Author Topic: Buying / Owning Timberland  (Read 4768 times)

oddballstocks

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Re: Buying / Owning Timberland
« Reply #10 on: August 23, 2018, 08:27:32 PM »
...Where are you?

Nate,

Naturally Jan can reply for himself. But the TLD in Jan's email adress in his signature is ".ch". Jan's LinkedIn profile says Czech Republic.

Possibly Switzerland? I believe that's .ch.

Anyways, I have no idea on Europe.  My impression of Europe is that there isn't much empty land like there is in North America unless you go fairly far east where the population starts to spread out.  Not to say there aren't rural areas in W Europe, but there is a LOT of the US and Canada that's just empty.  Where I was looking it has a population density of 26 per square mile, there are a lot of zip codes where it's half that or less.  And when you consider the skewedness from cities it's more stark.

In Europe I'd look at maybe buying land in Poland, Ukraine, maybe Russia?  Sounds crazy, but my guess is you could grab a lot of land in Siberia fairly cheap.  Logistics of getting the wood out might be tough.

For my math I needed an acre at $500/acre to $1k per acre.  Anything over $1k/acre wasn't worth it, unless it's hardwoods planted from scratch.
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JanSvenda

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Re: Buying / Owning Timberland
« Reply #11 on: August 24, 2018, 12:36:52 AM »
Been into this off and on for ~10 years.  Bought an acre as a test for $300. 

I don't know where you're at, but each area grows different types of wood.  If you're in the NE then you can buy land and do hardwoods, the most valuable wood.

For your area look at the proceeds from a cut at market rates, then figure you might be able to cut 25-30% of an area every few years, and back into what you need to pay for the land to get an acceptable yield.  Like any investment the price you pay for the land determines your return.

If you're buying timberland as-in get the forestry officer to do a cruise.  Most counties/states do this for free.  They'll estimate the value. 


Hey Nate,

thanks for the detailed reply. Did you read anything before you started?


The hardest part is finding the land at a reasonable price.  Your best bet is going to be visiting county courthouses and looking for land in tax sales.  Next to that going door to door and making cash offers.  I know someone who does this for gas rights, it's grueling, but it works.  Timber is no different.

I've found plots I like, written letters, made offers, like most sales 90% of the time you'll come up empty.


Sure I just started to look at online listings to get a sense of the stuff, but the more hands-on the better I suppose.


Last year I looked into building hunting camps.  Basic math was buy 10 acres for $18k or so (1.8k/acre) and then subdivide into three plots 3.33 acres apiece at the county level.  Pay $2k for a bulldozer to clear a road, pay $1k for gravel, pay $3k for electric service, buy three Amish made cabins at $8k apiece.  You're in for $48k or so, you can sell them in an urban area for $50k cash.  So a profit of roughly $100k on that $48k investment.

I sourced people for all of these things, they're a pretty good estimate.  Electric varies depending on your land and how far the furthest pole is now.  Between all of this figure it might take 6-8mo to do and complete, then another 1-2mo to finish?  It closely approximates a full time job.

Make sure you have a solid truck, all the tools you'd need.  The more I went down this route the more I realized you need a warehouse to store things, and suddenly this little "I'll buy land..." idea turns into a "I have a full cabin development company".

Get the land right and things will fall into place.



Nice way of redeveloping. What was your biggest challenge in this plan? Also have you encountered any natural problems (damage by animals or certain plans) with your timberland? Was theft any issue at all?

Also, have you thought about leveraging the asset (get a loan after purchase with collateral being the asset)?


Where are you?

I live in the Czech Republic in Europe (i just use swiss hosted email), so I would be buying around the area instead of the US. I would be up for buying somewhere further east, but only after the first purchase.
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Jurgis

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Re: Buying / Owning Timberland
« Reply #12 on: August 24, 2018, 01:21:12 AM »
In Europe I'd look at maybe buying land in Poland, Ukraine, maybe Russia?  Sounds crazy, but my guess is you could grab a lot of land in Siberia fairly cheap.  Logistics of getting the wood out might be tough.

Theoretically I'd guess Norway, Sweden, Finland might be timber places if you don't go eastward. But I have no clue about prices and profitability.
Anything eastward will have a large corruption issue, especially for non-locals.
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Cigarbutt

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Re: Buying / Owning Timberland
« Reply #13 on: August 24, 2018, 06:19:58 AM »
I live in the Czech Republic in Europe (i just use swiss hosted email), so I would be buying around the area instead of the US. I would be up for buying somewhere further east, but only after the first purchase.

Hi Jan,

The following is based on:
-I've looked at this investment possibility (in Canada) in the past.
-Some time ago, I helped one of my children with a school-related project that had to do with the evolving ownership profile of forest land in Europe and some potentially useful references are listed below.

There is a lot to like about timberland investment. It is long term in nature and truly a real asset. Jeremy Grantham (of GMO fame) has written about it and has been involved. He has described the reliable very long term return of the asset with inflation protection. I remember reading useful stuff from James Grant in the Interest Rate Observer but can't find the references now. I would say that the two critical parts are 1-price paid for property and 2-actual management of the property. It seems to me that this could become a full time job (with both feet on the ground) as you ramp up unless you can hire a competent manager. Pretty much like real estate as the market has a local flavor and personal involvement can make a huge difference on the bottom line, especially in the early phase.

The CAIA has produced primers which could be of interest to you.

In Europe, the best opportunities seem to be in Sweden and the Baltic States.

I don't know the specifics about the "economics" of the Czech forestry industry as an individual investor/manager and I've never seen the trees in person but "your" forests appear to be beautiful.
https://sites.ualberta.ca/~pcomeau/FOR_456/czechforests1.pdf
http://eagri.cz/public/web/file/353116/Zprava_o_stavu_lesa_2013_ENG.pdf

Good luck.

oddballstocks

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Re: Buying / Owning Timberland
« Reply #14 on: August 24, 2018, 06:35:43 AM »
Jan,

Ah, Czech, cool.

No, I didn't read anything.  There isn't much to read.  I love to read, but the unfortunate truth is that reading is about 15% of the knowledge, and the other 85% is obtained by doing, or talking to practitioners.  There are dense trade books, but they only make sense if you're a practitioner. 

The Grants piece CigarButt mentioned is awesome.  Someone scanned it for me years ago, I can't find it either.


Here's why I went the redevelopment route.  You need 30 years for this to work.  I'm 37, so I'd be 67 when I'd get my money out.  For 30 years you're working one plot of land, if something, anything happens you could lose it all.  If something happens in year five, no big deal, you're bumped back.  But what about in year 28?  A tornado rolls through and clears your land, you sunk all that time in with no gain.

That's why you diversify into different plots.  But then suddenly you just started a timber company.

I love the idea of it, love the woods, love camping, backpacking, hiking etc. Ultimately buying timber isn't the best way to merge those interests, but buying land and developing it could be.
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Saluki

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Re: Buying / Owning Timberland
« Reply #15 on: August 26, 2018, 07:26:13 PM »
Check BiggerPockets.com  There's a poster on there (I forget his name, but he's older and very active on the boards) who used to buy timbeland in the northwest and sell the trees.
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JanSvenda

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Re: Buying / Owning Timberland
« Reply #16 on: September 06, 2018, 12:55:13 AM »
First of all, I would like to thank everyone for their input much appreciated.

Jan,

Here's why I went the redevelopment route.  You need 30 years for this to work.  I'm 37, so I'd be 67 when I'd get my money out.  For 30 years you're working one plot of land, if something, anything happens you could lose it all.  If something happens in year five, no big deal, you're bumped back.  But what about in year 28?  A tornado rolls through and clears your land, you sunk all that time in with no gain.

That's why you diversify into different plots.  But then suddenly you just started a timber company.


Yeah, redeveloping makes more sense. I will see what I can do here in Europe where regulation is going to be a challenge to overcome.


Hi Jan,

I don't know the specifics about the "economics" of the Czech forestry industry as an individual investor/manager and I've never seen the trees in person but "your" forests appear to be beautiful.
https://sites.ualberta.ca/~pcomeau/FOR_456/czechforests1.pdf
http://eagri.cz/public/web/file/353116/Zprava_o_stavu_lesa_2013_ENG.pdf

Good luck.


Thanks for the links Cigarbutt and the other suggestions, they are useful. From a quick scan, Baltic looks cheap, Scandi looks good as well compared to Czech prices.

Anyway, I might update this thread once I will actually move on and buy smth.
Focused on Building Walker's Manual 2.0 - https://jansvenda.com/otc/ Feel free to email me at overthecounter@protonmail.ch

My favorite investment? Buying a house for the price of the bricks.

Spekulatius

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Re: Buying / Owning Timberland
« Reply #17 on: September 06, 2018, 04:05:47 AM »
i donít know about the Czech Republik lumber land prices, but it seems that Forst Land in Getmany trades at prices that canít be justified by expected cash flows from lumber harvesting. They seem to be more trophy properties for ďfunĒ. Most of the land (80%+) where I used to live was owned by towns and cities and scarcity of private land may increase its value. Redeveloping forest land is almost impossible, since it is almost considered sacred in Germany. Redevelopment in residential or commercial is mostly from farm or meadowlands.
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Jurgis

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Re: Buying / Owning Timberland
« Reply #18 on: September 06, 2018, 08:56:58 AM »
I'm not sure this is useful, but anyway: http://dzukugirios.lt/dzuku-giriosen (this is supposed to be in English, but it's only half in English  ::) )

These guys advertise on bilboards in Lithuania that they buy forest.

No idea who they are/etc.

As I said before IMO the corruption/grease is going to be significant in the East.
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