AcreTrader – Fees and Profits Explained
In our opinion, land is a resource that is grossly undervalued compared to other assets. These days, the spotlight is almost exclusively focused on financial assets such as stocks, bonds, and electronically traded funds (ETFs). However, a healthy and diversified portfolio requires actual assets such as land, precious metals, commodities, and real estate to function properly.
There is a good chance that its easy availability is to blame for its low level of appeal. It’s estimated that a stunning 55 percent of Americans are now involved in the business of owning stocks; however, the same question can be asked about land, as well as real estate in general. Hardly. This astounding preference is very certainly due to the “app-ification” of investment, since the majority of investing platforms enable users to buy traditional equities rather than real assets.
AcreTrader is a virtual trading platform that was launched in 2018 with the intention of changing exactly that. AcreTrader is most known for the asset class that it specialises in, which is agricultural acreage. Farmland is distinguished from both residential and commercial real estate developments by the presence of distinct advantages that appeal to buyers. Investing in the American Midwest brings a sense of purpose and meaning to one’s life, lending an ethical dimension to what could otherwise be seen as just another superficial attempt to amass wealth.
Historically speaking, the value of stocks has increased at a faster rate than that of real estate or other real assets. When viewed over extended periods of time, the returns that an S&P 500 index fund is anticipated to achieve are in the 9-10% area. On the other hand, the numbers for real estate are just slightly ahead of the rate of inflation. On the plus side, the results of a survey conducted by Gallup in 2013 about the economy and personal finances showed that real estate was the most preferred investment choice among Americans.
While it’s true that land and real estate have a lot of promise, these investments also come with a variety of risks, hidden costs, and other complications. Issues with negative financial flows, questionable tenets, undesirable locations, and structural flaws are frequently cited as the cause. Due to these factors, real estate is an asset that is subject to more volatility than typical equities or bonds.
AcreTrader, on the other hand, gets rid of the most of these annoying characteristics. Due to the fact that you are not considered a landlord when you purchase shares in farms through their platform, you are free to forego all of the tedious responsibilities that are associated with the management of farms. AcreTrader stands out from other agricultural investing sites because it offers rates that are astonishingly low.
Let’s take a look at the reasons why AcreTrader makes investing in farmland so readily available and within one’s financial means.
Expounding Fees, Applicable to AcreTrader
You are essentially buying into a settlement that is managed and controlled by one of the company’s project leaders when you buy farmland through AcreTrader. AcreTrader is an online marketplace that connects buyers and sellers of agricultural property.
These designated project managers are in charge of everything that has to be done on a farm, including the maintenance of large pieces of machinery, the harvesting of crops, the acquisition of seed, grain, and soil, and even the collection of rent from tenants.
The majority of the costs that are associated with using AcreTrader are used to pay these highly skilled individuals. Without their direction, the farms are certain to fail, and any potential earnings will fail with them. Investors and managers are therefore in a condition of amicable symbiosis, which allows for the production of a stream of passive income as a result of their collaboration.
How Much Do the Fees Cost?
In order to cover the costs of the project managers, the majority of agricultural investment platforms assess a fee of at least 5 percent on the total value of all assets. This is not against the law since most investors are ready to pay the price in order to take advantage of the historically high return rates that agriculture land delivers. AcreTrader, on the other hand, is head and shoulders above its rivals since it offers stable rates of 0.75 to 1 percent across the board, on all assets. The precise sum is going to be determined by the size of the portion of the project that you invest in.
AcreTrader does not include any “carries” in any of its transactions. Carry charges are fees associated with the actual commodity that you are investing in. These fees may include insurance, storage, or interest on the money. It stands to reason that this could reduce the revenues that are made from the land.
In a nutshell, AcreTrader has some of the most competitive pricing in the industry.
What About the Profit Margin?
If I understand correctly, this is the only question that actually matters, right? Why invest in farmland, which is a relatively unknown asset, when the stock market is doing so well and there is such an easy opportunity to make money there?
The flat rate of one percent that AcreTrader applies to all land investments applies even to those investments that do not produce a profit. But if past performance is any indication, agricultural property should be an investment. According to the information provided on the AcreTrader website, consumers can anticipate annual profits ranging anywhere from 9 percent to 11 percent. Any costs that are linked with the platform would be cancelled out by this.
The general value increase of the land that you purchase into, the annual rentals paid by the tenets working the property, and crop revenues all contibute to the generation of profits for the business.
However, we view investments in farms as long-term assets, which means that you should not anticipate earnings in a short amount of time. Instead, you will need to wait at least five years for the investment to mature before you can expect to realise any kind of significant surplus.
The Nutshell: Should YOU Put Your Money Into Farmland?
AcreTrader is an excellent resource to investigate farmland as an investment option if you are interested in diversifying the types of assets you currently own in your portfolio. It has some of the lowest fees that are available, and its application is so streamlined that it competes with the very best of today’s automated financial advisors. As a result, it may be the greatest farmland investment venture that is now available.
There is really just one catch: at the moment, AcreTrader is only available to investors who hold accredited financial status. But you don’t need to worry about it because AcreTrader has plans to start accepting customers from all over the world in the not too distant future.