AcreTrader Review – Scam Or Legit?

AcreTrader is an investing platform that focuses on farmland instead of stocks.

They claim they can get you a 12% annual return on investment.

Is this a legitimate opportunity or a scam?

We'll get to the bottom of this question in this review.

Additionally, we'll give you an overview of what you're getting and any red flags that I find.

You'll know if AcreTrader is worth it by the time you're done reading.

Let's get started!

What Is AcreTrader?

AcreTrader is a crowdfunding website that focuses on investing in farmland.

They're headquartered in beautiful Northwest Arkansas, in the fast-growing city of Fayetteville.

AcreTrader works by letting farmers submit their parcels of land, and AcreTrader reviews them for quality.

They only accept a small percentage of the farmland that is submitted.

A farmer would do this if he wanted to grow his operation and raise money to do so.

Once accepted, the farmland is broken up into shares and sold on the AcreTrader website.

All you have to do is buy the shares.

You don't have to run the farm or do anything like that.

AcreaTrader handles all aspects of administration and property management.

This includes insurance, accounting, and working with the farmers to ensure the operation is well run.

How Do You Make Money With AcreTrader?

The only reason you're thinking about investing on the AcreTrader platform is because you want to make money, right?

There are two ways to make money by investing in farmland.

The first is just the increase in value of the land over time.

The properties are held for around a decade, so you can expect the land to increase in value during this time.

The second way to make money is through annual cash rent payments from the farmers.

This works as a dividend payment.

According to AcreTrader, you can expect a 3% to 5% annual dividend payment with low-risk farmland.

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Pros And Cons Of Investing In Farmland

At this point, you might be thinking "What are the benefits of investing in farmland?".

Well, here are some things to consider if you are thinking about this question:

Pros of investing in farmland

The first major benefit of investing in farmland is that it's a tangible asset.

This allows professionals to really visit and assess the condition of the farm and see if it's worth investing in, which AcreTrader does.

Second, this asset class offers a steady income.

There are many ways a farm can make money, including growing cash crops, leasing, raising livestock, and more.

According to AcreTrader, an index of farmland has been positive every year, which is not true for assets like stocks and gold.

Thirdly, it's good for portfolio diversification.

Farmland investing doesn't correlate with stocks or financial markets.

So just because the market is hurting doesn't mean your farmland investment will be.

Fourthly, the long-term appreciation of farmland has historically been good.

This is due to many factors, such as population growth, increased demand for food, and a limited supply of arable land.

Cons of investing in farmland

There are some drawbacks to this asset class.

The main drawback is that these kinds of investments are illiquid.

Converting farmland and a farming operation into cash takes a lot of time.

However, AcreTrader does counter this by allowing you to resell your farmland shares on the AcreTrader platform.

So if you need the cash, you'll be able to go this route.

The second major drawback to farmland investing is the high initial investment.

For most of the properties on AcreTrader, you'll need at least $15,000.

Thirdly, you're at the mercy of Mother Nature when you invest in farmland.

Some of these properties are in places where there are tornadoes, and you might have to deal with things like crop diseases, commodity price changes, and government regulations.

Lastly, you're investing in the farmland management team as much as you are in the land.

AcreTradet thoroughly vets the farms they do business with, but you're still relying on strangers.

Farmland Vs. Stocks

Maybe you're new to investing and can't decide where to put your money.

Or maybe you're looking for something to invest in outside the financial markets.

There are some things to consider when comparing farmland to stock.

Stocks perform better.

If you invest in a market index fund, you can pretty much expect a 12% return on investment per year over a long period of time.

That doesn't mean every year will be 12% or that you'll even get a return every year.

Over a long period of time (let's say 30 years), you can expect 12%

According to AcreTrader, they average 11% per year.

Farmland is less volatile.

While stocks do perform better, farmland is a less volatile investment.

If you invest in a market fund, you have to expect years where you lose a pretty good amount of money.

For example, in 2022, the market lost about 16%.

But in 2021, the market had returns of 27%.

Farmland is likely to be positive every year for a lot of reasons.

You won't get 27% returns like you did in 2021 with the market, but you also won't lose 16% like you did with the market in 2022.

Farmland management fees are higher.

Another thing to consider is that there are more fees involved with AcreTrader than with a market index fund.

The annual management fee for AcreTrader is 0.75% of your investment.

However, a high-quality market ETF like QQQ only has 0.20% management fees.

So that's about half a percent of your return you're losing to management fees (remember, QQQ will likely perform better in the long run).

Additionally, there are closing fees associated with AcreTrader that don't exist with market funds.

This all means a smaller return in the end if you invest with AcreTrader.

In the end, though, it's not an either-or  situation.

Farmland investing is something you do to diversify your portfolio.

It can be good for offsetting the volatility of the market.

Final Thoughts

If I had to choose between investing all my money in the market or all my money in farmland, I'd choose the market.

The costs of investing in a market fund are lower than farmland, and the return is better.

It's really a no-brainer.

However, that's not how investing works.

You don't have to pick one or the other and can use many assets to balance risk.

And that's the best way to use AcreTrader.

With a stable asset that generates good returns and is unaffected by financial markets, it's a good way to diversify your portfolio.

So it can make years like 2022, when the market was down big time, less painful.

But stocks are still king when it comes to investing.

I've personally reviewed over 100 stock-picking services, and most are terrible.

However, there are a few that are worth buying.

To see my favorite stock picking service (which is very affordable), click below: