Understanding Timberland Value

By
January 03, 2018

Investing in property with marketable timber can be a wise investment when time is taken to truly understand how timber appreciates...

Investing in property with marketable timber can be a wise investment when time is taken to truly understand how timber appreciates and how to maintain timberland. To ensure that the timber and land are appropriately valued, it is suggested to work with a timberland expert.

Sometimes, it’s unclear how to determine how much timberland is actually worth. There are different methods to evaluate the cost like the cost valuation method, the soil expectation value (SEV) and the land expectation value (LEV). But, before diving in to evaluating the cost, there are many important factors to take into consideration that will help you know what to look for in timberland.

  1. Tree species & growth. Trees growth is influenced by their species, soil type, climate and other environmental factors. Paying attention to the species and their growth rates in that specific region is one way to help you determine if that piece of land is a good investment or not.
  2. If you break down the property, can you get more in certain tracts than in others. It might be better to sell or buy in tracts as opposed to all together.
  3. Timber vs. land. Are you looking into the timber, the land itself or both? The appreciation may be different for the land components than the timber itself.
  4. Timberland sales can be timed in order to maximize value. Like any other specialty property group in real estate, there are good and not-so-good times to buy or sell. If you are flexible, you can accelerate your sales depending on the time of year and the current market value.
  5. As a current owner, or prospective buyer, proper land management will increase the growth rate and density of the timber. Management also includes incorporating pest or vegetation control. Doing this can increase your appreciation rate.
  6. Current cash flow. Looking at current and historical revenue of the timberland sales, leases, taxes and management fees will give you a better look into what to expect in the future.
These are just some of the many ways you can determine the value of your timberland. It can be a solid investment no matter what your goal may be: to add an income stream, diversify your investments or just enjoy the land. Before jumping in, make sure you consult with a forester or timberland expert to make sure you look at every avenue and angle.

United Country Real Estate has experts all over the nation who specialize in timberland, hunting, recreational and vacant land sales. If you want to learn more about timberland properties in your area, visit www.UnitedCountrySPG.com/timberland.

Sources: http://thetimberlandblog.blogspot.com/2008/10/valuing-timberland-i.html http://www.foreconinc.com/timberland-investment-a-look-into-timberland-investing-in-the-northeast-part-1-2/  


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