Creating annual cash flow from longleaf pines and the land

[Courtney Buck]

Hello there,

I'm closing on 114 acres of timberland in Baldwin County, Alabama soon and I'm buying at a steep discount for the surface value. The land has been unmanaged and I plan on planting longleaf pine trees once I meet with the USDA on government programs. I understand the trees can be thinned after so many years and final cut roughly at 30-45 years which will result in income. So will pine straw harvesting after 8(ish). 

However, I would love to figure out how to cash flow annually from the beginning. Hunting leases do not create much money per year. I've thought about a billboard next to the road and also leasing the land to beekeepers as well. Any ideas would be great!

Courtney Buck

[Mike Hern]

Quote from @Courtney Buck:

Hello there,

I'm closing on 114 acres of timberland in Baldwin County, Alabama soon and I'm buying at a steep discount for the surface value. The land has been unmanaged and I plan on planting longleaf pine trees once I meet with the USDA on government programs. I understand the trees can be thinned after so many years and final cut roughly at 30-45 years which will result in income. So will pine straw harvesting after 8(ish). 

However, I would love to figure out how to cash flow annually from the beginning. Hunting leases do not create much money per year. I've thought about a billboard next to the road and also leasing the land to beekeepers as well. Any ideas would be great!

Courtney Buck

 Build a monthly storage facility, open a mobile home park, start an RV Park, build a strip mall 

[Bruce Lynn]

I don't think beekeepers can pay much.....most seem to do it as a hobby...probably not even really a side business from what I know...but that aint much.

I don't know if your state has an ag extension service, but a couple of people you might want to meet if they are in your area are the extension agent...and maybe an ag lender or two.  They might have suggestions on highest and best use of the property.  Maybe your USDA person will know too.  Ask them who you should talk to...might also talk to a game warden if one is assigned to your county.

Some people are renting out space on  AirBnB type sites for camping....so not sure if you could set up some camping sites there or not or RV sites, but that might generate some income....I'm not into that kind of thing so sorry I don't know the names of these websites...but someone here will know.   Of course some of that comes with headaches...trash, fires, destroying your trees.

Sounds like a fun buy....congrats.

[Bill F.]

@Courtney Buck

In general timber is a long term investment with lumpy cash flows so you'll fight an uphill battle from the start to make it cash flow from day 1. 

 To make the hunting leases more valuable you could thrown an old camper on the property with an outhouse/ cassette toilet to attract more people maybe? 

@Jay Hinrichs would be the person I'd ask. 

[Jay Hinrichs]

Quote from @Bill F.:

@Courtney Buck

In general timber is a long term investment with lumpy cash flows so you'll fight an uphill battle from the start to make it cash flow from day 1. 

 To make the hunting leases more valuable you could thrown an old camper on the property with an outhouse/ cassette toilet to attract more people maybe? 

@Jay Hinrichs would be the person I'd ask. 

thanks for the mention Bill..  I am not all that familiar with Southeast timber.. I have to think the pine straw is a good idea.  problem with the public and your timber land is damage to trees which is very real  and of course fire.. So not sure I would encourage any kind of activity on the property other than maybe hunting for a few buddies 100 acres is not a lot of land for hunting but i guess in that area were they use tree stands that might be OK.. plant an apple tree :)  other wise forest management from the NW perspective is keeping people out and talking to a local forester on how best to manage the stand for commercial production IE pre commercial thinning ( if that is even a thing in Pine country it is in Fir country) limbing up the trees if your going to sell the first log for dimensional lumber.  And there are some tax advantages called depletion one might
explore.

I made a presentation at Google headquarters and did a module on Timber investing to all those sub 35 year old engineers and told them if U can start a Roth and put some buddies together and buy your timber in your Roth you could make some serious retirement money tax free.. But kind of went right over their tech noodles :)

[Jay Hinrichs]

Quote from @Bill F.:

@Courtney Buck

In general timber is a long term investment with lumpy cash flows so you'll fight an uphill battle from the start to make it cash flow from day 1. 

 To make the hunting leases more valuable you could thrown an old camper on the property with an outhouse/ cassette toilet to attract more people maybe? 

@Jay Hinrichs would be the person I'd ask. 

BUT:  if these stands are bought purely for plup production then I think tree damage is not a big deal but you still have fire and the other thing I have seen there in the deep south is Blow down..  Katrina blew down 10 billion board feet of timber that then had to be hauled to the mill Pell mell lest it just rot and become worthless.  I was in Northern CA last weekend and saw a few mills log decks and they were stacked with fire damaged logs not sure how they go about salvaging those logs.. but they may  sell the ones with smoke damage as Artisanal lumber




lumber

[Courtney Buck]

Quote from @Mike Hern:

Quote from @Courtney Buck:

Hello there,

I'm closing on 114 acres of timberland in Baldwin County, Alabama soon and I'm buying at a steep discount for the surface value. The land has been unmanaged and I plan on planting longleaf pine trees once I meet with the USDA on government programs. I understand the trees can be thinned after so many years and final cut roughly at 30-45 years which will result in income. So will pine straw harvesting after 8(ish). 

However, I would love to figure out how to cash flow annually from the beginning. Hunting leases do not create much money per year. I've thought about a billboard next to the road and also leasing the land to beekeepers as well. Any ideas would be great!

Courtney Buck

 Build a monthly storage facility, open a mobile home park, start an RV Park, build a strip mall 

 @Mike Hern I have definitely thought about a storage facility. This county is the fastest-growing county in Alabama. They just announced a 2.5 billion dollar aluminum plant just a few miles away that will create 1,000 jobs. So the area will grow significantly.

[Jay Hinrichs]

Quote from @Courtney Buck:

Quote from @Mike Hern:

Quote from @Courtney Buck:

Hello there,

I'm closing on 114 acres of timberland in Baldwin County, Alabama soon and I'm buying at a steep discount for the surface value. The land has been unmanaged and I plan on planting longleaf pine trees once I meet with the USDA on government programs. I understand the trees can be thinned after so many years and final cut roughly at 30-45 years which will result in income. So will pine straw harvesting after 8(ish). 

However, I would love to figure out how to cash flow annually from the beginning. Hunting leases do not create much money per year. I've thought about a billboard next to the road and also leasing the land to beekeepers as well. Any ideas would be great!

Courtney Buck

 Build a monthly storage facility, open a mobile home park, start an RV Park, build a strip mall 

 @Mike Hern I have definitely thought about a storage facility. This county is the fastest-growing county in Alabama. They just announced a 2.5 billion dollar aluminum plant just a few miles away that will create 1,000 jobs. So the area will grow significantly.

 are you zoned appropriately ?   HBU may not be trees if you have development potential. 

[Courtney Buck]

Quote from @Bruce Lynn:

I don't think beekeepers can pay much.....most seem to do it as a hobby...probably not even really a side business from what I know...but that aint much.

I don't know if your state has an ag extension service, but a couple of people you might want to meet if they are in your area are the extension agent...and maybe an ag lender or two.  They might have suggestions on highest and best use of the property.  Maybe your USDA person will know too.  Ask them who you should talk to...might also talk to a game warden if one is assigned to your county.

Some people are renting out space on  AirBnB type sites for camping....so not sure if you could set up some camping sites there or not or RV sites, but that might generate some income....I'm not into that kind of thing so sorry I don't know the names of these websites...but someone here will know.   Of course some of that comes with headaches...trash, fires, destroying your trees.

Sounds like a fun buy....congrats.

 Yeah man, I'm excited. There is a USDA office in Mobile and they should be able to help. 

I've noticed that too. Beekeeping is more of a hobby

[Courtney Buck]

Quote from @Bill F.:

@Courtney Buck

In general timber is a long term investment with lumpy cash flows so you'll fight an uphill battle from the start to make it cash flow from day 1. 

 To make the hunting leases more valuable you could thrown an old camper on the property with an outhouse/ cassette toilet to attract more people maybe? 

@Jay Hinrichs would be the person I'd ask. 

 You're the third person to tell me to put an old camper on the property. I would have laughed at this a year ago then I started seeing people do this and make money!

[Reid Chauvin]

Quote from @Jay Hinrichs:

I made a presentation at Google headquarters and did a module on Timber investing to all those sub 35 year old engineers and told them if U can start a Roth and put some buddies together and buy your timber in your Roth you could make some serious retirement money tax free.. But kind of went right over their tech noodles :)

 This sounds really interesting, Jay. Do you mind expanding upon this a bit more? How much capital are we talking? 

[Courtney Buck]

Quote from @Jay Hinrichs:

Quote from @Bill F.:

@Courtney Buck

In general timber is a long term investment with lumpy cash flows so you'll fight an uphill battle from the start to make it cash flow from day 1. 

 To make the hunting leases more valuable you could thrown an old camper on the property with an outhouse/ cassette toilet to attract more people maybe? 

@Jay Hinrichs would be the person I'd ask. 

thanks for the mention Bill..  I am not all that familiar with Southeast timber.. I have to think the pine straw is a good idea.  problem with the public and your timber land is damage to trees which is very real  and of course fire.. So not sure I would encourage any kind of activity on the property other than maybe hunting for a few buddies 100 acres is not a lot of land for hunting but i guess in that area were they use tree stands that might be OK.. plant an apple tree :)  other wise forest management from the NW perspective is keeping people out and talking to a local forester on how best to manage the stand for commercial production IE pre commercial thinning ( if that is even a thing in Pine country it is in Fir country) limbing up the trees if your going to sell the first log for dimensional lumber.  And there are some tax advantages called depletion one might
explore.

I made a presentation at Google headquarters and did a module on Timber investing to all those sub 35 year old engineers and told them if U can start a Roth and put some buddies together and buy your timber in your Roth you could make some serious retirement money tax free.. But kind of went right over their tech noodles :)

That's what I did, I bought this in a Roth Self Directed IRA:) I want more land in Alabama and Georgia!

[Courtney Buck]

Quote from @Jay Hinrichs:

Quote from @Bill F.:

@Courtney Buck

In general timber is a long term investment with lumpy cash flows so you'll fight an uphill battle from the start to make it cash flow from day 1. 

 To make the hunting leases more valuable you could thrown an old camper on the property with an outhouse/ cassette toilet to attract more people maybe? 

@Jay Hinrichs would be the person I'd ask. 

BUT:  if these stands are bought purely for plup production then I think tree damage is not a big deal but you still have fire and the other thing I have seen there in the deep south is Blow down..  Katrina blew down 10 billion board feet of timber that then had to be hauled to the mill Pell mell lest it just rot and become worthless.  I was in Northern CA last weekend and saw a few mills log decks and they were stacked with fire damaged logs not sure how they go about salvaging those logs.. but they may  sell the ones with smoke damage as Artisanal lumber




lumber

 Hurricane Michael did the same thing in NW Florida. It was tragic!

[Jay Hinrichs]

Quote from @Courtney Buck:

Quote from @Jay Hinrichs:

Quote from @Bill F.:

@Courtney Buck

In general timber is a long term investment with lumpy cash flows so you'll fight an uphill battle from the start to make it cash flow from day 1. 

 To make the hunting leases more valuable you could thrown an old camper on the property with an outhouse/ cassette toilet to attract more people maybe? 

@Jay Hinrichs would be the person I'd ask. 

thanks for the mention Bill..  I am not all that familiar with Southeast timber.. I have to think the pine straw is a good idea.  problem with the public and your timber land is damage to trees which is very real  and of course fire.. So not sure I would encourage any kind of activity on the property other than maybe hunting for a few buddies 100 acres is not a lot of land for hunting but i guess in that area were they use tree stands that might be OK.. plant an apple tree :)  other wise forest management from the NW perspective is keeping people out and talking to a local forester on how best to manage the stand for commercial production IE pre commercial thinning ( if that is even a thing in Pine country it is in Fir country) limbing up the trees if your going to sell the first log for dimensional lumber.  And there are some tax advantages called depletion one might
explore.

I made a presentation at Google headquarters and did a module on Timber investing to all those sub 35 year old engineers and told them if U can start a Roth and put some buddies together and buy your timber in your Roth you could make some serious retirement money tax free.. But kind of went right over their tech noodles :)

That's what I did, I bought this in a Roth Self Directed IRA:) I want more land in Alabama and Georgia!

 OK since its your thread do you mind answering Ried who asked how that works..  Congrats on your purchase I am sure it will be a winner for your Roth.

[Jay Hinrichs]

Quote from @Reid Chauvin:

Quote from @Jay Hinrichs:

I made a presentation at Google headquarters and did a module on Timber investing to all those sub 35 year old engineers and told them if U can start a Roth and put some buddies together and buy your timber in your Roth you could make some serious retirement money tax free.. But kind of went right over their tech noodles :)

 This sounds really interesting, Jay. Do you mind expanding upon this a bit more? How much capital are we talking? 

 I will let Courtney answer on the Roth.. but for us in the north west U need to be looking at 250 to 1 mil purchases .. 

[Courtney Buck]

Quote from @Reid Chauvin:

Quote from @Jay Hinrichs:

I made a presentation at Google headquarters and did a module on Timber investing to all those sub 35 year old engineers and told them if U can start a Roth and put some buddies together and buy your timber in your Roth you could make some serious retirement money tax free.. But kind of went right over their tech noodles :)

 This sounds really interesting, Jay. Do you mind expanding upon this a bit more? How much capital are we talking? 

 Hi there, sure thing, it was 183k for the purchase but it appraised for much higher. So there is instant equity. I originally bought 30k in oil stock when it crashed in late March 2020. That stock exploded and I recently sold it(tax-free) and then used most of that money to buy this land.....again, tax free:) Since it's a Roth account, I paid the taxes already. I can't access it for nearly 2 decades but I'll just keep flipping this money for now. I buy discounted assets and love it!

[Jay Hinrichs]

Quote from @Courtney Buck:

Quote from @Reid Chauvin:

Quote from @Jay Hinrichs:

I made a presentation at Google headquarters and did a module on Timber investing to all those sub 35 year old engineers and told them if U can start a Roth and put some buddies together and buy your timber in your Roth you could make some serious retirement money tax free.. But kind of went right over their tech noodles :)

 This sounds really interesting, Jay. Do you mind expanding upon this a bit more? How much capital are we talking? 

 Hi there, sure thing, it was 183k for the purchase but it appraised for much higher. So there is instant equity. I originally bought 30k in oil stock when it crashed in late March 2020. That stock exploded and I recently sold it(tax-free) and then used most of that money to buy this land.....again, tax free:) Since it's a Roth account, I paid the taxes already. I can't access it for nearly 2 decades but I'll just keep flipping this money for now. I buy discounted assets and love it!

baring the obvious risk to timber (fire, wind, bugs) Timber grows in the north west it grows at a rate that with todays log prices will give the investor a 12 to 14% COC return just on the timber.. timber gets bigger you have more of it. Plus depends on the stand but if you care for it in certain ways it can increase value even more IE export grade or # 1 or #2 grade Timber is graded in about 4 or 5 grades with each being more valuable than the next.

the largest investors and owners of timber land in the Pacific Northwest are John Hancock insurance and the Harvard endowment fund.. Billions invested and that is why.  little to no ongoing expenses to maintain it and it returns 10% plus year in year out. Talk safe and passive.

[Reid Chauvin]

Very cool! Thank you both for sharing @Jay Hinrichs & @Courtney Buck. 

[Jay Hinrichs]

Quote from @Reid Chauvin:

Very cool! Thank you both for sharing @Jay Hinrichs & @Courtney Buck. 

 nice to talk about positive deals on BP since many of the threads are all doom and gloom LOL

[Mike Reynolds]

Most deer leases around here are just to pay the taxes on the land. You can word your lease to not have any hunting cabins on it. It's customary around here. One lease I was on charged 1000 dollars a tree if it was damaged. Mostly, responsible hunters will take care of it and no fires or camping allowed. You drive there and you drive out when your done.

If you have old growth timber, you can probably get a lot I your money back in that cut. Hardwood is in demand right now. 

[Joseph Vaughn]

There a many ways to monetize a timber stand. You can put it in a conservation easement, a carbon offset project, rake pine straw, thin & clear cut the trees. There are a lot of government subsidized programs to help offset the operational cost of managing timber. Let’s connect! I’ve worked in the US South and your timber is in my wood basket. 

[Courtney Buck]

Quote from @Jay Hinrichs:

Quote from @Courtney Buck:

Quote from @Reid Chauvin:

Quote from @Jay Hinrichs:

I made a presentation at Google headquarters and did a module on Timber investing to all those sub 35 year old engineers and told them if U can start a Roth and put some buddies together and buy your timber in your Roth you could make some serious retirement money tax free.. But kind of went right over their tech noodles :)

 This sounds really interesting, Jay. Do you mind expanding upon this a bit more? How much capital are we talking? 

 Hi there, sure thing, it was 183k for the purchase but it appraised for much higher. So there is instant equity. I originally bought 30k in oil stock when it crashed in late March 2020. That stock exploded and I recently sold it(tax-free) and then used most of that money to buy this land.....again, tax free:) Since it's a Roth account, I paid the taxes already. I can't access it for nearly 2 decades but I'll just keep flipping this money for now. I buy discounted assets and love it!

baring the obvious risk to timber (fire, wind, bugs) Timber grows in the north west it grows at a rate that with todays log prices will give the investor a 12 to 14% COC return just on the timber.. timber gets bigger you have more of it. Plus depends on the stand but if you care for it in certain ways it can increase value even more IE export grade or # 1 or #2 grade Timber is graded in about 4 or 5 grades with each being more valuable than the next.

the largest investors and owners of timber land in the Pacific Northwest are John Hancock insurance and the Harvard endowment fund.. Billions invested and that is why.  little to no ongoing expenses to maintain it and it returns 10% plus year in year out. Talk safe and passive.

 That's interesting you mentioned the insurance company. The largest owner of timberland in this county is an insurance company. Followed by sovereign wealth funds.

[Courtney Buck]

Quote from @Jay Hinrichs:

Quote from @Reid Chauvin:

Very cool! Thank you both for sharing @Jay Hinrichs & @Courtney Buck. 

 nice to talk about positive deals on BP since many of the threads are all doom and gloom LOL

I jokingly say that land and timber are filled with more positive people, ha!

[Jay Hinrichs]

Quote from @Courtney Buck:

Quote from @Jay Hinrichs:

Quote from @Courtney Buck:

Quote from @Reid Chauvin:

Quote from @Jay Hinrichs:

I made a presentation at Google headquarters and did a module on Timber investing to all those sub 35 year old engineers and told them if U can start a Roth and put some buddies together and buy your timber in your Roth you could make some serious retirement money tax free.. But kind of went right over their tech noodles :)

 This sounds really interesting, Jay. Do you mind expanding upon this a bit more? How much capital are we talking? 

 Hi there, sure thing, it was 183k for the purchase but it appraised for much higher. So there is instant equity. I originally bought 30k in oil stock when it crashed in late March 2020. That stock exploded and I recently sold it(tax-free) and then used most of that money to buy this land.....again, tax free:) Since it's a Roth account, I paid the taxes already. I can't access it for nearly 2 decades but I'll just keep flipping this money for now. I buy discounted assets and love it!

baring the obvious risk to timber (fire, wind, bugs) Timber grows in the north west it grows at a rate that with todays log prices will give the investor a 12 to 14% COC return just on the timber.. timber gets bigger you have more of it. Plus depends on the stand but if you care for it in certain ways it can increase value even more IE export grade or # 1 or #2 grade Timber is graded in about 4 or 5 grades with each being more valuable than the next.

the largest investors and owners of timber land in the Pacific Northwest are John Hancock insurance and the Harvard endowment fund.. Billions invested and that is why.  little to no ongoing expenses to maintain it and it returns 10% plus year in year out. Talk safe and passive.

 That's interesting you mentioned the insurance company. The largest owner of timberland in this county is an insurance company. Followed by sovereign wealth funds.

 well in the pac norwest  in my land and timber days those were the main money sources for the big guys. 

[Greg Purvis]

Even if the self storage option is a no-go, perhaps agricultural or forestry zoning/classification would still allow a metal pole/shop building, which- like the camper idea- can (location depending of course) rent out surprisingly well for storage, hobbies, or even business/es.

I'm not very familiar with the gulf coast, & Alabama has a funny bee law (no migratory/commercial beekeepers, basically) but if you were on the Florida side of the border- with a similar piece of property, you might well consider commercial beekeepers. Sure, the "rent" for a normal "bee yard" , a location for say 40-60 hives - is much more likely to be a couple gallons of honey in trade than cash. But many migratory east coast beekeepers move their bees to Florida for winter, the whole state is packed.. A large (preferably gravel) holding/staging yard where they can load/unload semi trucks with forklifts & place 400-600 (or many more) hives on pallets- COULD certainly be of significant value, depending on location, forage/plants, & other beekeepers already established in the surrounding 2-3 sq miles, etc etc.