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Farmland with trees purchase question - brace yourself!
Old 07-27-2018, 11:37 AM   #1
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Farmland with trees purchase question - brace yourself!

I have a question for y'all about buying land with trees.

I found some property in central Missouri. The property has a house of approx 1600 sqft on about 150 acres of land. The land is mostly covered in trees, maybe 130 acres.

I'm thinking I could buy the land for $400K, sell my house for $180K (100% equity), sell the trees for $260K then lease out the resulting cleared land for $20K/yr ($180 per acre per year). I net $40K plus $20K/yr and my cost of living is lower.

I am assuming (perhaps incorrectly) that trees would be worth $2000 per acre and that tree buyers would clear everything including the stumps. I'm also assuming that I don't have to "do anything" to make the cleared land suitable to lease for growing crops.

I know nothing about trees or farming. I'm a tech guy.

Does all of this seem plausible or is this one of those hare-brained ideas that only makes sense while sitting in an Aeron chair on the internet in an air-conditioned room while surfing the net with too many tabs open?

After you stop laughing, please tell me where my assumptions are incorrect.
Thank you.
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Old 07-27-2018, 11:45 AM   #2
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You need to talk with a local forestry expert.
(I happened to have one in the family, but he lives in NH. And, he is currently spending 3 months in New Zealand cutting down trees. For fun.)

Search The Google for "forestry management magazine"

Call your state ag school extension service.
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Old 07-27-2018, 12:01 PM   #3
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The go-to school in the NW for forestry is Oregon State University. They consult internationally, I found them in New Zealand (story there - they planted miles and miles of pine thinking they would be good retirement investments.). I am sure they can recommend a local expert.

What you are proposing was common in my youth. You really need to determine the harvested value of the trees. Doug Fir, slam dunk. Most cottonwood species are weeds in my neck of the woods. You also need to determine if there is property tax abatement for woodlands.

Take a look at sawmills in your area, what are they processing and what size are the trees? Talk to loggers. I am descended from a Norwegian who ended up in the forestry industry and the word at home was that there is no such thing as a dumb logger, they are as sharp in their field as a venture capitalist. Keep your specific plans to yourself as you evaluate the value of those trees.

If those trees are harvestable I would do that asap if there is ANY RISK of forest or rangeland fires in the area. In the NW we have tree farms and tree planting crews (dig a hole with a maddox and stick that plant in green side up). In our area the best time to plant is in the fall (rain).

Keep in mind the fact that Christmas Tree cultivation is agriculture under the Fair Labor Standards Act but all other tree growing activities are not. Think minimum wage and child labor standards.
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Old 07-27-2018, 12:09 PM   #4
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Originally Posted by johnhkc View Post
I have a question for y'all about buying land with trees.

I found some property in central Missouri. The property has a house of approx 1600 sqft on about 150 acres of land. The land is mostly covered in trees, maybe 130 acres.

I'm thinking I could buy the land for $400K, sell my house for $180K (100% equity), sell the trees for $260K then lease out the resulting cleared land for $20K/yr ($180 per acre per year). I net $40K plus $20K/yr and my cost of living is lower.

I am assuming (perhaps incorrectly) that trees would be worth $2000 per acre and that tree buyers would clear everything including the stumps. I'm also assuming that I don't have to "do anything" to make the cleared land suitable to lease for growing crops.

I know nothing about trees or farming. I'm a tech guy.

Does all of this seem plausible or is this one of those hare-brained ideas that only makes sense while sitting in an Aeron chair on the internet in an air-conditioned room while surfing the net with too many tabs open?

After you stop laughing, please tell me where my assumptions are incorrect.
Thank you.
We I'm amused to say the least. I spent 10 years in logging and sawmills, 6 of it in KC buying locally produced(MO, KS, IA, OK) timber. Mostly walnut and oak.

Your assumptions on what 130 acres of timber are worth are very optimistic.
You're going to be shocked that no logger is going to you pay to clear the land! You might get 2k an acre or 50 cents, for the timber. If you want to clear the land that's probably going to cost plenty. Making it tillable is still another challenge. Is it rocky or bottoms? Is it floodplain?

One thing I'll guarantee is the locals know that timber far better than you will ever!

So what type of timber is it? What size trees? Is it veneer quality? When was it last cut?

The big money you hear about comes from veneer logs, the butt log on the tree, with no "faces". You're in walnut county! Woohoo! Big money! Wait a second, central MO? South of I-70? Might be OK, or it might be full of worm and suitable for firewood. Might be full of shake and worthless, local folks might know but you won't. A general rule of thumb is walnut from North of I-70 is much higher quality than that from South. Sometimes good looking southern walnut is trucked to Winterset IA, to a local log yard.

Contact the local forestry department and they'll get some numbers for you. That's not what a logger will give you but it's a start.

Beware of logger's bids! There's some good honest people who log, and then there's the rest of them. Some of them are very bad people who would steal from old widows(I've seen it happen)!

Good luck.

If you actually start dealing with loggers shoot me a PM of names. Most of the folks I knew are dead, but there's some second generation folks still doing it. They generally follow the footsteps and business practices of the elder.
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Old 07-27-2018, 12:15 PM   #5
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Is this farmland in the CRP program if so you can get some rental income from USDA.

If it's just wild tree growth or forest land assume it's not worth a lot on crop farm rent...

And, since I have quit laughing I will say you have no idea of the amount of work needed to make that ground ready for a crop. Think tillage, massive weed control effort, perhaps some tiling, rock picking and on and on. If you spend a little more time on Google and get some more info, I'll be happy to answer a few specific questions.

I can't distill 40 plus years of farming both growing our own and rental crops in a post here.
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Old 07-27-2018, 12:15 PM   #6
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Quote:
Originally Posted by johnhkc View Post
I have a question for y'all about buying land with trees.

I found some property in central Missouri. The property has a house of approx 1600 sqft on about 150 acres of land. The land is mostly covered in trees, maybe 130 acres.

I'm thinking I could buy the land for $400K, sell my house for $180K (100% equity), sell the trees for $260K then lease out the resulting cleared land for $20K/yr ($180 per acre per year). I net $40K plus $20K/yr and my cost of living is lower.

I am assuming (perhaps incorrectly) that trees would be worth $2000 per acre and that tree buyers would clear everything including the stumps. I'm also assuming that I don't have to "do anything" to make the cleared land suitable to lease for growing crops.

I wouldn't do something like that unless/until I did a whole lot more research. First, I can confirm that your assumption that the loggers would take everything, including stumps, is not correct. They are going to cut whatever trees are specified for removal in the contract, but they certainly won't dig up the stumps and remove them also. If you want that done afterward, it is going to cost you a whole lot more $$ from someone who does that type of excavating work. Also, the value of the trees per acre depends greatly on the type and size of trees there. If you have large black walnut trees, or even large oak, that would be worth a whole lot more than smaller trees of other species. If you are serious about this plan, my advice is to first talk to a local consulting forester about what the trees on the land are worth, and what type of harvest is recommended. Also, If the land has some beautiful older trees (that have been well-managed over the years) on it and you have a logger go in and cut everything, you'll make some money, but you might also really piss off your neighbors, some of whom may be trying to manage their forest land in a more responsible manner. I worked as a forester for many years, so I do know a little bit about forest management and logging.


I don't know a lot about growing crops in Missouri, but you should also talk to a few experienced farmers in that area, and also the local Extension Service agent, about what is needed in order to get the land ready to grow crops (other than tree removal and digging/removing stumps). If there are slopes on the land, you will probably need to consider erosion control measures, for example.



Basically, there is a whole lot more to consider than the rough plan you outlined, so please get some good advice before you commit any $$ to this plan. The $$ profit you are envisioning probably won't work out once all of these other costs are taken into consideration.
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Old 07-27-2018, 12:24 PM   #7
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Originally Posted by johnhkc View Post
... or is this one of those hare-brained ideas that only makes sense while sitting in an Aeron chair on the internet in an air-conditioned room while surfing the net with too many tabs open?
^ This. Maybe you should close a few tabs and re-think the idea.
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Old 07-27-2018, 12:53 PM   #8
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My first thought is, if it was this easy and profitable, don't you think someone else would've snapped up the land and done this already?

Of course, there's always the unlikely chance you've hit on something no one has really thought of, but then I read:

Quote:
I know nothing about trees or farming. I'm a tech guy.
Subsequent posts indicate your assumptions were way too optimistic. I suspect the biggest truth in your post is what I quoted.
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Old 07-27-2018, 01:03 PM   #9
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Originally Posted by johnhkc View Post

I know nothing about trees or farming. I'm a tech guy.
I think I found the answer to your question.
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Old 07-27-2018, 01:16 PM   #10
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IMO like some already said you aren't going to get the price you want for the trees. What are the tree's you have?

Getting land up to speed to farm will be costly. Now, that isn't a deterrent from not buying this property. I have done very well in buying bare land making some improvements and selling. I have bought land and done nothing to improve it and have made a profit.

With the land that is farmable can you plant a crop like alfalfa? Is the area good for hunting?

I would look at how you could improve it for an outdoor recreation spot and then market it and sell. It looks like you are trying to flip it for a profit and not keeping it for yourself to live there.
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Old 07-27-2018, 01:21 PM   #11
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My land is deemed a tree farm , 11 acres of pine . Some are big some are small . I think you got a lot of thinking in front of you . Hardwoods do bring money but like some of the others have said forestry people are not the most honest people in the world . They told me at one time years ago that if they clear cut my land I might get enough for a couple chain saws . Since then it has grown , also when they leave your land looks like a bomb went off . It's not what you think.
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Old 07-27-2018, 01:59 PM   #12
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My grandparents farmed in mid-Missouri. Depending on where this is, it could be great farmland, or it could be the very prevalent and dreaded red clay that won't be suitable for growing weeds.


Missouri's Department of Natural Resources https://dnr.mo.gov/ is a real treasure, and also check this out: https://mosoilandwater.land/

Good luck.
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Old 07-27-2018, 02:00 PM   #13
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My land is deemed a tree farm , 11 acres of pine . Some are big some are small . I think you got a lot of thinking in front of you . Hardwoods do bring money but like some of the others have said forestry people are not the most honest people in the world . They told me at one time years ago that if they clear cut my land I might get enough for a couple chain saws . Since then it has grown , also when they leave your land looks like a bomb went off . It's not what you think.
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+1

When I was in the walnut business late 70s early 80s the industry average price paid for a walnut tree was $55. Those would have been harvestable size trees!

As far as logging cleanup wow. Great description. When I logged we bought jobs others couldn't because of our advanced technology. We had two old drunks who skidded with a team of horses. A team can only pull a single log, so it's kind to the terrain.

Folk I knew who logged in MO ran Timberjack and JD skidders. It's tough to walk where those have worked. Lunar landscape looking stuff with big roots.
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Old 07-27-2018, 03:21 PM   #14
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While I have no idea of the value of the lumber if it was as valuable as you think then I think some local logger would be jumping all over buying the land, logging it and then selling it after they logged it.

On the seond part, most logged land that I am familiar with is nowhere, anywhere near to being ready for crops... that is the fatal flaw in your scheme
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Old 07-27-2018, 03:30 PM   #15
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Here's a link to some reading on how to clear land for a pasture. Note the author suggests it's probably more cost effective to not harvest the timber and just pay the machinery.

https://pubs.ext.vt.edu/465/465-341/465-341.html
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Old 07-27-2018, 04:27 PM   #16
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A friend of mine in Mississippi has a real working tree farm ( pine Trees ) . He has a contract with somebody so they actually do better when they harvest his trees . Once he harvests I think he waits a year and they replant . I think it was about 200.00 per acre to replant.
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Old 07-27-2018, 04:44 PM   #17
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^ This. Maybe you should close a few tabs and re-think the idea.
Back in the day, beer cans had "tabs" that you pulled to open (you know, the ones that many folks dropped in the beer can and then choked to death or slit their throat). He may have had too many tabs open like I did yesteryear.

In any case, being a rank amateur in an arena of professionals is usually enriching - - - for the professionals.
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Old 07-27-2018, 04:48 PM   #18
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So the land with trees worth $2,000 an acre is selling for $3,000 an acre (rounded figures). So land without trees sells for $1,000 and acre? Math is so hard!

I have to go with RunningBum. It this works, the guy that owns the land would have done it already.

Side Note: I don't see a timber company doing anything other than cutting the tree and hauling them off. You will be left with stumps and lots of limbs.
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Old 07-27-2018, 05:15 PM   #19
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DHs family farms, logs, and buys/sells land in the PNW. the value of any timber is baked into the selling price of the acreage.
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Old 07-27-2018, 05:56 PM   #20
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That would be my guess. If you can get comparables with and without timber in your area, you know just about the timber is worth.
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