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Author Topic: Help with analyzing a TIMBER investment opportunity  (Read 1946 times)

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Offline Gary_C

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Re: Help with analyzing a TIMBER investment opportunity
« Reply #20 on: February 08, 2018, 05:20:40 PM »
I agree with WDH. The actual condition of a 28 year old stand is far more valuable than all the estimates and assumptions you can put together. There are a whole lot of things that estimates and projections can't tell you.

Oh wow. You are certainly coming here bound and determined to insult everyone. Normally I would just wave goodby but I will add this in hope that I can help in some way to help you see what you are missing.

If you notice I did not suggest you get a cruise. I am not a forester and never do cruises though I may have the ability to do a half fast one. I am a buyer and cutter of timber sales. One of the last things I would do is buy a timber sale until I put my boots on and took a walk thru the stand to see what it looked like. Yes, I can go to Google Earth and see what it looks like from above, and most of the sales I look at have been cruised by a state forester. Doesn't make any difference who cruised it, the most important thing is what I see on the ground and in the stand.

So what we are all telling you is your numbers don't mean much to any of us without actually seeing the conditions in the stand.

But if you want to buy a "pig in a poke," feel free to do so. Just don't complain later if you get the short end of a IRR.
Never take life seriously. Nobody gets out alive anyway.

Offline mills

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Re: Help with analyzing a TIMBER investment opportunity
« Reply #21 on: February 08, 2018, 05:50:26 PM »
Dang it boys, I didn't realize that we were indebted to him. Maybe the next bunch he talks to will tell him what he wants to hear. :D

Back last summer I walked a guys woods with him. Told him a guesstimate on what I thought his part would be. Come to find out that he knew quite a bit more about it than I did, and I wasn't no where near correct on the value of his timber. I laughed and drove off. Then found out that the next guy he had come in basically told him the same thing. But that logger told me he wasn't laughing when he left. Think it got pretty heated. The landowner eventually got it cut by someone a couple of counties over. Haven't heard how he came out yet. Wanna bet on who was closer?  :)

Offline mike_belben

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Re: Help with analyzing a TIMBER investment opportunity
« Reply #22 on: February 08, 2018, 07:44:05 PM »
I hear theres some really good returns to be had in speculating bitcoin right now.   Oh wait, thats crashing.  Maybe stocks..  ?    No, those are crashing too. 

Timber is a slow and steady living for a lot of people.  A hard one, but a living.  It is not a get rich quick scheme.  But it is a return backed in the tangible physical asset of real property.  Can you get a 10% return with a guarantee somewhere?  If AAPL and FANG price crashes, you have an account full of air.  If timber price crashes you still have trees and dirt.  Hire some amish to saw you a cabin and sell it as a rustic homestead.  Hunting camp.  Cattle pen.  Hay field.  Parking lot.  Or just sit on it.  Inflation guarantees you get your money back on land eventually.   

Whats the return on a Certificate of deposit these days.. Quarter percent?

Offline 47sawdust

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Re: Help with analyzing a TIMBER investment opportunity
« Reply #23 on: February 08, 2018, 08:35:32 PM »
Ah, he probably wouldn't have liked yooper night,anyway.
Mick
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Online Jeff

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Re: Help with analyzing a TIMBER investment opportunity
« Reply #24 on: February 08, 2018, 09:15:48 PM »
I havn't banned him yet. Was still hoping he would come back with some civility. Odds are, an issue with incapability.
Just call me the midget doctor.
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Online Southside logger

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Re: Help with analyzing a TIMBER investment opportunity
« Reply #25 on: February 08, 2018, 09:44:40 PM »
Texas Ranger ... yep.  Not viable.

2.31% IRR on the timber.
5.60% IRR if the seller cuts his asking price from $2350 to $1200 per acre,  which won't happen.   

Assumptions:
Pulp $8.35 per ton
ChipNSaw $17.06 per ton
SawTimber $23.99 per ton

Yields and Mix:
Thinning #1 ... 25 tons ... 100% Pulp
Thinning #2 ... 30 tons ...  40% Pulp, 45% ChipNSaw, 15% SawTimber
Clear-cut ... 85 tons ... 2% Pulp, 12% ChipNSaw, 86% SawTimber

This parcel doesn't need a Timber investor.  It needs a home owner who wants a forest to walk his dog in.

Jeff - Yes,  I will be gone.  Not because of your threats,  or Raider Bill's asinine comment.  I'm leaving the board after a brief presence because there's no one here with any financial modeling acumenI've come to learn that the entire industry is woefully lacking in talent to assess the financial returns from owning TIMBER.  Wet your finger,  stick it up in the air, and guess ... appears to be the main mode of operation in the US Timber Industry.  It's dominated by Axe Jockies and Chain Saw Bubbas.

TIMBER is a hobby,  not a viable investment.   That's what I've come to learn and understand after a couple weeks of deep dive into the economics of TIMBER.


First bold  - I told you that based on the data you had posted, and a couple of us explained that your assumptions on improvement were not reasonable given the history of the lot.

Second sentence - Seriously lack of financial modeling acumen?  It would be quite interesting to know the net worth and total timber land holdings of the members of this Forum, many of which were earned - not inherited.  More than a few write a check each week for logs, fuel, payroll, etc that exceeds the "investment" you have spent a whole two weeks pondering. 

The bold with italics well, somehow an industry which built a country has been lucky for the past couple of hundred years - so glad you are here to clear things up for everyone. 

You came here and said you know nothing about timber and were treated with kid gloves, several of the posters who answered your questions could write a novel just giving you an answer to your question.  Did you act this way to the landowner?  If so you still wondering why he won't come down to the price you think is right?  So many things in life are about attitude. 

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Offline ohiowoodchuck

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Re: Help with analyzing a TIMBER investment opportunity
« Reply #26 on: February 08, 2018, 10:35:34 PM »
Iím no genius or know it all but itís hatd to make a 1000 a acre off hardwood here in Ohio unless you find that piece of land that hasnít been touched in 150 years. These kinda tracks are getting few and far between. I know your lucky to get 200.00 a acre of there chipping around here. Just my experience but Iím not a logger or a forester, just a landowner putting out more then Iíll ever see back.
Education is the best defense against the media.

Offline SwampDonkey

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Re: Help with analyzing a TIMBER investment opportunity
« Reply #27 on: February 09, 2018, 12:10:10 AM »
Bare minimum stumpage for most landowners has always been $500-600/acre here for a long time, at least 25 years. But some regions of the province seem to sell when markets are down instead of waiting for better prices. We have advantages here because of marketing boards, everyone can find out quick what the current situation is. Woodlot owner groups do have advantages.  In this region, landowners are a lot closer to there land, half the population is rural. Cities are small and not growing too fast, a lot of them with one main industry, making pulp products. Most of the sawmills are in villages and towns with small populations. :)

Pre-commercial thinning pays off. :)

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Offline PA_Walnut

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Re: Help with analyzing a TIMBER investment opportunity
« Reply #28 on: February 09, 2018, 05:28:28 AM »
Van Gogh once said, "If you hear a voice within you say 'you cannot paint,' then by all means paint, and that voice will be silenced."  :o :D
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Offline coxy

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Re: Help with analyzing a TIMBER investment opportunity
« Reply #29 on: February 09, 2018, 06:28:53 AM »
 popcorn_smiley popcorn_smiley

Offline 47sawdust

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Re: Help with analyzing a TIMBER investment opportunity
« Reply #30 on: February 09, 2018, 08:34:55 AM »
I sure do like to see a good guard dog in action.This place has several,very entertaining. 8)
Mick
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Offline DMcCoy

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Re: Help with analyzing a TIMBER investment opportunity
« Reply #31 on: February 09, 2018, 09:41:24 AM »
This parcel doesn't need a Timber investor.  It needs a home owner who wants a forest to walk his dog in.

Jeff - Yes,  I will be gone.  Not because of your threats,  or Raider Bill's asinine comment.  I'm leaving the board after a brief presence because there's no one here with any financial modeling acumen.  I've come to learn that the entire industry is woefully lacking in talent to assess the financial returns from owning TIMBER.  Wet your finger,  stick it up in the air, and guess ... appears to be the main mode of operation in the US Timber Industry.  It's dominated by Axe Jockies and Chain Saw Bubbas.

TIMBER is a hobby,  not a viable investment.   That's what I've come to learn and understand after a couple weeks of deep dive into the economics of TIMBER.

Wow!  :)

Offline mike_belben

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Re: Help with analyzing a TIMBER investment opportunity
« Reply #32 on: February 09, 2018, 10:36:27 AM »
Out of curiousity, i used the huntstand app to measure a chunk of remaining backyard parcel i cut last year in a trade for dirtwork. 

 Primarily white oak, and a few "big" hickory with the usual bulk of pulp and tie junk.  A 10:1 ratio of pulp/firewood per load of stave grade.  Most loads were tie at an avg of about 30cents/bf.  All wood total avg 57cents.  Zero management, whole neighborhood was a former single commercial timber site, subdivided to trailer trash housing in the 1970s or 80s, and just became a backyard.  The commercial site was high graded to the max prior to subdivide,  and the trees i cut were passed over during the homeowners own logging because that corner was filled with too much junk for the logger to bother.  Biggest small end diameter i cut was probably 18 inch.. Maybe 20.  Most logs were 12" to 14"

The patch was only 1.3 acres and i have receipts for a hair under $3,600 in sawlogs.  I sold one load of pulp and decided the rate i could get just didnt warrant the hauling distance and brought it home for firewood.  This was my first winter in firewood here which i messed up.  Just didnt have enough dry wood on hand, sold it all in the first cold snap, delivered it too far for too cheap and was out when the real cold came and everyone was out of dry wood.  I did $1,010 in firewood. 

Im still bringing home firewood from that lot, he is a friend/neighbor.  Also much of the small, sellable tie grade stayed here for timbers to frame my first barn.  Maybe 40 logs. 

Sadly, this leftover junk was some of the fattest timber in a dense forest patch that ive seen here.  Avg diameter is shrinking fast.  To get a 20" white oak buttlog a tree needs to be passed over in the last TWO harvests.  Thats rare.

I woulda done the pond for $500 cash. 

Offline starmac

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Re: Help with analyzing a TIMBER investment opportunity
« Reply #33 on: February 09, 2018, 01:52:18 PM »
Mike, I am curious. You stated you would have done the pond for 500 cash, what is the going rate for a dozer the size of yours in your area.

Around here 500 bucks will not get folks interested in doing much of anything.
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Offline mike_belben

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Re: Help with analyzing a TIMBER investment opportunity
« Reply #34 on: February 09, 2018, 04:59:48 PM »
Maybe $75 an hour for a 450 size?  But everyone has a dozer in the rural south, theyre parked all over the place.   I have advertised for all sorts of services and had no calls on anything.  Im not saying i woulda made a profit at $500, just that i was desperate and fool enough to do it.  I drove the dozer from here to his house down the road and it was a come and go as i please, with my kids most days, kind of a job.   Only other thing with those kinda terms so far has been splitting wood on farms.   That mom life is kickin my butt.

Offline 47sawdust

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Re: Help with analyzing a TIMBER investment opportunity
« Reply #35 on: February 09, 2018, 07:04:41 PM »
Mike there certainly is no shame in being Mr.Mom.I was a single parent for 12 years,yes,it was a lot of work but you know who is raising your kids.You have my respect,good for you and your family......besides you seem like the kinda of guy that shouldn't have too much time on his hands. ;D ;D ;D
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Offline mike_belben

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Re: Help with analyzing a TIMBER investment opportunity
« Reply #36 on: February 09, 2018, 08:10:23 PM »
Thanks man :)

Offline PA_Walnut

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Re: Help with analyzing a TIMBER investment opportunity
« Reply #37 on: February 10, 2018, 05:40:57 AM »
Whoa!! $75/hr for dozer work!?  :o

Round here it's $225 or so.  :-X :-\

I have a big backhoe/loader and have been thinking about doing small(ish) jobs locally, but by the time I get a trailer to move it, DOT license to be legal, insurance to cover me/them/it on gigs, etc. I calculate I'd just be entertaining myself. (not that playing on a tractor all day isn't kinda great!  :D ;D)
I own my own small piece of the world on an 8 acre plot on the side of a mountain with walnut, hickory, ash and spruce.
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Offline longtime lurker

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Re: Help with analyzing a TIMBER investment opportunity
« Reply #38 on: February 10, 2018, 07:01:38 AM »
I did a Mr mom stint for 10 years before I remarried. Its hard but worth it. Mine are pretty much grown now - 20 and 17 - but I can remember how frustrating it was to be turning good work away because of the dad stuff that made it impracticable when they were little. i had to throw a pretty good business that I loved away for it ... cant say i havent regretted it at times but if it all played out the same I'd do it again tomorrow if I had to.

You're doing the right thing Mike. Be proud of it.
The quickest way to make a million dollars with a sawmill is to start with two million.

Offline mike_belben

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Re: Help with analyzing a TIMBER investment opportunity
« Reply #39 on: February 10, 2018, 04:53:24 PM »
Thanks.  I do have a great wife, but she has the stable career and i have the floating life.  I have a few more years of relocating equipment to go and thats sporadic so i cant go looking for a job.  No one hires a guy who is randomly available.  We make it work pretty well.


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