While the commercial real estate market is currently slumping, investors can cash in on hot opportunities in an unexpected sector: agriculture.

“There’s tremendous potential in farmland,” says Dutch Mendenhall, founder of RADD America. “While you’ll only get a four or five percent cap rate from an apartment building these days, you can derive approximately 15 to 20 percent from farms, which is a much larger return on your investment.”

Farms offer many ways to generate income

According to Mendenhall, investors can benefit from income-producing farms in many ways. Most farms' primary source of income comes from selling the products they harvest, whether crops or livestock. “This revenue stream is subject to the market prices of agricultural commodities,” Mendenhall explains.

The next source of income is government subsidies. “In some regions, farmers may receive subsidies or financial assistance from the government to support agricultural activities and stabilize the agricultural sector,” Mendenhall notes.

But that’s not all — agritourism is becoming increasingly popular. “Some farms may diversify their income by offering activities, such as farm tours, pumpkin picking, hayrides, or petting zoos, which attract visitors and generate additional income,” Mendenhall says. Many farms even host important events like weddings, anniversaries, and other celebrations. Others welcome overnight guests, provide hookups for recreational vehicles, or allow campers to set up tents.

Farms can also process their crops into value-added products like jams, jellies, wine, or cheese, which constitute another potential source of revenue. According to Mendenhall, “These can fetch higher prices than the initial crops and increase profitability.”

RADD invests in and improves farmland

However, investing in farms is quite different from becoming a farmer. When weighing a farm's profitability, Mendenhall considers their input costs, market prices, equity value, weather conditions, technology and innovation, government policies, land quality, and size.

While many kinds of farms and revenue streams might seem intimidating, Mendenhall finds these complexities exciting. “I love the variety that income-producing farms provide,” he says. “There are even ways to double tap the same land, like raising livestock on top of crops, or producing different crops during different seasons.”

RADD’s experts meet with the farmers as part of the vetting process. Once they’ve bought a property, they take their commitment to the surrounding community seriously by not only harvesting their own land but also helping other local farmers harvest theirs.

“These are two-way relationships,” Mendenhall says. “Everyone pulls together and helps. Investing in agriculture is different from other types of investing in that respect.”

RADD also improves farmland strategically to ensure increased returns in the future. “Every cent you put in pays off in the long run,” Mendenhall says. “Improving the soil alone can boost income, and adding more irrigation can also increase returns.”

Investors compete over farmland

Due to the many financial advantages of income-producing farms, RADD America has been purchasing US farmland since 2021. “Right now, there’s a war to gain market share in this area,” Mendenhall says. “Many foreign investors have been competing for these valuable properties.”

For instance, RADD America has secured high-value acres in Idaho, Arkansas, and Tennessee, while Mendenhall’s team of experts continues to investigate plots of available farmland nationwide. “Not all farmland is the same,” he warns. “There’s a big difference between depleted land — and in America, a lot of agricultural land is already depleted — and fertile fields. You want to invest in acres that have been maintained, not those that have been used up.”

Finding parcels of appropriate arable land to purchase in the US has become difficult. “There's a dearth of good, productive farmland on the market today,” Mendenhall notes. “If you have the opportunity to buy, you have to put your offer in as soon as possible.”

While few investors have the time and expertise to evaluate a farm’s potential accurately, much less compete to buy it, the good news is that RADD can do this for you.

Investing in farmland with RADD America

RADD America allows investors to purchase shares for as little as $10,000. By investing in the company, you get the benefits of the company’s entire diverse portfolio and the REIT’s farmland holdings. You also won’t have to worry about finding, vetting, purchasing, maintaining, or harvesting farms of your own — RADD America’s team of experts, which includes master farmers, will do all this for you.

“The value of agricultural land has shot up in a short period of time,” Mendenhall says. “I first started investing in farmland during the pandemic. At that time, I could find good deals for $3,500 to $5,000 per acre. Farms are now worth double what they used to be — you’ll pay $10,000 per acre, easy.” Indeed, NPR reports that, due to factors like inflation, competition, and good crop prices, farmland in Iowa recently sold for a record $25,000 per acre.

Mendenhall predicts further increases in value. “This is a really exciting asset class,” he says. “The time to get in is now.”

Luckily, RADD America makes getting in easy.