Here is how I've got it figured in investing in timber land

[Woodhog]

Well, the $$ look good..
Dont forget several very High Risk factors that come with your investment....

Some nitwit comes along on a hot windy day in the dry season and tosses his cigarette butt
out the window, puff its gone in a flash...or mother nature could throw a bolt your way with the same results..

or like what happened in a large swath of woodland near here, a high wind could cut through your land and you have a bunch of pick up sticks to play with....before they rot...

or insects could invade and use your trees for the main course....

There is a lot more to it other than $$$$ and cents.....

If all goes well its a very good investment...

[crtreedude]

Of course, the nitwit doesn't happen here - not that nitwits are extinct in Costa Rica, but, my plantation is in a rainforest - and we don't have high winds either -  I think there has only been one hurricane ever in Costa Rica in the last century, and it was south of us and not that big.  They all seem to have an affinity for Harold's place.

Insects can be a problem, but we have native jungle areas separating each stand of trees, and full time people on the plantation every day keeping an eye on things - more expensive than your 0 percent expenses for sure.

These things are considered honestly very low risk - it happens to a very small percentage of places compared to the whole. You can die going to see the land too.  Or be bit by a fer-de-lance. (it is my job to mention snakes at least once a week - I am trying to inure Jeff to them.)

[Rod]

True Woodhog,comes with no  guarantees..Also fred,you have expents on funds.When you buy them they charge something like 5% then they charge you for mangaing them every year even if your losing money on thier funds.Then when you go and sale the funds you have to pay tax if you made a profit ...Now if I would of bought Google a few months ago for $95 and sale it today for about $200 I'd have a party :D



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[crtreedude]

Yep - and that is exactly how people lose money really badly at times. For example, everyone sees that Google is going up like a rocket, so everyone piles on, pushing the price up because everyone wants it. Eventually it gets so high that everyone starts to take their profits, and then it drops.

However, has the VALUE of the company really gone up like this? I don't think so. Therefore, what is different between this and me telling you to buy something because if you buy it I make money, and then you can make money because others buy it from you, at a profit.  Eventually the poor sucker on the bottom gets hosed. This is okay if the final sale still has value - but what if it has almost no profit to begin with - or at least not as much as it is being sold for? This is called a pyramid scheme.

The same thing has been happening in stocks in my not so humble opinion. Too much speculation, not enough earnings - and it feels like financial chicken.  I keep buying stocks hoping that there is one more person out there that will think it has value after me, and oh please, don't let there be any bad news while I have it.

Perhaps it is more like hot potatoe... The people who are really raking it in are the brokers. Buy or sell, they make money.,

Thanks but no thanks. I can pull up roots, move to a foreign country, grow trees I have never seen before, climb trees and rock climb. Moutain bike and enjoy kayaks - but I am no risk taker!  :D

Fred

[tnlogger]

 wal now seeing that this here thead has sorta rolled around just a tad. :D
when we moved to tenn back in the early 90s i had a freind that was one of dem hoss trading loud mouthed auctioning types. one of them loud shirt cowboy hat pants half tucked in one boot fer real hosetrader.
well about that time them long legged google eyed ostrich where in demand
well now he said i'm going to fence in my grand pa's pasture and gets me some breader pr and raise um. yup he done took of for texas and pd 45000.00
for a pr of them things. done told eavryone would listen he'd retire in 5yrs off
just them 2 birds.  :D :D :D 3yrs later the price done bottomed out and him with about 60 of dem things couldn't give em away. Wal now i heres dem things is good eating but this ol boy shore gona try it dont think i could catch one to wring it DanG neck.  :D :D :D :D gene

[Rod]

I remember those days tnlogger 

I am no risk taker either :D,I buy stocks...I sold a bunch of them in 2000 and 2001.I said to myself I better sale some cause they can't keep going up for ever.   I started buying stocks in 1992 and I have and average return on about 10%.Not to bad for someone who didn't know what they were doing when I started. :D.

[farmerdoug]

Tha is like around here everyone thinks that the farmland should be saved but when the farmer has the choice between 5 dollar a bushel beans and 5-10,000 dollar a acre it is easier to see more houses.

[Rod]

farmerdoug ,not much building going on in these parts.Nothing but timber and digging for coal...alot of mud right now too.


Fred,I was sitting here thinking about poplar trees.So I went to the West Virginia Forestry site http://www.wvforestry.com/Stumpage%20Prices.PDF.It ,and looked up what poplar was going for back in 89,and what they go for in 2005,and it looks like the price of poplar's has increced in price at a return of 7%.In think the mony in poplar around here but I'm not real sure tho.


The coal company is growing red oaks on some of thier reclamined land..

[Rod]

This looks like a good web site 
LINK
It talks about poplars,which I'm starting to get really interested in now,maybe it cause I keep seeing $$$ sigins :D and also other stuff like Oaks.

[crtreedude]

Yeah, it is always nice to have a cash crop.  8) One thing that people have learned the hard way in investment is to diversify - make sure you have some other trees, one, because pure plantations run some pretty big risk from disease, but also, you don't want to put all of your eggs in one basket.

I have to admit, I grow 4 types of trees now - but want to get up to between 20 to 50 types in the future. Most of the trees planted in our area is either teak or gmelina. This means woods like mahogany, spanish Cedar, almendro,  laurel, corteza, tempisque, etc. are becoming more and more scarce. Bad for the trees, but very good for future value.

Fred

[Rod]

WOW Fred,sounds like you have some big $$ trees when their grown.Fred,back in 97 when I bought this brier pach :D this place was nothing but a brier patch,but all the tree tops and briers are gone now.And the forest has alot of diferent trees.But after doing some reading I think I'll go out today and cut down a bunch of those Hemlocks that are keeping those poplars from $$$ growing and then I'll cut those Hemlocks up on my sawmill.

The only thing I hate about those Hemlocks is they are so many branches on them.Well anyway, it looks like I have just created some more work for myself :D :D

[Rod]

Oh,and I ment to say that maybe you can grow poplars down your way.I don't know tho if they will or not,I do know they like alot of sun and water.I read some were they drink 30 gallons of water a day That sounds like alot of water.But anyway here is a site that figures out how much the poplars will be worth in the futuer.

http://www.fs.fed.us/ne/newtown_square/publications/research_papers/pdfs/scanned/OCR/ne_rp140.pdf

[crtreedude]

So far, so good - in fact better than expected.   We currently have about 16,000 trees planted and will be planting more every year - until we have somewhere between 35 to 40 thousand trees on the finca. And then we purchase more land - if not before.

First harvest is in 2 to 3 more years.  8)

If you want to see what they are looking like now - here is a link to our latest newsletter. If you click on the thumbnails, the pictures get bigger:

http://www.fincaleola.com/vol3issue1.htm

The picture of the trees in the left column at the top is teak that is 18 months old - they are doing fantastic - normal growth rate for teak in our area is 1 to 1.5 meters per year. Those trees are pretty close to 30 feet tall and 4 inches in diameter -  I figure we are going at about 4 + meters per year growth rate - it really is amazing.  I guess I did something wrong ;) I bought the best land I could find and we spend money on really good care. I think we can live with growth rates 3 times better than normal.  :D When we first started, the people who were here before us doing plantations told my Costa Rican business partner Hector that I was stupid for buying such expensive land just to grow trees. Now they want to buy us. (Not selling)

Pretty strange to see a tree grow at an 1/2 an inch - per day! 

[Rod]

Fred,nice looking trees you have there.Looks like logging them would be easy too.

A tree growing a 1/2'' a day is fast.

I went out Sunday and cut down a bunch of Hemlocks,the smaller Hemlocks ended up getting hung up in the poplars,so I just left them there.I cut one that was about 20'' dim and I thought I better cut it were it would fall fast,and it did.It look like it jumped off the stump and didn't hit the ground tell it was about 50 feet down the mountain,then it slide down the mountain about another 200 feet. :D.

[crtreedude]

Thanks, we are pretty proud of them.  With a plantation you get to choose where the trees are and build roads, etc.  It can make them pretty profitable if you do it right.

It also can create a high percentage of good trees.  However, it sure isn't - "Ignore trees until they get big enough" Lot's of work pruning, etc.

I was out Sunday riding the finca on a horse. Hector my partner showed me how to open and close the gates (barbed wire) while still mounted on a horse. I was very pleased that I could actually learn to do it. The success was due to an excellent horse and teacher - and I managed to following the instructions from both of them.  :D

Hector normally handles the fences but yesterday he was riding a green horse, just broken.  It didn't know how to do it . Hector says I am the first Gringo he knows who can do it.  ;D

Got to keep my partner proud of me.  ;)

[Rod]

Fred,he just hasn't meet any of  us who can ride horses. ;DI can remember when my girl was little.Someone came by and asked me if I could take their hay burning ponies off their hands,and I said I would.Well come to fine out these ponies were mean,but my little girl some how tamed them were she could ride them.Anyway to make a long story short with her being able to break ponies and horses I ended up,or should I say,she ended up with 10 horses by the time she was 12 years old.Some of those horses wouldn't let me ride them but when someone would come by looking for a riding horse I'd call her to show them that the horse was so tame that a little girl could ride it..

[crtreedude]

Here, a mean horse is a dead horse - in fact, you are likely to meet him as meat in the local butcher shop.  ;)

Since these are horses that work, no one keeps a horse that is ill-tempered.

When people come to Costa Rica - I generally advise them to undersell how well they ride. Telling a person whose has ridden horses since they could barely walk that you are a good rider can be hazardous to your health. For example, our business partner used to ride in rodeos.  A cattleman who was nearly born in the saddle is a wonder to see.

Because Hector is so good with horses, we actually get green horses pretty often for him to train. Since he is riding the fields, looking at the trees, he might as well train a horse at the same time.

Fred

[Rod]

Well you see Fred,the reason I wanted those mean ponies was I bought some farm gound that was farmed to death and wouldn't grow anything,so I thought the ponies would help build the ground back up and I wouldn't have to do any mowing.Well after I got rid of the horses that fild would really grow some corn and beans,but the last time I drove but that fild it had houses on it with alot of nice green grass.

[Rod]

And the little girl has grown up and has a bunch of kids of her own and maybe she can show them a thing or two about horses : ;D