When (and how) can you sell FarmTogether investments?
Farmland is a long-term investment. Because of that, the targeted holding period of FarmTogether’s offerings have ranged from five to 12 years.
However, FarmTogether has started rolling out a secondary liquidity market for its investors. It completed its first successful pilot test in early 2021. While that program allows investors to gain some liquidy if they need their capital before an investment goes full cycle, they should go into each investment planning to hold for the duration.
Going mobile: Is there a FarmTogether app?
Like most other real estate crowdfunding platforms, FarmTogether doesn't have an app. However, it does have an excellent mobile-optimized website, giving users the same features and capabilities as its desktop site. Rest assured, you can create and access your account, review and make investments, and access your portfolio from a smartphone or tablet just as well as from your desktop or laptop.
FarmTogether risks: Is FarmTogether safe to invest with?
When you invest on FarmTogether, you own a stake in the farm itself, through a separate legal entity -- typically an LLC -- and not a stake in FarmTogether. That means if FarmTogether were to get in financial trouble or become insolvent, your farmland investments would not be at risk. Additionally, FarmTogether isn't a farm operator, so any interruption in its operations wouldn't have a direct impact on any of the farms you invest in.
However, since it acts as the asset manager, there would likely be some interruption -- temporarily -- to a few things for investors, including access to reporting or documentation, the payment of distributions, or communications with the farm operator, since FarmTogether plays a key role in managing those things. There are some protections in place to limit this impact, with each deal including a survivorship plan for ongoing administration.
The biggest risk for investors in farmland real estate deals is the farm not producing sufficient results. This can be caused by a litany of things, including:
- Pests or disease.
- Catastrophic weather.
- Mismanagement by the operator.
- Low commodity prices.
Or -- most common -- some combination of the above. Whether it's bad luck or bad farm management, if a farm doesn't generate expected cash flows, investors may not earn the expected distributions.
In a worst-case scenario, a farm may even need to be sold off if things are bad enough -- and potentially at a loss. It's unlikely with well-vetted deals and qualified operators, but it happens. And if there's debt involved, those losses can be compounded in a worst-case scenario.
The lesson? Make sure you do your due diligence. Understand the financials for any deal before you invest, and consider if the risks fit within your personal risk profile.
With all that said, there's a lot to like about FarmTogether and what it offers investors. Farmland is not an asset class that many people have ever had the chance to invest in, but its risk and returns profile, along with its prospects going forward, should have it on your radar.