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June 20, 2023

How it Works : Farmland Investing with Land Income

Learn about the process of farmland investing with Land Income and understand the steps involved.

Step 1: Farm Selection & Entity Creation

After screening and inspecting numerous farms for soil, water, location, and price, we select the best combination of risk and value for our investors. Subsequently, a purchase contract for the property is secured with the landowner. The purchase contract allows us time to conduct due diligence, handle legal procedures, and raise funds on the Land Income platform. Typically, this entire process takes 90+/- days.

For each selected farm, the legal title to the property is held by its unique entity, usually an LLC. 

Step 2: Investment

Once the entity is created, it is divided into fractional shares. When you invest with Land Income, your investment goes directly towards purchasing the land, annual operating expenses, and organizational costs of the selected property. Through your investment, you become a partial owner of the farm. Your shares in the LLC represent your ownership interest in the limited liability company (LLC). This ownership entitles you to proportionate returns from the farm's cash flow, tax benefits, and appreciation from the value of the land. You can purchase any number of shares as long as it meets the minimum investment requirement. 

Step 3: Farm Management

Land Incomes management handles all administrative and property management tasks, including insurance, accounting, and working closely with the local farm manager. In addition, we work alongside consultants and external farm managers to implement best practices, leverage technology for improvements, and promote sustainability. 

We hire a highly skilled local Professional Farm Manager with extensive experience farming substantial acreage of the same crop locally for each farm. They are well versed in the local conditions, soil, water, labor market, weather, pests, and other relevant factors, minimizing our risk. 

We charge an annual administration fee of 1.0% (based on the overall farm value), typically deducted from the farm's income.

Step 4: Reporting 

Land Income offers transparency and timely reporting. Financial information is posted to the property website quarterly. The newsletters are released in the Spring, Summer, and Fall. Tax documentation is provided in February of the following year. 

Step 6: Returns / Distributions

Excess annual income generated by the farm is distributed to investors. The cash flow disbursements are made to investors in the fall and spring as we receive crop payments from the processors. 

It's important to note that this cash yield is in addition to the tax benefits and expected annual appreciation in the farm's value. 

Land Income offers an opportunity to invest in farmland, a safe, stable, and attractive long-term asset class.

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