Invest like Bill Gates: Farmland Never A Down Year?
Grab your overalls... I mean he was the world's richest man before Teflon Elon
I just may buy a farm. What? Why? Keep reading and signup for our premium version to get my playbook as I due diligence going nostalgic and rural.
Conspiracies & Cashflow - Oh My
Nothing I like more than a conspiracy theory and a way to profit side by side.
A little spice with my sugar, ya know?
So let’s talk mfing farmland and Mr. Gates.
Apparently, the largest farmowner in these here United States, looks like he’s unlikely to have ever had dirt under those meticulously manicured fingernails.
It’s the man, the myth, the legend… Bill Gates.
Well over the past 10 years+ Bill’s money manager has been accumulating acres of farmland across 19 states. As billionaire’s go with their money, Bill’s pretty secretive. No one from his Holding Co (Cascade) will speak to the media (I get it) and he hasn’t publicly stated why he owns the land. Regardless, it’s estimated through his multitude of holding companies that Bill owns about 242,000 acres of farmland and another 27,000 of other land.
That made me ponder.
I feel like farms are like vineyards. How do you make $1 million w/ a vineyard? You start with $10 million. Don’t mind if I do…
So I asked a question to a friend I like to pontificate on happenings in the world with… “What’s a crazy business move happening in the world you think people aren’t paying enough attention to?” Enter Gates and some tantalizing, totally unsubstantiated, potentially ridiculous theories.
Wild Theories for You:
Impossible Meats Takeover - Gates is a large investor in Impossible Meats and has long taken a stance that substituting meat would be beneficial for the environment. What if he buys up a bunch of farmland, including soy and corn land (which is the main feed for cattle) and holds back feed from farmers? Livestock pricing goes up, becomes less viable and voila faux meat takes off. That’d be a China level 100 year plan play. I’m almost impressed if he’s that forward looking. He profits and gets to will American’s from any cheeseburgers. Except, I love burgers so Gates better watch out.
Making Farming Environmental Friendly - Control the industry and you can control the lines in the sand. What better way to control farm environmental regs that be the largest farm? After our late night convo, I found out Bill is part of Leading Harvest are part of the largest environmentally sustainable industry groups in farming. Hmmmm….
THIS is why money is power. You get to play the long game. Why mess with lobbyists and regulators when you can just acquire all the assets and change the regulations yourself.
Gates Has Never Been Sexy
(Although I dunno, his moves are 🔥).
That said what I do find SEXY is how unsexy Gates portfolio is, it includes shares in Berkshire Hathaway, a Coca-Cola bottling company, the tractor manufacturer Deere & Co., FedEx, Walmart and a slew of other things that have nothing to do with crypto or NFTs or Gamestop apparently.
So I figured, let’s look at how and why to acquire farmland:
Who is Buying Farmland?
First, did you know American soil is not always so American?
Nearly 30 million acres of U.S. farmland are held by foreign investors.1 To be honest, we have 896 million acres of it, so that’s only 2.5%ish, BUT that number has doubled in the past two decades. Maybe they’re on to something.
Second, pensions snap out the asset class it seems.
6,175-acre Broetje Orchards acquisition by the Ontario Teachers’ Pension Plan in 2019.2
76+ pension funds have investments in farmland, managed either in-house or by external fund managers.5
It’s estimated that these pension funds had allocated roughly US$14.8 billion to farmland investments by August 2018.3
The rest of the largest landowners are largely big longstanding farming families.
There’s GOLD in the Grains
Besides Billy boy snapping up farmland faster than tech bros buying NFTs, the asset class intrigued me in my search for assets that are non-correlated to the stock market and protect during recessions. My 30 second pro-thesis on farmland:
US Farmland returns have averaged ~11.5% annually since 1990, with consistently low volatility and a near-zero correlation with stocks.
Volatility is WILDLY low - imagine pairing farmland with bitcoin, asymmetric upside and severely tamped down volatility. Aka one chart stays stable allowing other to ping pong around like a pogo stick on it’s hopefully hockey stick like curve.
Since they began measuring farmland has only experienced one negative quarter return. (Major disclaimer here I don’t like how they measured this). 4
USDA and the United Nations estimate that the demand for food will rise by +70% to +100% in the next 30-years.5
Rates are at all time lows. Debt is cheap, if you finance out the farm now your yield can be higher. So lock in rates now.
Commodities (like food) move in super cycles (often), we’ve been on a pretty long bear run in commodities it might be time for commodities to move. Forgot the crystal ball at home. BUT I did buy a bunch of energy stock when I told you all I was prepping for inflation and that’s a 300% return.
THIS IS KILLER - Owning farmland has significant tax advantages, tax deductions and writeoffs.
JOIN CASHFLOW FOR A DEEP DIVE ON HOW TO PROFIT FROM FARMLAND.
Investing is always a big giant fing guessing game, where we do a ton of work to try to “guess” better. So THIS IS NOT INVESTMENT ADVICE, gotta put on our independent responsibility hat.
Why NOT to Invest:
Productivity increasing (tech etc) means less farmland needed (US productivity has essentially 10x’d in the farming space. Thus less need for farm land. This throws off the supply and demand exponentially.
Doesn’t seem like we are buying in at the bottom. The average crop land real estate value per acre in 1980 was $1800, it fell by almost 40% to $1200 in 1991. SO when some of these platforms say farmland has never lost money in a calendar year. EHHHH always matters when you start your index bud. 1991 would have been a killer year to start tracking.
Overall farmland prices do not appear to go up sizably over time, unless it is for residential or population change dynamics.
Niche, high value crops like pistachios, berries, cashews, etc tend to outperform highly commoditized crops.
Hold My Overalls!
How do I Buy Farmland?
My consensus, I’d like to own some farmland as part of my diversified portfolio. Here’s how I’m looking at it. If you’re interested in syndicates (and an accredited investor) get into our contrarian cashflow fam, we may be doing a deal.
Otherwise turns out you don’t have to be a billionaire to buy farmland.
We put together options for you from $100 to $1,000,000 and beyond.
Crowd Funding Farmland Platforms:
As for all the rest you can buy the REITs and stock on any trading app… although hopefully not Robinhood because, hypocrisy.
Buying Farmland Direct:
I have a wild story about a deal we’re playing with. It involves a Tree farmer with 8 to 9 figures, who then went bankrupt as well as:
A pet gator I got eye-level w/ as it resides next to his bathtub (YUP!)
And 1 million cactus now up for sale…
Do you want to hear it? We’ll keep the names private to protect the living, but it’s just about too ridiculous to believe. Comment below…
So are we buying land and moving to the countryside or what?
Question everything (including and maybe especially billionaires),
Signup to become a Cashflowian.
We’re gonna do a deep farmland dive. It’s community to push you forward, ideas to get you going, a playbook to make you money.
LIVE ON TINY HOME BUILDING & PLAYBOOK HOW TO
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