The Press Room
Realizing a Profit
If he select cuts the timber, he’ll make a profit on the timber, and the land will be ideal recreational property. Then he can sell the land for a profit. The timber can provide an income while land prices are growing. The investors who are buying property for a timber return and a return on the land appreciation receive a double-whammy because they get two-different profit centers from the same investment. The bonus is being able to hunt that land or lease the hunting rights, as the timber and the value of the land grow.
Question: In other words, in the past, the timber on the property was the most-important component for an investor to see a return on his investment. But today, because of rising dirt values, the investor can see a good return on his investment, not only off the timber, but also off the recreation value of the land, if he doesn’t clear-cut the entire property.
McCulley: That’s exactly right.
Question: How long does an investor have to hold land before he can see a profit from that piece of property?
McCulley: That depends on the timber present on the land before the investor has purchased it. If the majority of timber on that property is only 10-years old, then the investor may have to wait 10 years before he gets a good return. But if the timber on the property is 15-years old, the investor will get a return on the property in only 5 years. The age of the timber has a lot to do with how quickly the investor can begin to get a return on timber on the land. Many investors are buying a piece of property, holding it for several years, select-cutting that property and then selling it several years later. The main advantage to this strategy is you get to hunt on the land or lease out the hunting rights before the first-select cut and after the second-select cut.
So, you have four revenue streams. The first revenue stream comes as soon as you buy the property, because you either save the money you’ve been spending on the hunting lease, or you lease out the hunting rights to the property. The second revenue stream happens when you make the first-select cut, because you’ve either received cash from the timber or hunted or leased out the hunting rights on the property from the time you’ve bought it until you make your first timber cut. After the first timber cut, you’ll still able to hunt or lease the land until you make the second timber cut. After the second timber cut, you can sell the land for more money than you paid for it. This simple formula for timber harvest and land appreciation is the reason we’re seeing so many people investing now in forest-recreation lands.
For more information about purchasing forest-recreation lands in this area of Mississippi, call Brad McCulley at (662) 563-1802, or email him at firstname.lastname@example.org.
Tomorrow: Selling Land in Mississippi