Sweet Returns with Low-Impact Tenants
Your creativity astounds us.
No, really. We’ve met investors from all over the world, and are always impressed with how fundamentally creative real estate investors are.
Real estate investment gives you enormous freedom to choose a market and product type that works for YOU.
Although people often equate real estate with single-family housing, there are so many other niches. That’s especially important to remember when competition in the housing space heats up.
Instead of people for tenants, our guest on our latest show has trees.
Our long-time friend, David Sewell, tells us all about his latest venture into agricultural real estate. He’s put a twist on a very sweet product type for maximum returns. Plus, he gives us details about his unique, sustainability-oriented business model.
In this episode of The Real Estate Guys™ show you’ll hear from:
- Your chocoholic host, Robert Helms
- His cacao-crazy co-host, Russell Gray
- Agricultural investor and founder of International Coffee Farms, David Sewell
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From caffeine to cocoa
David’s company acquires underperforming commercial coffee farms in Panama, replants them with specialty coffee over a period of three to four years, then sells parcels of land individually to investors while maintaining and operating each farm as a unit.
He’s one of a group of investors who’ve found that “rehabbing” a product … switching from a generic, commercial coffee bean to a specialty one, for example … can add tremendous value.
We asked David what makes specialty coffee different.
He told us specialty coffee is handcrafted from start to finish. Every bean variety is specifically selected, carefully grown in small quantities, handpicked, and thoroughly checked for defects.
In addition, David’s hired a team of artisans to oversee the growing and processing of the beans.
In the past couple years, David’s expanded to a new crop, one everybody loves … chocolate. Specifically, five-star, artisanal, organic cacao.
Although David uses the same tried-and-true investment model for his cacao farms as he does for his coffee farms, we asked him to give us the rundown of how his cacao farms function.
A cacao farmer who’s NOT in the candy business
The biggest cacao growers are located in Africa, along the Ivory Coast and in Nigeria. These growers produce mainly commercial cacao for large candy manufacturers. That ubiquitous milk-chocolate bar you can pick up in the check-out line of your local grocery store? It probably contains beans from Africa.
David emphasized to us that he is NOT in the commercial cacao growing and candy manufacturing business … and he has no desire to be in the business of exploiting children or slaves, who make up many of the workers at traditional cacao farms.
Instead, David took his resources to Belize, which has developed a world-wide reputation for specialty chocolate.
Under the heading of the Belize Cacao Consortium, David operates three businesses that grow, trade, and process chocolate.
His business model is based on three pillars: economic sustainability, environmental sustainability, and social sustainability.
In David’s own words, “We’re here to prove to the people that we are farmers.”
David provides his local workers with high wages, decent accommodations, and healthcare.
In addition to supporting his own workers, he aims to provide local farmers with a long-term place to sell beans at a price a little higher than the average market price.
And he gives these farmers a bonus, too … a portion of seedlings and saplings worth 20% of the crop price so local farmers can increase the economic viability of their own fields.
This allows the Belize Cacao Consortium to buy the yields of those saplings back at even higher prices, creating a circle of social sustainability.
David’s business model is structured to give local farmers and residents a leg up in other ways, too. He offers 10-year microloans to local farmers who want to expand or specialize, and he’s started a millennials’ program for those aged 20-34.
These young investors just need a little land, and David’s program takes care of the rest … saplings, a tool shed, tools, and guidance from the institute of professionals he’s put in place.
A stellar team for stellar chocolate
When we asked David how he was able to segway so quickly from coffee to cacao farms, he gave us a simple answer.
His farms operate virtually by themselves because he’s been able to find a stellar TEAM to operate them.
In Belize, David’s Cacao Institute turnkey manages every parcel sold to investors. This institute is composed of a group of people with 10-15 years of experience managing cacao farms, and they supervise the entire process of producing high-grade cacao … from farming, to trading, to production … they’re old hands.
We asked David to give us a rundown of the farming and production process.
This process is unique because it’s been perfected over thousands of years by the Mayans. Specialty chocolate takes many steps:
- The cacao pods are harvested and the beans are removed.
- The wet beans are fermented in a 6-day process.
- Over another 3-5 days, the beans are dried. Various environments provide subtle flavors to the beans.
- The dried cacao beans are then roasted, which provides another layer of flavor.
- The roasted beans are processed by cracking and winnowing to remove the cacao nibs, which are further processed to create chocolate products.
It’s a delicate process that requires a team of pros. And unlike David’s coffee business, the Belize Cacao Consortium takes the beans all the way from football-like pod to final product.
Their chocolate company, Mahogany Chocolate, will produce a product line managed by Joshua Parker, a chef and graduate of premier cooking school Le Cordon Bleu.
This product line will encompass 15-20 products that will be available to resort-goers at a shop in Mahogany Bay Village. David also aims to create an affordable candy bar for local Belizeans.
A sweet investment with even sweeter returns
If you like the idea of investing in a tasty product that’s booming in the health-foods industry—really!—you’re in luck.
David decided a long time ago that he wanted to invest in a product that would allow investors to diversify their portfolio internationally for not much money.
For new investors, cacao plots are sold in ½ acre parcels, starting with one parcel for $24,500.
Although it takes a while to get a coffee farm up and running, new grafting methods have allowed David’s group to get specialty cacao trees producing within two and a half years, meaning he has plots that are ready to go now.
Investors can rely on David’s track record and accurate return projections. The average annual return most investors in both the Panama coffee farms and Belizean cacao farms can expect is between 11 and 12%.
Revenue comes from three revenue streams … the farms themselves, trading profits from Belize Cacao Traders, and a share of profits from the Mahogany Chocolate business.
Interested in learning more? Tune in to the show to access a David’s report on how YOU can get involved in this off-shore sustainable agriculture opportunity.
A bean with a lot of benefits
We think David’s business model is great for a LOT of reasons.
He’s chosen a product type that has many exciting uses.
He manages a product all the way through the process, taking raw material and turning it into multiple revenue streams.
He’s leveraged an emerging niche to create incredible profit margins, simply by using new technology to put a twist on a process that’s been used for centuries.
And through social capitalism, he’s making an investment that will impact human lives, producing a better social and economic environment, and a better product.
If that’s not a convincing enough reason to get you to diversify your portfolio, think of the story you can tell!
In real estate, it’s all about conversation starters … sometimes, just starting a conversation can open doors. And what better than a conversation about everyone’s favorite food group … chocolate?
We’re intrigued by David’s model of agricultural investing … and we hope hearing about David’s business model gave you some ideas to chew on, too.
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