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Northeast woodland investment

Started by Splinter, October 05, 2009, 04:00:30 PM

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Splinter

So Foresters,
What are you seeing for average income/acre for managed northeast hardwoods?
This would be ongoing yearly average income (to the landowner) for very large tracts like 1000 acres, not a one time scalping.

Thanks


rickywashere

Quote from: Splinter on October 05, 2009, 04:00:30 PM
So Foresters,
What are you seeing for average income/acre for managed northeast hardwoods?
This would be ongoing yearly average income (to the landowner) for very large tracts like 1000 acres, not a one time scalping.

Thanks




with the way log prices are there is no way to be even close to accurate you may get 1$ board foot for prime red oak today and 50 cents tomorrow

Splinter

400 views/1 response must have been a bad question.

Lets try again.
I have heard that historically the value of wood in a northern hardwood managed woodlot typically increases at approximately 2-3% in value over the rate of inflation.

Does that sound right?

Dean

beenthere

Where did you hear that?   

Break down your question a bit, and lead us into some dialogue with where you are coming from, and where you are wanting to take us.  :)
south central Wisconsin
It may be that my sole purpose in life is simply to serve as a warning to others

Ron Wenrich

I've heard that figure before, but if you look at it on a species basis, that doesn't necessarily float.  A lot depends on the stage of development of the forest.  The only folks that have the necessary longevity to carry off the management like you're talking about is government, notably state governments.

For the most part, you would have to bring a large tract into balance, where you would have several different forests in several different stages of development.  Most privately owned tracts have been raided over the years, and its really hard to find a forest ownership like that.

Where the increase in value comes from is when trees pass from one value category to another.  When timber passes from pulp timber to saw timber is when you realize the highest percentage of value increase.  But, the highest value timber is in veneer quality. 

Then you get into a numbers game.  You have less value per acre in pulpwood than you do sawtimber.  Getting a 10% return sounds great, but you're getting on an acre of wood that is a lot less in value.  A 1 or 2% return in sawtimber may yield a lot more dollars, but not a higher rate of return.  Is that good or bad?

If you only look at rate of return, then you would be cutting timber way before maturity and looking at multiple cuttings before you would get to the veneer size.  You would also have better growth rates, since you're dealing with juvenile stands, and not maturing stands.

So, which is more important.  Do you want to maximize your rate of return or maximize your income?  Sometimes there's a difference.
Never under estimate the power of stupid people in large groups.

Splinter

Thanks Ron,
With real estate and timber prices both low, and the dollar under pressure it seems a good time to buy timberland as an investment.  Very tough to find a fairly priced tract with income potential this side of a decade.

Dean

WDH

It is almost impossible to buy timberland and make any return growing timber unless you are speculating on the land increasing in real estate value over the term.  Therefore, the key is location, location, location.  Good access is paramount, and if the property is located on an improved or paved road, that improves the potential for future value.  If there is no future HBU value (higher and better use), you better buy it cheap if you want to have any chance of making a return.  Real cheap.
Woodmizer LT40HDD35, John Deere 2155, Kubota M5-111, Kubota L2501, Nyle L53 Dehumidification Kiln, and a passion for all things with leafs, twigs, and bark.  hamsleyhardwood.com

WH_Conley

Did I hear someone wanting to buy property I have for sale. ???
Bill

whitepine

I have bought large tracts of land for timber that I later used for grazing cattle on. I let the trees regenerate and left the cattle in ( that is not good forestry management but it makes sense at the time for cattle), this is in northern Minnesota and aspen was the main tree. At the time I figured land was worth about $200/acre for growing trees and at the time the market was about $1000/acre also consider our timber markets collapsed here a couple of years ago just coming back and consider that one is usually able to afford to buy land later in life he would be buying it  up north for his grandchildren to harvest. The chances of two generations not needing money and holding on to harvest mature timber are remote to say the least. It is nice for me to wonder around in the woods I own but their income is little barely pay taxes now and will remain that way for another 40 years. One possible hope is if they start using  biofuels as in wood chips then immature stands may become valuable when cost effective say gas over $10.00/gal. One can make money buying mature stands and selling that (I did) but as you can imagine you better know what you are doing.

jdtuttle

I'm not sure what part of the Northeast your talking about but in our area (the finger lakes region) Land cost is out of site for most of us. The Marcellus shale gas drilling has everyone thinking their sitting on a gold mine and they arn't selling. You can purchase some land without the mineral rights still. :(
jim 
Have a great day

PAFaller

Insert Quote
I'm not sure what part of the Northeast your talking about but in our area (the finger lakes region) Land cost is out of site for most of us. The Marcellus shale gas drilling has everyone thinking their sitting on a gold mine and they arn't selling. You can purchase some land without the mineral rights still.

I hear ya there, same thing a bit south of you in northern PA.  My wife and I are trying to buy a small house but with enough ground that we can possibly have a few animals and a barn big enough for me to work on equipment in. Gas drilling has made the prices ridiculous, and if you find one that you can buy without the gas rights you have to read through piles of lease nonsense to make sure they arent going to be digging your ground up to put a well in. Its supposed to be good for the economy, but I haven't seen it. Most of the workers are from the southwest, and it seems that they even have their own foresters, site prep guys, excavation guys ect. Other than the hotels and restaurants it hasn't done much for this area yet, other than drive the price of land up and clutter the roads with oversize diesel pickups!
It ain't easy...

Splinter

I was thinking NH VT or southern Maine.

Ideal situation would be a large tract (500 acres) not in conservation, with lots of sugar maples 6-8" or larger, small road frontage and power.
Would work half as timberland and half as sugarbush. Numbers look great if you don't have to buy the ground :D  :D :D :D

Have a friend in PA with some of that marcellus going on. lucky guy, the drill showed up last week. has about 1/4 of the block with mineral rights.
Think he's going to have a career change pretty soon to something like hunting and fishing.


D



tughill

I think the question is kinda open ended.  Sort of like asking how much it costs to buy a used car, depends upon a lot of variables.

Seems like around here, if the stars line up and you can find the land for a reasonable price, and it's decent timberland (not necessarily with any good timber on it) and you manage it reasonably well for at least 20-30 years the overall return is pretty decent.  Is that a nice vague answer? 

I believe that you don't need to harvest timber to make money.  Buy good land, as you said now, during a depressed economy, manage the woods, give it time to grow, improve the roads, sell in the future with management plan in place etc. for profit. 
"Those who hammer their guns into plows, will plow for those who do not."- Thomas Jefferson
Local Farmer here won 10$ million in the lottery, when asked what he was going to do with his winnings, responded, "Keep on farming until that's all gone too."

SwampDonkey

Just came across this listing from a "tree planting" forum. I have no interest in the land, but thought I'd post here the link to the details. The guy that owns the internet site owns the woodlot and I think from the phone number he now lives in British Columbia or on a seasonal basis because of silviculture work. I believe he tree plants out that way and is/was a radio DJ back east here.

http://www.replant.ca/timber_river_property.html

I wish the guy luck. In this economy and having cut all the timber on it, I don't know if he can get that price. I'd suggest about half the asking price per acre, but I don't want that to be a downer. This is not a sales pitch, just a curiosity. ;)
"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)))

g_man

I have close to 200 acres in Vt and most land owners I know have trouble  just staying even with their taxes never mind making a profit. Even under land use conservation. To pay my taxes I do the work myself and that helps but I am limited to what I can harvest or market. Because I want to grow and maintain a healthy forest I dont see any profit potential except for those down the line who inherit it.

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