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If you don't know what an accredited investor is, odds are you aren't one.
Nonetheless, here are the requirements to be accredited:
- Your earned income exceeds $200,000 if single or $300,000 if married in both of the last two years
- $1 Million net worth excluding your primary residence
- You hold a Series 7, 65 or 82 license
Meeting any of the above requirements deems you to be an accredited investors. The bottom line is that most people do not meet any of these requirements.
However, there are still numerous ways to invest in farmland without being accredited.
This is a rare find, a farmland investing platform that does not require you to be accredited!
Farmfolio specializes in investments in Central and South America. Over the years, they have found this area to be the best blend of good weather, abundant land and affordable labor. The growing season down there is much longer as well compared to North America.
Investments on Farmfolio are called LOTs, which stands for land ownership titles.
FarmFolio experts research and identify what they refer to as alpha farms that produce the highest quality export fruit. The farms are also nearing peak production. Then, they negotiate with the farm owners to buy their property and break it into LOTs.
After this, they put out offerings to investors. The LOTs program gives investors a way to directly own the farmland.
This allows investors to own a small piece of a farm while taking advantage of the efficiencies associated with large scale farming operations. All of the farms are established and flourishing historically. They give the farmers on the land and the local communities stability and opportunities for work.
Minimum investments vary, but they tend to be over $15,000.
If the minimum investment for Farmfolio blew you away, don't worry. The minimum investment on Steward is just $100.
However, there is a big difference between the two platforms. Farmfolio sells equity investments in working farms whereas Steward is a farmland lending platform providing debt investments.
With a debt investment, you don't own the land or the farm. You are basically the bank, providing financing to farmers.
Many small farmers struggle with securing financing via traditional means. Steward aims to solve this by allowing lenders to loan money to farmers. This gives lenders exposure to the farmland debt asset class and helps farmers grow or expand operations.
Debt investments tend to have lower returns than equity investments, but also carry lower risk.
3. Farmland REIT
Lastly, one more option for non-accredited investors looking to gain access to farmland is a real estate investment trust.
This is basically like real estate that trades on the stock market. However, the underlying real estate in this case would be farmland. The minimum cost to get started is the price of a single share. However, with fractional share brokerages, that minimum could be as little as $1.
Currently, there are two farmland REITs available to investors in the US:
While REITs may seem like a great option, they do have a few downsides. Since they trade on the same exchanges as stocks, they are susceptible to the same up and down price swings. Also, publicly traded REITs tend to underperform private real estate equity investments for a number of reasons.
Nonetheless, they are still an easy way for non-accredited investors to buy farmland!