Investing in timber land?

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SecondMonkey

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There happens to be 20 acres of timber land for sale within a few miles of me. This is land that is absolutely positively not buildable in any way and probably never will be.

Owner says it was logged 5 years ago and 17,000 new trees were planted. They only want $70k. (buildable forest land around here is closer to $1 mil/acre)

Has anybody here invested in timber land as a long term investment? I'm thinking in another 25 years, those trees oughta be worth at least $200 each. That's $3.4 million. Not to mention the land would always be worth more in 25 years.

Only thinking outloud here, but I like those numbers. In the mean time, it would make great recreational land. It has a nice creek running through and I love to go shooting - but I don't have anywhere local to do it. (without expensive range fees)

Opinions? What is a fully grown Douglas fir tree worth roughly right now? And would a 30 year old tree be considered big enough to cut down?
 
Originally Posted By: tom slick
Why does the current owner want to sell?

Have no idea, still need to make an appointment with him to see it all. Probably looking for short term cash rather than a 25+ year investment. (add says "cash only")
 
If considering timber and $ alone, I think it might be quite risky compared to investing your money other ways.

You don't just plant the trees and walk away for 30 years. Early timber stand improvement work might include insect, disease, and brush control. Around age 15 or so it might require a pre commercial thinning. At age 30 +/- you might be able to do a commercial thinning for some income. I "think" (not sure) the youngest rotation age for DF is around 50 to 80 years, but the "thinkers" are trying to lengthen that to develop better sustainability. Growth varies widely between coastal DF and inland DF.

I would contact your Land Grant University forestry department for initial contacts (OSU) and then think about hiring a consulting forester that knows both real estate and forest management for your area.

To my knowledge, timber values have been on a roller coaster over the decades in the PNW and there have been huge changes in global markets and environmental regulations. Fire, insects, disease, deer browse, taxes,...all problems to contend with.

http://outreach.forestry.oregonstate.edu/ORforestsector/ppt/RWHaynes.pdf

Again, a consulting forester would be able to project/guess a rate of return so you can compare it to safer options.

http://www.oregon.gov/ODF/privateforests/FindConsultant.shtml
http://www.oregonwoodlands.org/

Good Luck. I'm kind of "lost in the woods" regarding western forestry.
 
You're certainly not going to get 17K trees out of 20 acres.

That stand will have to be heavily thinned (by you, or someone you pay to do it ) - I think one tree every 9-10 foot in rows 15 feet apart is typical around here.

A friend of mine planted a few hundred acres in Loblolly pine about twenty five years ago and hasn't harvested anything yet that I know of, and lost a big stand to a small forest fire.

Junk land like that around here goes for $500-1000/acre.

Consult a forester; your county extension office would be a good start.
 
I'd definately have to consult a forester, though after living my entire life in Oregon I know a thing or two about tree farming. I grew up on a christmas tree farm and live right in the middle of where most of them in the country come from. That could possibly bring in shorter term income on some of the property and thinning.

I still have to know more specifics about tree size, age, and value, but I still think a guess of $200/tree isn't bad. In 25 years probably a lot more. I think they'd be worth that much as firewood right now. Wind and fire is a big concern.

I also wonder if there might be some space to plant faster growing stuff - like poplar. A mix of long/short term investments.

I do love playing with the chain saw any chance I get. If I had an excuse to buy a nice 20 incher I'd be pretty happy. :) Plus, owning 20 acres of my own forest land around here is never going to happen. Unless maybe I take this opportunity...(I'm thinking this can be my own personal camp ground for 25 years, and then I get paid a million bucks...maybe)

I'd also have an excuse to buy a tractor. I SO need a tractor....
grin2.gif


(I plan on living at least another 50 years and being rich when I die!
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)
 
sounds like something i would do. as long as you are not reliant on it for a living, but it can supplement your income. also make sure that a disaster like a fire won't bankrupt you or force you to make payments even if you have no asset or future income potential.
 
My cousin is a timber buyer, and I have gone out with him quite few times to look at land and timber.
Good pine right now is $25/ton, which is pretty low, high a few years ago was around $40/ton. What Win said is correct.

We looked at 50 ac a week before of 25 yo pine that had been replanted and thinned once that has about 3000 tons right now,
in 10 years that timber will more than double. But there is no way the timber will ever bring $70K/ac, at least within the harvest time, and I don't think trees grow that much faster or are worth that much more in Or. as in E. Tex.

So in 20-25 years, your 20 ac will bring you about $30 - 45K in timber, and in 35 years will gross from $75 - 120K. You'll never get $1M off of it in timber.
 
I can find cheap forested property about an hour from me in the boonies and have thought about getting a small patch of wood as a "we ran out of oil" type retreat. The fault with my thinking is timber piracy: if I can't protect it, it's not really mine.

My inlaws just cleared a few acres and the guys doing it were able to pay for/use both pulpwood and good stuff.
 
If you buy the land, make sure you get the timber rights with it.

I know it helps to limb up the trees (prune the lower branches) as they grow. This reduces the number of knots and gives more straight grain wood, making the wood more desirable.
 
Also all the tree huggers that continue to fight for the "trees" (I know as my little Sister is one of them...)
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There are a LOT of them in OR that want to END clear cutting. If they get someone who feels like they do in office it will cost more and more to do anything in that business.

I'd pass myself. If you want the land to get away fine, but as a investment I'd pass.

Quote:
Not to mention the land would always be worth more in 25 years.


I would not want to go on that either. I think the days of property going up and up is over. (thankfully)

Take care, Bill
 
Originally Posted By: SecondMonkey
There happens to be 20 acres of timber land for sale within a few miles of me. This is land that is absolutely positively not buildable in any way and probably never will be.

Owner says it was logged 5 years ago and 17,000 new trees were planted. They only want $70k. (buildable forest land around here is closer to $1 mil/acre)

Has anybody here invested in timber land as a long term investment? I'm thinking in another 25 years, those trees oughta be worth at least $200 each. That's $3.4 million. Not to mention the land would always be worth more in 25 years.


For the price you would be paying I assume this is on the west side?

17,000 trees on 20 acres comes out to 850 trees per acre, typically industrial forest landowners aim for 375 trees/acre when they are planting. What that means for you is that sometime in the next 5-10 years (preferably in the next 5 years) someone is going to have to take out ~500 trees per acre in order to allow the remaining trees to grow well. This would be a pre-commercial thinning (PCT) that would cost you money but it would cost you more in growth to leave the trees in place.

Rotation on doug fir is usually 50 years although if you're Weyerhaeuser you'll slick it all off when it is 35.
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Most companies go for a 50 year rotation although as a private landowner I would suggest keeping it around longer. Doug fir stands start to look really nice when they reach ~40 years old.

A commercial thinning should be done around age 25, if you have done the PCT as mentioned above.

Quote:

Only thinking outloud here, but I like those numbers. In the mean time, it would make great recreational land. It has a nice creek running through and I love to go shooting - but I don't have anywhere local to do it. (without expensive range fees)


From a financial standpoint timber land is usually a mediocre investment. Granted, that doesn't take into account the non-financial benefits of owning it which you mentioned.

Quote:

Opinions? What is a fully grown Douglas fir tree worth roughly right now? And would a 30 year old tree be considered big enough to cut down?


Right now timber prices are very low. The timber markets out here follow the housing market very closely as that is what most all the timber goes to. Trying to figure out what a tree is going to be worth in 30 years is impossible. It's like trying to predict the stock market.

As a forester I'd be happy to answer any questions you have and as others suggest, I'd highly recommend hiring a consulting forester although at this time you don't have much need for one unless you plan on hiring out the PCT.

Clark
 
Does your state have a "tree growth" tax plan that, say, forbids you from developing but taxes only on the farm value of the wood? We do and it's marketed as an anti-suburban-sprawl dealie.

IIRC one has to pay 5 years worth of taxes to undo the break before subdividing etc.
 
Why is the land unsuitable for a home? No road access, topography, zoning? If its just steep land with road frontage and a nice view I'd seriously think about it. If you're in millionaire territory then practical considerations for building may not matter... The location alone may make it worth alot.

I imagine it looks a mess right now but in 25 years it could be quite nice and if you can get into some sort of managed forest tax incentive plan the taxes may be negligible.
We have our woods in a MFTIP (40 acres out of 100) and the taxes for that chunk are around $150... or 20 fence posts a year. We also use it for recreation and firewood so its a pretty good deal.
 
Originally Posted By: benjamming
Are you having to borrow or do you have the cash to pay for this?

Probably about 50/50.

Originally Posted By: IndyIan
Why is the land unsuitable for a home? No road access, topography, zoning? If its just steep land with road frontage and a nice view I'd seriously think about it. If you're in millionaire territory then practical considerations for building may not matter... The location alone may make it worth alot.

I believe it is a zoning thing. (I won't be able to talk to the owner until at least tomarrow) It is possible that could change in the future, but unlikely. Would be like winning the lottery...the lot would be worth closer to $20 million! There are actually some prominent local millionaires up in the hills around this lot...

Oddly though they say it is wired for power and phone. Wonder why? An RV can be parked there, I don't know if there's a time limit.

I'm pretty sure there are serious tax credits for the land, though not totally sure on that yet. Lots of people around here with excess land plant a certain number of xmas trees for the tax credit. It may be based on the number of trees per acre, thus the 17,000 trees planted.

Xmas trees are 5-10 years old usually, so if I have to do any thinning soon they may make good candidates for that. I can't open my door now without seeing SUVs with trees on top everywhere. And I always need firewood. Obviously we can't know the prices of trees in the future, but I think in 25-50 years it's only going to be higher, no? It's like oil...we're not going to stop using wood until the day after we run out.

My main thinking with this, is that a single cord of Doug Fir firewood right now is around $150+. Good trees can be worth a lot more than firewood...
 
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