Possible Timberland Property

43 Replies

Hi BP!

I'm looking for advice on how to begin analyzing a land deal with a possible timber harvest. 

There are three separate, adjoining parcels for sale, totaling 303 acres in northern WA state for $2,500 an acre. The parcels have 20 year old alder re-growth timber.  There are two major sawmills about approximately 30-40 miles down the highway.

I've looked around, but I still have no clue about how to analyze this and see if this would be worth pursuing.

For those who have done deals like this, how did you find resources/contacts in the industry? Should I find a wood dealer/broker first? A Forestry Consultant?  Would it be better to the state university or a state forester?  Should I get the property under contract before I do so?  

I know I can google a forestry consultant, but I have no idea who is reputable, and what fees are reasonable for a consultation on potential property.


How would you go about analyzing and tackling this potential deal?

This has been the most useful article I've ready so far. For your consideration:

https://retipster.com/timber/

I look forward to good discussion and, hopefully, your thoughts and experience on the matter.

Anyone have any thoughts or tips to share?

Robert, 

I haven't done any west coast timber stuff, but have done some on the east coast. 

The general rule of the day you buy it is the day you get out of it applies. Do you want to log and go, or log to pay the note and hold for regrowth,  or develop?

Generally the money works out like this: divide the value of the timber in 3rds. 1/3 to the land owner 1/3 to the logger and 1/3 to the other folks to pay along the way. This percentage can vary quite a bit,  depending on lots of factors. 

Your best bet is to hire a professional forester and have him come up with a management plan and do a timber cruise. I have no idea how much they cost now. When I was looking in the late 90's at timberland I was quoted between 1000 and 1500 for up to about 250 acres. It was a bargain because if I had a forestry management plan I was able to cut my taxes to just about pay for the forester.  The cost is also dependent on if you have them manage the property and/or harvest. Make sure that you explore options with your forestry person.  Personally I wouldn't do a timber deal without a good forester. 

You can find forestry professionals on line, through your forestry extension or in the old fashioned yellow pages.  

Good luck!

Jim

@James C. Thanks Jim! Great thoughts. I’m unsure of my long term strategy for this. I’m still very much feeling out the situation. I really appreciate your feed back though.

Cheers!

20 year old alder is reprod... and WAY too young to harvest.. its a long term hold at this point that's why it priced at those prices.

timber cruise on that big of acreage will cost way more than 1k.. in Washington you do need a harvest plan done by a forester.. ( I had one on staff in my day of doing this).

who is telling you its 20 years old ???  

in our area.. if you own the timber you simply pay a logger to harvest it..  they will do it on splits like @James C. mentioned or set price .. or some with even buy a timber deed and cash you out.

sometimes MIlls will buy your timber deed up front and do it all themselves.

however again unless your getting bad intel.. 20 year old tree's of any species other than Christmas tree's are too young.

Robert. This may be the most unique post that I've seen on here about someone buying a property haha. 

@Antoine Martel   nothing unique about timber.. its the number one best passive investment in the US hands down..

the largest owners of US timber land are  John Hancock and the Harvard endowment fund. 

10 to 14% returns annually all passive ... beat the crap out of most anything else if your looking for true passive.

it was the absolute best thing I have ever done in real estate... I just sold my last tree farm a few years ago 700 acres in Oregon for a 7 figure profit .. and all I did was hunt on it and ride out quads.. no tenants no toilets.. worse thing was occasional hunters trying to poach a deer or something..

Originally posted by @Jay Hinrichs :

@Antoine Martel  nothing unique about timber.. its the number one best passive investment in the US hands down..

the largest owners of US timber land are  John Hancock and the Harvard endowment fund. 

10 to 14% returns annually all passive ... beat the crap out of most anything else if your looking for true passive.

it was the absolute best thing I have ever done in real estate... I just sold my last tree farm a few years ago 700 acres in Oregon for a 7 figure profit .. and all I did was hunt on it and ride out quads.. no tenants no toilets.. worse thing was occasional hunters trying to poach a deer or something..

 Wow thats incredible. 

Are there any websites that I could check out which have timber land for sale? 

@Antoine Martel yes there are brokers in the northwest that specialize in timber land.. and the good OLE MLS.

I believe that any investor in their 20's or early 30's should have some timber land in their portfolio.. Ideally in their Roth if their roth is big enough to afford it..

100k timber land bought today and logged in 40 years can bring in a  million dollars in timber .. and you still own the land hand it down to the next generation and repeat..

Originally posted by @Jay Hinrichs :

@Antoine Martel yes there are brokers in the northwest that specialize in timber land.. and the good OLE MLS.

I believe that any investor in their 20's or early 30's should have some timber land in their portfolio.. Ideally in their Roth if their roth is big enough to afford it..

100k timber land bought today and logged in 40 years can bring in a  million dollars in timber .. and you still own the land hand it down to the next generation and repeat..

 Interesting. So $100k, vacant land, plant some timber, let them grow for 40 years, then someone will pay you to come and log the timber. what companies do this? how much do they pay for timber? 

Originally posted by @Jay Hinrichs :

@Antoine Martel yes there are brokers in the northwest that specialize in timber land.. and the good OLE MLS.

I believe that any investor in their 20's or early 30's should have some timber land in their portfolio.. Ideally in their Roth if their roth is big enough to afford it..

100k timber land bought today and logged in 40 years can bring in a  million dollars in timber .. and you still own the land hand it down to the next generation and repeat..

 teach me.... lol

Jay, 

With the demise of the pulp and paper mills in Maine (especially in Rumford), the subsequent loss of jobs, and the exodus from the state, I'm betting some of that land comes up for sale. The saw log business is still there, so some of the older cuts can produce in the saw log arena. One nice thing is that the state purchased (traded for tax reductions) the development rights to large tracts of the land, so it can be harvested, but can't be built on. Makes for nice deer, bear, moose and small game hunting in the select cut parts.

Back in the day, I was trying to put together a deal on a very small (50 acre ish) parcel that included about a mile of warm water stream front. the price was good. There were about 20 old oak trees on the riparian way. They were big enough around that you couldn't reach around them, probably 5 feet in diameter. If I remember right, the logger was offering about 12-15K per tree. The owner of the land was adamant that if he transferred he would put a deed restriction in that no trees over 2.5 feet in diameter could be cut on the property. So, that went nowhere, AFAIK, he's still holding it... For it's size, it would have paid for itself and taxes for my lifetime if I could have cut 4 or 5 of them. Reminds me, I should get in touch with him again, to see if he wants to sell...

Jim

Great thoughts and a great thread here. 

@Jay Hinrichs Thank you for your thoughts on the timber. It makes sense what you were saying about the age of the trees and the price. I think this would be a long-term acquisition for me then, because it is certainly out of the short term feasibility. 

Thank you all for your feedback and thoughts!

The person I believe you'd want to check with is Jay Hinrichs. Its been awhile but I think in listening to one of the BP podcasts he was on, he talked thru a bit about doing some of those deals.  Of all the people on here to ask, he would probably be the first one I'd ask for some feedback.....

@James C.   white oak in our neck of the woods .. for saw logs would be worth about 1k per tree.

logging is still a thing here.

the alder patch he is talking about the tops would go pulp but there is a good saw log market for it when they are the right age..

Love timber always have always will.

Originally posted by @Antoine Martel :
Originally posted by @Jay Hinrichs:

@Antoine Martel yes there are brokers in the northwest that specialize in timber land.. and the good OLE MLS.

I believe that any investor in their 20's or early 30's should have some timber land in their portfolio.. Ideally in their Roth if their roth is big enough to afford it..

100k timber land bought today and logged in 40 years can bring in a  million dollars in timber .. and you still own the land hand it down to the next generation and repeat..

 Interesting. So $100k, vacant land, plant some timber, let them grow for 40 years, then someone will pay you to come and log the timber. what companies do this? how much do they pay for timber? 

 no you don't plant it .. you find 20 to 30 year old reprod stands and buy those.. once you harvest then you replant.. but you can thin it over time.. its a HUGE money business.. just like those families that live on rentals there are numerous NW families that live on yearly thinning of their forests.. big difference is .. its two weeks of work.. and no tenants or other risk other than forest fire.. so you do have to watch for that of course.  but you can insure for that with Lloyds

Originally posted by @Jay Hinrichs :
Originally posted by @Antoine Martel:
Originally posted by @Jay Hinrichs:

@Antoine Martel yes there are brokers in the northwest that specialize in timber land.. and the good OLE MLS.

I believe that any investor in their 20's or early 30's should have some timber land in their portfolio.. Ideally in their Roth if their roth is big enough to afford it..

100k timber land bought today and logged in 40 years can bring in a  million dollars in timber .. and you still own the land hand it down to the next generation and repeat..

 Interesting. So $100k, vacant land, plant some timber, let them grow for 40 years, then someone will pay you to come and log the timber. what companies do this? how much do they pay for timber? 

 no you don't plant it .. you find 20 to 30 year old reprod stands and buy those.. once you harvest then you replant.. but you can thin it over time.. its a HUGE money business.. just like those families that live on rentals there are numerous NW families that live on yearly thinning of their forests.. big difference is .. its two weeks of work.. and no tenants or other risk other than forest fire.. so you do have to watch for that of course.  but you can insure for that with Lloyds

 Wow interesting. What are some big logging companies that will pay you for the wood?

@Antoine Martel   its not logging companies.. you hire logging companies to harvest and deliver the logs .

the MILLS  pay fore the wood.

just go down to home depot or lowes and look at stacks of 2/4 s and right on the side will be the name of the mill that manufactured the dimensional lumber.

Although on the West coast a lot of lumber comes from BC ( British Columbia)

and many mills are specialty mills.. like MIlls that do cedar fencing etc.

the big stud mills and plywood mills are

Boise

Warehouser

Hampton

Stimson  ( they are the ones that bought my 700 acre tree farm a few years ago)

and many many more.

but there used to be hundreds of mills.

Seirra Pacific is about the only one left in CA.. its really tough to get harvest permits in CA.

and they do what little redwood gets harvested anymore.

JLH

Originally posted by @Jay Hinrichs :

@Antoine Martel  its not logging companies.. you hire logging companies to harvest and deliver the logs .

the MILLS  pay fore the wood.

just go down to home depot or lowes and look at stacks of 2/4 s and right on the side will be the name of the mill that manufactured the dimensional lumber.

Although on the West coast a lot of lumber comes from BC ( British Columbia)

and many mills are specialty mills.. like MIlls that do cedar fencing etc.

the big stud mills and plywood mills are

Boise

Warehouser

Hampton

Stimson  ( they are the ones that bought my 700 acre tree farm a few years ago)

and many many more.

but there used to be hundreds of mills.

Seirra Pacific is about the only one left in CA.. its really tough to get harvest permits in CA.

and they do what little redwood gets harvested anymore.

JLH

 Interesting. Have you thought about buying any land up in BC for that reason? 

@Antoine Martel   PS I could do a BP podcast just on the benfits of the timber industry and how one can make LOTS of money at it.. far more than rentals in their best day unless you own a few hundred doors.

Originally posted by @Jay Hinrichs :

@Antoine Martel  PS I could do a BP podcast just on the benfits of the timber industry and how one can make LOTS of money at it.. far more than rentals in their best day unless you own a few hundred doors.

 Well I guess you should reach out to the guys who do the podcast here on bp and have them put you on the show again .... :) 

@Jay Hinrichs , thanks for all the info on here. I've recently started looking into the East Texas pines to diversify my portfolio. Do you know if it's possible to do a 1031 from residential to timberland? 

Check with @Dave Foster  I️ have only done it the other way sold timber deed to mill put proceeds in 1031 for income property 

Thanks @Jay Hinrichs .  Everything's up in the air right now with tax reform and some possible changes.  In the past Timberland as well as timber rights and in some cases the actual timber was generally considered to be like kind to investment real estate.  However states have started eroding and limiting the scope of the rights.  And now we have  potential tweak to 1031 that emphasis the "real" in real property.  so no one quite knows how that will mess with the definition of real estate that is used to allow some of these quasi real estate exchanges.  @Jieh Larson , feel free to reach out privately if you'd like to discuss a specific situation.

interesting thread. I was actually researching timber this morning. Recently, I got into woodworking and found that those hardwood are really expensive, like black walnut. Couple years ago, I cut two very large oak trees from one house due to foundation issue. I did not know they worth that much and just trashed it. What a pity.

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