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Timber Values:
Another added value of purchasing large North
Florida land tracts is the income producing timber. Timber
provides for reliable asset appreciation which lowers
investment risk. Timberland has a low to negative correlation
with most traditional portfolio assets.
With the long-term demand for timber and the
fact that trees will continue to grow, investors are finding
timber to be a wise investment strategy. When timberland is
purchased with preservation of the land and sale of the timber
in mind, the selection process is extremely important to
assure liquidity of the timber and the best return on
investment. The three factors that must be considered is the
biological age of the timber, timber product prices and land
value.
There are three phases of growth for
timberland that affect how it is used, its liquidity and
overall risk.
- Emerging Growth is the
first stage where trees are just beginning to grow through
15 years of age. The timber is primarily pulpwood and
liquidity is unpredictable.
- Established Growth
pertains to timberland where the trees are 15 to 25 years
old. Timberland in this category becomes more marketable and
liquid. About 40% of the timber is used for small dimension
lumbar and 60% is used for pulpwood. Holding this investment
for a 10 to 15 year period enhances return on investment
with moderate risk.
- Mature Growth refers to a
well established forest where trees are over the age of 25
years. By holding this investment for 5-10 years, liquidity
is tremendously increased as the trees become more
marketable. Timber in this stage is primarily used for large
dimension lumbar and plywood.
A balanced timberland portfolio
provides the most competitive returns, best liquidity and
lowest risk. A timberland portfolio where 30-40% is emerging
growth, 40-60% established growth and 10-20% mature growth
assures the best performance over a 10-15 year
period.
Matt
Raitz is your timberland and land development expert.
Call Matt today and tell him what you are looking for.
He will search for property by county in North
Florida (Leon, Jefferson, Wakulla, Gadsden) and by
acreage. |