My Bright Idea

Terrabus · #1 03/18/10, 10:27 PM

It has been my goal for some time now to buy 2-7 acres of land. My goal for this land was to live and do some micro-farming, if any, but mainly take care fo myself. Things haven't gone so well. Land is expensive around here, jobs don't pay much and all I can find are dead-end jobs.

So I came up with a brilliant plan.

1) Find a parcel of woodlands or timber that fits my size. Keep the cost-per-acre at bellow $4000.

2) Concentrate on finding parcels that have trees worth money, like oak, walnut and cherry.

3) Have a financier, and I think I have one, who would buy the land as an investment.

4) I find a timber company that would come in and take the trees. According to a person I know who used to be in the business in a different state, there's a good chance the timber is worth more than the cost per acre.

5) I make a deal with the financier to then sell me the land at a greatly reduced rate with the understanding they would recieve 100% of the timber sales.

Is this naive? I have a person who would like an investment like this. Risk is minimal but does exist. I know I might have to come up with money to off-set his losses if there are any, or if the profits are not there.

My goal is land so far in the middle of nowhere that it would be cheaper than "developmental" land, or land close enough to a grid or road to be cheap enough to make into another subdivision.

Has anybody done this?

Shadow · #2 03/18/10, 10:41 PM

Most timber cutters/companys are not interested in small acreage of timber. Just will not pay to move the equipment and set up for a few acres. We have 70 acres north side owner has 53, ease side 50 total of 173 and we have to arrange to sell all at the same time. Most of the time sellers figure the value of the timber up and add that to the value of the land with out it.
Second why does the investor need you as a middle man.

tinknal · #3 03/18/10, 10:48 PM

It could work with cabinet grade lumber.

salmonslayer · #4 03/18/10, 11:19 PM

Hopefully PhilJohnson (aka Shackman) will chime in. He is from Wisconsin and has a pretty cool place where he didnt spend much and he is chronically looking for work.

I'll bet he would be the best one on this board to give you some advice on the subject.

rambler · #5 03/18/10, 11:50 PM

Couple random thoughts.

Wood prices are way down now, there won't be the big bucks of 5 years ago....

Small plots of logs don't always bring a lot of money - like mentioned, takes a lot to travel in, set up, and then only a little bit of wood.

Two to 7 acres of woods worh logging can be hard to find.

What are you bringing to the table? All I see is you will be buying the clearcut land for cheap. Otherwise, the guy with money is doing the buying, the logger is doing the logging. You are - hoping to pick up the cheap pieces at the end? What if someone else offers your money guy a better price? What keeps him linked with you? What have you done to be a part of all this?

Just some thoughts. Not saying it's a bad idea, just thoughts.

--->Paul

Joshie · #6 03/19/10, 02:23 AM

If this was possible why would the owner sell you the timber with the land?

blufford · #7 03/19/10, 05:04 AM

It sounds like a great idea if it would work. To get myself a piece of land I was thinking maybe I could just sell a kidney.

ChristyACB · #8 03/19/10, 05:27 AM

While it might work, you aren't the first one to think of it and those sort of things don't always work out like you think. If your part of this is being the "fixer" who finds the right kind of land and gets the estimates on the wood harvest and all that, then you ARE providing a service to the investor. Many of those have lots of irons in the fire, so to speak, and someone to find the right spots and do all the legwork is a valuable service.

The problem is that size you're looking at. Everyone is very correct that in your area, it will be hard to make the price of the land back or even make a sizable dent. For small parcels, if you can get a decent logging company out for a parcel that size, the most you'll usually get is free clearing of the land and may some stump removal. If you just let them clearcut and leave all the stumps, you'll have a mess that will take years to repair and you'll probably lose all your topsoil in the process. Have you ever even considered how much work it is to pull out hundreds of stumps? Thousands? How long would that take you with a chainsaw and a truck? And how much of all that soil those trees kept in place would be gone by the time you got done.

Our home place in NC butts right up against one of the Weyerhauser farms and paper pulp is super common harvest and processing. But even there, it is hugely unlikely you would be able to get a few acres cleared for wood.

Unless you win the "tree" lottery and find a parcel with giant black walnuts or burl maple or something that the seller didn't count in the price, this is unlikely to work like you want.

Mid Tn Mama · #9 03/19/10, 07:08 AM

People do it here all the time. We know someone who has a lumbermill who buys property for the trees, cuts the trees and has given each of his five children a parcel of land afterwards. Now he has many integrated businesses, but the guy can smell a good deal. It's risky, he's made millions and lost millions. You have to have a good steady heart.

Starlighthill · #10 03/19/10, 08:39 AM

We sold 25 maples last year and got about $2200. Red pines were thinned one year from about 7 acres and then we sold the rest a few years later. We've not had difficulty finding loggers and got several estimates beforehand. This is normal for our part of Michigan, it may not be for your part of WI. Call some loggers and see what their requirements are to come for a few acres of trees, how big the trees need to be and what species.
Diane

ronbre · #11 03/19/10, 09:06 AM

well i'm not sure if your area has all the repos that there are in Michigan, but depending on what you want land is really cheap here right now..and repod farms are going for anywhere from $30K to $50K in the really depressed areas.

why waste your time on something that will require so much work in getting set up when you can buy a repo farm ready to go..for a lot less $.

also land around here is going for under 1K per acre most places as well..so if you just want the land..the price is a lot less here in Northern Michigan.

we also have tons and tons of loggers around here and if you wanted a job and can drive a truck you might even be able to get a job for one of them..there are 3 in our neighborhood and dozens in our town

edcopp · #12 03/19/10, 09:28 AM

Your idea has merit, and like most good ideas will require additional education and work on your part.

Read the IRS regulations on sale of timber. Sometimes the sale of timber can be subjected to favorable tax treatment. Then look for the investor who can benefit from that tax treatment.

Learn to shop for what you want in the way of land timber and so on. The better shopper that you become the better deal you will find.

Become a cheapskate. Save your own money. If you save up $1,000 then you can borrow that thousand $ from yourself at very favorable terms.

It might pay you to take a quick class in forestry at your local community college in forestry. Sometimes one overlooked tree can be worth the cost of an acre of land to the educated person. Might even be able to get some assistance to attend college from our "flush" government.

Before going to college you might want to go into business for yourself, so that your education and travel expenses would become tax deductable. Perhaps XYZ timber company (you) could order you to go to school and travel at the company expense.

ldc · #13 03/19/10, 11:07 AM

There are also many threads on this subject in the archives. I wrote earlier about selling wild cherry in NY State to a broker for furniture makers. Paid off well. ldc

ChristyACB · #14 03/19/10, 11:54 AM

Quote:

Originally Posted by ldc

There are also many threads on this subject in the archives. I wrote earlier about selling wild cherry in NY State to a broker for furniture makers. Paid off well. ldc

That is one I would call pretty close to a good tree lottery. Some types of wood really do bring exceptional prices.

We found a giant perfect burl on one of our trees. We needed it cleared out and someone in my family at least had the foresight to ask our harvester. He about peed himself when he saw it. We paid for the rest of our road grading with it. That was 15 years ago or so however, when prices were pretty good.

**Terri** · #15 03/19/10, 12:22 PM

Land in Wisconson looks very high! But, have you looked here? http://www.unitedcountry.com/locatea...nsin/index.htm

They have this one: http://www.ucoffices.com/office/defa...k&agency=48027

**Terri** · #16 03/19/10, 12:31 PM

Oh, yes.

The first homesteading book I ever read had to do with a similar notion.

This lady, with a poor job but with some money saved, bought wooded land. These were trees that were 4" to 6" thick second growth.

She cut trees with a chainsaw and sold them as firewood, by the cord. She planted the cleared land to vegetables, some of which she ate and some of which she sold. Basically she was working full time and sold and delivered her stuff on weekends.

Here is where the savings account came in: she used it to have a tiny home put on the land for her. Since she was working during the week and delivering wood by the cord on weekends there is no way she could have done the work herself.

When she moved in she continued clearing more vegetable land and selling the wood she cut as firewood, and she worked in town alsp (though not as many hours).

fishhead · #17 03/19/10, 02:58 PM

I've thought of something similar but it all depends on land prices and timber prices. I thought a person might still be able to buy a small plot of woods and cut firewood to pay for the land since firewood nets a lot more than logs. Also it's something that can be done by a single person with little more than a chainsaw if necessary.

I have accumulated enough wear and tear on my body that I wouldn't do it without some sort of mechanization like a small tractor with a self loading trailer that could handle 4' or 8' logs. I would also need a saw rig to cut logs to firewood length and a hydraulic splitter. In short keep the manual handling to a minimum.

I think it could be done.

ronbre · #18 03/19/10, 04:57 PM

i know of a home for sale in ky that is totally wooded and it has a stream as well..in order to work the property a lot of the trees would have to be removed..i know the gal and she really would love to sell and move as she is too handicapped to stay there any longer.

Terrabus · #19 03/19/10, 11:23 PM

I should have said, my investor is old and his ability to do the footwork has diminished. Also, he has expressed in the past to enter into investments like this if I act as birddog and do the legwork.

I'm not too happy about the prices of timber these days. I found a sight that discussed them and the market isn't' what it used to be.

I think my judgment was based on stories I've heard of people finding some very nice trees on their land that paid top dollar.

I call this my "Hail Mary" plan. By the time I save up enough money to buy anything I'll be too ----ed old to do anything with it but drive by and look at it.