Belize Teak Plantation

[Henry Clark]

Actually started this venture about 3 years ago.  I might get some activities out of time sequence.  Sit back and grab some popcorn.

I will chop this up into smaller segments, so each one isn't too long of a read and has a central theme.

Both Retiring and doing Self Storage, we hit the mark where we both had the funding and the time to invest overseas.  My wife has never had a specific place in mind, so got to do my choice.  Have always been interested in Aust, NZ, Brazil, India and Belize.  Have travelled to South Korea, Mexico, France, Canada, Maui and Italy. 

Decided on Belize.  Currency pegged $2BZD to $1USD (low inflation issues), Official language is English since it was a British Commonwealth, Property rights and laws are basically the same as the US since English based, 2nd/3rd world thus still Rough which I like (has flavor), 2 hour flight from Houston/Dallas connections, land is relatively inexpensive. These all play into the "type" of investment we wanted to do.

We are in Iowa where December thru March can be cold and windy.  Belize dry season (less humidity) is January thru May.  Great overlap.

Labor for a great skilled worker is about BZD $30 to $50 per day or USD $15 to $25.  Laborer is around USD $25 per day.  This is good pay for them.  Glad to have the work.  They also have an illegal migrant issue.  You could get workers for USD $3 per day to cut brush.

Local produce is relatively cheap.  Rock crab for USD $3 per pound.  Red Snapper, grouper, barracuda for USD $4 per pound.  Anything imported is really expensive.  Gas $10 per gallon.  Can of Spam might be $8.  Yep a Can of Spam can cost more than Rock Crab or Red Snapper.  I actually like Spam though.

Health care is both very inexpensive and for higher end issues, non-existent.  Most US prescription drugs can be bought over the counter from the Pharmacist.  Broken leg $50.  Cancer/heart need to fly home.

Over the course of this post will cover the following Real Estate angles.  Teak, buying property, building house, few buyers, real estate "fronts", preppers, as an Expat "you" will move back at some point, and "Yes" sometimes means "I don't know".

Below is Ramon, checking on Teak trees.  These are 11 months since transplanted, from about 10 inches tall.

[Sam Wilson]

@Henry Clark - I so look forward to following this thread! Thanks for taking the time to share your adventure and REI journey with all of us!

I visited Belize about a decade ago and loved it!  I have often mentioned to my wife that it would be a great place to move to - for the exact same reasons that you mentioned!

The cost of Spam comment made me laugh out loud; luckily that won't be an issue for me but glad to know it is available.

I specifically am looking forward to reading about how you chose Teak and what the real estate/business  buying process was like.

Thanks again!

[Henry Clark]

Now whatever I am about to say, you heard me right.  This will be the first Real Estate point (1) to buy in Belize.

See the picture above.  You see several Teak trees and Ramon.  It is what you expect to see in the picture, because that is what I told you.  What you don't see is:

a.  All of the trees are the "Same" tree.

b.  Ramon is 68 years old and the father of 58 kids.  Not "Grand Kids".  As I told him several times being Latin and with the name Ramon, of course he would have a lot of kids, but 58?  He is also our Mayan Priest.  I have him bless all of the major projects we do.  Do I believe in Mayan Gods? No.  Makes him know I feel he is important.  He is in charge of the Teak trees.  Which are more important to me than the house and land.  We are compadres.

When you go to any overseas place on vacation, you are going to see what "you see".  You have your Vacation eyes on.  Recommend you vacation there several times.  Get with different Realtors and see several properties.  Stay at AirBNB's similar to what you would buy.

We made about 6 trips.  Two of the trips were a week long each and we toured several areas and looked at many properties, around 50 to some degree.

Concepts:

1.  All "Expats" will go home at some point.  Divorce, cancer, heart problems, grandkids, the dream is not the dream, no retirement homes in Belize, etc.

2.  There are basically no "Buyers".  Belizeans don't have the money.  Very few Canadians, US, English will ever buy in Belize.  Don't plan to "Make" money.  Making money should not be your objective.  But hey, I'm a business guy, enjoyment and make a profit.

3.  Money is "King".  Use its power.  If they say $500,000; you say $300,000 and move on to the next property.

4.  Buy what is available and fix it, versus trying to build exactly what you want.  Building overseas is totally different than the US.  If you want a Curved Glass Shower door, you will need to custom order.  If not scheduled correctly the contractors can only build around an item for so long.  If the item gets damaged or lost, you have another lead time.  Again, the contractors have to move on.  You might end up with 2 or 3 crews working on your project.  If your doing this, do your really want to wait 2 to 3 years to build your dream house, or do you want to live here?

5.  The Most important decision as you are buying a building or location is the "Caretaker".  Do not buy a place unless it is a Gated Condo, unless you have the caretaker figured out.  See picture at bottom.

6.  Make sure they actually own the land.  Forget Title insurance.  Had a guy show me a place.  Told him how would we contract.  He said his Dad would have to buy it first?????

7.  Remember 1 above.  When you go looking for a property tell the realtor you want to look at the "Oldest" listings first.  It will take the prior owner about 1 to 2 years to come to the realization, there really isn't a market, but they have to go back to the US/England/Canada.  Now they are ready to bargain. Don't look at properties that have just (6 months or less) been listed.  Again, make an offer and move on to your next selection.  Our property was on the Market for 15 years.

Remember Item 5 above.  People used to live in this house.

[Henry Clark]

Why Teak Trees?

-Myanmar or formerly Burma is the major source of old growth Teak. They have basically shut down harvesting their forests.

- Primary markets are India, China, South east Asian countries. For me, this is a great risk management tools versus US investments.  Both India and China are both growing economically and in terms of people, China is kind of flat.

-  This is a product which is easily raised, harvested and milled in Belize.  But the market in Belize is almost non existent and very low priced.

- Resistant to price fluctuations.  Demand is increasing as India/China economy is growing, while number of Teak trees are diminishing.

- Even if all of you reading this planted a 1,000 acres; that would not but a dent in the demand, and decreasing availability.

- If the world goes into a recession or depression.  A Banana you have to sell.  A Teak tree you keep growing and as it grows, it keeps adding value.

Teak tree overview:  Below is the "Quantity" discussion, will do another post on the "Quality" side of the discussion:

1.  Generally a 25 year investment unless you can buy land already planted and maturing.

2.  For Belize the "delivered" log market is about $500 USD per cubic meter.  Not "Standing Timber".  Teak logs from Myanmar or former Burma might be $3,000 to $5,000 per cubic meter (for several reasons).  Be careful when someone gives you prospective figures to understand what the data represents.

3.  Measurements.  International market usually uses Cubic meters.  US usually will talk in terms of Board feet.  A board foot is 1 foot square by 1 inch thick.  A planed board is not a true 1 inch, it might be 7/8 inches, but still called a board foot.

4.  424 board feet make a cubic meter.

5.  Yield lets say $50,000 per acre.  Most foreign countries talk in Hectares which equals 2.47 acres.  

6.  Make sure you are converting correctly:  Currency, Acres/hectares, Cubic meters/board feet, standing timber/raw logs/finished wood.

7.  How much is a Tree worth?  Use the following as a "Factor" for discussion and not as exact.  This is for "Hardwood and not Softwood".

a.  ($1) Standing Timber.

b.  ($2) Delivered Logs

c.  ($4) Sawn or dimensional lumber

d.  ($8) Kiln dry

e.  ($16) Planed

f.  ($32) Molded   Retail value.

8.  As you can see the actual Standing timber has very little value relative to the Retail board.  There is almost a doubling of value as you move up the Value add chain.  Think of Shipping "Logs" to India, versus "Finished" boards.  The same price per container/pounds either way.  A large difference in Shipping cost versus Sales value.

9.  The Standing timber also has less of a Comparative price to use for the land owner to sale.  A timber buyer is going to adjust for: location to roads, distance to mill, terrain to log, unknown quality of wood, Owner lack of knowledge, etc.

10.  Usually timber gets sold as "Standing Timber".  The land owner wouldn't want to sell, after the trees are cut, because then they need to get to the mill and if the buyer backs out, they are stuck.  Given that the Buyer doesn't really know the quality of the logs until they are cut and sawn.  Thus the buyer won't want to give you the full $1 above.  Because they are gambling.

11.  Why would a Buyer not know what the wood is like until they cut it down?  Lets say two of the exact tree, but on two different properties.  Again this is Hardwood, and not Softwood.  When the buyer looks, Tree 1 and 2 are both 15 inches on the "Small" end.  Tree 1 however has "live wood" or the white growth wood of about 1/2 inch on the outer rim.  Tree 2 has 1 1/2 inch "live wood" on the two outer rims.  Normally this extra Live wood is caused by the tree growing to fast.  They may have kept fertilizing.  Tree 1 might get measured using a width of 14 inches, while tree 2 might be measured with a width of 12 inches.  Now 2 less inches doesn't sound like a lot, but it is a lot less.  Draw two circles with 14 and 12 inches and then measure the volume.  Its a big difference.  Hardwood, the value is in the "Heart" wood and not the "Live" Wood.  Softwood, you use both.

So the buyer might only offer you $.65 on the $1, due to rough terrain, distance from the mill and to cover if the Logs are poor quality.

If you invest in Teak or any timber, you want to reap the rewards as far up the Value Chain as possible.  Your profitability increases and the accuracy of Market Value is easier to determine.

[Sherri Stokes]

Following! This is amazing. 

[Rolly Weaver]

Interesting post. Thanks for sharing. 

[Henry Clark]

Got back 2 weeks ago.  Went down to check on trees, select doors, handrails and check out roof.

About 3 miles down the road is a premier welding shop.  Stopped in and they happened to have the types of rail I want for the roof, second floor steps and second floor balcony.  They will put an extra bottom rail about 4 inches off the ground.  Didn't want to do wood, due to the maintenance.  Thought about Stainless Steel wire, but tends to sag if people put their feet on.  He also said it will rust.  About 250 feet, will be about $10,000 USD installed and GST tax.

Below is the roof we put on.  We are building off a pre-existing building structure.  Did not really want a third floor, so decided to roof it and leave it open.  Great views and cooler breeze.  Worst case, a very expensive clothes drier.  See prior picture, for before shot.

Below are the stairs from the 2nd floor up to the 3rd.  Built on the patio our outside of the house to save interior space.  Also any water will stay on the outside and run off.  My contractor does great tile work.  Can't wait to design.  Will be one of the last things we do.

Went looking for Wood Exterior and interior doors.  Also travelled 2 hours to find a security door design I saw in Orange Walk.  The Wood door will be custom built, kiln dry Mahogany by some contractors in a village called Duck Run 2.  Cost about $300 USD.  This is an example.  We need to get them the final design.  It is a lot cheaper to buy locally than importing with about 70% tariff.  The metal security door got some pictures.  All of the security doors in Belize are custom built by welding shops.  Will need 3 of them, they are estimating around $400 each.  Will look similar to this.  Although I want an antique copper green look.  Searching for the medallions, or will get custom made down there.  You have to do security doors and windows due to theft.

Visited the neighbors across the road, who were having a roping contest.  Went a lot quicker with the ATV versus real calves.  The Cowboy roping is from Banana Bank Lodge where I stayed this trip.

Having breakfast at the lodge and this parrot flew in.  They raised it and it is in the wild.  Visits every morning to say hello.  This is an actual Belize parrot.  You see them flying around all day, but this is the first time I have actually looked at one up close.  The reason I stayed at the Banana Bank Lodge this time, is because the Lady is a world class artist, thus an artistic eye.  Also her husband has 100 acres of Teak and I wanted to see their operation.  Had them over and got their thoughts on the house we are building.

[Henry Clark]

See first picture above of teak trees. Same trees two weeks ago.  Had them go through and knock off leaves as high as they can reach.  Don't want the wind to make them grow crooked.  This will slow their growth down, with less leaves. They are now 20 to 25 feet tall.  This isn't photo shop.  Incredible growth during the rainy season.  Should turn dry in January, then they will go dormant for about 4 to 5 months and lose their leaves.  Their growth upwards will slow down around 35 to 40 feet and then their girth or diameter will start to thicken.  These particular trees are Clones.  Will show show normal seed sown trees next year to show the differences.  The Clones cost about $.50 USD more per tree versus $1.00 USD. But they growth faster, straighter, and have less limbs.

[Frederic Babeux]

Very interesting story, will follow as I was looking into citrus farms in belize not long ago out of curiosity.

Can't wait to see your progress and experiences as you go forward!

[Moses Handler]

Amazing and detailed infomation, thsi sound like on amazing place to in, following closley

[Henry Clark]

@Frederic Babeux

On citrus anywhere in the world, make sure you understand "Greening".

Same thought on Coconuts, understand "Yellowing".

Anyone on Belize, don't invest there unless you have made many trips there and either have an onsite Caretaker or a gated Condo community.

[Bruce Woodruff]

Good stuff my man, thank you!

[Jai Reddy]

@Henry Clark I’ve been reading all your posts here and on other threads. Thank you for taking the time to share your valuable knowledge and experience

[David Huffaker]

Amazing. A great read. Thank you. I'm curious about the financials, which I'm sure you will get to. You said "don't do it for the money," but I'm sure money calculations were part of convincing you this would be a reasonable way to spend your time and money. I've been interested in orchard and timber investment for a while, but haven't done much work to go that route. I have two apartment buildings and am currently spending time looking at warehouses.

[Henry Clark]

@David Huffaker

Your "curious about the financials" note above.  Also after you read the following, do you really want to invest in Timber?  The quick answer is 99.9% of the world should not do this investment, they will lose money.  Yes, I'm part of the 0.1% that can make money on this deal, because of my background and what I consider fun and interesting.  Note, most of the profit we make off this and other Teak projects, will go to two of my Belizean workers.  Showing them how to get rich.  Both of them are worth about USD $1,000 combined.  Have only "time" to contribute or lose.  In about 10 years they should be worth more than USD $500,000 individually and more importantly have a business model and the knowledge to expand in Belize and other countries.  I will get a lot of fun out of it, plus make money now and off their future efforts which I will not be involved with, other than as a Passive recipient.

Cost- if you did traditional logging and sawmilling operations, you would need about $3,000,000 of equipment on the cheap to start out.  I plan to only use $150,000.  Thus our business model we can scale at a lower level of volume.

Throughout Central and South America and Africa, Teak planting was the rage about 15 to 20 years ago.  So there are a lot of small plots all over, but no one has developed a localized market.  That is where we come in. The normal production cycle is around 25 years, by buying or cooping with the land owners we will cut off about 5 to 10 years, and my basic model is to not put any money into the trees up front. As noted above the trees are the cheapest part of the value stream.  So why are we planting Teak trees if that is not where the money is?  For the fun of it and to also give us credence and for my team to understand what it takes to make quality lumber. You can tell people, but they learn better by doing.

Before we move on, lets ask why not Mahogany which is native to Belize?  The wood door above is Mahogany.:

a.  Stemborer- Mahogany is impacted by a moth, called a stem borer until it reaches a certain height, above 15 feet.  The moth literally bores into the tree stem and lays eggs.  This causes the tree to be deformed at that point and send out many limbs and the central trunk basically stops growing.  You might get one log out of it.  You can spray the trees, but how often with a rainy season and how many years.  You just have to "miss" one time and the trees are ruined.

b.  Belize and most 2nd and third world countries do not have  a "long" view or a reforestration plan.  Thus as Mahogany is cut, it is not replanted.  Thus the forest is dwindling.

c.  Market- India and China are both upcoming countries in both GDP and population size.  Teak is a well known product and Status symbol there.  Mahogany is more of an European or local market.  The Local market is not what carries value.

Quality based on grade of wood.
We already covered general pricing above, based on Processing stage.  Now let's look at Quality based on grade of wood.

There are primarily two different terminologies and methods to grade Quality.  We will use the British or UK model which is primarily used in the India and China markets where we will be marketing to.

Quality grades:  This is a general discussion, there are more detail determinants, I am not showing.

A- basically no flaws, generally 100% "Heart" wood.  You can also have 1 sided "A" lumber, where a minimal knot is on the bottom of the wood not visible at the top, like a Table bottom.

B- minimal knot or two showing, more coloration variation in the wood.

C- can have "Live" wood and more knots, and dead knots or holes.

Rough- could have "live wood" or "Wane".  Wane is missing wood or bark.  As you make your preliminary cuts along the sides of the logs, the log generally will not be symmetrical.  Could be 15 inches at the top and 20 inches at the bottom.  Thus some portion might miss some wood.

"Rough" and "C" lumber might only be worth 1/10th or 1/5th the value of "A" lumber.

How do you "Make" Quality lumber?

You can grow quality lumber.

You can cut Quality lumber.

You can both Grow and Cut Quality lumber.

Last you have to Sell Quality lumber.

All of the above sound so basic, but until you have Failed or someone holds it in front of your face, you don't know. Thus you just wasted 25 years and received only 1/2 the money you could of.

Grow:

a.  Seed selection or cloned teak.  Some people save money by collecting local seed.  Savings Pennies versus $100,000 more.  Again, cloned teak are generally from the same mother tree source or a couple of trees.  They are selected for fast growth, few limbs and to grow straight.  The straighter a tree is, the higher it will Grade in Quality.  Clones cost about $.25 more per seedling but worth far more in outcome. 

b.  Thinning- around years 7, 14, 20 you need to be thinning.  Thin out deformed, curved, and slow growing.  Also allows the remaining "Quality" trees to grow thicker, thus more Quality lumber.  On a 10 foot x 10 planting grid on an acre.  You would have 435 trees.  Year 7 you would thin about 1/2 down to say 220.  Year 14 you would thin about 1/2 down to around 110.  Year 20 you might thin out a few more.  Don't take the good ones.  Year 25 you will have around 65 left to harvest.

Even at Year 25 these are still "baby" teaks.  On a percentage of Mass basis, Teak grows the most from about year 5 to 12.  Then the growth percentage starts to slow down.  Keep in mind though you are after Quality lumber and value and not Mass wood.

As the trees get older the amount of "Live Wood" starts to shrink, thus more Quality wood.  

Also from a percentage standpoint, say a 10 year old tree with a diameter of 10 inches grows 5%; but a 25 year old tree with a diameter of 20 inches grows at 3 %.  Which one earned you the most money, for that year?

Thus at year 25 with 65 trees; you might decide to leave the best 15 trees and let them grow to 35 years old.

Cutting for Quality:

a.  Log Magic- sometimes less is better and sometimes more is worth a lot more.  I will have to get you some log cutting pictures to show you the Magic.  But can you imagine the loss of money if someone didn't understand this Magic?

1.  So you have a 12 foot log worth say $100; but I say cut it into an 8 foot log and make it worth $200.;

2.  You have a 16 foot log that you could cut two 8 foot logs worth $250; but I say cut one 10 foot log worth $400.

3.  Two 5 foot logs are worth $80;  One 10 foot log is worth $400.

b. "Cutting" the tree down.  So all of us cut the same tree down, at the exact same spot.  Which tree is worth more?  It is amazing the amount of pent up force in a falling tree.  If you don't cut the tree correctly, as it falls part of the tree might not be cut all of the way through.  A one to three foot piece of the tree could be pulled out of the bottom and leave a hollow spot in the bottom log.  This cuts the grade down.  You can also crack the bottom log if it isn't cut correctly.

c.  So you have the tree cut down.  You have cut it into logs.  Did you "Paint/Seal" (to be more descriptive) the ends of the logs? When you cut a tree down it immediately starts to dry out.  It dries way faster at the cut portions than through the Bark.  This sped up localized drying causes the log to both Crack at the ends and to build up "Tension" inside the log.  When you go to mill the log, the lumber can twist and come out wavy due to the tension in the log.

d.  Dimensional lumber-

1.  So you have a log on your Sawmill bed.  It has 360 degrees of side.  How do you determine which sides to start cutting first so you get the most value out of it?  Picture a log with a big limb knot on one side.  You could cut the log cross way with the limb, but then all of the boards on that side would have a knot in it.  Or you could cut the log with the large limb knot, say vertical, so the knot only shows in one or two boards.

2.  Kerf- Generally all Sawmills use a band saw.  The one I will use has a Circular blade, just like a Skil Saw you would use at home.  The Band saw blade is significantly Thinner than the Circular blade so you keep more wood.  On one board you wouldn't care.  But over many boards, you might end up with 10% more lumber.  The Band saw blade has many small teeth, whereas the Circular blade might have 12 big teeth.  The Band saw blade will produce a smoother surface.  This means less wood is lost when you go to "Plane" the lumber to size".  Again more quality lumber.  Then why am I going to use a Circular Blade?  Another story.

e.  Cut to random lengths-  Let's say your logs are to 8 foot lengths.  Let's say the price per Square board feet is "A" $10; and for a "C" is $2 at this processing stage.  If the knots in the "C" board are in the last two feet of the board, then you cut off two feet and now it is an "A" quality board.

f.  Joining-  You're "Rough" grade lumber, is it even worth it to ship it to India/China?  Either sell it into the local market as construction lumber; or trim/Join it.  Cut or trim all of the bad wood or open pieces out of the board.  Then trim into standard small lengths.  Then "Join" and glue them together into any size board you want.  You could make 4 inch wide joined boards.  Or you could join the 4 inch widths into 8 inch widths or greater thicknesses.

Selling for Quality:

a.  Selling for Quality lumber requires Sorting.  If I bake you a cake and you find a piece of paper in one slice.  Is the rest of the cake bad?  If your the customer or buyer the whole cake is bad, and you will only pay me for a bad cake.  When dealing with overseas buyers you want to Sort to their Specs within the price range you are selling.  Any deviation and they will want a price concession and its to late, the product is overseas.

b.  When to Sell?  Teak is a tropical climate tree.  It is really hard to cut and deliver timber during the Rainy season.  Then get it to the sawmill for processing.  Sell your lumber right before the next Rainy season, when supply of lumber is Short, "hopefully", or you will need to sell at a lower price or carry for a year.

What does this have to do with Real estate?  Timber land is a great investment.  As mentioned before a Banana, you have to sell immediately.  Timber you can let grow and it gains value.  Whether Teak or Southern Pine, the above items or concepts will need to be applied to determine the value of your property or purchase price.

[Henry Clark]

Below are some pictures of a Teak tree that was already on our property.  This is both a communication and a quality example.  I asked the caretaker at the time to trim the 12 trees lower limbs.  Bought a "Saw" and showed him how to do one.  

Came back months later and noticed he had cut them with a Machete versus the saw.

A Machete is a person's third arm in a third world country.  It's a hunk of steel.  It won't break down and doesn't take fuel.  Easy to train on.  It becomes ingrained in their culture.  Telling someone not to use a machete, is telling them to not use their third arm.  Now this same kind of example happens even in the US, but it is more pronounced in a third world country because they "know" better than you what works.  They can't afford a chainsaw, gas or to have it fixed.  Mentally not an option.

Had my current caretaker trim this stub with a chainsaw and send the pictures as an example.

This limb should have been trimmed when this tree was around 2 to 5 years old.  Versus around 15 years.  The white spot will heal over and show as good wood.  The dark brown limb spot will stay.  When we cut to lumber, it will cause that board to grade out as a B or C.  Thus that knot will cause the board to lose half its value.  This is just one item.  You can see from the previous notes all of the items that need to be followed to get Quality lumber.  More importantly the amount of communication and follow up necessary on site.

[Tom Yung]

@Henry Clark Your writing skills is excellent.

I learned & enjoyed at the same time. Thank you.

[Henry Clark]

The border on the South side of our property is the Belize river.  Where we go down is a side branch which has shallow water, next an island and then the actual river. The dogs are enjoying the side branch since it is shallow.  The green path is back up the hill towards the house.  There is about a 20 foot rise to the top of the green area.  A year ago, due to two hurricanes going into Guatemala, the run off filled this entire river valley.  Be careful where you build.  No rain even fell in Belize, it just drained down river.   Next picture is looking up stream and a view of the main river.  The river is usually this clear as long as it hasn't rained for 3 to 4 days.  Primarily limestone rocks, so it is very clear.  If you go about 300 feet down the side branch in the back water area, that is where our 7 foot crocodiles are.  Can't wait for some Barbecue Crocodile.

Still have some ground to plant and out of Teak trees.  We have been planting a lot of native trees such as Cedar, Guanacaste, Sapote, Tinga, Soursop, etc. 

Buying 100 Hybrid Coconut trees to plant.  I've made the same error a couple of times and it is a matter of greed and not understanding.  My contractor sourced two sellers for Hybrid Coconuts.  One for $10 BZD or $5 USD and another for $15 BZD.  Now both are cheap to me.  You can't buy a fruit tree in the US for $5 or $7.50 per tree.  So I started to go with the $5 trees.  But he showed me a picture where the guy just had them piled on each other.  They were sprouted.  This seemed unprofessional so I asked him to find out how they were bred.  He said the guy just has Hybrid trees and they fertilize each other.  My guy is a great contractor, but has never done any agriculture.  It takes the male pollen from a "Tall" variety, sprinkle on a dwarf variety, to make a Hybrid coconut.  Breeding Hybrid to Hybrid, you could get Tall, Dwarf, or middle of the road trees.  I made this same mistake when I went to buy "Sweet" Corn for the dinner I threw last time I was there.  5 ears for $10.  or 5 ears for $4.  They both looked nice and fresh.  The first was true "Sweet" corn.  The second was regular field corn.  The field corn ears they cut off the kernels and make a wet paste, to make a special dish.  Tasted okay anyways, but not as sweet.

Basically if there is a large difference in price, there is a reason.

[Henry Clark]

There are several objectives on this investment:  A.  Lifestyle addition, B.  Real Estate- Land, C. Real Estate- House, D.  Real Estate- Timber, E. Real Estate- Timber management.

No matter how good the "pictures" look, no matter if it is 0 degrees where you are at, no matter whatever; don't do this type of investment.  I'm having fun, but there are a lot of other reasons, I'm doing this investment that you probably don't have, can't get, or can't take the potential loss.  I will have more failures than successes on this project.  But in total it will be fun and profitable.

Lifestyle:  My wife and I never plan to live there permanently.  Our son this week just went to Navy Bootcamp for submarines, 15% drop out, so have to see how he does.  He should do good.  Iowa 9 degree high and -5 low last week.  Belize 85 and going into low humid and bug period for 4 months.  Can't wait to pick our own Pineapple and Banana.

RE Land-  Belize has one of the lowest population per square feet in Central and South America.  Less pressure on land price.  I will use the next 25 years as a time frame.  51% of the people are 24 or younger.  Land at key locations along roads or recreational areas is still readily available.  If you want land next to a river or the beach you can readily purchase it.  In the next 25 years the population of 400,000 will probably double due to the young having kids, bette health care, migration from poorer countries and Expats.  More people, higher prices.  We are in at $4,000 per acre.  Going with current day dollars and not inflation, this land will go for about $20,000 in the future, in today dollars.  Actually, if you saw my Subdivision post, if we subdivided this land today it would go for about $10,000 per acre today if sold in partials due to the location, Creek/River, Electricity and water access.

RE House-  Bad investment up front.  There is not much of a Real Estate market.  Right now you should not expect to build or buy and make money.  Belizeans $5 BZD or $2.50 USD per hour for a laborer; don't make enough to be in the market for the types of houses you would be thinking about.  Thus your market is fellow "Expats".  So why am I building?-  We built next to a clean/nice river and also a creek.  In a great geographical location.  Took someone else's dream, and built upon it. Found a great contractor and developing a long-term business relationship with him.  Over a 25 year time frame the combination of the location and the house will grow faster than other properties, due to location/location.  We will have about $100,000 into this building furnished.  Might have to wait 3 years to sale, but would expect $350,000 to $500,000; house with 2 acres.  Again, due to the location, creek/river access and the fruit trees planted.

RE Timber- takes 25 years till harvestable Teak trees.  Not counting the land which was discussed above we will have about $40,000 NPV into the Teak trees over the 25 years as standing timber, not harvested.  

Value of Trees:

435 per acre x 20 acres= 8,700 trees

At 7 years thin 1/2= 4,350

At 14 years thin 1/2= 2,175

At 20 years thin ??= 1,085  Some of the thinning's are saleable.

At 25 years harvest 1,085 trees.

You measure at the small diameter end of the log.  Since we are properly managing these logs, we will get at least 3 clean logs of 8 foot each.

                          Diam.       Doyle BF

Log 1 diameter- 20 inches       128

Log 2 diameter- 15 inches         61

Log 3 diameter- 8 inches             8

Total board feet per log=        197

Number of trees=                1,085

harvested BF=                  213,745 BF

Use $1USD/BF today=      $213,745

NPV today=                     $ 49,802

So we plan to invest $40,000 in today dollars and have timber worth $49,802 in today dollars?  Why would you ever plant Trees?  It's not worth the risk or effort over a 25 year time span.  Look up above at the Value stream from Standing Timber to planed lumber.  A 16 multiplier.  So the $49,802 x 16= $796,000 in today dollars.  Wait though, there is the cost of taking a standing tree all the way to Planed lumber.  We will do it very inexpensively in Belize due to the cheap labor and the scalable equipment I will use.  The major point to take away from this, it's not worth growing Trees for lumber, unless it's just for fun. 

Plus, we have a problem. I'm 62 and 25 years from now, I will be 87.  Already told my Wife and Financial Planner to count me out at 80.  So, I will be too old and I already noted it's not worth just growing trees.  See next section.

RE Timber Management- So above, it's not worth "growing" trees and I will be too old.  Setting up a partnership with our Belizean contractors to teach them the Lumber industry.  They are about 40 and 18 years old.  Should make it another 25 years.  Plus, my son is only 20.  Will contract out with small Teak property owners to manage and harvest their trees.

Heading down in a few weeks.  Will grab some more pictures and continue the story.

Hope one of our Pineapples is ready.

[Henry Clark]

Been having too much fun.  Haven't updated this post.

House- basically done.  Started staying in it about a month ago.

House is basically finished.  Few lights still to buy and switch covers to put in.  Top picture is the three story structure.  Who needs three stories so in the second picture you see the open veranda space on top.  This was a pre-existing structure so we went with the flow designing it.  Third picture we got all of our cabinetry in.  Local furniture shop about 8 miles away did the woodwork out of Mahogany, really great job.  Did the customer doors also.  All of the exterior wood doors we had them do full size carvings on them.  The marble came from a shop about 2 hours away.  It's called Jaguar.  About half price of the more expensive patterns.  All installation and manufacturing costs are relatively inexpensive down here.  It is a lot more cost effective to have things custom made than to pay 80% import tariff, plus it is local.

[Henry Clark]

Separate post, we sold the newest storage location we had developed.  Was uncomfortable with where the economy, inflation, interest rates etc were/are heading.  Wanted to both reduce our debt load and also take profits off the table.  Although we might set on some cash, I believe in selling and buying on the same market.  Took some of the profits two weeks ago and went looking for more property in Belize.  Remember from above the Teak industry outlook, plus you don't have to sell on a down market, you can just let the trees keep growing.

Keep in mind the markets are totally different down there.  Basically, non-existent so Cash is King.  Some properties might be listed for 3 to 5 years.  Our Teak is for the overseas market so not dependent on the Belizean economy.  Our house and land are special, so not worried about selling those in say 15 years or my son can keep.

With Cash being King, I use a Buyers' market approach down there.  Made a list of 12 properties in descending order of interest.  Listed the property, their asking price and my offer price.  Gave to our Realtor down there, and said let's go through each one, until we get a bite.  Basically a 3-day offer, with a due diligence visit/review.  Third property took our offer after a few counter offers.  Went from $310,000 to a final $170,000.  Actually, agreed to $200,000 initially but re-negotiated once I visited the property and looked at the existing Teak/Mahogany trees.  You have to know the price point where you are willing to walk away.  And you have to challenge their asking price.  We only look at properties that have been on the market for a while.  By then they realize they are not going to get their price.  This property had a few defects which I used to negotiate down.  Even though those defects don't affect my usage.  Since teak is a 25 year investment, also look for a secondary purpose or value to each property such as location, river access, future tourist area, etc.

There were two lots, 36 and 23 that we bought together.

Lot 23 is 32 acres and has 12 year old Teak/Mahogany on it.  This helps cut down the investment time horizon.  It had not been taken care of very well so the trees weren't in as good of shape as other properties.  That is why we re-negotiated downward.  But we can Thin and Trim and get a good quality stand of timber still.

Lot 36 is basically cleared and just weed grass and shrubs.  Shipping our skidsteer down.  Should be there next week.  Will use that to clean up the brush.  Plan to start planting it in two weeks.  Have enough seedlings for about 12 acres.  Will plant the rest next year.  It is currently Rainy season.  You want to transplant in the Rainy season otherwise they will die.

What makes these Attractive and Unattractive are.  These properties are a mile off the main road. About 200 yards in, is the nearest towns trash dump.  Trash, Buzzards, etc that you literally have to drive through.  That is why this property had been on the market for so long.  How about when we get ready to sell?  There is an alternate path that bypasses the dump, just need to either build it ourselves or get the town to build it.  Not in no rush, have about 15 years to wait.  I actually like the trash dump.  It is depressing values.  Will try to buy more property along that road.

The main road at the front is a brand-new road in Belize.  A large majority of the tourist attractions and beautiful views are along this road. The "Rio On Falls" below is down the road.  Think of a cold Colorado stream but in Belize.  Mayan ruin, ziplines, butterfly farms, Francis Ford Coppola resort, 1,000 foot waterfall, etc etc; this road will really develop over the years.

[Henry Clark]

Went down for 2 weeks.  Got the skidsteer there.  Working with the guys on the two new pieces of property.  

32 acres with the teak and mahogany, they have been trimming the limbs back and thinning the number of trees.  All of the limbs and brush under the trees are from our Trimming.  Still need to go back thru and thin out about 1/2 of the trees you see.  Basically, when the tree limbs start to touch at the top, you need to thin out.  The roadway is down the middle of the property.  With the skid steer been moving loose rock onto the roadway and building it up so it can take traffic.  Second tree on the left at the bottom you can see scarring.  This is a Mahogany tree.  The prior owners used to burn to clear weeds and brush.  When young this scarred most of the Mahogany trees.  That same tree towards the top you see two forked leaders.  Will need to come back and trim off to one main leader.  Mahogany does not grow as straight as our Teak.

The other property we were able to clear, mow, spray most of the underbrush out on some of the land.  Had it plowed.  Was very rainy when I got there, but the last week it was dry.  We have to wait till it rains again so the plowed rows are not too dry.  Otherwise, if we transplant the dirt will suck the moisture out of the seedlings and kill them.  Next week it will be wet and overcast so they will make a big push to plant about 2,000 trees.  Rows are 10 foot wide, and the trees are spaced 10 foot in the rows.  This isn't a bunch of trees.  We need to get more land cleared. The back of the picture we have a bulldozer clearing the Low bush areas to plant next year. Ran into two spots with Chechen or Poisonwood seedlings.  Left them since they are doing well and are a valuable species.  Just like Poison Ivy, except in a tree.  This ground has a lot of limestone under it.  This is actually the best type of ground for most of the valuable local hardwoods, including Teak.  Mahogany likes wet ground; thus, we will plant it and similar species on the low spots.  Bought some seedlings from a Mennonite family.  Ziricote, Jobillo, and tree of Cortex.  Waiting on Purpleheart and some others to mature before buying and planting.  Rainy season ends about the end of January.  Need to get the seedlings planted now, so we don't have to water during the dry season, which is a waste of time.  

As we hiked through the forest marking the property boundaries noticed most of the trees and underbrush are worthless lumber species.  Survey cost BZD $250 or USD $125 to mark 4 corners.  Additional BZD $100 if they had to replace the concrete markers. When you look around the countryside although everything looks green, most of the valuable tree species have been harvested and there is no regeneration.  Most 2nd and 3rd world countries don't have a reforestation plan model.   The two larger trees on the left of the photo are Cedar trees.  Spanish Cedar.  Not the cedars we are used to in North America.  They rank up there behind Mahogany for furniture making.  Within one year I would expect someone to steal those trees since they are large and along the roadside.   Will plan to build a house there and have one of our workers live there for free, to watch over both properties.  Off grid, no water or electricity.

Marvin, one of our young workers used to work with a survey crew clearing survey lines.  He noted a small mound of rocks and called them a Monument.  It is a small Mayan ruin, size of two pickups.  He said you can tell because the rocks are stacked on top of each other.  Don't know if it is imagination or the real thing, but as you stop and really look at it you can see a formation.  Keep in mind this could be 500 to 1,000 years old with vegetation slowly working on it.  Left it alone and not bulldozed. Will go back and take a look at it later.  Any of you with a metal detector, welcome to check it out.

Mark and us were marking the corners and property lines by putting Steel T posts in and putting 10-foot PVC pipes over them.  Wish all property owners would mark their lines.  Still get amazed.  Not as many ticks, mosquitoes, snakes, spiders or animals in general in Belize versus the creek bottom I grew up in Louisiana.  Was a lot easier to get lost though.  Due to the Low bush, and the larger trees having been cut down, harder to see.  The main thing everyone worries about being in the woods are the Killer Bees.  They are fierce and really attack.  You will notice Mark is walking around in Cargo pants.  Everyone prefers that, even when going through the Jungle.  Last trip, I stopped at Goodwill and others and bought a ton of Cargo pants, Black dress shoes, and dri fit shirts for around USD$1 to $3 each.  Took down to my crew and their kids.  These cost around USD$12.50 at their markets.  Again, they make about USD$2.50 per hour.  Which is good pay for them.

Real Estate- to re-iterate, these are long term investments spanning 10 to 30 years. If the economy is bad at that time, you just don't harvest and let them keep growing until the economy comes back. There is a lot of upfront costs, so it does not cash flow up front. Also, the properties we are buying have other REI values other than just Timber. We could buy land that it takes you 12 hours to walk to. These properties are in major tourist of growth areas. Having fun, don't need the money now, can afford the upfront costs and will return better than the majority of our investments.

[Henry Clark]

Why Belize.  It gets cold in Iowa.  Highs of 35 and lows in the teens this week.  Cant wait to go 1 week a month starting in January.

[Henry Clark]

Still working on the two new properties we just bought.  As we are bulldozing the one property, cleaning up the underbrush to prep for planting.  One spot has a spring on it.  Decided to build a pond.  Will put fish in for eating.

The patch of underbrush on the right has a lot of Chechen or Poisonwood.  We are leaving that since that is a good lumber species.  It is just like Poison Ivy, but in a tree.

Guys are taking a lunch break.  Usually, they just bring tortillas and eat for lunch.  Today they were planting more seedlings so Mark our contractor sprung for lunches.  In the upper left corner in yellow, you will see the skid steer with 440CT model on it.  This has been a huge help in moving brush.  Building roadways on the property and filling potholes on the dirt road.  The guy sitting behind the tree with the no trespassing sign is Arlin. He lives with Jack's sister who is to the right of him.  He is heart broke because she wants to apply for a Visa to the US to get work and maybe move there.  He hid her passport so she couldn't get a Visa.  Everyone wants to get to the US.  Owning a US passport is gold, overseas.

The black motorcycle in the middle and the guy kind of facing it, is Marvin.  December will be the last payment he makes to me on his motorcycle.  I paid for the whole bike, but he had to pay me half out of his pay.  It's entirely his after December.  He is 22 and lives at home with his parents and 3 other siblings.  Dropped out of 10th grade to make money for his family and so the younger ones could make the "payments" to go to high school. He is Mark and our, junior partner.  He will share in our timber profits.  Timber is a long-term investment.  I'm 62, Mark is 43 and Marvin is 22.  Marvin has no money, knows no trade, did not finish high school.  He brings youth and years to the mix.  Plus, we can train him on the timber industry, the way we want him trained.  We had him start back working on his GED or he can't be a partner with us, so he is taking night classes.  Owning the motorcycle, he is probably wealthier than 1/2 of Belize.  His dad doesn't own any vehicle.  We will harvest in about 13 years on our pre-existing trees and another 25 years on the seedlings we are planting. Mark and Marvin will both know all that I know and have taught them.  Since they both have a vested interest in the trees, they will protect them.  Trees get stolen all the time.  May build a house on one of the Properties and get one of the guys to live there.  No Electric or running water.

At the bottom is a young Boa.  The bulldozer damaged it.  Not poisonous.  Just don't want to meet Mamma Boa.  Even with this picture, I have only seen four snakes so far in Belize.  Way more snakes and mosquitos in Louisiana where I grew up.

[Alicia Marks]

I love to see that you’re building a community as well as creating wealth for others!

[Henry Clark]

Quote from @Alicia Marks:

I love to see that you’re building a community as well as creating wealth for others!

Thanks for comment.  Mark our contractor and groundskeeper will get 30% if we sell standing trees.  40% if we sell finished lumber. He doesn’t contribute any of the cost. I just ask him for trust and to gaurd it like it was his.  He is probably with about $2,000 USD.  Once we harvest he will be in the top 1 % in Belize and probably top 20% in the US. Have walked him through the financials and the numbers are to big for him to comprehend. The Forest industry is one of the most corrupt industries.  Teaching him every way someone will try to steal from us.