AcreTrader Review 2024

How Does AcreTrader Work?

AcreTrader works by providing potential investors with due diligence about farmland properties that AcreTrader thinks will generate sufficient revenue through farming operations and capital appreciation over time. AcreTrader then makes the properties available for purchase in smaller increments, typically with a number of shares corresponding to 10 times the acreage being purchased (25 shares would equate to 2.5 acres). 

With AcreTrader, there are no portfolios. The company only offers individual properties that investors purchase as a partnership. Investors may choose to invest in multiple available properties, but they are purchased individually, one partnership opportunity at a time.

Interested investors need to be vetted by the Know Your Client (KYC) rules and provide proof that they are accredited investors. They can then link a funding account to their Acretrader account so they can make their investment and collect revenues from the partnership. 

Each deal will have an estimated hold period for when the property will be sold, but this is more of a guideline than an ironclad sell date. While the investment is held, partners will receive updates, typically annually, from AcreTrader on how the farmland property is performing. 

Investors will also receive cash distributions, typically once per year in mid-December, from revenues their investment generates; these revenues are typically land lease or profit-sharing arrangements that AcreTrader enters into with farmers on behalf of the partnership. Finally, the partners are sent Federal K-1 tax forms for their partnership interest.

Key Features

AcreTrader has a number of features that may be appealing to investors. AcreTrader is available only to accredited investors in the U.S., and while minimum investment amounts for farmland partnerships are different for each property, they start no lower than $10,000 and are typically between $15,000 and $40,000. Some deals even have a minimum investment of as high as $100,000.

AcreTrader performs due diligence on individual farmland properties that become partnerships with multiple owners. While each partnership is for one farmland property, the investor benefits through AcreTrader’s active management of the property. AcreTrader even handles the tax reporting, where each partner receives a federal K-1 form for each partnership for tax filing.

Another aspect of AcreTrader accounts is that investment in the company’s partnerships limits liability to the investment amount and the fact that there are multiple ways accredited investors can invest in AcreTrader partnerships, including through individual, joint, corporate, LLC, trust, solo 401k, or self-directed IRA accounts. 

Fees

Fees for purchasing farmland partnerships at AcreTrade include a one-time closing fee of approximately 2% (this differs for each individual partnership).

There is also an annual fee of 0.75% of the value of the farmland, which is typically paid to AcreTrader from the farm’s operations. According to a company representative, AcreTrader has applied the fee to the purchase price to date, and the documentation for each partnership gives AcreTrader the right to use a different value based on the company’s assessment of land appreciation. Therefore, the 0.75% fee, while staying at that rate, could cost investors more if the value of the illiquid real estate is increased by the company.

Finally, AcreTrader also receives a real estate broker fee of 5% for property sales; this is paid by the farmer when the property is first acquired but by the investor when the investment is sold. Fees are usually funded through the income generated by the farm and through the eventual sale. While these are not unreasonable fees, and they allow AcreTrader to offer a low 0.75% annual fee, the price of the farmland, when sold, needs to cover the 5% fee just to break even on the sale.  

Considering that farmland is an alternative asset that requires expertise to evaluate and manage investments, an annual fee of less than 0.75% compares favorably with fees for other alternative assets. 

Transparency

AcreTrader provides a high level of transparency relative to the due diligence it performs on the properties it offers investors. AcreTrader only approves a small fraction of the farmland it considers purchasing. Further, the company shows updates and current status on properties on its website, and may also send direct updates on the property to partners. 

AcreTrader also manages the distribution of income from farm operations and/or farm sales to investors and also provides investors with federal K-1 tax forms for the partnership. Fees are also clearly communicated for both the annual fee and the closing fee. It is also helpful to understand that investors own part of an LLC, and will continue to have that ownership stake regardless of AcreTrader’s financial viability, and the company has eliminated a common risk for real estate investing by not using any debt financing or leverage for farmland purchases.

Liquidity issues, which are common across the real estate crowdfunding industry, are disclosed by AcreTrader. Such transparency is critical, because you can’t rely on being able to withdraw your money quickly. 

Liquidity

Like many real estate crowdfunding platforms, liquidity is a negative of AcreTrader partnerships. The deals require funds to be raised prior to closing on a farmland purchase, which results in investor funds sitting idle while waiting for a deal to go through. Further, once a partnership is created for a farmland property, the funds are locked up for anywhere from three to eight years or more, so it may take a good deal of time for investors to get their money out, even if they are receiving distributions from operating revenues. 

AcreTrader has spoken about creating a secondary market for its partnerships to provide more liquidity allowing partners to sell their stakes. To date, however, this has not materialized. A lack of liquidity makes price discovery more challenging for real estate prices, including farmland. Partners in AcreTrader deals are able to privately sell their interest in AcreTrader properties, but there is no secondary marketplace and no guarantee that a sale will take place. 

Investment Selection

AcreTrader is focused on one area of investment: partnerships of farmland. While this can represent row crops or field crops, the focus is solely on individual farmland properties, each of which becomes its own LLC.

Compared to other types of alternative assets, such as gold, wine, and art, farmland generates income along with land appreciation. This may appeal to investors looking to diversify their portfolio with alternative assets, but who do not want to give up on having an income-producing asset.

Sectors and Domains

As of now, AcreTrader limits its focus to a single sector: commercial farmland.

Educational Offerings 

AcreTrader’s educational offerings get the job done. Although they focus on a specific market, it is easy to learn everything you need to know about the company and how its partnership products work. 

AcreTrader’s educational offerings include:

• Helpful videos
• Wide-ranging FAQs
• Informative articles 

Customer Support 

AcreTrader’s customer service representatives are knowledgeable and its customer support is adequate. Support is available by phone from 8 a.m. to 5 p.m. CT, via email, and by contact form, but not via real-time chat. 

AcreTrader works differently than products related to publicly traded securities, so its model utilizing individual partnerships for each farm property is unusual, but reasonably straightforward to describe and understand. Also, while AcreTrader does not have a mobile app, and is only available via website, the materials are well presented when viewing the website on a mobile phone.

The Bottom Line

If you are an accredited investor who wants direct exposure to the farming sector, but wants the investment to be passive, and not excessive in size, AcreTrader is an excellent platform for identifying potential farmland investments. Investors can select from multiple farmland-based investments that are structured to generate passive income and have the potential to appreciate in value. 

The investor benefits from the expertise of the professionals at AcreTrader to both identify and manage the properties they invest in. The price and ease of use make AcreTrader worth looking at for obtaining direct exposure to the farming sector, which has had good long-term appreciation relative to other sectors.

Why You Should Trust Us

Investopedia analyzed 19 real estate crowdfunding companies and scored each based on eight major categories and 38 criteria that are crucial in evaluating the offerings and usability of these platforms. We used this data to review each company for their fees, investment selection, transparency, and other features to provide unbiased, comprehensive reviews to ensure our readers make the right decision for their needs. Investopedia launched in 1999 and has been helping readers find the best real estate crowdfunding platforms since 2020.

What Is AcreTrader?

AcreTrader is a company that brings farmland real estate investing to accredited investors, who can make a passive investment in farmland. AcreTrader identifies farmland to purchase, establishes partnerships for the purchase that consist of multiple investors, and manages the properties through ownership and eventual sale of farmland partnerships.

Is AcreTrader Legit?

Yes. AcreTrader is a legitimate company, and it has a positive reputation for customer service and the success of the properties it has brought to accredited investors to purchase to date. AcreTrader, however, is not a broker-dealer or regulated by securities regulations. The company acts as a real estate company that generates fees through the purchase and sale of real estate, as well as management fees paid annually by the partners through the revenue generated by the properties. 

AcreTrader’s deals are structured as individual LLCs, which means investors retain their ownership stake in a farm even if AcreTrader experiences insolvency issues. AcreTrader also has steps in place to assign new external farm managers and work on liquidating assets in the event the company can no longer operate.

Who Owns AcreTrader?

AcreTrader is a privately owned company that was founded in 2018 by CEO Carter Malloy, who grew up in an Arkansas farming family and went on to spend five years as the co-founder of a global equity investment firm. Previously, Malloy was a managing director with Stephens, Inc., a large private investment bank, where he focused on the data and analytics and property technology sectors. Malloy decided to start AcreTrader to overcome the high cost of entry and lack of expertise in farming so that passive farmland investing would be available to average investors.

AcreTrader’s COO, Garrott McClintock, grew up as the fifth generation on his family’s farm in the Mississippi Delta and was a partner at Oxbow Agriculture, where he co-managed agricultural businesses worth more than $200 million. Before AcreTrader, McClintock has also advised on agricultural startups and worked at SouthernSun Asset Management.

Do You Have to Be Accredited for AcreTrader?

Yes, investors in AcreTrader’s farmland LLPs have to be accredited investors. Investing in real estate partnerships results in owning an asset that is less liquid than exchange-traded financial instruments like stocks, fixed income, and foreign exchange markets. AcreTrader requires accredited investors to have capital sufficient to purchase less liquid assets such as a partnership interest in farmland.

Is AcreTrader a Good Investment? 

AcreTrader is not a company you can invest in directly. Rather, AcreTrader is a company that identifies promising farmland real estate properties that it will manage on behalf of the partners that invest in each farmland. For accredited investors looking for a passive way to invest in farmland with relatively small amounts of capital, AcreTrader is a good company to consider for identifying and investing in this alternative asset. 

AcreTrader’s website informs readers that farmland had an 11% annual rate of return from 1990 through 2021, with a relatively low 6.85% implied volatility. This compares with 17.1% returns and volatility of 12% for the S&P 500, 18.2% returns and volatility of 13.0% for real estate investment trusts (REITs), and both returns and implied volatility of 8% for commercial real estate. Therefore, over time, real estate has provided investors with consistently solid returns with relatively low risk; the farmland index has been positive every year since 1990.

How We Review Real Estate Crowdfunding Platforms

To evaluate and review real estate crowdfunding platforms, Investopedia’s team of researchers, data collectors, and industry experts spent nearly two months conducting in-depth industry research, company survey data collection, and hands-on evaluations of 19 companies. We grouped the 38 criteria that we collected, like investment selection and minimums, holding periods, and curated portfolios, into eight categories. We then scored these criteria and weighted the categories to determine which real estate crowdfunding platforms are best for both accredited and non-accredited investors:

• Fees: 15%
• Account Services: 15%
• Investment Selection: 15%
• Liquidity: 12.5% 
• Transparency: 12.5%
• Sectors and Domains: 12.5%
• Customer Support and Usability: 10%
• Educational Offerings: 7.5%

Through this all-encompassing data collection and review process, Investopedia has provided you with an unbiased and thorough review of real estate crowdfunding platforms. Read our full process for more information on how we review real estate crowdfunding platforms.