The Ultimate Guide to Buying Timber Land
Wood has become so integral to our society that we’re running low on one of our most valuable resources. We’re fighting a battle against the slowly replenishing growth of timber.
The limited amount of timber to go around makes timberland ever-valuable, and coincidentally the same concept applies to property, only to an even more extreme extent.
To put it simply, we’re running out of useable land. Property is becoming scarcer by the day, meaning we’re running low on a finite resource we can’t ever replace.
It makes buying land a worthwhile investment. And buying timber land is one of the better land investments available. So today, we’re giving you our guide to buying timber land.
Buying Timber Land 101
Timber land is valuable because of the two-fold scarcity of timber and land that we mentioned above. The rate at which humans consume each and their continued demand means that owning either generates wealth.
But when we talk about timber land we need to talk about the difference between investing and owning the land. Our article focuses on purchasing the land yourself, which is easily confused with buying shares of a timber company trust.
Actually buying the land comes in two forms, each of which requires its own mini-guide for finding the right timber land for your unique situation. Let’s take a look at your options.
Real Estate Agents (Direct Purchase)
Direct personal purchases represent the traditional way to buy timber land. The buyer (you) finds a piece of property that’s worth purchasing and makes an offer to the seller.
The benefits here are that you own your own land to do with what you please. There’s no minimum investment (we’ll get to that later) and no one monitoring what happens on your property.
Plus, much of the lumber across the country comes from small landowners. It’s a proven strategy to make the most of your timber land. In the South, almost two-thirds of timber comes from small landowners.
Though with all the freedom comes a few drawbacks. First, you’re required to maintain the land.
Timber logging requires certain property characteristics that are a must for proper logging.
Tree density, log roads, and other aspects must stay maintained in order to qualify for logging.
This means you’ll need to either maintain the property yourself or hire someone else to keep things in order.
If this all sounds like a good fit then you’re next step is…
Find the Right Real Estate Agent
Every broker works with different properties, sometimes decided by their likes and dislikes while other times decided by their geographic location. If you’re serious about buying timber land you need a real estate agent skilled in that market.
Find an agent skilled in timber land is slightly more difficult than most people assume. Timber land is scarce, meaning not many agents see enough of it on the market to consider it worth their time.
What’s more, higher concentrations of agents are generally in urban or suburban areas without timber land. Rural areas typically have fewer agents servicing the area since there are fewer homes for sales.
Start your search with agents specializing in farmland. They’re far more common in rural areas and often have experience themselves, or know someone with experience, selling timber land.
Ensure the Land Qualifies
Logging has strict regulations that protect the environment from overuse. Tree density and more factors into the specifics your land must meet in order to qualify for logging.
This means you’re responsible for maintaining the land to live up to these requirements. And those requirements aren’t easy to maintain. Timber density alone means planting trees and removing trees to ensure optimal growth.
And beyond logging regulation, the state of your land also affects how much you’ll get in return for your timber. If loggers have to deal with wet ground and other hazards expect to command a lower price.
This again, means you’ll need to maintain your land or at the very least pay someone to do so. The more you spend on maintenance the less eventual profit.
Buying Through a Third-Party
Buying timber through a third-party is not to get confused with purchasing shares on a timber company. In our case, we’re referring to purchasing actual pieces of timber land through an investment company like U.S. Trust.
When you purchase through a third-party you’re still buying land, though it’s not land you’re responsible for in any way. Rather it’s land your own that the third-party selected for its quality, and manages for you.
If it all seems too good to be true, that’s because it is. Third-party buyers often require large initial purchases; in the case of U.S. Trust $5 million gets you into the program. You need to spend money to make money if you go this route.
Find an Investment Organization that Meets Your Needs
As we mentioned, investing in an organization like U.S. Trust requires a large sum upfront.
That’s usually the case with large investment organizations, but there are smaller entities offer timber land for less initial money.
That’s why you need to shop around to find a company that’s right for your needs. When you’re looking for woods for sale from investment companies, it’s the financial component that always becomes an issue.
Any land from a reputable organization will come fully maintained and prime for logging. The only thing left is to determine whether the initial investment is worth the eventual returns.
Determining which of the above options for buying timber land is best for you means understanding the ins and outs we covered in this guide. Though time and money are the two easiest ways to determine which choice is best for your situation.
Put simply, if you’re short on time an investment organization is your best options, and if you’re short on money go with the direct sale.
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