Real Growth, Resiliency, and Diversification through Agriculture

Everyone needs a place to live and EVERYONE needs to eat. 

In good times and bad, we all need food. For centuries, agriculture has been synonymous with wealth and productivity. 

(Maybe that’s why they call it “produce!”) 

Agriculture relies on real estate. It also provides investors with an opportunity to create cash flow from cash crops. 

So, we’re revisiting the opportunities in agriculture … even in the midst of a rapidly changing world. 

In this episode of The Real Estate Guys™ show, hear from:

  • Your high-growth host, Robert Helms
  • His fruity co-host, Russell Gray
  • Agricultural investing expert, David Smith

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Opportunities in agriculture

We love all kinds of real estate investing, and we’re spending a few weeks talking about what you might consider to be alternative investments. 

Today, we’re talking about a real estate investment that can make a ton of sense if you’ll just open your mind … agricultural real estate. 

Agriculture was THE original use of land. People have been investing in agriculture for thousands of years. 

Agriculture produces something of high value … food and commodities for textiles! 

The population is increasing. Everyone born needs calories … and yet the resources to produce calories across the globe are either diminishing or the costs are increasing. 

So, today we see lots of opportunity in the agricultural space. 

If you will, your tenants are trees … so things like tenant and landlord law go out the window. 

And you don’t have to get the geographic market as exactly right as you do when you’re buying an apartment building.  

Agriculture also offers an opportunity to diversify some of the risks that are present in other assets during changing times. 

What does agriculture investing look like today?

David Smith is an agricultural investing expert. Why does he think people should consider agriculture?

“First and foremost is the diversification of your investment portfolio,” David says. “Also, agriculture in general creates generational wealth.”

Agriculture is a long-term investment in many cases. You’re looking at 10, 20, or even 25 years of producing … while most tenants typically stay a year or two. 

When you think about agriculture, you may envision fields with corn or wheat or rice. But a lot of commercial produce grows better in a greenhouse. 

“You just have to open your mind to see that agriculture doesn’t mean just rows out on a highway. There’s lots of different kinds of agriculture,” David says. 

So, part of agriculture is picking the right market and product for you. 

Paraguay

Let’s talk about markets. There are areas of the world that are just more prone to agriculture. 

“It’s just as important to pick the right product and the right country,” David says. 

David’s team focuses, for example, on Paraguay. Paraguay exports produce all around the world. But David and his team work with the internal market within the country. 

Paraguay has more freshwater than any country in the world by way of aquifers and rivers. It also has very small changes in climate. 

There are about six weeks of winter that take place between August and September. Then, it goes right back to warm weather … making it conducive to growing year round. 

The land in Paraguay is also very fertile. “You can grow anything,” David says. 

In farmland, the composition of the soil is critical. You need to know the nutrients, the density, and what is going to grow well there. It can also help you determine the best tactics for pest control. 

David’s team uses a unique strategy in Paraguay. Instead of exporting to other countries, they focus on selling in the local markets. 

Paraguay currently imports large amounts of food. But by growing locally, David and his team can sell their produce locally for a lower price than the imported products and carve out a solid piece of the market for themselves. 

Getting started in agriculture investing

So, how does investing with an organization like David’s work? 

There are currently two investments … oranges and greenhouses. And there are two main components. 

The first component is simply a real estate transaction. 

“You have a  purchase contract for buying land. Then, the land is dismembered from the main master plan of the plantation. A new title is created in your name or the legal entity that you prefer to use,” David says. 

The second component is the farm service agreement … an agreement between the investor and the farming company to operate the plantation and care for your land and your crops, harvest the produce, and take it to market. 

From that point on, it becomes a completely passive, hands-off investment. 

“The only exception is in the case of greenhouses where after 10 years, an additional amount has to be paid for refurbishing and renovation,” David says.  

The greenhouses aren’t the small backyard version you are familiar with … each is 6/10 of an acre!

In the greenhouses, David’s team is growing vegetables that are used in almost every meal in Paraguay … tomatoes, cucumbers, and peppers. These can grow year-round and offer year-round cashflow.

The oranges on the other hand are a once a year crop with a large once a year payout.  

Essentially, these are a hard asset, passive turnkey investment.

To learn more about agriculture investing … listen to the full episode!


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Agriculture Investing – An Opportunity to Diversify Globally

Everyone needs a place to live … and everyone needs to eat.

Food is the original wealth. The world’s population is growing … and there are more mouths to feed every day!

Investors don’t have to limit themselves to properties with assets like houses, commercial buildings, or shopping malls.

You can harvest dollars from land that doesn’t have anything to do with tenants … and has everything to do with crops.

Agriculture investing is one of the most enduring and common sense investments there is.

Learn firsthand how money CAN grow on trees from a well-seasoned expert in international agricultural investing.

In this episode of The Real Estate Guys™ show, hear from:

  • Your food-for-thought host, Robert Helms
  • His food-loving co-host, Russell Gray
  • Expert agricultural investor, David Smith

Listen

 


Subscribe

Broadcasting since 1997 with over 300 episodes on iTunes!

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Digging into agriculture investing

We live in a big world with lots of mouths to feed … that means lots of crops … and lots of ways to profit.

In the past, agriculture investing was a difficult business to get in to on a small scale. If you didn’t have huge capital to buy huge plots of land … you were hugely out of luck.

But in the last several years, we’ve seen lots of folks who have figured out a way to let mom and pop play alongside them.

When it comes to investing in agriculture real estate, the pizza theory comes into play … fitting since we’re focusing on food.

Someone buys a large pizza. They take it to a party, cut it into slices, and sell each slice for a little bit of a markup.

At the end of the day, the person who brought the pizza makes a little bit of profit for their effort … and everybody gets to have a slice of something they might not be able to afford on their own.  

In agriculture, somebody buys a large parcel of farmland and puts all the operations and distribution channels in place.

Then, they divvy up a slice of the deal for a small markup to give many small investors the chance to play in that space. We see this as a great opportunity.

Everyone needs to eat

Crops come in all sizes, shapes, and degrees of durability … not to mention that different regions of the world have different opportunities.

In real estate, we often talk about getting the market right. Buying an investment property in the wrong market can get you into trouble.

But with crops, it’s not exactly the same.

It doesn’t really matter where the hungry mouths are … and it doesn’t matter where the food is grown.

Wherever the best farmland is … that’s where you want to buy. With today’s shipping technologies, you can get the food wherever it needs to go.

Another perk of agricultural investment? It is a staple. It meets a basic human need … just like housing.

Everyone needs a place to live … and everyone needs to eat.

And the population … the number of consumers demanding food … is steadily GROWING.

Crops and cash flow in Paraguay

David Smith is an experienced investor. He started in real estate, and for the last several years, he has been involved in agriculture in Latin America.  

After many years living and working in real estate in Latin America, David knew he needed to diversify.

After some due diligence, David decided to invest in agriculture.

“I was so interested in the business model,” David says. “It was a passive, turnkey investment not subject to the whims of the market. I really liked the security of it.”

David landed in Paraguay … a big farming country a bit off the radar … and invested in oranges.

Why oranges?

David says one of the biggest things that struck him about this particular crop was its durability. It also has a great distribution area.

Paraguay imports about 85 percent of all the citrus products consumed in the country.

“We can’t even meet the demand in Paraguay, let alone try to export yet,” David says.

Today, David is expanding to new segments of citrus fruits like lemons, limes, and sweet limes … ingredients that are important in the local diet.

Paraguay is traditionally a row crop producer … foods like soybeans, wheat, corn, and chia. It imports citrus from Brazil and buys greenhouse vegetables from Argentina.

Looking for ways to provide foods locally that are traditionally imported can open up lucrative niche opportunities in agriculture.

By providing a local alternative to imported foods, David provides a cheaper option for local grocers while creating income for his investors.

Going bigger with greenhouses

Like any investment niche, creative solutions can pay off … literally.

In Paraguay, one of the biggest challenges to growing vegetable is the heat.

“Paraguay gets very hot … and when I say very hot, I’m talking Tucson hot. It can be 120, 130, even 140 degrees in many locations,” David says.

The vegetables grown locally under normal farming conditions don’t grow very well. Their growth is stunted, their colors aren’t as bright, and they don’t taste as good as imported vegetables.

That’s where GREENHOUSES come into play.

By growing high-use … and typically high-priced … vegetables in greenhouses, David and his team can provide a local, tasty, and affordable solution to consumers.

This also provides a unique opportunity for investors. Instead of investing in land, individuals can purchase a greenhouse.

Each greenhouse is approximately 26,000 square feet … that’s a good amount of space for growing some green.

Greenhouses are also a popular investment because of their quick returns. Most investors will receive a return after just one year of making their investment.

“It’s a very stable business that runs 24/7,” David says.

And it’s a business that you don’t have to worry about managing. David and his team employ expert staff members that specialize in growing each crop.

These employees are even more motivated to provide extra levels of care, because they share in the profits.

“We offer them bonuses based upon produce amount, not net profit. In turn, they really put a loving touch into their work,” David says.

Determine if agriculture investment is right for you

Most Americans haven’t invested overseas.

There are a lot of reasons for this … but one of the biggest is not understanding how things operate on the ground in a different country.

That’s why having a local team managing the day-to-day of your investment is so powerful … especially in a niche like agriculture.

Just like any other investment opportunity, it’s important to do your due diligence.

David and his team help investors get a feel for agriculture by providing informative tours of their operation in Paraguay … and he also prepared a new, informative special report Citrus Fruits in Paraguay Investments that Grow Naturally.

Whether or not this particular opportunity is right for you, expanding your thinking to a bigger picture of real estate than just houses and hotels is important … and can yield lucrative results!


More From The Real Estate Guys™…

The Real Estate Guys™ radio show and podcast provides real estate investing news, education, training, and resources to help real estate investors succeed.


Love the show?  Tell the world!  When you promote the show, you help us attract more great guests for your listening pleasure!