"Land hacking" - buying land and selling all the trees?

13 Replies

I have always wanted to own a large piece of land (20+ acres) and build a house on it. 

I've been looking at what lands are available for sale in my area. There's one piece of land that's over 100 acres, that is zoned as forest commercial and has about half a million board feet of estimated timber. The land is selling for 200k. 

So essentially, I could sell the timber for somewhere around 150k-200k, giving myself free or very cheap 100+ acres of land? There has to be a catch, right? I mean, I know I'd have to deal with zoning, but still... 100+ acres for $0-50k sounds way better than a small lot in the city for that same price.

So someone with a forest zoned tract of land supposedly doesn't realize they are selling land for the value of the timber that is ready to be sold? Possible. But more likely you don't know what you're talking about.

Not currently zoned for residential usage, so you won't be able to get a conventional loan. You also wouldn't be able to get a commercial loan because it's not an income producing property. You could try for a bridge/construction loan, otherwise you're going to have to pay cash.

Originally posted by @Cason Acor :

Not currently zoned for residential usage, so you won't be able to get a conventional loan. You also wouldn't be able to get a commercial loan because it's not an income producing property. You could try for a bridge/construction loan, otherwise you're going to have to pay cash.

  What would be the draw backs of this kind of deal, assuming I found a way to finance it (or paid cash)?  

That is called tree hacking (lol) and you can't just cut down the forest for profit and build houses. Every state has forest management laws that often include building limitations, foresting permits and reforestation laws. Odds are good if the land is selling for $200K that the trees on it cannot easily be sold for $200K. @Jay Hinrichs has experience in the timber industry and housing development. What state are you in?

Originally posted by @Joe Splitrock :

That is called tree hacking (lol) and you can't just cut down the forest for profit and build houses. Every state has forest management laws that often include building limitations, foresting permits and reforestation laws. Odds are good if the land is selling for $200K that the trees on it cannot easily be sold for $200K. @Jay Hinrichs has experience in the timber industry and housing development. What state are you in?

500l MBF on 100 acres is very very light.. and probably too young.. thats only running 5k to the acre.. UNLESS the 500k bd ft is concentrated on say 20 acres of the 100 then you have a stand that is probably commercial..  Also check zoning much of these lands as stated are not buildable .   this is priced as non buildable reprod.. great long term investment..  But GP  area is very lacking in private timber most of the good timber is comemically own or BLM or Forest service.

Idk jack squat about tree biz but on face value the zoning means no residences allowed. You could maybe camp on it idk. As Joe mentioned Jay is goto expert in these matters. He has got the coolest stories and knows waz up if worth pursuing further. I am imagining these are cash and carry deals, Harvard Endowment owned a crap ton timber land, thats going back 300 years. They likely still do. 

Good luck!

Originally posted by @Matt R. :

Idk jack squat about tree biz but on face value the zoning means no residences allowed. You could maybe camp on it idk. As Joe mentioned Jay is goto expert in these matters. He has got the coolest stories and knows waz up if worth pursuing further. I am imagining these are cash and carry deals, Harvard Endowment owned a crap ton timber land, thats going back 300 years. They likely still do. 

Good luck!

YUP Harvard endowment still funds and owns a lot of the NW timber lands.. you know good timber grows at a 12 to 14% COC return annually they are not Harvard if they are not smart and understand the value play in Timber long term.

the other thing to mention is that we dont know the species  I just assume its all doug fir but if there are hardwoods in there then the value drops.. Pure speculation on my part is this was a logged over track and replanted or naturally seeded and is being sold.. great for hunting and camping and quad riding etc.

@Ellie Narie from a lending perspective, you'll be looking at a recourse loan with a high interest rate, a lower than average LTV, and possibly multiple points. I think everyone else that has commented so far has given you a good idea of the technical drawbacks.

@Jay Hinrichs is the go to guy.  We have bought parcels that we timbered, it is not without its down sides.  Many of the parcels are steep, some that we have had had portions where is was too steep to cost effectively timber.  Parcels on the north side have slow growing trees.   The timber areas are often is mountainous areas where the soil depth is shallow and lots of bedrock underlayment, not exactly good areas to perk.  And often the tract are in remote areas, with no utilities, no paved roads and sometimes landlocked, all of which are not condusive areas for building houses.  I also suspect that there is more to this story that has been already stated.  We bought a tract that had been clear cut and all the trees there were therefore too small to cut.  

Originally posted by @David Krulac :

@Jay Hinrichs is the go to guy.  We have bought parcels that we timbered, it is not without its down sides.  Many of the parcels are steep, some that we have had had portions where is was too steep to cost effectively timber.  Parcels on the north side have slow growing trees.   The timber areas are often is mountainous areas where the soil depth is shallow and lots of bedrock underlayment, not exactly good areas to perk.  And often the tract are in remote areas, with no utilities, no paved roads and sometimes landlocked, all of which are not condusive areas for building houses.  I also suspect that there is more to this story that has been already stated.  We bought a tract that had been clear cut and all the trees there were therefore too small to cut.  

The OP is in Grants Pass Oregon  so I am assuming the parcel is in the vicinity somewhere within a 40 or 50 mile radius .  This is state Federal and BLM along with major timber companies commercial logging areas.. so there are Roads all over the place built for when the old growth was logged 150 years ago then 90 years ago so most of this is 3 generation  ..  and if you pull a BLM map or US forest service map you will see a huge patch work of section land which leap frogs each other in 640 acre sections  which is one mile by one mile.   500k fd ft on 100 acres if its scattered is simply logged over reprod. leave trees or a large mixture of hardwoods which came up before replant was the law..  AT least at that price point.. when you figure building lots of 10k sq feet sell for 100k or so..  100 acres of very nice easy to get permit buildable acreage with good access and utls would be more in the 500 to 1 mil range or more depending on location .. with NO merch timber.

@Ellie Narie

If you are looking for cheap timberland look at Arkansas. You can buy large tracts of land after logging for $1500/acre. I researched it a while back when my wife and I were looking for a place to retire. In some cases the land has been replanted and will be ready for harvest in 20+years.

There is also a play with carbon credits. If you agree to not to cut the trees you can get paid for carbon sequestration. I looked into it for my place in Texas. It pays $1500 total per year for our 85 acres. Not worth the hassle. Timber land does better.