Diversifying Portfolios with Timberland Investment

Diversifying Portfolios with Timberland Investment - article image

“Timberland! Why are so many buying it?” asked an investor as he noticed our sale of 5000+ acres of timberland which closed just last week. While I have been asked this question on many occasions, his interest caused me to revisit the “why” of timberland sales. In short, timberland is currently a hot commodity! There are some reasons why timberland has become the commodity of choice, lets visit a few of those reasons.

Ever since the economic crisis, business is booming in the timberland market here in Southeast Georgia and in many other areas of the United States; you can read more about that here. Investors, timber REIT’s, and even your average Joe are gobbling up as much timberland as they can find. Timber pricing in this area is exceptionally good. Current price trends are due to the competition for the harvested wood and its close proximity to the ports. LandThink outlines pricing and timber REITs in this article.

Here at Carter Group Real Estate we get calls every day from these type of clients. Many folks saw their portfolios pummeled during the recession and they are looking for an asset that doesn’t rise and fall with the stock markets. Something they can actually use; something tangible. Stocks and bonds are merely paper and can be temperamental. Timberland is something you can see and touch and use if you choose to do so, while staying consistent on the market. Stansbury Research did an interview with Dr. Steve Sjuggerud, editor of True Wealth, one of the world's most popular investment advisories. "In this interview, entitled The Ultimate Agriculture Investment, Steve reveals one of his all-time favorite "alternative" investments... an asset the average investor has never considered... but that has consistently beaten stocks and bonds over the past 30 years." That's right, he's talking about investing in timberland.

Many of our clients do visit their land. Some choose to use it for recreational purposes like hunting, fishing or just spending time with their families in the great outdoors. A few of them build log cabins “to get away from the stress of the world.” There are some that even rent their land for hunting or sale the pine straw so that it makes them money while they are waiting on the timber to mature enough for harvesting. However, you choose to use your investment, it's one that you can bank on for a good return at maturity.

With this information, your next question might be, “How does it work?” While owning timberland doesn’t come cheap, there are a few details to consider when purchasing. First, consider that older trees typically cost more than the younger ones. Younger trees still have a lot of growing to do before they can be harvested. Second, one should consider the size of the tract they are seeking to purchase. The larger tracts come with better pricing and may offer more possibility in creating your strategy for your return on investment (ROI). Which leads to our last consideration, your return on investment (ROI). When clients purchase these large tracts we do our homework and help them visualize what can be done with the property to create a better ROI. This could include subdividing the property, development, or harvesting the timber as it becomes mature enough when the prices are right. 

In this article, Assessing Future Forest Supplies and Wood Markets for Timberland Ownerswe learn of wood markets and we are proud to say that we have all of these markets within an hour of our location. Educating ourselves and passing that on to the client is one example of continued support for the client. We want to help our clients every step of the way in their new investment. Timber harvesting is a another great scenario of this kind of support. As the trees become mature enough to harvest, we help guide the client in obtaining the services of local logging companies. If requested, we oversee the process of harvesting the trees in an environmentally safe way while preserving the natural beauty of the land. Our clients can get involved or just sit back and enjoy the benefits of the timber harvest.

So whether clients purchase due to exceptional pricing, a less temperamental investment, or for recreational purposes, those who have chosen timberland investment are not playing the commodity game any longer. They actually own the land and all the benefits and returns on investment that come with investing in what lasts.  

Think you are ready to invest in your own tract? We have some to show you! Follow this link to see all our Timberland properties. But don’t wait too long. They aren’t making any more land and this commodity is hot right now!

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