Rocket Your Dollar Ep. 42: Agricultural Crowdfunding with FarmFundr

Brandon Silveira, CEO of FarmFundr, shared how his farmland crowdfunding platform bridges the gap between the agricultural industry and investors.

Transcript:

Thomas Young:

Welcome back everyone to the Rocket Your Dollar Podcast. I have with me today, Brandon Silveira. Brandon is a graduate of the California Polytechnic University at San Luis Obispo with an agricultural degree. After graduating, Brandon started his career in the agriculture industry and has extensive experience managing and farming a large variety of crops. He has bought and sold millions in real estate and currently manages over a hundred million dollars worth of assets. His farm management company was recognized in 2012 for achieving over 900% growth and was listed on Inc Magazine's list of fastest-growing companies at number 701. It was the only agricultural company on the list.

His specialty is in farm management, land acquisition, and the variety of farm and land financing and strategy. His passion is to help bridge the gap between the ag industry and the consumer-led to FarmFundr, where he gives investors access to high-quality, high-profit potential farm operation investments. Investors can rest assured that they're gaining access to deals selected by a professional that has a demonstrated history of success in the farming industry. Brandon, thanks so much for being here. 

Brandon Silveira:

Howdy, how are you? 

Thomas Young:

Yeah, I'm doing great. I'm super excited to talk to you because in the last six months or so just at Rocket Dollar and just with our customers, we've seen an explosion in the sort of interest in agriculture investing and I want to get your take on why it's so hot right now. 

Brandon Silveira:

Well, when anything happens in the market, especially something that's kind of crazy as this pandemic I think people are looking for different places to put their money, in places that can ride out some of these financial waves, the ups, and downs. I think agriculture is probably one of the best ways to hedge your risk against the market. Yeah, it's funny you say that. We've had a lot of interest as well in FarmFundr just the last few months. 

Thomas Young:

Yeah, and to me, just sort of thinking about it in my head, it's different from, buying rental units or buying self-storage deals or things that are great investments but agriculture to me seems like a little bit, even deeper of a hedge because it's just... We all got to eat. We don't have to pay rent, but we got to eat.

Brandon Silveira:

Right, right. It's kind of funny you say that. That was the reason why I spent so much of my life in agriculture and got a degree in agriculture. At a very young age, my dad always said, "Hey, everyone has to eat so this is a great business to be in. When the market's doing great people eat better. When the market's doing bad, people still need to eat." Yeah, you're 100% right. It's one of those assets that as the world population is growing, the farmable land is declining. It's one of those assets that demand is going up and we're able to keep up with demand currently with a yield increase but we're hitting that plateau where demand is going to increase what we can grow in yield per year. That's going to include the middle class and all these other demands that are going to come. It's kind of like, where do you want your money to be? That land asset I think is going to be one of the best places to park money.

Thomas Young:

Right, and one of the stats on your website, I was looking at it earlier that caught my eye was the amount of farmland lost annually. 

Brandon Silveira:

Yes. We lose a lot of farmland every year.

Thomas Young:

That's crazy. So do you guys, when whenever you sell or whenever you invest in a farmland project, is there in the back of your mind, a, maybe a developer wants to come in and build houses here and that could be an attractive opportunity for my investors, or is that not even something you're looking at?

Brandon Silveira:

Of course, you're looking at that. None of the investments we're offering on the site currently, and that I have in the pipeline are boarding along the city, mostly because those investments, there's a lot of speculators out there that are farming ground right next to the city because they know it's going to be developed soon, but they usually don't cashflow in the short term. It's one of those things where you're farming it but you're overpaying for the price of farmland, right? In hopes that it's going to be developed. It usually does work out and is developed at some particular point. For our investors that are on the site, they're not going to want to see a negative cash yield yearly for seven years or eight years before somebody decides to put some houses on it. It's not something that we're offering currently on the site, but there's a lot of that going on right now.

Thomas Young:

Yeah. No, and that makes sense. I'll follow up with what are some of the things that you guys are looking at and that you focus on primarily?

Brandon Silveira:

We're trying to find something that's going to have good appreciation. We're trying to find something that's going to have a good cash yield. In farming, usually over the longterm, the appreciation is what's going to be the best investment for you. For us, a lot of these nut crops that we're investing in right now, almonds, walnuts, pistachios, those types of crops are giving a really good cash yield per year. So we're looking at stuff that's going to be in full production, that still has a long life ahead of it, that we can get a decent return yearly for the investors and we can exit out of in time for it to still have a long life after we sell it. That way, the next investor can still have cash yields as well. 

Thomas Young:

Right. That makes sense. When, for example, you guys are selecting a project, is it already been producing and somebody needs to exit the farm? Is it a family farm? Are you guys identifying land and then developing it yourself, developing the farm yourselves? Tell me a little bit about where the land's at.

Brandon Silveira:

Yeah. Currently, that's what makes us a little bit different than anybody else out there. We're pre-funding the deals, we're finding the piece of property. We're developing that piece of property and we're putting it on the platform so we have 100% control over what the investor's getting into. I specifically did this because I wanted to make sure that the farm was top notch. I didn't want to get into a piece of property or have a sponsor come on our site and the investment not be what I thought it was going to be. The yield history wasn't what they said it was. I think it's a good way to manage these assets to guarantee that you're going to have a good piece of ground for the investors. Now there are no guarantees that it's going to be a good investment. That's just life, but we're in it for a very long time, just making sure that the investment's a good one.

Thomas Young:

Right. What is the average hold time for an investment made through FarmFundr?

Brandon Silveira:

We like the longer period. The longer the hold time, the better off you're going to be as far as short term market fluctuations. Eight to 10 years is quite common. We are going to offer a pistachio development that we're going to look at sell between four and five years. We'll have some shorter deals coming through the pipeline. We're also looking into debt, which we may do a 24-month or 36-month type of a debt situation. But if you're going to own the property, you're going to own that land you want enough time for it to appreciate, and you want enough time to get that average cash yield up because you're going to have a year where you kill it and you're going to have a year where you might break even or might do three or four or 5%. That's just kind of the way ag is. A lot of people don't advertise it as being that way, but it's most certainly a reality.

Thomas Young:

Right, and that makes sense. The reason I ask about hold times is just that a lot of Rocket Dollar investors and self-directed investors like these long hold times because you put your money to work and you know, it's not money that typically is going to be used in the short term. It aligns well with retirement investing and so that's fantastic. I don't think a lot of our investors will be too concerned about long hold times. I think they'll like it.

Brandon Silveira:

Here where we're at a lot of, I would say almost every pension fund in the United States is actively investing in pistachios and almonds and walnuts in our area just because of that. Great appreciation, great cash yield, and long hold times.

Thomas Young:

Right. And that's interesting. Are nuts and pistachios and those sorts of crops just in high demand right now? Is it in response to what people are buying or how do you select what you grow someplace? For example, you guys are in California where you could almost grow anything, or is it pretty specific?

Brandon Silveira:

You can almost grow anything, yes. There are different types of soil. Certain crops don't work well on certain soils here in the valley, but for almonds and pistachios, for example, pistachios can grow on a little bit tougher soils than an almond would not be able to be planted on. What's driving this is the market demand and we've just seen a huge demand worldwide. We're producing 80% plus of the almonds in the world and pretty close to that same amount or more of the pistachios in the world. For example, say in the almond market countries like India are as their middle-class develops, you see more and more people with this plant-based diet that just want these nuts. It's part of their daily diet. So we've seen a huge increase in market demand.

Thomas Young:

Yeah. That's, that's fantastic. Having someone on the ground with your type of experience is important because you can identify some of these trends as well as most people, which certainly matters, right? You want to make sure your land is working as hard as it can for you and selling what you're growing, right? 

Brandon Silveira:

Right.

Thomas Young:

I'm curious what drives your passion for not only, we talked a little bit about the agriculture side, but connecting these projects to investors. When someone with your experience could pretty easily probably get financing from like you said, pension funds and these big players that just write one check and then never talk to you again.

Brandon Silveira:

Sure. For me, it was the, just like anything there's risk involved. When you're a farmer and a family farm, I see the family farm dwindling. We've always talked about the family farm going away, going away. There's still going to be lots of family farms 20 years from now, but there are so many of these midsize farms that are just, they're going to sell out because there's too much risk involved. For example, if you own a farm and you want to buy the property next door, you have to go to the bank and you're going to have to get a personal guarantee. If there was anything that happened, they would lose the family farm that they had in their family for years and years. What we want to do is, we want to be able to give people options in the capital world.

We want the investors to come in and invest in farmland. Then we want to open the platform up to farmers that can say, "Hey, I have this great piece of property. An investor can buy it and the farmer can farm it." There was just a huge gap in between what so many investors crave as far as an alternative asset and so many farmers need as far as the capital, that just the gap wasn't being filled. That's just one example. We don't know what's going to happen with estate taxes and whatnot in the future. There's a lot of family farms that get sold off because their family just can't afford the estate tax. If an investor wants to purchase into that family farm and the farmer who's been farming it for the last 30 years gets to farm it for another 20 years I think that's a great win for the farmer and the investor. Especially if the returns are good for the investor. I just think there are so many different options to get people involved in farmland that will help the family farm as well as diversify the portfolio that the investor wants.

Thomas Young:

Right. It's sort of like, you let people focus maybe on what they're good at. Investors want to invest and farmers want to farm and they can work together to make sure that everybody's doing sort of what they're best at, right?

Brandon Silveira:

Yep, yep, yep. I think there's going to be a lot of opportunities. We've got just about $3 trillion worth of farmland out there and the average age being 60 years old. Most of this farmland is going to change hands in the next 15 years or so. How that farmland changes hands is going to dictate how people get their food. I hope that small farmers continue to be a big part of that. It's kind of our goal.

Thomas Young:

No, and that makes perfect sense. I love the way you guys are approaching it and what you guys are working on. Tell me a little bit about what you're seeing with this pandemic that we're in, not only in the interest but in the way that even supply chains are changing with the way we get our food with restaurants being shut down. Has any of that affected you guys that you've seen or what's your take on all of that?

Brandon Silveira:

Yeah, I don't think there is a farm, I don't think there's a person in the United States at least that is not affected by this. Small businesses, farmers the same. All the commodity prices are being hit pretty hard right now. The only positive thing I can say about all this is I do think we're going to get back to normal, but I have not seen the price and farmland drop and it usually doesn't happen that way. You don't have a market fluctuation of five to six months of prices and then see the farmland drop. There's this lag time. Yeah, we're seeing commodity prices drop, but farmland the asset is staying at the same price, which is good. I think that's one of the reasons why people like farmland as an investment because it can take these short fluctuations and spread it out over a long period and people see that it is a good investment. Yeah, it is tragic. Just everything that's going on is it's pretty bad out there.

Thomas Young:

Yeah. I know we talk about it internally at Rocket Dollar. It's tough to stay upbeat and see that there are still opportunities coming and that we will be okay eventually. I firmly believe that. We've gone through some pretty rough times in the past and we've come out of it. I think that'll be true for this as well. It'll be interesting to see how it's talked about in the next 10 years or so, what we've been through, right?

Brandon Silveira:

Right. Right.

Thomas Young:

There's a ton of benefit to investing in farmland and agriculture. What are some of the risks that an investor needs to be looking at or thinking about when they're doing their due diligence on an individual deal on your platform?

Brandon Silveira:

You want to make sure that you have a good source of water. As far as an investor looking at different deals, we want to make sure it's something that you're interested in. If you are into almonds and you like almonds, it's probably a good investment. There's a lot of people who like it. A lot of the due diligence that goes into selecting the right piece of farm ground is where a FarmFundr comes into play. We're out there making sure that you have the best soil for that particular crop. We're making sure that your water supply is good and you're going to be able to sell it later on. There are some good deals out there with some bad water that you can probably cash flow pretty good for the next few years, but in 10 years may be a really bad investment. So we're out there making sure that all those are in line for a good investment as well as managing it correctly, whether we're farming it internally for investors or if we're hiring an offsite farmer. We're vetting these farmers to make sure that they are the best person to farm that particular crop. A lot of that is why you would go to a platform or go to someone like us because that's what we do. 

Thomas Young:

Right. That makes sense. I guess a follow up to that is of all of the different deals that you see or that you have the potential to put together, what percentage of them end up on your platform? I'm sure it's low just because I know you're selecting only top tier deals.

Brandon Silveira:

Yeah. Because we are selecting these deals and pre-funding them ourselves, I couldn't even tell you how many different pieces of property and how many different things I've looked and said, "No, this isn't going to work." Honestly, a thousand different deals just to put a couple on there. There's a lot of work that goes into it making sure each piece is there to make sure it's a good investment. Even then there's still risk involved. There are weather risks and pests risks and different things like that. But like I said, it's FarmFundr's job to hedge those risks and make sure that we try and mitigate that.

Thomas Young:

Right. I'm looking at your site now on the forward-slash property. You have three deals in California, two coming soon, one open now in California. Do you guys invest primarily in California or across the country?

Brandon Silveira:

Everything we have currently is in California. The things we have in the pipeline are in California. Now, we will be offering the site open to farmers that are looking to gain funding from our investors. At that particular point, we'll offer it nationwide. We want to gain our investor base. We want to make sure that we have the best possible deals. I liked California agriculture right now. There are some other parts of the country I'm a little eh, but there are good deals to be had all over the United States. It just kind of depends on what comes through our pipeline as far as different geographical locations.

Thomas Young:

Right. Just because you can do a mediocre deal somewhere else doesn't mean you're going to do it. When the right deal comes along, it'll make it on the site I'm sure.

Brandon Silveira:

I was just talking to the team here recently. We are a farmer-based, farmer-started platform. Other people and other private equity funds, when they go out to invest in farmland, they call a company like us to go out and find the right piece of property and do the due diligence to make sure it's good for their fund. As we grow this platform, I would rather not have a deal on the platform for our investors than put a bad deal up. One thing we never want to be is in that position to have a deal, right? Oh, we have to put something in front of investors. That's not us. We're going to make sure we have the right deal.

Thomas Young:

Right. That's a great way to lose trust pretty quickly if you're just throwing something up for the sake of throwing it up. So Brandon, if someone wants to get in touch with you or your team, tell me about some of the resources you guys have for people wanting to learn more and potentially make an investment via FarmFundr, whether it's with the Rocket Dollar account or just with cash.

Brandon Silveira:

I would say check out our website at Farmfundr.com. Check it out. We've got a bunch of different blogs that kind of talk about farmland and what's going on. Can send us an email at info@farmfundr.com if you have any questions. No matter what the question, if it's involved with agriculture in California, I'm sure we can answer it. Just search around. Check out what's going on. California is just a great place for farming.

Thomas Young:

Yeah. I think it's safe to say that it's world-famous. It's world-known for being excellent farming ground. 

Brandon Silveira:

Everyone thinks we surf over here. I don't understand. 

Thomas Young:

Yeah. Right. If you're within three miles of the coast, you surf, and then everybody else is... I'm always amazed when I go to either San Francisco or LA. There's two California's and one is within 10 miles of the coast and the other is just completely different. Always astounding the diversity of that state. So Brandon, thank you so much for taking the time to talk with us. I'm sure you're going to get calls from our audience because it is an exciting time for alternative investments in general, but there's been such a demand for agriculture investments and what you guys are doing at FarmFundr I'm a huge fan of, and I know our team is as well. I do want to thank you again, and we'll put all the links in the show notes for FarmFundr and some of their different blogs in the show notes. But I want to thank you for taking the time and sharing your expertise with us. 

Brandon Silveira:

Thank you. I appreciate you having me on.