152 Chris Rawley – Investing In Farmland To Beat The S&P

Brief notes from my interview with Chris Rawley

Not a farmer

Did not grow up in the ag world

Military – Navy

Went to work in real estate

First alt investing was real estate

Worked in different industries

Few years ago became enamored in ag as asset class

Ag is an asset class that is taken for granted

Crowdfunding act of 2012 for investors

  • Pooling small $ together to buy larger assets
  • Allowed retail crowdfunding for non-accredited investors

A number of real estate funds focusing on apt buildings, etc

Created “harvest returns” about a year ago

Put money in private placements of ag

Have investors w existing land and make the opportunity available for investors

Focused on the production side (crops, land, etc)

HR focused on accredited investors

Non-accredited by end of the year

Reasons to invest in ag

  • World population
    • Urbanization – arable land is shrinking
    • Wealthy populations shift from plant protein to animal protein, more ag devoted to protein
  • Returns
    • Farmland has outpaced S&P, reits, gold, since 1970
    • The underlying land
    • Price of crops has increased
    • Operations of the land
  • Tangible
    • Like real estate
    • Real land
    • Returns positively correlated to inflation

Common investment for large institutions

Very challenging to access these investments

There are some farmland and timberland REITs

  • Problem: correlated with greater stock market

There are some funds but have really high minimums ($250K)

Liquidity is a double-edged sword

Allowing on the marketplace:

  • Confidence in management team
  • Location, trends
  • Expected returns

Regulatory environment

  • Act of 2012
  • SEC published rules for
  • Big learning curve regarding regulation

How will you validate yourself to a skeptical market?

  • Why is ag a good investment?
  • Why crowdsourcing a safe/good idea?
  • Learning curve on the farmer side

Looking for people raising $500K-$2M

Sale/leaseback deals

Provide creative financing opportunities

How much of portfolio? ~5-15%