Northwest Timberland

[Mudfarmer]

Found out an interesting side effect of the bubble-burst real estate market here in SW Washington state a couple of weeks ago: land is down to treefarm prices for the first time in years. I just purchased 38 acres of logged off replanted timberland a few miles north of Elma for $95,000.:thumbsup: The property first went on the market 2 years ago for $250,000:confused2:

Nice western slope with type 1 and 2 soils and four or five year old douglas fir in the ground. The place is 1000 ft deep and 1/2 mile long on the county road. Adding this to my previously vast 60 acres of tree farm (not adjacent, though) I think almost makes me (or my great grandkids maybe) a timber baron.

Mf

 

[Mounted Madness]

Found out an interesting side effect of the bubble-burst real estate market here in SW Washington state a couple of ...
... Adding this to my previously vast 60 acres of tree farm (not adjacent, though) I think almost makes me (or my great grandkids maybe) a timber baron.

Mf

Congratulations on the purchase. IMHO, in todays world, anyone investing in renewable resources, let alone actually having the land on which renewables are sustained, will be rich. Good luck and congrats once again. :thumbsup:

 

[keegs]

Congratulations. :thumbsup:

 

[smstonypoint]

MF,

Congratulations!

Just curious on two points.

1. How long before you realize income from pulp/timber sales? I have a loblolly pine plantation. In my neck of the woods (Piedmont of NC), the first thinning usually occurs at 16+ years (for pulp) and subsequent thinnings occur at 5+ year intervals.

2. Would you mind sharing what you will be paying in the way of property taxes? My farm is covered by an approved forestry management plan, so I pay just over $1/acre/year.



Steve

 

[clemsonfor]

Found out an interesting side effect of the bubble-burst real estate market here in SW Washington state a couple of weeks ago: land is down to treefarm prices for the first time in years. I just purchased 38 acres of logged off replanted timberland a few miles north of Elma for $95,000.:thumbsup: The property first went on the market 2 years ago for $250,000:confused2:

Nice western slope with type 1 and 2 soils and four or five year old douglas fir in the ground. The place is 1000 ft deep and 1/2 mile long on the county road. Adding this to my previously vast 60 acres of tree farm (not adjacent, though) I think almost makes me (or my great grandkids maybe) a timber baron.

Mf

Im an eastern forester and know those firs at least i think have a longer life cycle but here you would have not really done to well. Timber land that has been cutover in that tract size can still be found for +-$1,000/acre. Then again that 38 acres (if around here) you own will have a payout in 40 years, at todays dollars (ignoring thinning revenue) of about $2500-$3000/acre hardly making you a rich man after figuring it took you 40 years to get there. I guess prices out west are vastly different for timber. But im an ignorant southern pine forester. :laughing:

 

[Larry Caldwell]

All the mills in the PNW have converted to short rotation small logs, so you actually get docked for any log over about 26". They like 6" on the scale end. He's looking at about a 40 year harvest, so his kids and grandkids will collect the money. There will be one commercial thinning at about 25 years.

 

[clemsonfor]

I mean around here you first thin like Stony point said around 16 give or take a yr. But that might get you $500/acre if you do it right. Then you can thin about 25 and see 1000-1500 depending on how agressive you go and then a final harvest at like 45. But If your prices are similar to ours it will never pay off at that current price per acre. Remember he paid $90+K for this place. If he put that in gold or the stock market you will see a better return in the short run. Im just saying you dont get rich in timber with no less than several thousand acres at least around here.

 

[Mudfarmer]

Maybe I forgot to mention zoning is minimum five acre lots and utilitys are all along the frontage road. The forestry is the hedge. We are talking Pacific Northwest here, the land hasn't been this cheap since the '80s. Precommercial thin at 15 years, commercial thin at twenty five to thirty and harvest forty to fifty. Or sell it sooner. Only cost five times as much as my tractor. Taxes as managed forestland less than $100 per year.
Mf

 

[Pilot]

That ought to be a very productive area.

And land prices in the northwest are phenomenal. I can believe the asking price was $250K a few years back.

In our area, closer to a major metro area, if you could find 38 acres of timberland for sale, you sure wouldn't get it for any $95K. We have been looking for several years for 2-5 acres in a rural area near Portland and $200K is about what it would cost for trashy land. Sure, not comparable to what Mudfarmer bought, but just to give you an idea of the insane prices out here.

In '91 we stole a 10 acre parcel, 18 miles from the edge of the metro area for $47,500. Divorce case, they had to sell to settle the divorce and they hated each other enough to sell below market and get things over with. I took out $17K in timber about 6 years ago.

 

[clemsonfor]

That ought to be a very productive area.

And land prices in the northwest are phenomenal. I can believe the asking price was $250K a few years back.

In our area, closer to a major metro area, if you could find 38 acres of timberland for sale, you sure wouldn't get it for any $95K. We have been looking for several years for 2-5 acres in a rural area near Portland and $200K is about what it would cost for trashy land. Sure, not comparable to what Mudfarmer bought, but just to give you an idea of the insane prices out here.

In '91 we stole a 10 acre parcel, 18 miles from the edge of the metro area for $47,500. Divorce case, they had to sell to settle the divorce and they hated each other enough to sell below market and get things over with. I took out $17K in timber about 6 years ago.

I assumed we were talking a timber tract not a timbered tract near a "metro area". As a forester you will advise a buyer or yourself to first look at site productivity if interested in growth and $$ and then find a tract far enough from the city or metro area so there is no imediate developement potential and crazy high county taxes on it. Im not saying not to "steal" a tract under market value with timber on it, that you can grow 15 years clearcut then sell for development and buy 3x the land farther out thats a perfect case to be in. But when most look for a timber investment tract they are not looking "close to metro areas" for the reason you state, price. You have to carry that purchase price with interest for all those years to consider a profit.

Another thought, in figuring bare land value (BLV) or the price you can afford to pay for land and still make money growing timber on it you figue out the present value for all future rotations if this will be one fine if it will be infinity there is an equation for that. I work for a federal entity and my responsibility is selling timber and collecting mone, not making money for a landowner and running scenarios all the time, that said i cant remember all my equations to the T from college. Anyway i do remember that all rotations after the first one combined are only worth something like a $100/acre at most considering a modest interest rate, reason being the # of years that that money is discounted to present day. think your 45 year age harvest you have 40 yrs to the first one then 45 more years to the second so thats 85 yrs of discounting on that second final harvest at say 6% which is a conservative next best investment rate of return.

At this point i will bow out and let stonypoint coment as i beleive he is an econ professor, for any further comment.