How Much Does Timber Land Cost?

As a land specialist Realtor, I have been in the timberland business for about 30 years. In that time, I have bought and sold a lot of land for investors. Timberland has been a great long term and sometimes, short term investment for a lot of folks. With a little luck, one can get rich owning land.

So, how much does timber land cost?  That depends.  Land has appreciated in value tremendously in some areas and stagnated in others.

Here in Pennsylvania, when I started out in this business, one could buy “mountain ground” for $500/acre. It was considered fairly low in value because you couldn’t grow crops on it or develop it for housing or commercial use.

Now, with people having more expendable income, there are more folks who can afford to buy some land and own it just for recreation. Plus, mountain ground is generally worth $1,500 to $5,000 per acre depending on size, oil – gas – mineral (OGM) rights and value and location.

Back when timber was closer in per-acre value to the cost of the land, buying and harvesting timber was a very profitable business. Now days, it is difficult to buy land to grow and harvest trees for profit. Difficult but not impossible.

In this post, I will go over the value of timber on a tract of timberland and discuss investment in wooded property.

How Much Is Timber Per Ton?

Timber is measured in Board Feet, cubic feet, cords and tons. If the trees are pulpwood sized (under 12 inches diameter) or very poor quality, we often use tons or cords to measure the volume on a tract of land.

I usually sell low quality hardwood for pulp by the ton. I typically get $3/ton for this wood.

In some regions of the country, this price could be up to $8/ton. Moist hardwood is heavier than softwoods or dry hardwoods.

A truck load of pulp generally weighs 25 tons, more or less. The logger will get $25 to $30 per ton delivered. So a truckload of pulp logs nets the logger $750 or so.

An acre of hardwood timber that needs thinning or regeneration harvested might yield about a truckload of pulp. I have seen stands of pine plantation that had many times this volume.

Will Logging Companies Pay For Trees?

In order for a logger to come and harvest trees for pulpwood, there must be enough volume to be worthwhile moving equipment and setting up the logging operation. Generally, a minimum amount is 20 tons to the acre to operate profitably.

Then, there has to be at least ten acres of land that needs to be cut. Anything small like ten acres would probably need some saw timber to go with the sale in order to entice a logger to work on it.

How Much Do Timber Companies Pay For Trees?

Timber can be worth anywhere from nothing to thousands of dollars per acre, depending on what it is. I once sold some walnut trees on 5 acres for $40,000.

That’s a rare occurrence. Generally, if you can come up with some pulpwood and saw timber, then you can sell timber for around $1,000/acre if the timber is good quality and the species are in demand.

How Much is a Truckload of Timber Worth?

A truckload of timber can be worth $500 or it can be worth $5,000, depending on what logs are on it. I once had a hunting club decide to go with another Forester because he could get twice as much per load as I sold timber for.

This was a silly argument because all I sold from the land was pallet grade logs, saving all of the quality trees to grow more.

Should I Plant Trees For Retirement?

Penn State once did a study on the economics of planting trees early in life for harvest at retirement. The wisdom of this investment depends greatly on the soil and climate conditions, which greatly effect the growth rate of the trees.

I once sold some red oak for a farmer who was 80 years old. He said he could remember when his father and his uncle cut all the timber from that woods. It grew back to maturity within his lifetime.

The problem is, one cannot predict the market for any particular species of tree ten years down the road, let alone 50. For a time, Pennsylvania black cherry was the king of the world wide timber market.

A good stand of red oak and cherry would bring bidders from all over the state and they would pay $700/MBF (thousand board feet) for red oak and $1,500/MBF for cherry. Now, you can’t get half that, and you have to drag buyers to look at it. At one time I could not get anyone to take cherry, even if I drove up and unloaded it for free.

Imaging if you had planted oak and cherry with the expectation of having it for your grandchildren to harvest later? You would be disappointed.

We used to do net present value calculations when investing in timber. All that theory goes out the window when interest rates drop and demand for timber drops, fuel prices go up, wood industry plants close. You cannot predict the future.

Trees just don’t grow fast enough to pay off in one lifetime. In the South, people planted southern pine species which grow extremely fast and have 30-year rotations (the time from establishment to harvest). At the current market conditions of the time, investing in planted pine on your land was a sensible investment for the future.

But, with demand for building products waning, processing plants closing, and a glut on the market, it has not worked out well.

Buying Timberland as an Investment

A better bet is to buy timberland with productive soil, in a good location that has upward price potential (a growing local economy and population) and good wildlife and aesthetic quality.

If you can find a tract of land that has small saw timber of high quality, say 10″ to 14″ diameters with very clear trunks that has about 2- 3 thousand board feet per acre, that would be a good investment. Timber that is thinned so that they have room to grow fast and put on a couple inches of diameter every ten years can double in volume in 20 years.

This growth added to any appreciation in value of the land itself can be a terrific investment. With some good luck as in the north-central part of Pennsylvania and its gas drilling boom, you could cash in.

Counting on OGM going up in value is a crap shoot. That’s why I like timber. I can see it, I can measure it and value it, and I can influence its’ value with good management.

A great way to invest in timberland is to buy a tract that has a great stand of harvestable timber that the Seller is not aware of. I have had in the past what we call a “home run” buy where we were able to get the purchase price back in a timber sale.

I have also been able to put a down payment on a tract, presell the timber, harvest it and resell the land and net a nice profit without putting much money into the deal. This king of stuff is not possible today but it was fun for a while.

However, one can still find good deals.  For instance, 20 years ago, white oak was not in high demand.  Tracts that had red oak and cherry got raped and they left the white oak behind.

Today, you may be able to find a tract where the Seller thinks there is no timber left when there can be some very nice white oak. So, a light harvest of some of the best trees can help offset the cost of the land, increasing your rate of return since you get an immediate positive cash flow from your investment.

Here is a video about how I am marking timber on just such a tract of land. This 50-acre tract yielded $50,000 without doing any damage to the aesthetic value of the property. Timber Marking for a $$ sale.

Conclusion

So, if you are thinking of purchasing timberland as an investment I would say that it is a good one if you have good advice.  I have never had a client loose money on a land deal.  Sometimes we made a lot of money.

As a long term investment, timberland has historically out-performed equity markets. The only problem is it takes a chunk of money to get into.

To purchase a 100-acre tract of wood, you will need about $25,000. Then you have to pay taxes on it and manage it. The management part is where my Forestry expertise comes in handy.

As a Silviculturist, I can show you how to maximize your growth rate and return on timber. Trees species mix, correct stocking rates and timing of harvests are all part of good, sound management of your timberland.

If you want to look at some good investments that I have listed or you want to have me evaluate a tract of land you are interested in, then let me know and I can help you make great decisions.