Warning: Declaration of action_plugin_safefnrecode::register(Doku_Event_Handler &$controller) should be compatible with DokuWiki_Action_Plugin::register($controller) in /home/public/dw/lib/plugins/safefnrecode/action.php on line 14

Warning: Declaration of action_plugin_blog::register(&$contr) should be compatible with DokuWiki_Action_Plugin::register($controller) in /home/public/dw/lib/plugins/blog/action.php on line 0

Warning: Declaration of action_plugin_blockquote::register(&$controller) should be compatible with DokuWiki_Action_Plugin::register($controller) in /home/public/dw/lib/plugins/blockquote/action.php on line 0

Warning: Declaration of action_plugin_include::register(&$controller) should be compatible with DokuWiki_Action_Plugin::register($controller) in /home/public/dw/lib/plugins/include/action.php on line 0

Warning: Declaration of action_plugin_popularity::register(&$controller) should be compatible with DokuWiki_Action_Plugin::register($controller) in /home/public/dw/lib/plugins/popularity/action.php on line 0

Warning: Declaration of action_plugin_redirect::register(&$controller) should be compatible with DokuWiki_Action_Plugin::register($controller) in /home/public/dw/lib/plugins/redirect/action.php on line 0

Warning: Declaration of action_plugin_captcha::register(&$controller) should be compatible with DokuWiki_Action_Plugin::register($controller) in /home/public/dw/lib/plugins/captcha/action.php on line 0

Warning: preg_replace(): The /e modifier is no longer supported, use preg_replace_callback instead in /home/public/dw/inc/auth.php on line 656

Warning: preg_replace(): The /e modifier is no longer supported, use preg_replace_callback instead in /home/public/dw/inc/auth.php on line 656

Warning: preg_replace(): The /e modifier is no longer supported, use preg_replace_callback instead in /home/public/dw/inc/auth.php on line 656

Warning: preg_replace(): The /e modifier is no longer supported, use preg_replace_callback instead in /home/public/dw/inc/auth.php on line 656

Warning: preg_replace(): The /e modifier is no longer supported, use preg_replace_callback instead in /home/public/dw/inc/auth.php on line 656

Warning: preg_replace(): The /e modifier is no longer supported, use preg_replace_callback instead in /home/public/dw/inc/auth.php on line 656

Warning: preg_replace(): The /e modifier is no longer supported, use preg_replace_callback instead in /home/public/dw/inc/auth.php on line 656

Warning: preg_replace(): The /e modifier is no longer supported, use preg_replace_callback instead in /home/public/dw/inc/auth.php on line 656

Warning: preg_replace(): The /e modifier is no longer supported, use preg_replace_callback instead in /home/public/dw/inc/auth.php on line 656

Warning: preg_replace(): The /e modifier is no longer supported, use preg_replace_callback instead in /home/public/dw/inc/auth.php on line 656

Warning: preg_replace(): The /e modifier is no longer supported, use preg_replace_callback instead in /home/public/dw/inc/auth.php on line 656

Warning: preg_replace(): The /e modifier is no longer supported, use preg_replace_callback instead in /home/public/dw/inc/auth.php on line 656

Warning: preg_replace(): The /e modifier is no longer supported, use preg_replace_callback instead in /home/public/dw/inc/auth.php on line 656

Warning: preg_replace(): The /e modifier is no longer supported, use preg_replace_callback instead in /home/public/dw/inc/auth.php on line 656

Warning: preg_replace(): The /e modifier is no longer supported, use preg_replace_callback instead in /home/public/dw/inc/auth.php on line 656

Warning: preg_replace(): The /e modifier is no longer supported, use preg_replace_callback instead in /home/public/dw/inc/auth.php on line 656

Warning: preg_replace(): The /e modifier is no longer supported, use preg_replace_callback instead in /home/public/dw/inc/auth.php on line 656

Warning: preg_replace(): The /e modifier is no longer supported, use preg_replace_callback instead in /home/public/dw/inc/auth.php on line 656

Warning: preg_replace(): The /e modifier is no longer supported, use preg_replace_callback instead in /home/public/dw/inc/auth.php on line 656

Warning: preg_replace(): The /e modifier is no longer supported, use preg_replace_callback instead in /home/public/dw/inc/auth.php on line 656

Warning: preg_replace(): The /e modifier is no longer supported, use preg_replace_callback instead in /home/public/dw/inc/auth.php on line 656
Owning some forest directly is a challenge, but doable [ClearOnMoney]
Top

Site

About
Contact

Warning: preg_replace(): The /e modifier is no longer supported, use preg_replace_callback instead in /home/public/dw/inc/auth.php on line 656
Sitemap

Profile

Warning: preg_replace(): The /e modifier is no longer supported, use preg_replace_callback instead in /home/public/dw/inc/auth.php on line 656
Trace:
Owning some forest directly is a challenge, but doable

Reference

Main
Updates
Schedule

Warning: preg_replace(): The /e modifier is no longer supported, use preg_replace_callback instead in /home/public/dw/inc/auth.php on line 656

Warning: preg_replace(): The /e modifier is no longer supported, use preg_replace_callback instead in /home/public/dw/inc/auth.php on line 656
Commentary

Owning some forest directly is a challenge, but doable

6 Sep 2012 by Jim Fickett.

If you buy shares in a timber REIT, or put money in a Timber Investment Management Organization (TIMO), you are paying experts to manage a forest for you. But J Brian Fiacco, the forester mentioned in a previous post (The difficulty of investing in timber), is quoted by the New York Times as saying that owning a piece of forest directly is also possible. In that case it is up to you to manage it. How practical is that?

I called Fiacco and asked him. He was very helpful, and outlined quite clearly what is involved. My short summary is that you do need to hire expert help for some things, and you do need to be ready to put significant time into your timberland, but it is a doable task for a layman.

I started with a rather naive view that perhaps one could just cut a few of the oldest trees every year, or every few years, and try to keep the forest in some kind of steady state. It turns out different species need to be managed very differently – for example, douglas fir will not regenerate unless clearcut. And the mix of species on your land may also lead to a different strategy for harvesting. So the first step in evaluating or managing a forest is to hire a local expert, who knows the climate, species, habitats, and market in your area, and develop a management plan. Then you can project revenues, expenses, and cash flows and get an idea of what would be involved in managing the parcel, and whether it would meet your investment goals.

Cash flows may be quite uneven, and sometimes expenses (e.g. planting) will precede associated revenues (harvest) by many years, so this is not an investment for someone with cash flow issues.

The harvesting process can sometimes go badly wrong. An incompetent or dishonest logger may take non-designated trees, understate how much wood they take, damage surrounding trees and land, fail to comply with state regulations, leave behind a big mess, etc. So this is another area where it pays to hire a professional forester, who understands your parcel and knows all the local loggers, and who can make sure (for about 10% of the revenue) that the harvest happens smoothly.

In order for loggers to give you a good price, you probably need to be not too far from a sawmill, and to have a minimum of something like 50 acres. It helps if you can coordinate harvests with your neighbors. Very, very roughly, timberland sells in the neighborhood of $1000/acre. So that gives some idea of the minimum investment.

Some things you can do yourself: signing the boundary, keeping an eye out for insect damage, maintaining roads and trails, and getting to know your neighbors, who can help keep an eye out for trespassers or the rare thief.

If interested in pursuing this option, the first thing to do is to get to know some people from the USDA or the state government, and get some free advice. Next one can join a forester association, go to meetings, and learn from people who own and manage forests. If you decide you want to buy, one can find listings on the MLS, on Craigslist, on www.landsofamerica.com, www.landandfarm.com, and other places (Google is your friend). It is a must to find either a realtor who specializes in local forest land, or a forester who knows the local area well, and to be sure you hire them as a buyer's agent (i.e. really working for you, not the seller). As in residential property, the seller typically pays a 6-8% fee.

The best way to evaluate a price is to develop a management plan, attempt to project cash flows forward 10 or 20 years, and come up with a net present value. The appraisal process is heavily regulated by the state, and may not represent the true value of the land. This presents opportunities.

Overall it sounds more than a little challenging, but also very interesting, and quite rewarding too, to get to know a small piece of forest in some depth, and to manage it well.