and downs in the stock market. They are a solid option for earning income, whether that’s from renting out the land or from your share of the annual crop harvesting.

For decades, farmland has proven itself to be a smart investment, having far less volatility than any other real estate asset. Historically, it simply does not lose value.

What’s more, farmland returns typically don't move in the same up and down fluctuations of the stock market. In many years, farmland has produced a positive return in a year that the S&P 500 has lost value.

 

When you invest in farmland, you are directly helping preserve open spaces that might otherwise be slated for deforestation and land development.

Farmers are often inter-generational family members passing on traditions. And finally, farms are a sustainable way to feed the explosive growth in world population. There will always be a plentiful demand for farm food products, and more and more people are looking to eat a healthier plant-based diet as time goes on and research proves its healthy benefits.

As an investor, you are of course also looking for ways to increase your own net worth.

There are also significant tax benefits to owning farmland. States provide a wide array of tax benefits for farms, with the most common being exemptions from sales, use or property taxes. A state may allow farms to avoid paying such taxes in the first place, or may issue a credit for taxes paid after farms have filed their returns each year.

How Was American Farm Investors Launched?

Founder, Brian Luftman, has been investing in farmland for years. He learned about farmland as an investment from his eight years of trading commodities on the floor of The Chicago Board of Trade.

He founded Luftrade, a commodity options company at age twenty-seven. Through his years in Chicago, he gained valuable expertise in livestock and grain futures and options. He moved to Lexington, Kentucky in 2011 to create American Farm Investors.

He is confident that farmland is the best possible investment for today’s economic condition. How accessible is he? Brian lists his phone number and direct email on the AFI contact page.

How Successful Has American Farmland Investors Proven To Be?

Annual financial returns on the nine farms purchased and managed by AFI mirror or exceed results achieved by investors in the bond market.

Unlike stocks and bonds, farmland is something an investor can touch, or visit. Unlike volatile securities, farmland has been appreciating in value an average 5% annually.

A typical AFI deal is the Danville, Ky., farm just purchased with $1.4 million raised in $100,000 increments from different investors.

AFI leases the land to farmers, in that instance grain crops bound for bourbon distilleries. Within the city's limits, the Danville farm may be ripe for residential or commercial development but would require a vote of the majority of investors before it could be sold.

What Are Syndicated Investments?

Here’s a scenario: If you call a farm broker and say you have $100,000 to spend, then ask what type of farm you should buy, you probably won’t be happy with the answer. That $100,000 investment will purchase roughly 10-20 acres of cropland. You will have a difficult time renting that farm out to provide good cash flow because it is relatively small and most farming operations won’t consider renting a space smaller than 80 acres.

Sizable farms of 80 acres and up are much more manageable, predictable, and therefore attract the best lease contracts with the best farmers. Large farms are actually in high demand making farmers anxious to sign rental contracts for good prices.

On the flip side, American Farm Investors purchases larger tracts of prime farmland and divides the ownership among multiple investors. This would allow an investor with $100,000 to buy into percentage ownership in a quality farm that provides:

• Good cash flow
• Steady rental contracts
• Future land appreciation possibilities

It’s important to note that AFI has its own hand in the game. They invest in every project, which means they have an ownership interest in every syndicated farm they purchase.

Here’s how it works:

• AFI locates solid farms with a history of success
• They buy them with investor funds as well as their own equity
• Then they find the best farmers to rent and farm this land

A large number of institutional investors are working with American Farm Investors because they own title to the underlying property. Commodity exposure, fixed income, and real assets are requirements for a balanced portfolio of any size. Grain farms in particular provide excellent exposure to all three categories, with minimal risk to the investor.

Is There Long-term Appreciation In Farmland?

No one has a crystal ball when it comes to investing. AFI certainly can’t predict where land values will go in the future, so they do not count land appreciation in its calculations.

However, given the nature of land ownership over time, AFI says its investors can rightfully expect long-term land appreciation. Farmland has been appreciating at approximately 5% annually for the past several decades.

There’s an old saying, “They don’t make any more land.” That statement is very true, and it’s ringing truer today with a growing world population and development of 3rd world economies. Investors can reasonably expect their investment to grow over time.

Can I Visit The Farms?

If you decide farmland belongs in your portfolio and you want to invest through AFI, you can actually take a trip to one of the farms in the investment pipeline. You will have an opportunity to meet the farmers, can discuss soil and crop types, as well as possibilities for the future of that farm.

This could both give you peace of mind and satisfy your curiosity about your investment.

What Are Some Examples Of AFI Farm Investments?

Let's take a look at a few examples of farmland listed for investment with AFI:

1: Burgin, Kentucky: 1 sq mile of prime farmland – 635 acres

• Purchased in August 2017
• Quite possibly the most productive, efficient farm in all of Kentucky
• This property produces corn, wheat, soybeans and industrial hemp
• Its soil map shows blue-colored soil as most productive land in the region

2: Harrodsburg, Kentucky: 83 acres in favorable A-3 zoning district

• Purchased in October 2013
• Crop Rotation: Red Winter Wheat, Non-GMO Soybeans, Corn
• Neighboring the well-known 5,500 acre Anderson Circle farm, this 83 acre tract is the ideal mix of good soils with future development potential
• A-3 zoning distinction allows for light commercial and smaller residential lot sizes

3: Herrington Lake Farm, Kentucky: 245 acres with 1/2 mile of lake frontage

• Purchased in 2014
• Crop Rotation: Red Winter Wheat, Non-GMO Soybeans, Corn
• Located in beautiful Danville, KY
• Future lakefront development opportunity

American Farm Investors Review: Conclusion

Investing in farmland is one of the wisest moves you can make when it’s time to diversify your portfolio.

American Farm Investors is a solid choice as a farmland broker. Their experts vet the top-performing farms in the state of Kentucky and select the cream of the crop. Investors will receive annual earnings.

While it’s not something experts can put a percentage on, land appreciation is most likely to soar in decades to come, which will serve to be a long-term passive investment for anyone smart enough to get in on the deal.