iDRY Vacuum Kilns

Sponsors:

Good quality trees or poor quality trees?

Started by Dobie, October 28, 2015, 11:56:18 AM

Previous topic - Next topic

0 Members and 1 Guest are viewing this topic.

Dobie

Buying a large tract of land as an investment and as a family hunting getaway.  I've already put a ton of money down on this property and can't get out but I'm starting to worry after a forester told me the trees were poor quality.  Also had another forester tell me it was a very nice stand of timber so not sure what to think  I know it's hard to judge by pictures but maybe some of you could give me a general idea to know if I'm walking into a disaster.  I've bought a few stands of timber in the past but my knowledge is basically knowing what species of trees are there and if it's straight or not.  I'm retired military(enlisted) and if this investment goes south, I don't think I'll be able to recover.  I've also heard some things from a neighboring land owner that makes me a little nervous such as the property was cut really hard in the past and the estimates of timber volume on this tract are suspect.


This is a large parcel of land in nw Pa consisting of mostly Soft and Hard Maple, Hemlock, Cherry and Red Oak with some lower quantities of White Oak, Beech, Ash and Hickory.


Cherry


Red Oak


Cherry


Cherry



Rd Oak


Red Oak


Red Oak



Cherry



Sofr Maple


Soft Maple



Cherry



Red Oak


White oak



Red Oak


Red Oak







Dobie

I don't want to get too personal but I will say we are paying $2360/acre and a previous timber cruise had the volume per acre at around 5000 ft per acre.  Seemed like a no brainer to me but I've been wrong more than once.

beenthere

Get a forester to walk the property with you, or get a logger to walk it with you. They will be able to point out quality trees that either have value now, or will have value in a certain number of years. Let them tell you what your management plan should be now so your investment continues to improve.

Best to find out now. In the pics, one can imagine some quality as well as see the lack of quality in some of the trees. The percentage of good and bad cannot be seen in the pics, for me anyway.

You need some facts about your property, not 3rd hand comments from what was heard.  IMO.

Good luck with it. Hope it goes well for you.
south central Wisconsin
It may be that my sole purpose in life is simply to serve as a warning to others

Dobie

I have walked the property with a forester.   He thought the trees looked great.  What's making me a bit anxious is the other forester I was considering using said this to me.



-  "Well actually I have been to the property and I am certain that I am not very interested in working on this property.  To be honest I would be very careful of the timber cruise information that you have.  I do not feel that the volume is there and the quality of what is there is rather poor overall.  It has just been cut too hard. The cherry and oak that is there is starting to pin feather already.

Thanks for the consideration and yes next time your thinking of doing something let me know.  I will be glad to take a look."

Ron Wenrich

There's some trees that look ok, but you can't gauge the whole property from a few trees.  If there has been a timber inventory, then it should break down the stocking, trees by diameter class, and volume.  Saying there is 5 Mbf/acre doesn't really mean a whole lot.  They could be low quality in one part of the stand and higher quality in another. 

It sounds like the one forester may have been involved with a previous harvest or know a lot about it.  Did he tell you when it was cut?  Did he walk the property?

If you've bought it, then I'd get a timber inventory and management plan.  That will tell you what you have, and you will be able to use the inventory to give you a cost basis on your timber.  That will save you money in taxes.

Did you get the mineral rights along with the land? 
Never under estimate the power of stupid people in large groups.

Dobie

Wish the trees weren't so wet when we took these pictures.  Only have a couple from another day when it was dry. 


My wife is standing in the middle of the last picture for scale.








Dobie

Ron,

Neither of these foresters were involved in the recent timber cuttings.  The last cutting according to the forester who did the plot cruise was around 10 years ago and was mainly beech and ash.

We close in 2 weeks and we are unable to back out now even if we wanted to.   I still haven't completely walked the whole property but it seems the quality, to my eyes anyways, stays pretty consistent throughout.  I could probably take a thousand pictures like above with 18 - 22" maple, oak and cherry over the entire place.   Of course, if it's poor quality, it really doesn't matter.


Well we are having the forester that we are using doing a small cut getting rid of any diseased, poorly formed or poor quality trees along with a few of the mature trees after we close so I guess we should be able to gauge what we're getting ourselves into from that.

Ron Wenrich

Your wife gives a good perspective on tree size.  I'm not seeing poor quality due to form or excessive limbs.  If they took out beech and ash, they weren't high grading.  Seems like you have a decent amount of desirable species.  High grading would have left the beech.  Red oak and cherry in that area are generally of good quality.  Red oak prices have turned down in the past year.  White oak is prone to cat faces, which affects quality and would be hard to see in pictures.  If you're looking at a good deal of 18-22" timber, then you should be OK.  They say a picture is worth a thousand words, but it isn't the same as being there.

Keep us informed on how things turn out.



Never under estimate the power of stupid people in large groups.

Dobie

Thanks Ron.  Feeling better.  Also saw 3 buck tonight hunting at my home so the world is looking a lot better overall. 


Will keep you all posted on how things turn out with the timber sale. 



Really like this forum!!

Clark

One other thing to keep in mind is that some foresters have very broad prejudices and many foresters have very specific prejudices. Around here many foresters have a prejudice against basswood due to past markets (it's never been as good as oak or maple, never mind that we can't grow good maple and quality oak is limited to our best sites) despite the fact that it has nearly perfect form and grows very well. The best I have seen is one tree that had self-pruned to 64'! This is a very specific prejudice.

A few foresters around here don't see the value in growing hardwoods, ever. Unless it is aspen then you are good, so they say. This is a very broad prejudice that a few foresters have.

I'll echo what others have said, it's difficult to tell from the pictures but I don't see any cause for alarm. I get the impression at one of the foresters you talked to had a prejudice and you weren't able to pick up on it, which can be tough to do in a couple of hours.

Clark

SAF Certified Forester

Dobie

Thanks Clark.  That makes a lot of sense.


I talked to the forester I'm going to use and he told me that the timber is very high quality and he expects a good amount of the cherry to veneer.  He's sold a lot of timber in that area over the past 20 years so hopefully my worries are overblown.  He also told me timber in this area usually gets a premium because of it's quality.  We shall see.




Ron Scott

It appears that you have a professional forester who knows the area the local timber values. You should be able to grow some quality hardwoods by following his management recommendations. It appears that you are on the right track.
~Ron

SwampDonkey

I'd say you have lots of potential. Up where I'm from we are on the fringe of hardwood and we will never grow the quality of hardwood that would average out to the potential on that land down there. Veneer hardwood is like chasing white pine in an area prone to weevil and rust, might be a big tree, but most are full of defect.

I took my prism in the bush yesterday on my plantation ground, planted in 1996 and has a lot of natural fir and a few maple and ash mixed in. Not much popple (aspen). I consider where I walked with the prism to be the same stand type, ground the same to, flat land with subtle rises. But the basal area was a lot higher where there is more fir. In just the spruce dominant spot it is 12 m2/ha (50 ft2/ac and), with a lot of fir 20 m2/ha (87 ft2/ac). The trees are only 25-40 feet tall.  15-140 bf/acre because of the bigger fir. A big variance for sure. ;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)))

Dobie

Well we've been spending a lot of time up at the new property having a lot of fun walking around and getting better acclimated to it.  We did have an issue with someone trying to steal a ladder and shooting bench shortly after we closed.  Hopefully that isn't something we have to deal with all the time here.


Anyways, we have been up there with the forester and have a plan of attack.  We are going to do a timber sale on the southern half of the property concentrating on getting rid of poor quality trees and looking at spacing.  We will be taking out some of the mature hard and soft maple which is very hot in our area right now.  The Cherry and Oak get a pass unless they really need taken out.  Red Oak pricing is on the uptrend around here according to the forester which I know has been beaten down pretty badly from what I've read on this forum.  Cherry is terrible unless veneer which is holding steady and according to one of the forester's Amish bidders, "Cherry is a curse word".  lol, I guess that's pretty bad.


Here's some more recent pictures from a walk around.

Cherry


Hard Maples



Hard Maple



Red Oak



Cherry


Red Oak





Hard Maple









Ron Wenrich

I remember when red oak wasn't worth much.  When I started as a procurement forester in the early '70s I was told not to buy too much red oak.  Markets were terrible, and it never brought too much.  That all changed in the late '70s.  Then it turned out that you didn't want to buy any maple, as red oak was dominant in the market.  Many guys in the business don't remember this time and only know that red oak is valuable.  It is only a recent occurrence.

A number of years later, I talked to an owner of a large shop that made furniture panels.  They went through about 25 MMbf/yr, so they were a major player.  He said that specie demand roughly follows a 30 year cycle.  When ring porous woods (oaks, ash) are hot, ring diffuse woods (maples, birch, hickory) are not.  That cycle flips and demand for oaks will drop while the maples will go up.  Something to remember as a forester and landowner is that markets aren't static, and what is popular today doesn't mean it will be popular at harvest time. 

Cherry is a totally different marketplace.  I remember when cherry went through the roof.  Veneer was fetching $8/bf.  I talked to someone from the state that had their finger on what was going on.  Cherry is a highly exportable wood, so the market is dependent on foreign markets.  What happened during the cherry price spike was that Europe started to limit the imports of rainforest wood.  The theory is that you don't use the wood, then they won't cut the trees down.  England has a very healthy appetite for fine furniture and they used a lot of mahogany.  With the limits on it, they turned to the unlimited cherry.  Demand exceeded supply and the prices spiked.  When you look at today's market, you have to see that the dollar is higher than it was, so that makes cherry more expensive in those overseas markets.  That is probably the reason for the dip in demand.  You can add how the European economy is doing.

Market timing is a hard thing to maneuver.  I tend to disregard markets as a guide to what you are doing on the ground.  I want to grow the best quality trees for the site.  Some sites won't grow cherry, red oak or other high quality timber.  So, why try when pine may be a better option?  It doesn't seem that you're in that situation, as good quality hardwoods can be grown on your site.  It sounds like you are doing OK with the forester.  Getting rid of poor quality trees is always a good move.  You want to take good quality trees forward.   You don't want to kill your best milkers.

As far as "curse words" on a particular species, just imagine what your forest would look like if you turned someone loose in that type of a situation.  Those are the types of jobs where you have cut the best, and leave the rest. 
Never under estimate the power of stupid people in large groups.

Dobie

Ron,

Never thanked you for your considerate and thoughtful post although I've read it many times.




Since you fellas were so helpful, I thought I would share some information I don't normally share.

We have our first timber sale up and it's sounding better than expected.  Forester marked the timber on the southern half of the property.  He went easy on the timber and pretty much left alone the nicer sections except for a tree here or there for crown spacing.  Emphasis was placed on the poorest quality trees, trees with bad tops or trees that were mature and on the verge of going backwards in quality.  A total of 1055 trees were marked on the southern half(about 180 acres) and 745 were graded V-1.  Only 24 trees were graded #3.  In addition there were 218 pole timber trees(mostly ash/ black birch) and 82 cull trees.  Our maple markets here in Pa are hot which is great timing for this property with it's heavy hard/soft maple component.     783 of the trees marked were almost evenly divided by hard/soft maple.   Only 49 cherry and 74 red oak were marked so the majority were left.  Total footage came in at 322k International or 241k Doyle which represents about 1/6th of the total standing timber estimate from 2009.

Dobie

Very pleased with the prices we received on the bids.   If the volume holds up, we'll have more than enough timber to pay for the place with some breathing room to spare.    Sure glad I didn't listen to the people who made me nervous about this place and wanted to thank everyone here for their advice.   

enigmaT120

I'm glad it's working out for you, but you brought up another question I've been wondering about for some time.  I hear about people who buy a plot of forest land and sell the trees for enough to pay for the land and build a house.  Cool, but why would anybody sell land for less money than the trees are worth?
Ed Miller
Falls City, Or

SwampDonkey

Any experience I have seen in these parts, the land is clearcut to pay for it. No trees left. Or the land was already cut off and then sold for $300/acre or less or $8000+/acre if building lots. Either way, the woods get hit hard.

"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)))

Ron Wenrich

Common practice, especially with real estate agents is to ignore trees.  They have absolutely no concern for value.  They appraise real estate by looking at what similar properties sold for in a particular area. 

Many years ago, I did a management plan and timber appraisal for a client that had recently bought a nice piece of land.  The value of the timber was about 20% higher then he paid for the total.  I figured it would be a good selling point to go to realtors and point out that doing a timber appraisal on forested land would be warranted.  That particular realtor said he didn't care, as he sold the property and he got paid.  I never got a realtor to do a timber appraisal.  That hasn't changed.

You would think landowners would do the same when they sell property.  That don't seem to be too concerned about timber value when they sell trees, why would they worry about it when they sell the land?  You see the same thing on shows like Antique Roadshow where someone finds a really valuable item that they bought dirt cheap because the seller had no knowledge.  Same goes for trees.

Buyers are equally ignorant as they also won't spring for an appraisal, even though it is to their advantage from a tax and investment standpoint.  Buyer beware is always something they should be aware of.  The value of bare land should be established, and then you make a decision whether it's a good buy or not.  Not all land is created equal, and not all real estate is equally valued.

I fought that battle for many years.  I even went to banks that were putting money into these purchases, pointing out that they may be financing more than they think.  I couldn't crack the market, as the professionals were always smarter than me.  So, I walked away from that side of the industry.  I learned early on that the value of anything is what a willing buyer will pay a willing seller for any item - marked value doesn't matter.
Never under estimate the power of stupid people in large groups.

sandsawmill14

dobie we bought 106 acre of mostly timberland back about 10 yrs ago and the bank told us what we cut in the first year would not be taxable as we were repaying our investment so its something to think about or at least check into and see if its still that way the pic looks like pretty good mature timber to be but like was already said you cant judge a stand from a few pics  good luck :)
hudson 228, lucky knuckleboom,stihl 038 064 441 magnum

SwampDonkey

Up here that works if your a logger or farmer with a management plan being followed. Just buying land and cutting wood without a plan and that is not part of a business, doesn't have exemptions. That took a long time to even get that lenience. The tax man wanted tax on all wood sales. At one time woodlots were targets for senior care. The guy that had assets had to pay, while his neighbour got a free ride. Now it wouldn't bother me if I had no relatives to leave it to. But if I had family, why should they take the family woodlot and the neighbour pays nothing for his care? And they could go back ten years, so if you deeded the place over 5 years ago, too bad for your family.
"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)))

Dobie

Quote from: enigmaT120 on March 16, 2016, 03:58:46 PM
I'm glad it's working out for you, but you brought up another question I've been wondering about for some time.  I hear about people who buy a plot of forest land and sell the trees for enough to pay for the land and build a house.  Cool, but why would anybody sell land for less money than the trees are worth?


The timber appraisal was from 2009 and showed the timber value was 65% of our purchase price..  2009 is when timber markets crashed and the pricing in the appraisal reflected that.



Dobie

Quote from: Ron Wenrich on March 17, 2016, 06:21:33 AM
Common practice, especially with real estate agents is to ignore trees.  They have absolutely no concern for value.  They appraise real estate by looking at what similar properties sold for in a particular area. 

Many years ago, I did a management plan and timber appraisal for a client that had recently bought a nice piece of land.  The value of the timber was about 20% higher then he paid for the total.  I figured it would be a good selling point to go to realtors and point out that doing a timber appraisal on forested land would be warranted.  That particular realtor said he didn't care, as he sold the property and he got paid.  I never got a realtor to do a timber appraisal.  That hasn't changed.

You would think landowners would do the same when they sell property.  That don't seem to be too concerned about timber value when they sell trees, why would they worry about it when they sell the land?  You see the same thing on shows like Antique Roadshow where someone finds a really valuable item that they bought dirt cheap because the seller had no knowledge.  Same goes for trees.

Buyers are equally ignorant as they also won't spring for an appraisal, even though it is to their advantage from a tax and investment standpoint.  Buyer beware is always something they should be aware of.  The value of bare land should be established, and then you make a decision whether it's a good buy or not.  Not all land is created equal, and not all real estate is equally valued.

I fought that battle for many years.  I even went to banks that were putting money into these purchases, pointing out that they may be financing more than they think.  I couldn't crack the market, as the professionals were always smarter than me.  So, I walked away from that side of the industry.  I learned early on that the value of anything is what a willing buyer will pay a willing seller for any item - marked value doesn't matter.




I just scratch my head.   There are times to be frugal with your money and there are times when it is worth it to get professional advice. 


In my opinion, foresters are worth their weight in gold. 

Dobie

Swampdonkyey and sandsawmill,


We have learned the hard way to establish a cost basis for timber when buying it as an investment.   This is why we don't mind paying a good accountant $400 do to our taxes vs the $29.99 advertised special you see in malls with someone who has 2 weeks of tax preparation training.    Once you get hit with a $10,000 - $20,000 tax bill, that $400 accountant seems downright reasonable. 


We've also learned from a good accountant the benefits of a 1031 like kind exchange.  Good Lord that has saved us a ton of money in the past though it didn't come into play here.

Thank You Sponsors!