Determining the value of Timber Land

[Gabriel Ferrin]

I'm considering buying timber land and I'm trying to figure out how to do calculations to determine good deals. 

My ideal situation is to find arbitrage opportunities where the price of the land is less then what the value of an initial harvest. I'm not looking to clear cut the land but ideally I would like to cull some of the weaker trees and allow the better hardwoods to grown and to plant more desirable trees. 

I've heard anecdotal stories about this being possible, but I was wondering if anyone has any good resources or models for determining the potential profitability of a piece of timer land. 

I know it varies tremendously by type of tree and number of trees on the property but any resources to get started are helpful. 

[Jay Hinrichs]

well something I know about as I owned a land and timber company for many years

this is all species dependent.. hard woods generally do not give you enough yield per acre to come close to paying for the land unless its VERY VERY inexpensive land.

you have harvest rules in most states..

The greatest amount of value per acre per species is basically like this.

1. Port Orford Cedar  southern coast of Oregon

2.  Redwood... Northern California... trees can be huge with yields of 100k NET per acre.

3. western red cedar  hi price lower volume per acre grows in the watersheds of ORegon WA BC

4. tie between old growth Yellow pine east slope of cascades and  J log  prime doug fir WA OR BC

    I have taken 400k net dollars off of 10 acres of prime growing ground in Oregon.. that's 400k in my jeans in 5 working days.

5. all the other lesser sorts of doug fir and pine.. I know you have yellow pine out your way not sure on the price per MBF however I suspect the old growth no knot stuff could rival our doug fir.

6. Hard woods for dimensional lumber .. that does not count beryls and other specialty cuts.. but yields per acre are quite low and there is only so much wood in the main trunk.

I got into land and timber for the exact reasons you state. first deal I ever bought in Oregon I paid 120k for a 40 acre with a small farm house  (circa 1992)  logged it got 160k NET in my jeans in a few weeks.. then sold the house for what I paid for it.. and it was that AH HA moment that created a very nice 10 year run buying and seller timber land timber rights .. etc etc.. doing 1031 on timber deeds.. It was cool.. we were kind of like storm chasers.. you really can't log in the winter here so we worked 24/7 from May to Nov.. then my partner went to Maui I stayed home I the Napa valley and played golf every day.. it was a great 10 years..

there is still money to be made my old partner is logging to this day and he has hit a few 1 milli8on net income years but its rare now we did that in 3 months back in the day.