This is something a partner and I have considered many times. We are constantly coming across good land with hardwood that we can either pick up on owner financing, or cheap on cash. Our issue is finding someone to come in and harvest the wood. We've considered doing it ourselves, but we're balls deep in projects right now. Let me know if you end up exploring this any further
some pretty straight forward ways to determine a timber market.
first would be to contact a local registered forester they will give you the following
1. Mills that buy logs
2. Loggers that are currently working in the areas
3. Harvest permits or what has to happen to get one ( if needed at all)
what species bring the most money.. along with harvest per MBF per acre so you can do napkin math.
so for example.. in our area of the northwest we are soft woods.. Fir Cedar and on the east side of the moutains Pine
some hard wood but mainly alder with a tiny bit of Oak.. nothing much else in Hardwood.
So we of course have all the big dimension stud lumber mills.. they all have log buyers.. so we contact a log buyer to get their delivered log prices.. then we know that we can log for about 250 per MBF camp run to the mill.
And then we know for example right now domestic fir is bringing 800 per MBF camp run which is pretty much an all time high... so we know there is a 550 delta.. now then you have stumpage.. the land owner will want a stumpage price for the logs which is generally about 200 to 300 per MBF leaving a net profit of 200 to 350... now some will do all this for a 50 to 100 MBF net profit.. just depends on the stand.. Hard wood your yeilds are a fraction that of soft wood per acre..
and logging prices could or are different.. but gives you the formula to figure it out.. I suspect in your area.. many who own land may not even be putting stumpage value on the land.. so your not paying for the stumpage.. but if you log can you sell for the same amount as a virgin property.?
Would be interested in following this. Jay's got some great experience in timber which I've been trying to learn from. We are closing on a very small tract with some decent oak and walnut and the way we are wired, we are either going to let it grow, and/or be geared up to take something all the way to the market (finished product).
At first glance, the rewards from getting tables , gun stocks / etc built seem worth it rather than selling stumpage or delivered at mill prices. I'm speaking more to hardwoods though, I think softwoods are more of the commodity/volume game as I don't see a ton of 'value add' products coming from that type of timber.
I've been searching nylandquest.com and local MLS and it definitely seems there are some good deals out there. When you are looking at these tracts what are some of the things that you are seeing as a common trend that are appealing to you the most about the NY timber industry? And based off of what you have been seeing deals wise what would you consider a good deal number wise?
Thank you for the reply and some insight on the industry. Definitely let us know how things work out with the purchase of your tract!
First off thank you for the reply I just listened to your podcast on BP for the second time and your story and knowledge on real estate as a whole is definitely inspiring to say the least. Thank you as well for some key steps to get started.
- Are you saying that hardwoods are typically worth less in value compared to softwoods per acre or just that you are more likely to harvest more softwoods than hardwoods per acre?
- To your point on home/land owners potentially not factoring in stumpage value on the land.
- This is what has intrigued me the most about the timber industry, a few years ago i came across that idea of what if i buy land, sell the timber, and then resell the land for the same or a little less that what it was bought for. Obviously this concept is easier said than done and probably not realistic in most areas, but it still made me think. Have you seen this type of situation before or have you done something similar in nature? I know on the podcast you had mentioned bringing value add ideas to the land such as building driveways, drilling wells, etc. I suspect just starting out this would seem as a very good option to build more and more capital until i can purchase a more long term already managed tract. What is your opinion?
Thanks in advance guys!
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