Author Topic: Buying / Owning Timberland  (Read 4767 times)

BG2008

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Re: Buying / Owning Timberland
« Reply #20 on: October 09, 2018, 09:53:41 PM »
Jan,

Is your approach and are your considerations at this stage here strictly rational, from an investment angle? - Please do not consider the question here asked as sceptical or negative in any way, because it's not meant that way. There can actually be other incentives and motives for doing such an investment, which is a personal matter.

Yeah, I view this as an investment (long-term appreciation & diversification). I am not a huge fan of gold (physical).

For people who are fans of gold, why not just own some real estate and put some 30 year mortgage on it.  Not a house that you live in, but a decent property that you can rent out to someone else.   Utilize a barbell approach and buy some guns as hedges.  I mean, if sh$t really hits the fan, wouldn't you want to own guns than gold?


Spekulatius

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Re: Buying / Owning Timberland
« Reply #21 on: October 10, 2018, 03:40:18 PM »
Jan,

Is your approach and are your considerations at this stage here strictly rational, from an investment angle? - Please do not consider the question here asked as sceptical or negative in any way, because it's not meant that way. There can actually be other incentives and motives for doing such an investment, which is a personal matter.

Yeah, I view this as an investment (long-term appreciation & diversification). I am not a huge fan of gold (physical).

For people who are fans of gold, why not just own some real estate and put some 30 year mortgage on it.  Not a house that you live in, but a decent property that you can rent out to someone else.   Utilize a barbell approach and buy some guns as hedges.  I mean, if sh$t really hits the fan, wouldn't you want to own guns than gold?

Agreed. A House with a 30 year mortgage had a nice hedge against rising interest rates build in. if interest rise, the value of thr house may go down (higher cap rate), but if mostly financed with any 30 year mortgage, it wouldn’t matter, since the cost to carry would remain the same or in a market to market world, the value of the mortgage  would decline, possibly faster then the value of the house, because the house would benefit from higher inflation ( via Rent increases presumably).

If interest go down, one can refinance.

What would worry me about trees is if wood is even a construction material any more 50 years from now? If not, wood prices may be much much lower.
« Last Edit: October 10, 2018, 03:42:06 PM by Spekulatius »
To be a realist, one has to believe in miracles.

rb

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Re: Buying / Owning Timberland
« Reply #22 on: October 10, 2018, 06:04:51 PM »
What would worry me about trees is if wood is even a construction material any more 50 years from now? If not, wood prices may be much much lower.

What would you build with?

Cigarbutt

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Re: Buying / Owning Timberland
« Reply #23 on: October 10, 2018, 06:21:14 PM »
Jan,

Is your approach and are your considerations at this stage here strictly rational, from an investment angle? - Please do not consider the question here asked as sceptical or negative in any way, because it's not meant that way. There can actually be other incentives and motives for doing such an investment, which is a personal matter.

Yeah, I view this as an investment (long-term appreciation & diversification). I am not a huge fan of gold (physical).
For people who are fans of gold, why not just own some real estate and put some 30 year mortgage on it.  Not a house that you live in, but a decent property that you can rent out to someone else.   Utilize a barbell approach and buy some guns as hedges.  I mean, if sh$t really hits the fan, wouldn't you want to own guns than gold?
If you're like Kyle Bass, you want guns and gold.
https://www.theamericanconservative.com/dreher/get-guns-judgment-day-coming/
I held physical gold from 2003 to 2008. I put that investment in the good outcome/poor process file. Will never do it again.

The idea of long term investmnent in income producing real estate makes sense.

But what if 1-the sellers around you expect further price appreciation away from fundamentals (ie price to rent), 2-the price paid incorporates a view that interest rates will continue to stay low in a booming economy and 3-you need to reset the mortgage rate every 5 years, what is the reasonable investor to do?

Doesn't a barbell approach mean that one not only survives but also thrives?

DTEJD1997

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Re: Buying / Owning Timberland
« Reply #24 on: October 10, 2018, 09:03:22 PM »
Jan,

Is your approach and are your considerations at this stage here strictly rational, from an investment angle? - Please do not consider the question here asked as sceptical or negative in any way, because it's not meant that way. There can actually be other incentives and motives for doing such an investment, which is a personal matter.
I've often thought about this and discussed it with many people...

What so many people don't get, and frequently argue about is that you can do everything, OR more precisely, you are NOT limited to one thing.  You can own a tremendous amount of stock, real estate, business interests, etc...but you can also own a bit of precious metal. 

I have heard it said that "in order to own gold, you must also own lead.  For without lead, you can not keep gold". 

Real estate can be great...but it is not anonymous, it is not mobile, it is not concealable, it is not liquid.

I am of very limited means...but I've still got a little bit of gold.

I think it would be incredibly foolish NOT to have a few percent of your wealth in gold/precious metals.

This is ESPECIALLY the case today, as the situation in the USA has probably become the most dangerous/volatile in my life time.

rb

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Re: Buying / Owning Timberland
« Reply #25 on: October 10, 2018, 09:52:06 PM »
Jan,

Is your approach and are your considerations at this stage here strictly rational, from an investment angle? - Please do not consider the question here asked as sceptical or negative in any way, because it's not meant that way. There can actually be other incentives and motives for doing such an investment, which is a personal matter.
I've often thought about this and discussed it with many people...

What so many people don't get, and frequently argue about is that you can do everything, OR more precisely, you are NOT limited to one thing.  You can own a tremendous amount of stock, real estate, business interests, etc...but you can also own a bit of precious metal. 

I have heard it said that "in order to own gold, you must also own lead.  For without lead, you can not keep gold". 

Real estate can be great...but it is not anonymous, it is not mobile, it is not concealable, it is not liquid.

I am of very limited means...but I've still got a little bit of gold.


I think it would be incredibly foolish NOT to have a few percent of your wealth in gold/precious metals.

This is ESPECIALLY the case today, as the situation in the USA has probably become the most dangerous/volatile in my life time.

I am fascinated by the fact that some people think that should some bad or even cataclysmic event were to happen we'd go back to exchanging gold nuggets.

Also keeping a few points of your wealth in gold i guess could be fun. Because you can fondle it. But really a few points for your wealth (especially if you're of very limited means) will do you no good in a dystopian scenario. If you really want to prepare to such a scenario there are better ways to allocate a few points of net worth that will result is vastly better outcomes.
« Last Edit: October 11, 2018, 08:50:14 AM by rb »

Spekulatius

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Re: Buying / Owning Timberland
« Reply #26 on: October 11, 2018, 07:37:53 AM »
What would worry me about trees is if wood is even a construction material any more 50 years from now? If not, wood prices may be much much lower.

What would you build with?

Steel. 50 years from now possibly composite materials.
To be a realist, one has to believe in miracles.

Gregmal

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Re: Buying / Owning Timberland
« Reply #27 on: October 11, 2018, 07:42:21 AM »
What would worry me about trees is if wood is even a construction material any more 50 years from now? If not, wood prices may be much much lower.

What would you build with?

Steel. 50 years from now possibly composite materials.

Agree. Look at decking over the past couple decades.

MarkS

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Re: Buying / Owning Timberland
« Reply #28 on: October 11, 2018, 07:51:13 AM »
I own some Western Forest Products. https://www.theglobeandmail.com/investing/markets/stocks/WEF-T/
I can't walk through it admiring my trees, but it pays a dividend and easy to get out of it needed.

Pelagic

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Re: Buying / Owning Timberland
« Reply #29 on: October 11, 2018, 08:35:43 AM »
Thousands of Southerners Planted Trees for Retirement. It Didnít Work.

https://www.wsj.com/articles/thousands-of-southerners-planted-trees-for-retirement-it-didnt-work-1539095250?mod=cx_immersive&cx_navSource=cx_immersive&cx_tag=collabctx&cx_artPos=1#cxrecs_s

Interesting reading this considering that Hurricane Michael likely decimated a significant portion of the timberland in the SE. I believe Oddballstocks mentioned earlier the problem of not being able to diversify as an individual investing directly in timberland and the potential for a tornado (or in this case a hurricane) to wipe you out. I don't think anyone is concerned with the effects of Michael on timberland yet as there are more pressing matters but it certainly tracked over a lot of the SE US' timberland and almost certainly destroyed a lot of it.

I found this paper analyzing the past impacts of hurricanes on timberland. Page 215 has a table totaling the economic impact in dollars from a selection of hurricanes.

https://www.fs.fed.us/pnw/pubs/gtr802/Vol1/pnw_gtr802vol1_prestemon01.pdf