Northwest Timberland

[Mudfarmer]

Found out an interesting side effect of the bubble-burst real estate market here in SW Washington state a couple of weeks ago: land is down to treefarm prices for the first time in years. I just purchased 38 acres of logged off replanted timberland a few miles north of Elma for $95,000.:thumbsup: The property first went on the market 2 years ago for $250,000:confused2:

Nice western slope with type 1 and 2 soils and four or five year old douglas fir in the ground. The place is 1000 ft deep and 1/2 mile long on the county road. Adding this to my previously vast 60 acres of tree farm (not adjacent, though) I think almost makes me (or my great grandkids maybe) a timber baron.

Mf

 

[Mounted Madness]

Found out an interesting side effect of the bubble-burst real estate market here in SW Washington state a couple of ...
... Adding this to my previously vast 60 acres of tree farm (not adjacent, though) I think almost makes me (or my great grandkids maybe) a timber baron.

Mf

Congratulations on the purchase. IMHO, in todays world, anyone investing in renewable resources, let alone actually having the land on which renewables are sustained, will be rich. Good luck and congrats once again. :thumbsup:

 

[keegs]

Congratulations. :thumbsup:

 

[smstonypoint]

MF,

Congratulations!

Just curious on two points.

1. How long before you realize income from pulp/timber sales? I have a loblolly pine plantation. In my neck of the woods (Piedmont of NC), the first thinning usually occurs at 16+ years (for pulp) and subsequent thinnings occur at 5+ year intervals.

2. Would you mind sharing what you will be paying in the way of property taxes? My farm is covered by an approved forestry management plan, so I pay just over $1/acre/year.



Steve

 

[clemsonfor]

Found out an interesting side effect of the bubble-burst real estate market here in SW Washington state a couple of weeks ago: land is down to treefarm prices for the first time in years. I just purchased 38 acres of logged off replanted timberland a few miles north of Elma for $95,000.:thumbsup: The property first went on the market 2 years ago for $250,000:confused2:

Nice western slope with type 1 and 2 soils and four or five year old douglas fir in the ground. The place is 1000 ft deep and 1/2 mile long on the county road. Adding this to my previously vast 60 acres of tree farm (not adjacent, though) I think almost makes me (or my great grandkids maybe) a timber baron.

Mf

Im an eastern forester and know those firs at least i think have a longer life cycle but here you would have not really done to well. Timber land that has been cutover in that tract size can still be found for +-$1,000/acre. Then again that 38 acres (if around here) you own will have a payout in 40 years, at todays dollars (ignoring thinning revenue) of about $2500-$3000/acre hardly making you a rich man after figuring it took you 40 years to get there. I guess prices out west are vastly different for timber. But im an ignorant southern pine forester. :laughing:

 

[Larry Caldwell]

All the mills in the PNW have converted to short rotation small logs, so you actually get docked for any log over about 26". They like 6" on the scale end. He's looking at about a 40 year harvest, so his kids and grandkids will collect the money. There will be one commercial thinning at about 25 years.

 

[clemsonfor]

I mean around here you first thin like Stony point said around 16 give or take a yr. But that might get you $500/acre if you do it right. Then you can thin about 25 and see 1000-1500 depending on how agressive you go and then a final harvest at like 45. But If your prices are similar to ours it will never pay off at that current price per acre. Remember he paid $90+K for this place. If he put that in gold or the stock market you will see a better return in the short run. Im just saying you dont get rich in timber with no less than several thousand acres at least around here.

 

[Mudfarmer]

Maybe I forgot to mention zoning is minimum five acre lots and utilitys are all along the frontage road. The forestry is the hedge. We are talking Pacific Northwest here, the land hasn't been this cheap since the '80s. Precommercial thin at 15 years, commercial thin at twenty five to thirty and harvest forty to fifty. Or sell it sooner. Only cost five times as much as my tractor. Taxes as managed forestland less than $100 per year.
Mf

 

[Pilot]

That ought to be a very productive area.

And land prices in the northwest are phenomenal. I can believe the asking price was $250K a few years back.

In our area, closer to a major metro area, if you could find 38 acres of timberland for sale, you sure wouldn't get it for any $95K. We have been looking for several years for 2-5 acres in a rural area near Portland and $200K is about what it would cost for trashy land. Sure, not comparable to what Mudfarmer bought, but just to give you an idea of the insane prices out here.

In '91 we stole a 10 acre parcel, 18 miles from the edge of the metro area for $47,500. Divorce case, they had to sell to settle the divorce and they hated each other enough to sell below market and get things over with. I took out $17K in timber about 6 years ago.

 

[clemsonfor]

That ought to be a very productive area.

And land prices in the northwest are phenomenal. I can believe the asking price was $250K a few years back.

In our area, closer to a major metro area, if you could find 38 acres of timberland for sale, you sure wouldn't get it for any $95K. We have been looking for several years for 2-5 acres in a rural area near Portland and $200K is about what it would cost for trashy land. Sure, not comparable to what Mudfarmer bought, but just to give you an idea of the insane prices out here.

In '91 we stole a 10 acre parcel, 18 miles from the edge of the metro area for $47,500. Divorce case, they had to sell to settle the divorce and they hated each other enough to sell below market and get things over with. I took out $17K in timber about 6 years ago.

I assumed we were talking a timber tract not a timbered tract near a "metro area". As a forester you will advise a buyer or yourself to first look at site productivity if interested in growth and $$ and then find a tract far enough from the city or metro area so there is no imediate developement potential and crazy high county taxes on it. Im not saying not to "steal" a tract under market value with timber on it, that you can grow 15 years clearcut then sell for development and buy 3x the land farther out thats a perfect case to be in. But when most look for a timber investment tract they are not looking "close to metro areas" for the reason you state, price. You have to carry that purchase price with interest for all those years to consider a profit.

Another thought, in figuring bare land value (BLV) or the price you can afford to pay for land and still make money growing timber on it you figue out the present value for all future rotations if this will be one fine if it will be infinity there is an equation for that. I work for a federal entity and my responsibility is selling timber and collecting mone, not making money for a landowner and running scenarios all the time, that said i cant remember all my equations to the T from college. Anyway i do remember that all rotations after the first one combined are only worth something like a $100/acre at most considering a modest interest rate, reason being the # of years that that money is discounted to present day. think your 45 year age harvest you have 40 yrs to the first one then 45 more years to the second so thats 85 yrs of discounting on that second final harvest at say 6% which is a conservative next best investment rate of return.

At this point i will bow out and let stonypoint coment as i beleive he is an econ professor, for any further comment.

 

[Larry Caldwell]

A bare dirt quarter acre lot in town in the PNW will cost somewhere around $70,000. It amazes me that so many people find living in town so attractive, but I guess that's fortunate or there wouldn't be any country left.

You are right that he won't break even on timber in his lifetime, but any time he wants he can split the land into 5 acre ranchettes at $100,000 a pop and make a tidy profit.

 

[clemsonfor]

A bare dirt quarter acre lot in town in the PNW will cost somewhere around $70,000. It amazes me that so many people find living in town so attractive, but I guess that's fortunate or there wouldn't be any country left.

You are right that he won't break even on timber in his lifetime, but any time he wants he can split the land into 5 acre ranchettes at $100,000 a pop and make a tidy profit.

Correct and i made that point in my last post about buying and reselling for the next best option of the land.

But think about those folks in town they dont have to pay all that extra money we spend on gas each year, say $1200/yr.

 

[Pilot]

Yes, if I were strictly looking for timber land, I would look farther out, especially in or near the coast range where productivity is very high. Still spendy.

But I was looking to move out of our small town and we had a business in the town near where we found the 10 acres. And I had a commute for my primary job. So we got 10 acres with some timber and it worked out well. Got a place with a good view of Mt. Hood and the nearest neighbor's house was about 1,000 ft. away.

Now we are getting a little older and the need to be closer to medical facilities, etc. is becoming apparent--had a little trip to the ER by ambulance last summer & 2 surgeries last year. Just planning for the future in looking for 2-5 acres. And we really don't want to be IN town.

 

[dmccarty]

...
But think about those folks in town they dont have to pay all that extra money we spend on gas each year, say $1200/yr.

Think how much the city folk pay in higher property taxes.

Our old city house cost us twice as much in property taxes than our current house and land in the country. The country house is double the size of the city house, worth, at least 3-4 times as much not to mentioned the acreage.

I figure we are better off financially even with higher transportation costs living in the country vs the city. My taxes would almost certainly be even higher back in the city today than when we left six years ago.

Later,
Dan

 

[clemsonfor]

DM, i was kind of half joking. I would not trade my car to live in the city. I agree with you. Although where im at i think i pay a lot in property tax considering what i get. My city water is not even from the county i live in, so none of that utility stuff, we dont have sewer availible. If you call the police and you really need them i hope you have a gun cause your on your own for at least 15 minutes most likely if not longer. EMT substation without an ambulance is 15 minutes up the road, but has a pickup and an emt on duty. I pay about $700/yr for my 3000sqft home values at a little over $100K sitting on less than 1 acre. My farm property (different county) i have 130 acres in ag and 1 acre residential with a small 1300sqft home on it and i pay $600/yr and i am taxed higher as a nonresident as well.

But compare that to a guy i work with who has 12 acres a $200K home and they claim some farm thing in ga to redue their taxes by half and still pay like $2500 month (so they really would pay like $5K!!) and they live outside a town of less than 10K people!. Georgia sure knows how to rip um, at least that county does!!!

 

[ultrarunner]

Maybe I forgot to mention zoning is minimum five acre lots and utilitys are all along the frontage road. The forestry is the hedge. We are talking Pacific Northwest here, the land hasn't been this cheap since the '80s. Precommercial thin at 15 years, commercial thin at twenty five to thirty and harvest forty to fifty. Or sell it sooner. Only cost five times as much as my tractor. Taxes as managed forestland less than $100 per year.
Mf

I think you did great... I paid 100k in 2005 for 10 acres forested with a stream in Thurston County. Lots of old Cedars and large Fir... part was logged a 100 years ago and the cedar stumps are amazing.

My biggest problem and one I've posted before is the Assessor Loves My Property... the value, according the the county has nearly doubled as seen on my last tax bill.

I've contested several times and get no where. The Assessor referred me to a conservation group buying conservation land at the Assessed Price... it's kind of one hand washing the other or at least it seems to be to me.

As far a large timber... there is/has been a constant stream of Japanese Freighters hauling large raw timber out of the port of Olympia... apparently the Japanese really value large diameter timber and have been willing to pay for it.

 

[Mudfarmer]

I think you did great... I paid 100k in 2005 for 10 acres forested with a stream in Thurston County. Lots of old Cedars and large Fir... part was logged a 100 years ago and the cedar stumps are amazing.

My biggest problem and one I've posted before is the Assessor Loves My Property... the value, according the the county has nearly doubled as seen on my last tax bill.

I've contested several times and get no where. The Assessor referred me to a conservation group buying conservation land at the Assessed Price... it's kind of one hand washing the other or at least it seems to be to me.

As far a large timber... there is/has been a constant stream of Japanese Freighters hauling large raw timber out of the port of Olympia... apparently the Japanese really value large diameter timber and have been willing to pay for it.

The property I bought outside Elma is in Grays Harbor County and my other parcel is in Pacific County. I am looking at one in Thurston County. I did find out that there are two forestry taxations in Grays Harbor at least (and i think state-wide); one for more that 20 acres and one for more than five less than 20 acres (don't quote me though). The latter allows a house on the land as well. Another point, I wonder whether since your timber is considered to be mature, that the only way you could qualify it as timberland (ie timber farm)would be to cut and replant. Another issue is that your timber may be in a wetland or creek buffer and not harvestable with our 100 foot setbacks, hence no value as timber (and not "timber land") Just speculating.
Mf

 

[ultrarunner]

Thank you neighbor for the reply!

Majority is in the newly expanded buffer zone which I believe is 200' now.

This all changed after I bought.

The county seems to be playing both sides... I spoke to the assessor and mentioned I am now inside the buffer and this has reduced my value... her reply was I would first have to attempt, unsuccessfully, to take out a permit for timber harvest or building and then we could talk about it.

 

[clemsonfor]

I think you did great... I paid 100k in 2005 for 10 acres forested with a stream in Thurston County. Lots of old Cedars and large Fir... part was logged a 100 years ago and the cedar stumps are amazing.

My biggest problem and one I've posted before is the Assessor Loves My Property... the value, according the the county has nearly doubled as seen on my last tax bill.

I've contested several times and get no where. The Assessor referred me to a conservation group buying conservation land at the Assessed Price... it's kind of one hand washing the other or at least it seems to be to me.

As far a large timber... there is/has been a constant stream of Japanese Freighters hauling large raw timber out of the port of Olympia... apparently the Japanese really value large diameter timber and have been willing to pay for it.

Look into a conservation easement. These will cut down your taxes and there are various ones with vrying limits as to what can and cant be done on them. Some allow timber harvest some dont, some dont allow additional structures and some do to a specified amt. Some wont allow hunting etc. If interested check into it and have some legal advise on it before you sign it.

As far as the big timber, they buy it here as well to send there. They only buy Primo large diameter southern Pine. The guy who buys here sends a truck to get it trucks it 2-3 states away and pays $100/ton where as GP only pays like $45. He has it cut into cants and shipped over there.

 

[clemsonfor]

Thank you neighbor for the reply!

Majority is in the newly expanded buffer zone which I believe is 200' now.

This all changed after I bought.

The county seems to be playing both sides... I spoke to the assessor and mentioned I am now inside the buffer and this has reduced my value... her reply was I would first have to attempt, unsuccessfully, to take out a permit for timber harvest or building and then we could talk about it.

I hope you are grandfathered in by owning the land prior. That seems criminal to change "required" setbacks and not grandfather you. Why would anyone buy land in a river area if they dont know if in the future it will have timber value as its in a restricted area or potential to be in a future restricted area.

Around here wetland setasides are not mandatory but in most cases are usually followed as the mills usually require this to buy wood. Again who wants their land to wash away anyhow.