If you call a farm broker and say "I have $100,000 to spend, what type of farm could I buy?" you will not like the answer. That $100,000 investment will purchase roughly 10-20 acres of solid crop land. 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 have an easier time getting good farmers to rent them. Large farms are actually in high demand making farmers anxious to sign rental contracts for good prices.
American Farm Investors purchases larger tracts of prime farmland and divide the ownership among multiple investors. This allows the aforementioned investor with $100,000 to purchase a percentage ownership in a quality farm that provides good cash flow, steady rental contracts, and land appreciation possibilities. We invest in our own projects, having ownership interest in every syndicated farm we purchase. We locate solid farms, purchase them with investor funds and our own equity, and find the best farmers to rent our land. Our initial target rate of return on a farm is 3.5-5.5% annually, which should increase over time as rental prices go up. That return is strictly cash flow to the investors. Investors get a check every year.
Institutional and Family Office
Family offices and institutional investors love 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 provide excellent exposure to
all three categories, 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 increased. AFI can place large amounts of capital into productive properties, without the waiting lists that many competitors are offering.
Long Term Appreciation
We cannot predict where land values will go in the future, so we do not count land appreciation in our calculations. However, given the nature of land ownership over time, our 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. Our clients should expect their investment to grow over time.
We want our investors to have a long term outlook on their farm investment. We understand that the future cannot be predicted and circumstances may arise for a client to want to sell their ownership interest. We will primarily offer their share, at an agreed-upon price, to the other investors of that farm. If that is not successful, we will attempt to sell the interest to another client or a new investor. We will possibly purchase their interest in the farm ourselves. We will do everything in our power to maximize the liquidity of this investment.
If you decide farmland belongs in your portfolio, we can take a trip to one of the farms we have in the investment pipeline. We can discuss soil types, possibilities for the future of that farm, meet the farmers and give you the peace of mind knowing that veterans of the industry have signed off on that farm as a great investment.
Please contact us, even if you simply have a question. We hope you'll find that American Farm Investors offers an investment opportunity that you cannot find elsewhere. In fact, we think you will be shocked to find out how profitable and rewarding it is to invest in America's favorite resource: farmland.