Unlocking the Potential of Farmland Investment with Artem Milinchuk

On this episode of REI Mastermind Network, our guest, Artem Milinchuk, discusses the intricacies of investing in farmland. He starts by explaining why debt is not accretive in farmland due to low interest rates and how returns in the rental model are about 6-7% net IR after fees. He then delves into the direct operated model, which offers a higher return of 9-11% with the potential for even higher returns. Milinchuk emphasizes that investing in farmland is seen as a defensive move against inflation, as farmland does not depreciate and can appreciate with proper soil care. Throughout the episode, Milinchuk provides valuable insights on selecting target markets for investment in farming. He highlights the significance of vibrant farmer markets and renting land in the United States, revealing that 140% of farmland is rented out in the US, and 98% of farms are owned by families. Renting land has been a common practice for decades, allowing farmers to create multiple revenue streams. Milinchuk explains how they focus on areas with existing vibrant ecosystems, using California's almond production as an example. Additionally, Milinchuk explores the unique aspects of farmland investing, from the long-term yields of orchards and trees to the various strategies investors can pursue. He emphasizes the importance of location and discusses the advantages of US agriculture, including excellent infrastructure for exporting products. Milinchuk also touches on their internal technology called terra, which aids in finding, analyzing, underwriting, transacting, and managing land. Furthermore, Milinchuk addresses the challenges of educating people about farmland and how it is often overshadowed by trendy investments like NFTs and Pokémon cards. He advocates for farmland as a stable and reliable asset class, comparing it to "salad" while dismissing trendy investments as "gummy bears." He shares the story of a crowdfunding deal for an apple orchard development in Vinatchi, Washington, called Galaxy Orchard, which has become the largest crowdfunding deal in the US. As the conversation progresses, Milinchuk emphasizes the importance of proper capitalization, weather considerations, and the significance of finding the right operators and tenants. He shares experiences dealing with unique tenants and highlights the importance of great partners in the direct operated model. Milinchuk concludes by emphasizing the value of hiring and retaining exceptional talent, drawing inspiration from the success of OpenAI and the power of small dedicated teams. Tune in to this episode of REI Mastermind Network to gain valuable insights into the world of farmland investing and learn from the expertise of our guest, Artem Milinchuk.

Connect with Artem Milinchuk: https://farmtogether.com/

Topics Covered in this Episode:

1. Debt and Returns in the Farmland Investment Space

• Debt not accretive due to low interest rates
• Returns in rental model vs. direct operated model

2. Farmland Investment as a Defensive Move Against Inflation

• Farmland does not depreciate and can appreciate with soil care

3. Orchard and Tree Investments

• Long-term yields of 50 years or more

4. Selecting Target Markets for Farming Investment

• Importance of vibrant farmer markets and renting land in the US
• Rental practices and multiple revenue streams for farmers

5. Factors to Consider When Selecting Target Markets

• Focus on areas with existing vibrant ecosystems

6. Technology and Tools in the Farmland Investing Process

• Use of internal technology called terra for managing land
• Lack of data tools for analyzing farmland markets at scale

7. Education and Marketing Strategies in the Farmland Investment Space
8. Farmland Investment vs. Trendy Alternatives

• Farmland as a stable and reliable investment
• Comparison to trendy investments

9. Crowdfunding Deal for Apple Orchard Development

• Details of the Galaxy Orchard crowdfunding deal
• Introduction of the Cosmic Crisp apple strain

10. Challenges and Importance of People in Farming Investment

• Weather and capitalization challenges in farming
• Choosing the right operators and tenants
• Unique experiences with tenants and stories from the land

11. The Value of Great Talent in Farmland Investment

• Importance of intentionally hiring and retaining talent
• Trusting intuition and recognizing when someone isn't working out

12. Small Groups of Dedicated Individuals in Changing the World

TIMESTAMPS 00:00:00 reimastermind.net 00:01:13 Upbringing, scarcity, and professional interest in food 00:04:15 Farmland comparable to real estate 00:09:29 Target markets filtered for vibrant farmer markets 00:13:00 US agriculture: diverse, connected, and climate-dependent 00:15:39 Education and perception are changing about farmland 00:19:12 Weather unpredictable, capitalize farm, choose partners 00:22:45 FarmTogether.com focuses on education and accessibility 00:26:30 Deliberate hiring, retaining talent, and trusting intuition ... https://www.youtube.com/watch?v=hBkcwGRT_d4