Carter Malloy, AcreTrader - In A Couple Of Minutes, You Can Invest As Little As $15,000 Or $20,000 In A Particular Farm | #312

Episode Summary

Executive Summary: The episode explores farmland as a historically resilient, low-volatility asset class and AcreTrader’s role in making it accessible to individual investors. Carter Malloy explains how COVID boosted demand, why farmland prices are rising, and how AcreTrader sources, underwrites, and structures deals. The conversation centers on diligence, especially water, soil, operator quality, geography, and exit value, using the host’s Nebraska farm investment as a live case study.

Main Topics: Farmland as an investable asset class (Priority: 5/5): The discussion frames farmland as a long-term, income-producing, relatively uncorrelated asset with a strong historical return profile and less boom-bust behavior than many alternatives. AcreTrader’s platform model (Priority: 5/5): Malloy explains how AcreTrader provides low-minimum access to farmland investing through passive SPVs, with investor services, reporting, and eventual sale handling. COVID-era demand and farmland price trends (Priority: 4/5): The speakers discuss how the pandemic accelerated interest in rural land and farmland, while prices—especially in the Corn Belt—continued a steady upward trend. Due diligence and underwriting process (Priority: 5/5): A detailed breakdown of AcreTrader’s multi-stage screening process, including data science, local diligence, and physical inspections, with a focus on quickly rejecting weak deals. Critical underwriting factors: water, soil, and financial profile (Priority: 5/5): Water availability, soil quality, and rent/comparable analysis are identified as the most important drivers of farmland quality and future value. Capital raising and business growth (Priority: 4/5): Malloy describes AcreTrader’s recent venture financing, how the funds will support headcount and technology, and the company’s commitment to staying disciplined rather than chasing growth at the expense of quality. Portfolio construction and investor behavior (Priority: 3/5): The conversation covers how investors think about diversification across crop types and geographies, and whether a more automated or fund-like product could help repeat investors.

Key Arguments: Farmland is a slow-and-steady compounding asset, not a speculative boom-bust trade. Institutional and private capital are increasingly entering farmland, but professional ownership is still a small share of the total market. Supply is structurally constrained because farmland acreage keeps shrinking while demand for agricultural output continues to grow. COVID increased investor interest in land and farmland, partly due to a broader reconnecting with rural assets. AcreTrader’s competitive edge is not deal volume alone but stringent curation, transparency, and disciplined underwriting. Water is the most important risk factor in many markets, especially California and parts of Nebraska/Texas, where long-term access determines exit value. Soil quality and drainage matter because they affect crop flexibility, resilience, and productivity. Over-rented or Excel-good deals can be dangerous if rent assumptions are above market or based on sale-leaseback distortions. The best farmland investors should diversify by geography and crop type, but asset quality often matters more than the exact crop mix. AcreTrader intends to remain conservative with capital deployment and prioritize long-term credibility over rapid scale.

Data Points: AcreTrader minimum investment: $15,000 to $25,000 - Typical minimum per offering for individual investors on the platform Typical farm deal size: $1 million to $5 million - Approximate total value of farms AcreTrader tends to represent Portfolio mix: 70/30 or 60/40 row crops to permanent crops - General composition of deals on the platform Number of farms done: About 50 - Approximate number of offerings AcreTrader has completed States represented: 13 states - Geographic spread of deals mentioned during the interview Crop types represented: 12 to 15 crop types - Breadth of crop exposure across the platform’s offerings Private equity farmland capital growth: $3 billion to $35 billion - Growth in farmland-focused private equity funds over the last decade U.S. farmland asset class size: $3 trillion almost in the U.S. alone - Scale of the broader farmland market referenced by Malloy Farmland loss rate: Several acres every minute - Describes structural shrinkage of farmland supply in the U.S. Farmland price trend window: 2015 to 2020 slower compounding - Period described as still positive but less rapid than other eras Leverage in farmland: 20% LTV or less - Typical leverage level cited for much of the asset class California leverage on some farms: 50s and 60s LTV maximum - Higher leverage pockets in California permanent-crop areas AcreTrader Series A: $12 million - Recent fundraising round described by Malloy Prior 2020 raise: A capital raise in 2020 - Earlier financing round led by a family office/offshoot Team size: About 30 employees - AcreTrader headcount at the time of the interview Software engineers: 9 or 10 - Portion of the team dedicated to engineering and data work Diligence funnel: 50 to 200 farms in, about 1 passes - Illustrates how selective AcreTrader is in underwriting Posting cadence: About 1 farm per week - Rough average pipeline cadence for new offerings Nebraska farm purchase price: A little over $3 million - Host’s AcreTrader case-study investment Nebraska farm projected gross yield: About 3.7 - Host’s farm economics as discussed on-air Nebraska farm projected net return: Around 8% - Projected return for the host’s farm investment Nebraska aquifer depth: About 8 feet deep - Water table detail for the host’s Nebraska farm Nebraska farm location detail: About a mile from a river - One factor supporting water availability on the Nebraska farm Investment hold period: 5 to 10 years - Expected time horizon for farmland ownership on the platform

Pivotal Quotes: "We are an investment platform for farmland dedicated to three core principles or goals, and that is access, liquidity, and transparency." — Carter Malloy: Defines AcreTrader’s mission and product positioning "Water is a huge one." — Carter Malloy: Introduces the most important underwriting risk factor in farmland deals "This is not a wild asset. It's not boom and bust times at all. It's slow and steady compounding." — Carter Malloy: Summarizes the core investment thesis for farmland

Implications: Farmland remains an attractive diversifier, but only for investors who respect local underwriting realities—especially water. AcreTrader’s approach suggests the category is becoming more institutional, data-driven, and accessible, while still constrained by supply and quality control.