0

I have been dreaming of building/developing a sustainable and regenerative farm (say in Arizona, New Mexico, Nevada or Colorado). I live in California.

If I buy a piece of land that has 2 or more of water/electric/sewage/phone utilities, how could I go about developing that land? I am assuming just land (probably barren but reasonable quality soil to be able to produce some crops/fruit trees). I can think of building a ranch style house/rentable small units in future to generate some income to sustain.

But to start of (as an initial investor myself) I could put close to $100k-$300k, but if I don't want to put all/most of my money how could I de-risk or seek investments? Here are some general questions I have:

  1. Do I have to have a company?
  2. Do I look for lawyers to draw up some agreements?
  3. Do I start a kickstarter campaign?
  4. Could I issue a SAFE (Simple Agreement for Future Equity) in lieu of individual investors like friends, friends of friends, etc?
  5. What is the sequence of things or what are some important gotchas?
  6. Is there a way to seek farmers who can rent (for less) and work the land?

While I can post detailed questions about Law and Sustainability in the respective SE sites I'd like to understand the approach and pros/cons of some options.

3
  • I’m voting to close this question because it is not about personal finance.
    – base64
    Mar 18 at 15:27
  • @base64 - not sure why this is not about personal finance. This is about personal investment and land ownership. On Money SE there are questions ranging from Airlines miles, stock market analysis, home and mortgage, etc. Farm land and financing for a personal asset is within the spectrum, no? Mar 19 at 20:44
  • For the sake of posterity please look at questions like money.stackexchange.com/questions/79573/… and money.stackexchange.com/questions/24137/… which were/are accepted as on topic. Mar 19 at 20:46
2

To be honest, it always starts with you.

Write a business plan, not so much for the sake of investors (although you'll need it if you decide you want to raise money) but because it helps you clarify in your own mind what it is you want to achieve, what resources you have, and what you need to learn or understand about what you're proposing to do. The process of writing a plan will very quickly reveal the flaws, shortcomings, and impracticalities of your ideas and give you a clearer sense of how to fix them.

Prospective investors want to see that you have actual "skin in the game", so the fact you're willing to put up a significant amount of capital shows that you have faith in your own plan enough to take real risk.

You should ALWAYS use a business entity (LLC or corporation) to separate your personal assets from those of the business and to protect yourself from potential losses and liability.

It's a good idea to have a lawyer involved to the extent that some boilerplate agreements people use might not adequately address your state's requirements, and any loopholes could easily be exploited by clever people. That being said, there are some services out there on the web (can't mention names since we're not supposed to do endorsements!) that do an admirable job of giving you a good starting point which makes it easier (and cheaper) to have an attorney review and amend.

If you have family and friends, that's normally the best and easiest starting point for raising capital, as long as you're realistic with them about the prospects for success or failure. Nothing ruins a relationship like feeling as though you were deceived into giving the other person money.

Make sure you have done all of your legal homework - know and comply with all of your state's requirements for forming a legal business entity. File an incorporation or other organizational documents, obtain an EIN (employer identification number) from the IRS so you can use it to open bank accounts, obtain business credit, and so on.

If you're starting a farm, I suggest checking with your state's agriculture department about programs they have for subsidies, loans, grants, and other programs which can help you bootstrap your project or put you in contact with other agencies or organizations which can give you guidance and help. The same applies to the U.S. Department of Agriculture and your local farm bureau.

Here's an unorthodox idea - why not post a Craigslist ad giving a brief explanation of what you're thinking of doing and ask anyone who might be interested in helping out with advice or labor to get in touch with you?

Believe it or not, it's also a great source of fundraising - I posted an ad for a new business venture and within three days raised $20k from people who thought what I was doing was a great idea.

Educate yourself on what it takes to be a farmer/businessman.

This is a good starting point, but there is much more you should learn before proceeding. I hope you'll take this and build on it, but I commend you for wanting to take the plunge.

Good luck!

1
  • I like the idea of Craigslist to seek advisors. And perhaps even seed fund like you mentioned. More importantly I may bump into someone who farmed/worked around the farming side of things. Mar 16 at 15:04

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.