I'm contemplating investing in timber land in New England

[dave1949]

Im not trying to pick an argument here...but this is a really strange quote?? I very odd idea about who foresters and state licensing programs are about.

Yes you are correct I do not like to see over mature trees sit out there and just blow down or rot over. But then again me nor every other forester do not think that we have to cut every single tree on the landscape either. Letting nature run its course on a tract is fine. Especially like I said if the person paid me to write a plan with a do nothing attitude/plan. We were taught in school that you "do what the landowner wants" after all your working for the landowner. NOw if you work for a government agency they are the landowner, if you work for private folks they are the landowner, if they request to let it be, then you let it be. I of course would lay out a normal or even delayed harvest plan as well as go over tree growth cycle and times as well as explain stand growth as a whole actually will go down after a period of time as your mortality factor out weighs the growth component of the stand, but as a professional its not my place to "convince someone to cut or harvest their trees, on the terms of keeping my license". I work for them if they choose to let It be than that's what I do. It can even entail me monitoring it for them once a year for trespass etc for a fee?

We don't pull a lawyers license for representing a rapist or child molester do we, and if proven guilty that is way worse than letting some trees rot.

If a landowner never intends to cut trees, they don't have much use for a forester. As I noted, there are other tax reduction "Current Use" programs in Maine that require no management plan or forester involvement. "Open Space" and "Forever Wild" are examples.

The Maine Tree Growth program is intended to promote the wood industry in Maine by making it easier for woodlot owners to bear the tax burdens, which in theory, makes it less likely they will sell off lots and subdivide their land. The wood industry is a major component of Maine's economy, it makes sense to try and protect that industry.

Why would a forester, whose income and vocation is tied to that industry, want to look the other way or help a landowner subvert the intent of the program? They would be doing a landowner a service, and saving them money, by pointing out the correct programs rather than misusing the wrong one.

When land is sold off to developers or subdivided into small parcels, it is effectively "lost" to the wood industry. That is what the program is trying to prevent by taxing woodlots by the actual current use (tree growing) value, not at their highest potential use value. The more valuable (and higher taxed) the land is, the more the Tree Growth program will reduce the tax burden.

A good woodlot management plan will of course leave some wolfs and snags here and there, the plan can and should be written to keep the forest ecosystem as healthy as possible while taking the wood from it. That is the one of values a good forester provides.

If land enrolled in the Tree Growth program isn't serving the intent--wood production--there can be trouble. The landowner can be penalized with back taxes and kicked out of the program. When they are faced with that penalty, their foresters name is going to come to mind. If a forester goes around writing bogus management plans, that is simply dishonest and they should lose their license.

 

[clemsonfor]

OK i just realized that this program is to "promote" wood growth and offset some taxes to then be collected at harvest time. So yes useing this to get around taxes and nver cut wood is a little shady, and as a pro you dont want to be in on that kind of stuff. I misstook the program for a farm type claim on your taxes where you can claim "tree farming or silvicultural" practices and then reduce your property tax as well as write of mgt money spent on the land.

The reason why i kept saying a forester is to be involved if you were to do nothing is because i was thinking some would get into said program for tax shelter, but according to you, they would need a licensed forester to draft a mgt plan.


But it sounds like your tax system in the state is way different than ours here in my state?? Here if you have 5-10 acres or something, as long as its not for some other use or in a city or something you just go to your county (at least in the county of my family farm) and say that you want the land under farm exemption, they dont even ask why, its really pointless because siliculture is a recognized farming activity by the IRS as well as my state so anyone can claim that one. Doing so drops your taxes to the dollar or two per acre range, and takes it out of residential taxes or commericial or whatever it would normally fall under.

 

[sixdogs]

How long ago was this? The Tree Growth program is diddled with by the legislature every session. Plus some towns, where you submit the application, will administer the program differently than others--whether they are following the rules or not. I can only tell you what the current rules are.

Most recently was 12 years back and had a history going back another 25 years. Area was to the north of Bangor maybe 40 miles and to the west by about the same distance. My broad experience with Tree Growth around there was the property tax reduction that came about for just letting the wood grow. It had to be a parcel larger than a certain amount--I think 10 acres--and if you sold to someone that did not plan to continue the tree Growth aspect of things they had to pay the back tax discount as a "recapture". The program was commonly referred to as the "Tree Growth Tax" program because all it seemed to do was give the tax break and everyone that could would take advantage of it. I dealt with it in a lot of ways and had foresters as friends that surveyed for me and never had any plan nor was one suggested. Maybe it was a regional thing?

As well, I don't recall any purpose to prevent subdivision because you can't--or couldn't --divide into smaller than 40 acre parcels without getting the state's permission and involvement.

Now, things could well have changed--and probably have--so I do need to defer to you--dave1949. You are likely far more clued it on this and live in an area of the state where Tree Growth is daily conversation.

As much as as I dearly love the Pine Tree State and my time spent there, some of it is fading away. It was quite the place in the 1970's and probably still is. Who knows, maybe part of the year spent there might be in my future.

 

[WayneB]

Your past experience has swayed your views. Different forests require different mgt techniques. Clear cutting at some point is the only option. For one you will get a better stumpage rate on a clearcut vs several thinnings over time. The reason is that its more efficient to cut it all at once. That said if you have a bunch of weed or low value species that are limiting growth on crop trees you will want to do a marked thinning. Without adequate regeneration you can only do so many thinnings before you need to clearcut. Also if the species diversity is more swayed to low value trees and or poor formed target species you will cut your losses and restart over today so that your no longer wasting time on low value trees. Also remember that trees are sustainable, cutting and oak or maple or cherry will not kill it, they resprout from the stump and eventually will develop a tree, if your labor intensive you can cut the suckers off and allow the best coppice sprout to live and thrive. This is why you have a forester who knows the area, I don't do hardwoods, I am a southern pine forester.

That said there still can be mismanagement.

Also I don't know your state but in SC if some one commits a "timber trespass" when taken to court the restitution is 5x stumpage value. There is a way to determine what was taken from the surrounding timber and doing what is called a stump cruise.



Okay maybe I got carried away, and a bit over board when it came to the misuse of the forest near my property. I actually got a lawyer involved, but the person who hired the loggers to come in and do the clear cutting was from out of state and that would mean a hardship for all involved. It was not an easy case and if I wanted to spend the money to take t to court who knows what would have happened. He purchased the land to get the wood off from it and then sell the land. He sold the land before he did the cutting and the new potential owners back out of the deal after the cutting. I assume they were a bit upset with his actions. You are maybe right about the economics of clear cutting, but many of the Forrest areas around here are hardwood with a minor amount of lumber quality pine.

I believe in selective cutting and improvement of the Forrest, but I am somewhat against any clear cutting. Our state has been cut across I believe four times. Once we had many areas of high standing softwoods that are all gone now.

The (The Pine Tree Riot - Weare, NH, April 1772)

nhfr

The king of England took them first cutting and put a band on logging any pine trees over 18 inches in diameter. The Pine Tree Riot in Southern New Hampshire was much larger than the Boston Tea Party, but went unnoticed by most of the world

 

[newbury]

Your point is well taken but it can be done because we did it. :laughing::laughing::laughing: But you have to move fast and you have to have a prepared for some games. The first piece of land we wanted to buy had been clear cut and put on the market. I don't know why they put the place on the market because the subdivided it and were going to put the lots up for sale. We wanted to entire parcel but they would not sell. :confused3: Another parcel was owned by two guys who were were playing the Buy Land with Timber, Clear Cut Timber, Sell Land game. <snip>
Dan

Mimics my situation.

THE GAMES

The first place we decided on and told the realtor we wanted to buy was sold to a local realtor at about $20K LESS than we were going to pay in a shady swindle.

The second place we put down the $3K deposit and the b&*(^% who were selling insisted on a clause that the sale had to be finished by a certain date. AND THEN NEVER MAILED BACK PAPERWORK, another swindle.

BE PREPARED TO ACT FAST

The place I'm sitting at now I found online - one short ad with wrong description during the middle of the week. We were in DC. It's in Mississippi. I called the realtor, checked the imagery (Bing maps, Google) and drove down the next day (14hr drive), saw it and signed. It REALLY helped that SWMBO is from the area because the Realtor wasn't that into selling it. He had the listing for months, didn't list it in the MLS, didn't put up any signs out front, listed it as 2.5 acres when it had 3.5 acres, didn't have the owner clean up at all. He also flips houses.
Part of the story here:

http://www.tractorbynet.com/forums/projects/212437-rough-value-workshops-barns-ne.html#post2429342

Then I got the 66+ acres around it for about $1.1K/acre.

It took about 2 years of browsing, 6 months of hard shopping but we got a lot more than we thought we would get for our $$.

We (I) had set a price ceiling of $300K for a house and at least 3 acres, so most realtors started by showing us $350K homes with 2 acres. This was in 2010 and early 2011. We ended up with a suitable house, 5,500 square feet of shops and 70 acres for about $250K.

So you need to have ALL your finances in order, loans lined up etc. Unless you can pay cash. And be ready to act fast. And find someone in the area that you looking in to translate "outsider" to "neighbor" to get around the inside scams being run.

I'm sure if the realtor we bought from hadn't gone to the same small town school as my wife he wouldn't have closed the deal.

 

[dave1949]

I haven't looked too much into VT's program but it seamed to me that it's more about money. The state reduces your property taxes but gain on the sale of the timber through taxes. There's plenty of land around here that's ripe for logging yet the owners are just sitting on it for various reasons. It looks to be a way to force owners to farm the land or harvest the wood. To me a good program would be one that keeps the land open for hunters and other non vehicle recreation. I started looking into putting my land into the program but the taxes are not that great. If I owned 100s of acres it would be very different.

Same with me. I would maybe put 60 acres into the program. The hardwood tree value rate in my county is $220 per acre, and I think those acres at the normal rate are around $450-$500 per acre. My savings would be around $250 per acre in valuation. So, $250 X 60 acres = $15,000 in reduced valuation. Our tax rate is $14.90 per thousand. 15 (thousands) x $14.90 = $223.50 in tax savings per year.

It would take a long time to break even on the management plan costs, plus the encumbrance on the land use. It just isn't worth it for small, low-value parcels. Now, if I had 60 acres on the coast that sells for big bucks, that would be different.

I do think the best long-term way to keep land open to hunting and outdoor recreation is to keep it in forest lands. Those timber harvests do wonders for the deer and moose populations due to the new growth that follows. It's good habitat for things like grouse too. Of course, it is not good for some wildlife that thrives in mature forests, but done in moderation it is the best chance hunters, etc. are going to get.

 

[dmccarty]

It can be complicated here. The mapping required with the application has to show several things. Wetlands, stream banks or other areas not able to be harvested, the type of wood growing: conifers, hardwoods, or mixed growth. Roads and access points.

I have a good idea of where those things are on my land, I don't have the GPS and mapping tools to transfer them to paper. It would be very difficult, but not impossible to get accurate measurements by older methods. It would be very time consuming. I not sure how accurately I could determine the harvest-ability of some areas.

The tax value of the land is based on the type of wood, conifer, hardwood, mixed. The forest service establishes a value per acre, for each of the 16 Maine counties, for each of those classifications. That is what your property tax bill is then based upon if the land is enrolled in Tree Growth.

I printed off a map from the county GIS office and drew in the different stands of trees. I did not use GPS but I could get real close because of the GIS map but I don't think the county was looking for GPS accuracy. If they did, I could have printed off the aerial photos which show the property lines and used it as a reference to for the drawing on the GIS map. It would be danged close.

That said, I think the real value of the forester comes from things like knowing what mills are looking for and at what price. Which logger has the right equipment for the job. Which logger should you never hire. Judging soil and moisture characteristics to determine the best species to plant or promote. Knowing how a sawlog will grade out by the scaler at a mill, how to get the most value out of a tree when it is cut to length. When is the optimal time to harvest, thin, shelter cut, etc. Those are all things I am definitely clueless about, and I am not going to become an expert by doing it once every five or ten years.

Agreed. A forester for selling is good money well spent. I know some very smart and intelligent people who lost a lot of money selling timber. They simply did not know the value of what they were selling. A forester would have made them far more money than they received AND the forester would/should be protecting the land owner interest.

Later,
Dan

 

[dmccarty]

From the original post I got the impression you might be open to other ideas. Some of the responders seem familiar with the variables involved with timber harvesting. My sense of it is, if you have to finance the land purchase and any capital investment you'll need for the harvesting it will be difficult to break even let alone make a profit.
...

Yes and no. It depends on the price of the property, the timber market, and the trees.

I can think of at least two land sellers who bought the land, timbered the trees, and then sold the land. The money was in the trees and the land value was minimal in comparison. To a certain extant, we did the same thing. We bought the land, sold some of the timber, and we have sold some land. In hindsight, I would not have sold some of the land to a "partner" because the timber sale reduced our land loan so much. If we had kept the land instead of involving a partner, we would not have neighbor issues.

There are plenty of parcels that I know about that are being actively managed for timber and are providing a stream of income. Some of these parcels have been thinned over that last couple of years which provide a bit of money. Course the land sat for 10-15 year without any income. Some of the thinning was for 15ish year old trees while another was for 50ish year old trees for saw logs. I don't think they have put much money into the land and trees except for replanting which is not that expensive if you do it yourself.

The trick, as in all investments, is to buy low. This is where it takes some work on the buyers part. In our case, the seller was out of state and the land was part of an estate. I don't think they knew the value of what they were selling and they were using a local selling agent. We certainly bought low and the timber value was roughly 2/3s the value of the property. The county back then was doing tax evaluations every seven years. We bought at the end of the time period and when the revaluations were done our land price went up by something like 250-300 percent! :shocked:

This property did not just fall in our lap. We spent almost every weekend for at least three years looking for land. When the property we bought went on the market we knew we had to move fast and we were on the parcel the next day as the sun rose over the trees. You moved fast or you lost back then. I was spending some time in the court house looking at parcels of a given size, in a certain area, and owned by people out of state. I was going to send them letters asking if they wanted to sell because we simply were not finding what we wanted. The place we bought is danged near perfect for what we wanted and we got a great price but we worked hard to get it too. When we first looked at the parcel the ONLY way we could afford the place WAS to log some of the timber to help pay off the land mortgage. The value of the land was almost twice as much as the house we were living. To be fair, I bought that house so we COULD have the money to buy land, but the land was cost was FAR more than I thought we could afford. Since we would have to log, and log quickly after buying, I had to learn about the timber business ASAP. I knew NOTHING about the timber business. We took some BIG risks.

Risks that most people would not take on such as a fight with a local inspector. We won the fight but it was a risk. Big profits usually don't come from little risk but from big risk. I knew we were right, I had two professional opinions, and I was not going to let an ignorant and almost certainly corrupt official bull scat us from the contract. Frankly, most people would have pulled the plug and run. We stood firm and won.

We got a good deal but we worked long and hard to get to that parcel. We then took on quite a bit of risk buying the land, fighting the inspector, and estimating how much money we MIGHT make if we timbered.

Later,
Dan

 

[dave1949]

I printed off a map from the county GIS office and drew in the different stands of trees. I did not use GPS but I could get real close because of the GIS map but I don't think the county was looking for GPS accuracy. If they did, I could have printed off the aerial photos which show the property lines and used it as a reference to for the drawing on the GIS map. It would be danged close.



Agreed. A forester for selling is good money well spent. I know some very smart and intelligent people who lost a lot of money selling timber. They simply did not know the value of what they were selling. A forester would have made them far more money than they received AND the forester would/should be protecting the land owner interest.

Later,
Dan

I wish we had GIS here, the town is working on it. We are a bit behind the technology curve here. Our counties are less involved in that sort of stuff than the individual towns.

If GIS is available, or your own land survey in digital, using the "track" function on a GPS unit with upload capability is supposed to work pretty good. Just walk around the area you want to map with tracking turned on, upload that and add it to the digital map. That's my understanding, maybe someday I will be able to do that. I would have to upgrade from my ancient Garmin GPS III unit.

I am tempted to ask the survey company that did ours if they can provide my survey in digital form. I would have to get the software for the PC, etc.

 

[clemsonfor]

GIS software is thousands i think? Its very expensive. Arc view basically has a monopoly and is extremly pricy for a small business let alone a landowner just wanting to map his place.