Going rate for lumber in Western NC / upper SC area?

[meanwhile]

People in our neighborhood recently received mail from a "lumber company" who says they will buy up trees. They say they will carefully "select" if the landowner does not want a clear cut of land. Several landowners are interested in selling some timber but wonder what the payoff may be. How would we learn the current prices for timber in order to compare with what these folks offer?

[Fried Okra]

You could call the local state or fed forester to vet this "lumber company"; see if they are legit or a scam. They would also be good resources for current prices, best practices, etc. Be aware that they will probably "carefully select" the very best trees as they are unlikely to waste time with the kind of trees you would like them to remove.

[hillsidedigger]

Depending on the stand of trees, a landowner might expect to receive from $300 to maybe $1500 per acre of trees cut which most places in WNC/USC is no more than 10% of the value of raw land.

One guy told me he had been offered $4500/acre just for the trees in an average stand. I mentioned that to a logger I know and he laughed.

[Shadow]

Last year we had some of ours cut. Only mature oaks, we got half the timber cutter got half. About $8,000, we got $4,000 paid 44% state and federal capital gains tax you do the math. Was approched about some large pines and oaks on the other side of the farm but we are not interested. The mes is just not worth the little amount of money. You always hear about the vieneer log that brought $25,000 yea sure and I am still waiting for the Easter bunny, tooth fairy and I have some water front property really cheap.

[meanwhile]

Thank you -- the man called and said the going price is "about $500 to $1300 per acre" but he did not say costs, what type mess they leave, etc. I am having him come out since it does not cost anything to get an estimate but will also check references, etc. Thank you.

[agmantoo]

Hire a forester, let him inventory the type and volume of timber you own. Only then can you project the value. Have the basis for the trees established, know what you paid for the trees and how much they have grown since you purchased them. Trees held for more than a year should qualify for long term capital gains and taxed accordingly for the profit only. Otherwise you are about to get your clock cleaned. You are the babe in the woods and the buyer is the expert and you are going to be had.

[meanwhile]

Haha! A babe in the woods! Thats a good one! (I'm 54)

But, agmantoo, I get the point. Good idea for find a forester. I did not realize I would have to pay anything tax wise on the trees? Why - what would it be called? We bought the property 7 years ago, trees were here........now I am thinking about hiring the man to clear but he might pay me for some of the trees......so why am I paying taxes on it? thank you.

[agmantoo]

meanwhile,
I was of the opinion that you were going to market the trees. Timber is a commodity. Two of the things you got when you bought the property were the land and the trees. Both have value and you are going to realize income from one of them. Those trees have grown in the 7 years your have owned them. The basis in those trees is the amount of money you paid for them at the time of purchase, that part is not taxable. The trees have grown and increased in value most likely. When you hire the forester he will charge a fee. This fee is one of your expenses and that will be deductible. When you sell you will extract your basis and expenses from the gross profit resulting in a net gain. This gain is taxable. Since you have owned the trees for more than a year they should be taxed as a long term capital gain. A forester can certainly be worth his fee many times over. Personally I am aware of a property that was considered to not have any merchantable timber of any consequence. The forester pointed out that the trees were northern red oak and went on the market accordingly. Instead of getting the typical $1600 to $1800 per acre the buyer had a specific need and the offer was for over double those amounts. If you have furniture grade cherry you could be looking at $800 per thousand BF instead of the $240 / thousand for mixed hardwood. I recently assisted a party in selling his timber(38 acres) and he got $35000 more than the highest offer he had. Knowing where to market also has a lot of merit, particularly for good timber. If you sell into the pulp market then expect pulp prices.

[Shadow]

Timber is considered capital gains, when we sold the small amount of timber we sold, federal capital gains was 26% state capital gains 18% of the profit, Thats 44% total profit after deducting the cost basis. The mess is the limbs, tree tops, stumps the damage to smaller trees and there will be some damage. My timber cutter used horses to pull the logs out to the trucks so they were easier on the land than skidders or bulldoizers. Yeah I could use the limbs and tops for fire wood but forty acres of it. Me and the wife cut 2 years worth and did not make a dent in the firewood laying out there in the woods. The woods will recover and look good in about 12-15 years, that is how long it took after a tornado back in 1995. Thats how it looks now. But we got a couple of thousand bucks no thanks Just my opinion.

[Quint]

Capital gains!?!?! But the politicians always tell us that capital gains taxes only affect the rich!!! You know the top 1% of millionaires and whatnot who can afford to contribute more. Why how can this be possible? Why if I didn't know better I'd think the politicians were lying to us!

[meanwhile]

Ok - I am embarrassed now at how dumb I shown myself to be! I called brother-in-law last night and he explained "income" to me too. Thank you Shadow and Agmantoo for the detailed explanations. I think we may not do this project since the small amount of money would not be worth tearing up the woods. I only had about 7 to 11 areas we needed cleared and I do not need that area of mess. BUT I also like the idea of having a Forester in to give me more information. Thank you for the education and ideas.

[agmantoo]

meanwhile,
What type of tree comprises the majority of the acreage and what is the average diameter of these trees at breast height? In a typical area, pace off an area 208 ft x 208 ft. How many trees above 16 inch diameter at breast height exist in this area? I know this is crude but it will assist in making a rough determination.

[MELOC]

i would have thought timber sales could be considered a "crop" since your property is now a tree farm.

[meanwhile]

Agmantoo: we have a mix. The Lumber man did come out and he said one section (3 acres) was "worthless" since it would only be good for pulp. He is looking for larger lumber but he said some would be hauled out for pulp too......I was a bit confused by some of it. He did say he would pay "cash up front" but when I said I wanted to think about it more, he said he would come up with more firm numbers. He also explained the chest high measurement but he said he wanted chest high to be 14 inches at least, then for lumber 10 inches to 12 inches at the smallest end.

I have a 2nd section of land that is only 4 acres and he said it had better trees and would be "about $1500 to $3000" for the whole 4 acres.

In the 3rd and 4th sections (one about 2 acres / the other about 3 acres).....he said the same. I was surprised since on section #3 especially there are very large trees.

We have mainly large poplars but some white pine, hemlock (several huge ones), and some yellow pine......mainly the larger trees are the poplar. Sprinkled in are red oak, white oak and then smaller trees.

I have almost decided not to do this since the mess would be more than what money I would get. It sounded as if the most I would receive would be a total of $4,500 to $9,000 max.......and I doubt it would get up to $9,000......and the mess would cost more to clean up. The young man was very nice and said he was going to do something online with our county's GPS map system and come up with firmer numbers. Since it does not cost anything, I said sure, give me some numbers and we will see what he says.

The goal here was/is not to make money but was to clear these areas and not have to pay a fortune to do it. We are trying to clear near creeks, springs and spring heads. It is too much clearing for the children and I.....so I had hoped to "swap" basically, the Lumber Company would get the timber, I would get the trees cleared but have enough money to then clean up. It sounds like too much mess would be created and not enough income to pay the tractor man to then clean up.

Thank you for the information. It helps to learn more while trying to decide. Thank you.

[agmantoo]

meanwhile,
In Ashe county I have known of persons getting property cleared in exchange for the timber. One company doing the entire process. If you were to go this route make certain that the harvester get a bond to assure you that the work will be done. Never do what your are considering on trust alone. If the trees are sold get copies of each and every load leaving, get paid every week and make them sign paperwork assuring that they will clean up all trash. Have in writing the prices they are going to pay. Do not sell as one lot, get paid on yield. Once you contract to sell call the NC Forestry agent for your area and tell him they will be harvesting. He will monitor that things are done correctly. Did you notice the change in the potential buyer from being vague to one of being more specific from just asking a few questions?

[meanwhile]

Agmantoo: yes, he did change somewhat but never did get too specific. He said several times "cash up front" and once "I can pay you now".......which seemed odd to me. When I asked him how can you pay me now if you don't even know what is back in there (he did not even walk the whole property) , then he backed up and said he would come BACK and do an "inventory" of species. He was young, very nice but I did not feel very comfortable about it. He said he was going online, checking on property lines, doing more research and then coming back in two weeks with another price. On one pieces (the 3 acres) he said the whole parcel was "worthless" for pulp and "worthless" also as lumber. Said not big enough for lumber and too big for pulp.

I did get the name of the Forestry man down here but since I have family in town for the next two weeks, then I am just going to wait and see what he comes back to say. Doesn't cost anything. I probably just will not do anything since I suspect, nope, I bet I know there will be way too much mess.

Thank you.

[agmantoo]

The young guy is attempting to bait you with his upfront payment. He is only going to give you a small percentage of its value. These people are experts at their game. I get weekly inquires from such people. They sound convincing but so did the old snake oil salespersons. Be careful!

[texican]

Don't trust any of them... The only way to guarantee you're getting the best price is to cut and haul them to the mill yourself. Trust me, it's possible... it's work, but you'll make all of the money.

If you deal with a logging company, plan on getting the short end of the deal.

If it were a large sale, I'd have a timber deed recorded in the courthouse...

[agmantoo]

Even for the smaller acreage the buyer will probably get a timber deed. He will want to pay a portion or deposit now and get the timber deed for a period of 2 years. Then he will let his investment grow for another 18 to 20 months at the sellers expense and then harvest. These buyers are experts at their fleecing.

[meanwhile]

It sounds more and more like a "no go" for me! All I wanted was to have 4 section cleared, cleaned up and it seemed like a good deal for me and a good deal for a Lumber Co. too BUT now it does not seem like a good idea at all. Thank you very much for the tips and warnings. Thank you!