Has anyone looked into investing directly into timberland?
I've only read a little about it so far. But it seems like a nice, low-maintenance real property investment.
I've considered paying cash for 50-100+ acres nearby in Maine where prices can get down into the $500/acre range. From what I've read a managed forest can get annualized returns of around $150-$300/acre.
The only work involved seems to be thinning every 7 years or so. And then the big harvest every 30 years or so. Which basically involves calling a forester, having him analyze the timber and then calling for bids from logging companies to cut it down. Plus there's the possibility of a more active income from byproducts like producing biomass, compost, and from crops grown on the forest floor.
I'm planning to find a rural house somewhere anyway in the next few years with at least a few acres for me to cultivate. So I was thinking, why not get a lot of acreage so I'll be sure to have my privacy, plus perhaps make a profit off the excess land with minimal hassle?
Anyone here ever managed a forest or thought about getting into it? Seems like a very ERE compatible investment, especially for the recluses among us.
Timberland Management
Yes Mike, we are currently involved in the management of our 40 acres of woodland and a select harvest is planed for this summer. 40 of our 80 acres is a forest and had not been harvested for twenty years before our purchase last year. Due to my ignorance concerning forestry, I secured the services of an educated forester promoted by the state forestry office to guide the process of a select cut. His services have been very educational and his work marketing and timing the sale to local loggers seems to have proven beneficial to extract top dollar while still promoting the procurement of future harvest. This harvest is good netting nearly $1000 per wooded acre but is beneficial by cleaning up the "trash" and promoting the growth of the small to medium size hardwoods that currently inhabit the area. The next havest in 15 years or so should be bountiful. The forester's fee is 10% of the sale contract. The best current by-product of the sale will be nearly unlimited hardwood firewood from the limbs and trails that I will keep open made by the loggers. About 7 acres of the land is scrub pines. I plan to clear that tract and purposefully plant hardwood saplings from our state nursery in the spring. The prices for native hardwood saplings extremely low. Obviously, this is a business and I have it contained in an LLC. The work involved with this aspect of the farm has been gratifying. The hardwood saplings and spruce trees that I planted this spring are flourishing. The Forster calls it growing money. Finding land that has not had it's timber tract pillaged may prove difficult to you. If the stand is valuable, the owner is likely aware and will price accordingly. A good tract of land a shipment of native saplings is a good ERE way to grow money.
Very interesting... In fire states (Rockies) there are programs to help pay the cost of hiring a forester, for fuels reduction.
Some states have small landowner forestry workshops. If your parcel is smaller and homogenous, I think the main benefit of the forester is dealing with loggers.
Most of their prescription will be for proper spacing and removal of the weaker trees/undesirable species composition.
However, the timber market can be very volatile and much of the price you can obtain will be determined by proximity to a mill... In my area selling pulp is out of the question due to mill closures since the crash.
Some states have small landowner forestry workshops. If your parcel is smaller and homogenous, I think the main benefit of the forester is dealing with loggers.
Most of their prescription will be for proper spacing and removal of the weaker trees/undesirable species composition.
However, the timber market can be very volatile and much of the price you can obtain will be determined by proximity to a mill... In my area selling pulp is out of the question due to mill closures since the crash.
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George the original one
- Posts: 5406
- Joined: Wed Jul 28, 2010 3:28 am
- Location: Wettest corner of Orygun
Timberland is a store of wealth, but it's very difficult to create an income stream which meets ERE needs since you only get paid when you harvest. And, as a store of wealth for an individual, it has some inherent problems: disease/infestation, fire, and extended drought can clear the balance sheet in a few short days.
In Oregon, timberland that you live on is a way to dodge property taxes as the property taxes can be deferred until harvest. Typical prices for uncut forests are in the $1,500-$2,000 per acre range unless you're buying over 100 acres. Steep hillsides and poor access sites are less expensive than level sites next to paved roads.
In Oregon, timberland that you live on is a way to dodge property taxes as the property taxes can be deferred until harvest. Typical prices for uncut forests are in the $1,500-$2,000 per acre range unless you're buying over 100 acres. Steep hillsides and poor access sites are less expensive than level sites next to paved roads.
In our area the ash borer is an issue. All of my ash trees are to be taken because of predictions for and the current borer infestation. My contract was agreed upon before the significance of last years Midwestern drought was fully recognized. The logger that holds my contract has complained to my forester that he paid too much for my contract because of the risk of some of my standing timber being reduced to cull status.
@Jason
You need region specific resources such as this. http://www.ces.purdue.edu/extmedia/fnh.htm
We nor the seller correctly estimated the wealth of standing timber. The sellers assessment was based on a walk through by a local logger. I'm sure his vast underestimation was based on the hope that the seller would let him harvest the forest for the low amount. What I have learned about the logging industry is that it is very cut throat and difficult to quickly immerse ones self into. I know it sounds very un-ere but consulting with a forester in your area may be the best option. Most of what I have learned from his has been free or at least seems free because it was built into his commission.(his direction to web sites an ways to uncover pertinent info. I also walked the property with him a few times to pick his brain as he did his assessments.) Negotiating the sale and his overseeing the actual harvest is what I feel like I paying for. I would highly recommend a forester's opinion if purchasing a tract with timber as main consideration.
You need region specific resources such as this. http://www.ces.purdue.edu/extmedia/fnh.htm
We nor the seller correctly estimated the wealth of standing timber. The sellers assessment was based on a walk through by a local logger. I'm sure his vast underestimation was based on the hope that the seller would let him harvest the forest for the low amount. What I have learned about the logging industry is that it is very cut throat and difficult to quickly immerse ones self into. I know it sounds very un-ere but consulting with a forester in your area may be the best option. Most of what I have learned from his has been free or at least seems free because it was built into his commission.(his direction to web sites an ways to uncover pertinent info. I also walked the property with him a few times to pick his brain as he did his assessments.) Negotiating the sale and his overseeing the actual harvest is what I feel like I paying for. I would highly recommend a forester's opinion if purchasing a tract with timber as main consideration.
@Jason
You need region specific resources such as this. http://www.ces.purdue.edu/extmedia/fnh.htm
We nor the seller correctly estimated the wealth of standing timber. The sellers assessment was based on a walk through by a local logger. I'm sure his vast underestimation was based on the hope that the seller would let him harvest the forest for the low amount. What I have learned about the logging industry is that it is very cut throat and difficult to quickly immerse ones self into. I know it sounds very un-ere but consulting with a forester in your area may be the best option. Most of what I have learned from his has been free or at least seems free because it was built into his commission.(his direction to web sites an ways to uncover pertinent info. I also walked the property with him a few times to pick his brain as he did his assessments.) Negotiating the sale and his overseeing the actual harvest is what I feel like I paying for. I would highly recommend a forester's opinion if purchasing a tract with timber as main consideration.
You need region specific resources such as this. http://www.ces.purdue.edu/extmedia/fnh.htm
We nor the seller correctly estimated the wealth of standing timber. The sellers assessment was based on a walk through by a local logger. I'm sure his vast underestimation was based on the hope that the seller would let him harvest the forest for the low amount. What I have learned about the logging industry is that it is very cut throat and difficult to quickly immerse ones self into. I know it sounds very un-ere but consulting with a forester in your area may be the best option. Most of what I have learned from his has been free or at least seems free because it was built into his commission.(his direction to web sites an ways to uncover pertinent info. I also walked the property with him a few times to pick his brain as he did his assessments.) Negotiating the sale and his overseeing the actual harvest is what I feel like I paying for. I would highly recommend a forester's opinion if purchasing a tract with timber as main consideration.
@sshawnn thanks for the info! I could only afford recently cut land. And the intermittent income wouldn't make it a good primary income to live off of. But I figured it might be a nice long-term alternative investment to possibly top off my portfolio as I get into my 50's. I think I'd enjoy managing it anyway.
I believe it is possible to insure standing timber to protect yourself from fire/disease/theft once the value starts to get up there. I have no idea what the rates are like though or if it's even worth it.
I believe it is possible to insure standing timber to protect yourself from fire/disease/theft once the value starts to get up there. I have no idea what the rates are like though or if it's even worth it.
@mikeBOS i bought land in Maine a few years back with the intent to homestead. The land I bought was recently selectively cut, though they did leave a bit of a mess. I will probably seek the help of a forester at some point to guide me with sustainable timber management. Where in Maine are you looking?
@Lorraine Hey neighbor!
Haven't looked much other than just checking out the prices in the different regions. I'm working on buying investment rental properties in central Mass right now and I'll be tied to those for the next decade or so. So I was hoping not to be more than about a 3 hour drive from them. Which pretty much limits me to Western Maine. Though I'm keeping my options open in every direction. I'll probably buy something late next year or so.
I'm used to the previous owners of the properties I buy leaving a mess for me to clean up
Haven't looked much other than just checking out the prices in the different regions. I'm working on buying investment rental properties in central Mass right now and I'll be tied to those for the next decade or so. So I was hoping not to be more than about a 3 hour drive from them. Which pretty much limits me to Western Maine. Though I'm keeping my options open in every direction. I'll probably buy something late next year or so.
I'm used to the previous owners of the properties I buy leaving a mess for me to clean up
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Neil Imrie
- Posts: 11
- Joined: Sun May 08, 2011 10:05 am
It's kind of interesting that this is an investment with a 30-35 year maturity. Not many people could see an investment that long through from start to finish. But ERE-ers are uniquely positioned to do just that since we can buy the land in our 20's and enjoy its maturity along with our own.
I mean sure, you can figure out a discounted present value on standing timber based on its future value while changing its ownership so one owner doesn't have to sick with it for 30+ years. But it could be very satisfying to look after land purchased in my 20's and follow it all the way to its big pay day in my 60's.
I mean sure, you can figure out a discounted present value on standing timber based on its future value while changing its ownership so one owner doesn't have to sick with it for 30+ years. But it could be very satisfying to look after land purchased in my 20's and follow it all the way to its big pay day in my 60's.