Review of the Pela Terra Farmland Fund

Pela Terra Farmland Fund Review 2021: Golden Visa Opportunity?

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Summary

Pela Terra Farmland Fund is an agriculture fund that offers members access to both farmland investing as well as the Golden Visa in Portugal.

While other farmland investing platforms may offer a higher return, Pela Terra can grant you a visa to live in Portugal.

This could be the platform for you if you are seeking entrance into Europe. If not, other platforms may be better suited to your investing needs.

Pros

  • Ability to obtain the Golden Visa and travel throughout Europe
  • Supporting sustainable farming efforts
  • Non-resident investors pay 0% tax in Portugal on their gains
  • The business model is optimized for stability, durability, and environmental restoration

Cons

  • High investment level: You will need to invest a minimum of $118,000
  • According to the USDA, farmland brings an average annual return of an impressive 11.5%. Pela Terra’s target return is 7%
  • If you have no interest in traveling or obtaining citizenship in European countries, this fund isn’t likely right for you.

Farmland investing has long been a lucrative investment option. Investing in farmland presents individuals with a number of benefits such as low correlation to the stock market, strong and consistent demand, and tax benefits.

In this article, we will provide a review of a platform that offers individuals a chance to invest in farmland: Pela Terra.

What is Pela Terra?

Pela Terra Farmland, based in Portugal, is a farmland fund that lets investors reap all the benefits of investing in farmland while at the same time giving them a highly sought-after perk: earning their European Citizenship with the Golden Visa.

There is a long history of earning citizenship through investments in Europe, but Pela Terra differs because it opens doors for people to put their money into and profit from farmland.

The investment strategy for the Pela Terra Farmland Fund is all about minimizing the risk from an investment portfolio. The company aims to have tenants lined up before ever acquiring the land.

Pela Terra's agriculture fund targets a 5% annual dividend from rent collection. The company also projects 2% per year in land appreciation, which offers individuals a blended 7% projected return.

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Why Invest In Farmland?

Before we delve into the Golden Visa in Europe, let’s take a look at the multitude of reasons it is a wise move to invest in farmland.

Statistically speaking, farmland remains profitable. Since the early 1990s, farmland has shown a profitable return every single year. If you follow its track record, then you will see that farmland outperforms all other asset classes, including traditional real estate.

Pela Terra Farmland

Investors will have other benefits along with this well-above average return. Farmland returns have low volatility when compared to other assets such as U.S. Treasury Bonds. What’s more, farmland returns usually do not move with the roller coaster ups and downs of the stock market. This type of land has been known to thrive in profitability even in years where the market has seen downward spirals.

As the world's population continues to climb at an alarming rate, there are more hungry mouths to feed. This means there will be a steadily increasing global demand for food sources, including crops ranging from wheat to greens and fruit.

When you invest in farmland, you have a way to help efforts for sustainable, eco-conscious and organic farming. Your investment can have a positive effect on the environment in which you and your family live.

Overall, farmland is a solid investment, and demand for agricultural products will only rise in the decades ahead.

Click here to view offerings on Pela Terra!

What is The Golden Visa?

The Golden Visa is a “Citizenship By Investment” program that allows investors to obtain Portuguese residency and citizenship through various investment channels.

People that have a Portuguese Golden Visa are given the freedom to live, work and study in Portugal and throughout Europe as well. After five years, applicants are eligible to apply for Portuguese citizenship.

The Golden Visa was introduced in Portugal in 2012 and has become very popular with applicants from across the globe. Since that time, Golden Visas in Portugal have been granted to approximately 9,000 applicants, plus roughly 16,000 to their family members. The total value invested exceeds €5.6 billion. This symbol is for Euros, the European form of currency. One Euro is the equivalent of $1.18 in American money.

What are the Benefits of the Golden Visa?

The list of benefits is long and varied, including:

  • No other visa required to enter Portugal
  • You can live, work and study in Portugal
  • Freedom to travel throughout 26 European countries
  • Option to include family members in your application (spouse, dependent children and dependent parents)
  • You can apply for Portuguese citizenship after five years
  • Portugal allows dual citizenship

The Golden Visa is extremely flexible. Although you are immediately allowed to move to Portugal if you want to, you are not obliged to. In fact, you can spend as little as 7 days per year in Portugal, if you would rather live somewhere else.

There are also monetary benefits for investors, including:

  1. Tax efficiencies: The funds are highly tax efficient as well; non-resident investors pay 0% tax in Portugal on their gains.
  2. Funds require less management than the traditional real estate investment route and they also avoid the 6.5% property taxes
  3. Qualified managers: Pela Terra funds are managed by experts in their fields so your investment will be in safe hands
  4. Carefully regulated: The Portuguese Securities Markets Commission (CMVM), Bank of Portugal and the tax authorities all have a role in regulating the funds to make sure they are in compliance with strict rules and are being managed properly.

Click here to view offerings on Pela Terra!

How Much Of An Investment is Required to Qualify for The Golden Visa?

The minimum investment required to get into a Portuguese fund is $118,000. There will also be fees applied to the government immigration agency, totaling approximately $26,300.

What are the Fund's Management Fees?

When you subscribe to the fund there is a 1% fee to cover the initial account setup, and there is an annual 0.95% fee to cover the management of the investments. There are no fees investors pay at the maturity date of the fund.

How is the Fund Managed and Regulated?

Pela Terra Farmland Fund is fully managed by STAG Management SCR SA. The fund is fully regulated by the Portuguese Securities Market Authority.

Can US Citizens Take Part in The Golden Visa Program?

Americans can put money into Portuguese investment funds in order to qualify for the Golden Visa, and many are currently doing so.

However, you should note that the IRS puts demands on foreign financial institutions to report on the foreign assets held by American clients and account holders. In the case of Portuguese Golden Visa funds, this forces banks, funds and fund managers to follow heavy compliance regulations imposed by the US Government.

Therefore, many of these Portuguese institutions prefer not to deal with that headache and do not accept U.S. citizens as investors or account holders. However, the good news is that some others are happy to accept American clients. If interested, Pela Terra financial advisors can let you know who is on that list.

Pela Terra Pros

  • Ability to obtain the Golden Visa and travel throughout Europe
  • Supporting sustainable farming efforts
  • Non-resident investors pay 0% tax in Portugal on their gains
  • The business model focuses on stability, durability, and environmental restoration

Pela Terra Cons

  • High investment level: You will need to invest a minimum of $118,000
  • According to the USDA, farmland brings an average annual return of an impressive 11.5%. Pela Terra’s target return is 7%
  • If you have no interest in traveling or obtaining citizenship in European countries, this fund isn’t likely right for you.

Pela Terra Review: Conclusion

Obtaining the Golden Visa is extremely important for Europeans and their families. So, Pela Terra has set up a viable route combining this with investing in farmland.

Farmland has historically proven itself to be a wise investment. It performs better than assets including other types of real estate. When you invest in farmland, you are doing your part to help good stewardship of the earth and feed the growing worldwide population.

If you are from the U.S. and would like to travel extensively throughout Europe, the Golden Visa makes it easy to do so.

Click here to view offerings on Pela Terra!

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