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Is a woodlot worth it?

Started by Warped, January 08, 2015, 02:44:51 AM

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Warped

     So, I have a seven acre woodlot well treed. Figuring I can sustain 10 face cords a year (that's 3 1/3 cords for those not from New Yorkistan) and paying over $600 a year in taxes, it's looking to be hardly worth owning it. I could buy it cut, split and delivered for that and park my capital elsewhere. I was offered 3k by a logger in '09 to be split evenly, and then the exact same from a different logger this summer for the timber. Didn't wish to tear up my land for $1500.
     The only possible salvation I see is paying for some guidance and taking it to the mill myself? I don't believe my HFE 21 is up to the task.....then I have to sell it.
Good with the rough stuff and rough with the good stuff

Ianab

Strictly from the cash point of view? Probably not... Buy a whole truck load of firewood grade logs for $500? Yeah that's easier.

But if you actually LIKE working with trees, logs, chainsaws, firewood etc? Folks spend a LOT more than $600 a year on a hobby. If it's one that also heats your house and provides you with wood working lumber, then the equation changes.

The urban legend on the forum is the $300 slab of wood. And that's an gnarly old walnut tree, that wont make a "saw log". But you might cut 10 x $300 table tops out of it? I can show you pictures of logs sold for more than the sawmill that's cutting them.

Personally I'd LOVE 6 acres of trees to "play" with. Drop and mill few trees each year (a ~$3000 mill will do the job) and then build stuff with the wood. Priced out much solid wood furniture lately? Even basic rustic stuff that's easy enough to build is $$$.

Extra bonus, you don't need a gym membership.  Pruning, thinning, hacking weeds and dragging out the occasional log and load of firewood is a pretty good workout.

Signing in here and expecting folks to tell you sell your woodlot and buy propane is like walking into a bar and expecting the barkeep to an AA counsellor. If you want to know the best whisky  or what drink to mix? Then you are in the right place  ;) :D
Weekend warrior, Peterson JP test pilot, Dolmar 7900 and Stihl MS310 saws and  the usual collection of power tools :)

Warped

     That's funny, I do have a 3k mill and build log furniture, and log spiral staircase among other pieces. Even advise my son to come home and work firewood instead of the school gym, get something for that effort!  :D
     Everything you said is exactly why I keep it. But, also curious how the numbers work out elsewhere given the tax burdens. There's many options I kick around for the land, initially, I primarily bought it to build cabin rentals and logs was a bonus (and a reason to buy a mill 8), but I also watch market gains to see if they ever outstrip the taxes on undeveloped land. And when it doesn't, it simply drives down the sale price. Nothing wrong with sound investing.

"Signing in here and expecting folks to tell you sell your woodlot and buy propane is like walking into a bar and expecting the barkeep to an AA counsellor. If you want to know the best whisky  or what drink to mix? Then you are in the right place  ;) :D "
  I hear ya, but I also expect an impartial opinion. That's like saying " I support unions as long as I'm in one, when I'm not, bust'em up!" lol!
And don't be surprised if your barkeep isn't mandated to be an AA counselor in the future, ever see the messages tobacco companies are required to put on cigarette packs in Canada? :) :) :laugh:

Good with the rough stuff and rough with the good stuff

Ianab

Put it this way, I call around and see my old buddy. He has a ~$20K boat in the driveway, He uses it to go and catch some fish. I have a ~$10k sawmill in my driveway. I've sawn more boards than he's caught fish.

But we are both happy with our choices   ;)

I guess what I'm saying is that it's not just about the $$. If it was, then the sports car  / pleasure boat / etc industry would just implode.

If your  "thing " is putzing about with  a small woodlot, then so be it. 10 years time, you still have the asset and hopefully it's worth more. You have a lot of fun in the mean while.
Weekend warrior, Peterson JP test pilot, Dolmar 7900 and Stihl MS310 saws and  the usual collection of power tools :)

Peter Drouin

A&P saw Mill LLC.
45' of Wood Mizer, cutting since 1987.
License NH softwood grader.

xalexjx

usually for use to purchase wood lots that are sustainable (break even or make money) they have to be 40 acres plus and start out with decent timber. For personal use/ firewood id hang on to it, then you have a reliable source to heat your home and your not held to the conditions of the market like last year when hardwood prices boosted up. Holding onto property is never a bad thing as long as the tax's arnt outrageous. 
Logging and Processed Firewood

FarmingSawyer

I own a 40acre wood lot. It was heavily logged in '95, but there is enough harvest-able timber on it now, if I do the work, to make it pay. There are also 170 cords of firewood on it, not including the tops of the saw-log trees. That's 17 years of firewood or so, at least, which is equivalent to the taxes currently. I allowed my dad to build a yurt on the property, which is nice. In a few years--he's 85--he probably won't be using it. I should be able to sell the piece as a camp and make a tidy profit. It's too bad it's 20 miles away or I would spend more time on it. But as it is I can head up there a few times a month and cut firewood or twitch out some logs. It was better when I lived across the street, but we won't go there........
Thomas 8020, Stihl 039, Stihl 036, Homelite Super EZ, Case 385, Team of Drafts

Warped

Quote from: Ianab on January 08, 2015, 06:04:54 AM
Put it this way, I call around and see my old buddy. He has a ~$20K boat in the driveway, He uses it to go and catch some fish. I have a ~$10k sawmill in my driveway. I've sawn more boards than he's caught fish.

But we are both happy with our choices   ;)

I guess what I'm saying is that it's not just about the $$. If it was, then the sports car  / pleasure boat / etc industry would just implode.

If your  "thing " is putzing about with  a small woodlot, then so be it. 10 years time, you still have the asset and hopefully it's worth more. You have a lot of fun in the mean while.
So far I love the hobby, but see no reason not to limit the cost, save money, like you said on propane, or better yet put some cha-ching in my pocket. And if it cost me more money to heat with wood than propane, that would be the end of that. That was the point of my initial question. That's why the guy didn't give away his 10  $300 walnut slabs. Then with some walking around money I can recreate more, like go fishing. You may have cut more boards, but his fish were bigger... :D
     You know the old adage "Enjoy what you do and never work a day in your life" 8) :o
But seriously, I have of no intention of making a living at it like others can, and it's very satisfying to get your wood split and stacked. When it's all done I'll go out 3-4 more times and check it over, adjust it, check the covering. I do the same thing when I slice lumber, sometimes with a flashlight....ya, I got issues! :-[
Great discussion, lot of good input from everyone.
Good with the rough stuff and rough with the good stuff

WDH

When Forest Products Companies evaluate land for purchase, they figure out the value of two consecutive timber crops in the future using assumptions for stumpage price escalation and also inflation, and build in a desired return on the investment.  Then, they discount that value back to the present to determine the Net Present Value (NPV) of using the land to grow timber.  This value is called the "Bare Land Value", and this is what they can pay per acre for the land (the dirt), and then they add on the value of any standing timber that might be currently on the property. 

For southern pine forestry, that Bare Land Value is around $600 to $800 per acre.  This is what determines the "Market Value" of timberland.  In many places, that market value for growing trees is exceeded by land values because of demand for land.  That rules out growing timber profitably.  You have to really have a sharp pencil and know your business if you expect to buy land to grow timber and expect to make a return. 
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

Warped

Quote from: WDH on January 08, 2015, 07:44:08 AM
When Forest Products Companies evaluate land for purchase, they figure out the value of two consecutive timber crops in the future using assumptions for stumpage price escalation and also inflation, and build in a desired return on the investment.  Then, they discount that value back to the present to determine the Net Present Value (NPV) of using the land to grow timber.  This value is called the "Bare Land Value", and this is what they can pay per a :Dcre for the land (the dirt), and then they add on the value of any standing timber that might be currently on the property. 

Oh boy, assumptions, forecasting, NPV, FV----you're bringing back my finance and operations management courses from an MBA. Excellent explanation, you're making my head hurt though from the flashbacks! :D

Good with the rough stuff and rough with the good stuff

Warped

WDH,
   Not to be misunderstood, my response was tinged with a little sarcasm, Finance was my favorite courses. Sunk costs, annuities, sinking funds, risk free rates.....you actually got me to get some old books out for review....thanks a lot!
   Unfortunately, the timber industry was never touched upon in grad school, it was always airlines, Walmart and Howard Schultz's Starbuck's. Guess I should've went up the road to Paul Smith College!
Good with the rough stuff and rough with the good stuff

thecfarm

If trying to make money and get a return on your 7 acres,no.
I have acres and I have toys to support it. I know I could get an apartment and have more money than what I have now. But I like the life I have. I enjoy working the land,I think I am making it better. I have had more than one neighbor that has stopped when I am "working" by the road and tell me all you do is work.  :D  It's not work to me. I enjoy it. Not like I have a 4 o'clock deadline that HAS to be met. I can start one project and walk off and take a walk through the woods or start another project.
Model 6020-20hp Manual Thomas bandsaw,TC40A 4wd 40 hp New Holland tractor, 450 Norse Winch, Heatmor 400 OWB,YCC 1978-79

Warped

Quote from: thecfarm on January 08, 2015, 08:50:23 AM
If trying to make money and get a return on your 7 acres,no.
I have acres and I have toys to support it. I know I could get an apartment and have more money than what I have now. But I like the life I have. I enjoy working the land,I think I am making it better. I have had more than one neighbor that has stopped when I am "working" by the road and tell me all you do is work.  :D  It's not work to me. I enjoy it. Not like I have a 4 o'clock deadline that HAS to be met. I can start one project and walk off and take a walk through the woods or start another project.
" I can start one project and walk off and take a walk through the woods or start another project." Holy smokes, you sound just like me, got eight or nine going on now. No different than everyone else, right? :D
I may just harvest it and dump it to somebody who wants to build, even has the option of muni. sewer and water. I have more acreage slightly closer to play on, and I'll save on transportation costs to boot. Whoot!
Good with the rough stuff and rough with the good stuff

Ford_man

Are you saying that the taxes on the 7 acres of woods is $600 or is there additional land. Those Tax rates seem real high to me. That is almost what I pay for my complete farm with buildings.

thecfarm

I thought you lived on the land. We did the same thing here for years. When my Grandmother left here around the early 70's no one lived here. It was kinda of a bother. I did start to stay in the old farm house just for the summers months. That made things so much easier. Than I had a house built here in 2000. It's nice to have a ½ hour and just go out and do something. Instead of being 20 minutes away. The enjoyment factor is just so much more.
8-9 projects is just about right. But with some of those 8-9 projects a few I doubt I will ever see get done. As I say when I die,someone will come in with a bull dozer and do what I have been working on for 20 years and do it all in a few days.
Ford man,sounds you you have it made on the tax part.  :)
Model 6020-20hp Manual Thomas bandsaw,TC40A 4wd 40 hp New Holland tractor, 450 Norse Winch, Heatmor 400 OWB,YCC 1978-79

Warped

That's just 6.91 acres of land, no improvements. Oh, put a 18" driveway culvert in and the town covered it with a load of bony gravel. 45.72 acre lot is over $1600, nothing on it.
    Taxes are outrageous. I have a nice see through Majestic fireplace I've been holding to put in the center of a 20x36 or so addition, but not sure I want to do it, they'll hammer me. There's no incentive to make anything nicer, quite the opposite in fact.
Can't wait to get out of NY!  :) :) :) :)

Good with the rough stuff and rough with the good stuff

trapper

Had simular discussion with my daughter couple days ago.  Told her I was busy cutting wood as I probably couldnt aford to heat this old house with propane. She told me to sell my place and move into an apartment and I would have lots of free time.  I Replied that put me in an apartment and I would be dead in two years.  I like playing on my land.
stihl ms241cm ms261cm  echo 310 400 suzuki  log arch made by stepson several logrite tools woodmizer LT30

barbender

If money is the bottom line, then probably not. You're the only person that can answer your question.
Too many irons in the fire

Warped

Quote from: barbender on January 08, 2015, 02:41:00 PM
If money is the bottom line, then probably not. You're the only person that can answer your question.
Well, anyone with the pertinent numbers could answer it, I guess I was more interested, and should have stated it clearly, if anyone else has done an analysis on a similar situation and how variables and specifically land taxes affected them in their region. Of course, if you're talking about personal fulfillment and satisfaction then you're correct, only I can answer that. I understand the leisure factor, but my initial post was concerning raw numbers only and it was probably my fault for letting the thread take a turn.
     And while WDH provided excellent information it would be nice to hear how individuals fair and if they've ever given it any thought.
     There certainly seems to be a consensus though, that timbered land can't support itself financially purely dedicated to forestry. Like WDH said, takes a sharp pencil. I know many big paper mills around here lease land to hunting clubs. Our club leased thousands of acres for twenty years on Tug Hill Plateau before there were too few members. Bet that cabin is still there.
Good with the rough stuff and rough with the good stuff

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