PURCHASE OF CULTIVATED AGRICULTURAL LAND

Purchase of arable agricultural land

Basic information about the investment.

1. Type of investment:

• Purchase of arable agricultural land 50-60% below the market price, with the aim of consolidation and resale of the land at the real and market price.

2. Forms of investment:

The investment can be in the form of "Cuentas en Participación" or "Debt Investment", depending on the preferences and risk profile of the investor.

• With "Cuentas en Participación", the investor provides capital to the company in exchange for 50 to 80% from the profit from the successful implementation of the project. This form of investment allows the investor to benefit from the profit generated by the project together with the entrepreneur.
• In "Debt Investment", the investor provides a loan to the company and receives a fixed annual interest of 8 to 12% , which is agreed in advance. This form provides a stable and predictable return without being tied to the success of the project.

3. Minimum amount of investment:

• The minimum amount of investment depends on the available investment opportunities at the time of investing the funds. Typically, minimum participation amounts start at €100,000 , with some projects also offering smaller investments through collective participation.

4. Minimum term of the investment:

• 36 months with the option of exiting the investment through the so-called "substitute party". In this case, the contract is terminated, and the investor receives back the funds paid by him, including a proportional part of the profit or the agreed interest. This part is calculated based on the time during which the funds were used, relative to the total contract period.

5. Minimum guaranteed annual return on investment:

• 8% guaranteed annual return on the invested amount with full return of capital at the end of the investment period.

How the investment is made: Step by step

1. Identification of agricultural lands:

• We find farmland owners who are under pressure to sell quickly but don't have time to sell on the open market, as well as those whose plots are fragmented, reducing their commercial value. Our activity resembles the model that use iBuyer (Instant Buyer) companies and funds to buy agricultural land at 50-60% below market value . This allows us to acquire land at significantly lower than market prices.

2. Purchase of the identified agricultural lands below their real market price:

• We buy the lands at prices 50-60% below their real market value. For example, if the market price of agricultural land is €1,000 per acre, we acquire it for €400-500 per acre.

3. Land compaction:

• After the purchase of the agricultural land, we carry out consolidation, uniting the fragmented plots into larger and more attractive plots for potential buyers. This process increases the value of land, as larger plots are more desirable to investors and farmers. For example, if before consolidation the price of one acre was €1,000, after consolidation it can reach €1,200-1,300, thanks to the improved commercial value.

4. Resale of the land:

• After we complete the consolidation process, we sell the land at a significantly higher price. For example, if we bought the land for €500 per acre, the real market value of which was €1,000 per acre, after consolidation we sell it for €1,200 per acre. This provides significant profit for both the investors and the company.

5. Return of invested capital and profit distribution:

• After a successful resale, investors receive back their initial capital investment, along with a proportionate share of the realized profit.

6. Repeat the process:

• After distribution of the profit, we start a new cycle by investing in new lands with the potential for consolidation and resale. This allows investors who wish to reinvest the funds to receive even higher returns.

This buyout and consolidation model of farmland investment offers a unique opportunity for profit that is difficult to achieve with other forms of real estate investment.

Frequently Asked Questions (FAQ)

1. What is agricultural land consolidation?

• Compaction is the process of uniting small, fragmented parcels of agricultural land into larger, compact blocks. This facilitates the cultivation and management of the land, increases its value and makes the land more attractive to investors and farmers. Comsolidation leads to optimization of land use and improvement of the efficiency of agricultural production.

2. What is the business model of iBuyer (Instant Buyer) companies and funds for purchasing agricultural land at 50-60% below market value?

• The business model of iBuyer companies and funds for the purchase of agricultural land is based on the purchase of land at significantly lower than market prices, often between 50-60% below its real value. They purposefully buy up land that is fragmented or has lower market appeal. The land is then consolidated through a process of consolidation, creating a larger and more attractive plot for potential buyers. After consolidation is completed, the land can be resold at a significantly higher price, resulting in a serious profit.

3. What are the main risks with this type of investment?

• The main risks in the investment in agricultural land include a number of factors that can make it difficult to successfully implement the project. Changes in legislation can make the consolidation process more difficult or limit the possibility of reselling the land. Market conditions also play a key role — declines in farmland demand or prices can reduce potential profit. Another important risk is the length of the consolidation process, which can be prolonged due to administrative obstacles, delaying the return on investment. In addition, poorly selected plots, such as those with difficult access or lower commercial value, can also complicate a successful sale and reduce the possible profit.

4. How is the security of my investment guaranteed?

• The security of the investment is guaranteed by a careful selection of the agricultural lands that are bought. Plots are analyzed in advance based on their location, infrastructural connectivity and development potential. In addition, consolidation significantly increases the value of the land, which reduces the risk of losing the investment. It is important to note that the process is supported by experts in agriculture, law and finance, who provide a professional evaluation and strategy for the realization of the land at the market price.

5. What does return on investment depend on?                                                                 

• The return depends primarily on the form of the investment. Investors who choose to invest in the form of "Cuentas en Participación" can expect a percentage of the profit on a successful investment. For those who choose Debt Investment, the annual return is fixed and is based on a pre-agreed interest rate on the capital borrowed.
• The return also depends on the size of the investment. Smaller investments offer a lower rate of return and lower interest, while larger amounts increase the rate of profit and interest. The larger the amount invested, the higher the return will be.
• In addition, the return is also tied to the term of the investment. The longer the investor leaves his funds in the project, the higher the interest and profit he will be able to realize.

6. What happens if you fail to sell the properties?

• In rare cases, if we are unable to sell the properties at the expected price, we will continue to work to find suitable buyers. If this drags on, we can offer various options for exiting the investment, including selling at a lower price or renting out the properties until market conditions improve.

7. Can I exit the investment before the end of the project?

• Investments in this type of project are usually fixed-term. However, in some cases we may offer to buy out your share if there is such demand from other investors or partners. The conditions for this are discussed individually on a case-by-case basis.

8. Which form of investment is for you?

• If you are an investor who is willing to take on higher risk in exchange for the possibility of greater profit, Cuentas en Participación is right for you.
• If you are an investor who prefers minimal risk with predictable and stable returns, Debt Investment is the best solution for you.