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How come most foresters don't oen timber land?

Started by Rod, February 27, 2005, 01:10:59 PM

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Rod

I've talked to a lot of foresters and so far I've yet to find one who invest in timberland.They tell me that they think  putting there money in 401k  plan,or a savings accout is a better idea..

Texas Ranger

Most foresters are to far down on the income ladder to invest in land.  I regret not buying land when younger, but, had a family to raise and educate.  Show me a forester who consistantly invests in land and I will show you a forester with family money, or one who gets more for his work than can be justified.
The Ranger, home of Texas Forestry

SwampDonkey

In my experience the timberland owned by a forester is inherited or he buys it because he runs a logging business. I know very few loggers that have mature timberland not being harvested unless they've been in the business a long time and got land when it was real cheap.  I've talked to foresters who would like to own land, but its too expensive for them. It's not like it was 50 years ago when you could by 100 acres for $500. Mature timberland is expensive, for 100 acres your talking at least $100,000. And unless you have rich family, you'de have the clearcut it to own it. Which defeats the purpose of owning it. The math has shown that investing in non timber assets are more profitable long term. Once in awhile you can get lucky in land speculation, but the conditions have to be right. ;D
"No amount of belief makes something a fact." James Randi

1 Thessalonians 5:21

2020 Polaris Ranger 570 to forward firewood, Husqvarna 555 XT Pro, Stihl FS560 clearing saw and continuously thinning my ground, on the side. Grow them trees. (((o)))

jph

I am not a forrester but we have just invested £70,000 in 60 acres of mature woodland here in the UK. With even non arable farmland making nearly £4000 per acre we think it is a good buy. As your your  man Mark Twain said, I can't remember the exact quote ''the trouble with land is they are not making it anymore''



Tom

Except for the Japanese. :D   Mark Twain......  and Will Rogers, both, I think said something like that and were not thinking of Japanese when they did.  The Japanese have built an Island in the Osaka Bay area and put a cotton Pickin' Airport in the ocean. 

It makes me wonder,  If I were to build an island off of the coast of Florida, would it be mine or would the State or Feds claim it?

Hmmmm-   probably put me in jail for defiling Government property, eh?

jph

Tom
Jim Rogers I 've heard of , but who is Will?

Tom

I thought that everybody new who Will Rogers was.  Here is a place to start.  Search the web and you will find even more.  He was one of America's "down-home" philosophers.  He was a writer, Entertainer, actor, roper and "gadabout gaddis".  Seriously, read about him.  You will laugh and enjoy yourself.  We, as Americans, are proud of him.

http://www.willrogers.org/  :D :)

http://www.ellensplace.net/rogers.html

http://www.willrogers.com/

SwampDonkey

There is even a Will Rogers Institute in White Plains, NY I think.  ???

I was gonna comment on the Japanese and Island Making. They are in the design state of creating a super duper city in the sky to house over 100,000 people. I think it's going to be built in the ocean as well. They can't expand outward much more, so they are going upward. ;D

I saw it on the Discovery channel a while back.
"No amount of belief makes something a fact." James Randi

1 Thessalonians 5:21

2020 Polaris Ranger 570 to forward firewood, Husqvarna 555 XT Pro, Stihl FS560 clearing saw and continuously thinning my ground, on the side. Grow them trees. (((o)))

Jeff

I know a few foresters who own timberland, and some that sure would like to but cant afford it . Same boat I am in.  I would run like heck from a forester that thought timberland was a bad investment. Jeez, think about it.
Just call me the midget doctor.
Forestry Forum Founder and Chief Cook and Bottle Washer.

Commercial circle sawmill sawyer in a past life for 25yrs.
Ezekiel 22:30

Tom

I had to study a little of that Modus ponens, Modus tolens mess in college.  Let's see if I can make it work.   Hmm

I'm not a forester and I own a little timber so ..........   I must be rich.  HEH HEH !

How'd I do?  :P ???

Phorester


Texas Ranger and SwampDonkey nailed it.  How I'd love to own timberland.  But had to raise 2 kids, buy a house, maintain and replace vehicles, etc., etc. 

Some people say timberland is a bad investment only because it takes so long to earn money if you have timber a long ways from harvesting. 

It's not a bad investment, but is a very long term investment, and that turns some investors off. 

But there's also hunting leases, nontimber products, etc, that the average stock/bond-type sit-in-the-office-talk-on-the-phone investor doesn't know about. .  Won't make you rich beteen timber harvests, but for the average timberland owner who likes to knock around in the woods, you can certainly pay the real estate taxes every year from these other minor income producers if you work at it.

Texas Ranger

Tom, you done good, son.  Obviously bug work was more profitable than tree work. :'(
The Ranger, home of Texas Forestry

Ron Wenrich

We had one state forester that ended up being a millionaire from the forest land he owned.  He funded two chairs at the state university.  How could a man making meager state government wages go out and buy hundreds of acres of timber?

Easy.  Tax sales.  He bought it for pennies on the dollar.  He never mentions this when he talks about how much money can be made growing trees.

I do know of loggers who buy timberland for less than what the timber's worth.  They do it in NJ, where land value is high, but timber value is higher.  But, you can't convince a realtor that a forest inventory is worth anything.   ;)
Never under estimate the power of stupid people in large groups.

Ron Scott

I believe that any forester that can "afford" to own timber land and pay the taxes on it will own it. I know many that do, but much has been inherited and retained in forest land as tree farms, private non-industrial forest land etc.

When I worked for the USDA-Forerst Service we were "not allowed" to purchase or own forest land within the National Forest boundaries. It was considered to be a "conflict of interest" so non of us became rich by owning forest land. ;)

As the previous foresters stated, if we could have afforded it in our "early years" we would own some. 
~Ron

Bro. Noble

Young people who enjoy country living and/or timberland need to learn from this.  You can own land and make it pay for it's way if you want to bad enough.  You may have to make some sacrifices and do without some playthings,  but if this is what you want do some studying and buy the right property.

My ancestors homesteaded part of the land where we live in the 1840's and my g-grandad on another line owned several thousand acres in the area,  a small part of it which we own.  My grandad built the house where my son lived until recently and where our sawmill is.  Some newcomers to the area assumed I inherited this land but the locals know that our family sold out during the depression.

After sawmilling in New Mexico,  and California,  Grandad bought a farm about 20 miles from here where Dad farmed and I learned to love country living.  There was a bad drought here in the early 50's and they sold that farm and we moved to town.  I still lived to visit my maternal grandad who farmed  in the area and always knew that someday I would be a farmer.

In the early 60's I started college in Iowa.  My counselor asked what I wanted to do and I told him "farm".  He asked where our farm was and I told him there was none.  He laughed and told me I needed to marry a rich Iowa farm girl or else become an ag teacher.  I assume this is a lot the same story as a lot of foresters.  The didn't have timberland but wanted to work in that field.

Anyway,  I married a city girl from my Illinois high school and we took education jobs in central Mo.  We had junk cars and no TV,  but saved half of what we made to buy a little farm.  After a couple of years we bought 8o acres and put a trailer on it.  In 1971 we sold that place and bought the first of the place we now own and live on in South Mo.  We didn't have to pay our kids way through college because they had their own milk cows and paid their own way. 

We now have a TV but it's busted :-\  My old 84 Bronco runs great,  but reverse went out on it about three years ago.  Our mechanic said it would cost more to fix it than it was worth.  He joked that we had enough hills that we could just let it roll backward.  I've only had to walk after the tractor a couple of times and that was when I was first getting used to not having reverse :D :D

Point is,  you can have whatever you want if you want it bad enough.

I don't know if we did the right thing and I'm not sure whether we are rich or poor (excentric or crazy).  I do know it's a mistake to measure wealth in dollars.

I do know that my wife and I have had 38 wonderful years together (as of last Sat) and we have raised three terriffic kids who have a great work ethic and wonderful values.  Tom who has a degree in animal science and works with me,  Carrie who recently married a farm boy who works with the forrest service.  (they recently bought a house and small acerage at the courthouse steps and have done a good job of fixing it up and are looking for more land) She is a full time student in elementary education (junior) works Fri and Sat at a bank,  and substitute teaches one or two days a week.   Dave,  who some of you met at the pig roast is completing his PHD this summer in Math education.  He wanted to get away from the farm,  but it is kinda funny that the only girls he is attracted to are farm girls ;D
milking and logging and sawing and milking

Buzz-sawyer

Good post Noble
I believe we went to the same class on farm life ...I chose it as you did :)
    HEAR THAT BLADE SING!

Rod

Well I was raised in the city and when I bought my timber land I didn't know one tree from another.I've been a carpenter most my life and about the only kind of lumber I ever saw was the stuff from 84 Lumber.I've learned alot about trees now.

Tillaway

I would buy timberlands in a heart beat.  Too expensive, over the years big investment companies, retirement plans (teachers), and insurance companies have been scooping it up out here.  It was giving better returns than the stock market after the crash.

I have looked at buying lands but the smaller parcels are too expensive.  Large tracts, thousands of acres, are a much better value.  Financing is the trick.  Banks usually won't touch them so you have to look for alternative financing, insurance companies, private investors and such.  It takes connections to come up with the scratch.  I never had any good connections.
Making Tillamook Bay safe for bait; one salmon at a time.

Wudman

I'll concur with the other foresters that have checked in.  I'd buy every acre of forest land that I could afford.  Unfortunately, I haven't been able to afford as much as I would like.  A few years back, my sister and I were able to purchase a small farm near my parents.  The merchantable timber had been harvested.  We prepared and planted the cut over lands.  Those stands are three years old now (loblolly pine) and looking good.  There will be some supplemental retirement income there when things mature. 

I don't think you can go wrong buying timberland.  If you have to borrow money, the biological growth of your stands should cover your interest without any problem.  The growth to higher use products (sawtimber) and the appreciation of the land itself is the gravy, not to mention the satisfaction of land ownership and having a place to call home.

Returns on investment long term will rival the stock market.

Wudman
"You may tear down statues and burn buildings but you can't kill the spirit of patriots and when they've had enough this madness will end."
Charlie Daniels
July 4, 2020 (2 days before his death)

SwampDonkey

I'll put my $100,000 into long term life insurance, and cash in at retirement for tax free money. ;D
"No amount of belief makes something a fact." James Randi

1 Thessalonians 5:21

2020 Polaris Ranger 570 to forward firewood, Husqvarna 555 XT Pro, Stihl FS560 clearing saw and continuously thinning my ground, on the side. Grow them trees. (((o)))

Rod

well it looks like that timberland increases about 16% per year.Say you borrow $100,00 for 20 years at 6%,you would of payed the bank a total of $172,000.The timber and land if it increased at 16% would be worth $334,000.The reason I pick 16% is thats what my timber and land has increasced over the last 7 years.Maybe more because the timber companies said I could keep the house which when i bought the place it came with it.

Now for insurance companies how do the make their money?Well the sale insurance on house etc and they take that money you pay them to buy stuff with so they can pay you back the part you want and they keep the difference.Insurance companies have been known to buy timberland. I haven't seen any large timber companies selling any land here in West Virginia yet.You might find some small tracts that have been cut over hard,but thats about all I've seen.

Rod

I picked a timber company out of the air and look at their stock.And with this chart http://moneycentral.msn.com/investor/charts/charting.asp?Symbol=PCL&IntraDay=Yes if you would of invested $100,000 in Plum creek timber company 10 yeras ago it would be worth $340,000 today.I think that works out to about and increase of about 12% per  year averge

Rod

WOW,I just looked over to the left at those pine trees and it says I'm a senor memeber :o :o :o.have I been here that long?Man time sure does fly by.I didn't signup with the AARP cause I wasn't ready to quit working yet.I still got to much to do.. :D :D

SwampDonkey

A lot of large parcels of land have been sold here. Just recently, Fraser/Nexfor has announced they are selling off about 760,000 acres to invest in paper making technologies. Doaktown lumber sold over 26,000 acres of lands to local land owners. JD Irving sold 300,000 acres in northern Maine to a concervation group. Georgia Pacific sold land in Southern New Brunswick. We aren't talking about alot of money per acre (typically around $100-200/acre). In my area farmland is where the money is, forestland doesn't yield returns anywhere near 16 % in 10 years, more like 6 or 7% (of course it's much higher when looking at 50 year yields) and interest on barrowed money to buy land is usually 8%-12 % at our banks, unless you go through a low interest program with farm credit, maybe prime at best. I can barrow money to invest and right off the barrowing interest, and down the road get a tax break when I cash in.

The bottom line is, returns on land depositions varies by location and is just as speculative as the stock market. ;)

Some math

$100,000 x (1 + 0.05)^20 = $265,329 (5 % for 20 years)

$2,500 x [1 - (1.05^20)] / (1-1.05) =  $82664 (invest $2500 annually at 5 % for 20 years

$2,500 x [1 - (1.05^30)] / (1-1.05) = $166,097 (invest $2500 annually at 5 % for 30 years

$500 x [1 - (1.05^40)] / (1-1.05) = $60,400 (invest $500 annually at 5 % for 40 years


Don't loose sight of the cost of the investment in the timber land and the cost to harvest it. ;D
"No amount of belief makes something a fact." James Randi

1 Thessalonians 5:21

2020 Polaris Ranger 570 to forward firewood, Husqvarna 555 XT Pro, Stihl FS560 clearing saw and continuously thinning my ground, on the side. Grow them trees. (((o)))

SwampDonkey

"No amount of belief makes something a fact." James Randi

1 Thessalonians 5:21

2020 Polaris Ranger 570 to forward firewood, Husqvarna 555 XT Pro, Stihl FS560 clearing saw and continuously thinning my ground, on the side. Grow them trees. (((o)))

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