Saturday, January 5, 2013

Tips on Selling Your Land

As a REALTOR and Registered Forester, I look at and show a lot of property. So, I thought I would pass along some ideas about selling your property.  

1. Unique Features: Anything unique that can be identified will help set your property apart from others. Probably the number one feature I’m asked about is water. People want some type of water, whether it’s a stream, pond, or frontage on a main river or lake. Obviously, you cannot manufacture this if you don’t have it, but extra time to photograph and highlight what you do have will pay off.   Example, I had a land-locked tract listed for sale for about two years, it was priced accordingly, and I could not get a serious inquiry. One day I was walking across it and came across a small but scenic stream. I squatted down and took a photo with my phone. I posted it on the internet as the feature photo and put it under contract in about three weeks. This is the actual photo:


We also can use topographic maps along with ArcGIS mappng software to show potential lake/pond sites.

Other Unique Features: Large hardwoods are hard to find these days, game plots with hunting stands make the property ready to hunt, people love a scenic view, old home sites just add character, and well kept open land enhances aesthetics.

2. It’s Not What You See; It’s What You Don’t See: People do not want to drive into a property and immediately see something they need to fix. For example, I’m a Forester and I drive in the woods all of the time and limbs dragging down the side of my truck do not bother me at all. However, if I’m showing a tract to a husband and wife and I have to push my way through a woods road where limbs are raking both sides of my truck, it’s an immediate turn-off. More importantly this is an easy and inexpensive fix. Another situation, if I’m showing a property and driving down a primary internal road and have to lock my truck into four-wheel drive, not good. Here’s a non-exhaustive list of things you can do: trim limbs along roads/trails, fix roads, cut limbs or trees to provide a view, mow/bush hog where possible especially road right-of-ways, provide for an easy pull-off to access property, manicure entrance to property, install gates, and PICK UP TRASH.  

3. Be Realistic on Pricing: If I had a dollar for every time I’ve been told “It’s a buyer’s market” I could retire comfortably. It appears activity is picking up, but there has been a definite “reset” of prices as compared to what they used to be. Does this mean you have to sell your property cheap, absolutely not? However, there is a sweet spot on pricing and you have to be in that range to get people to look. I monitor my internet activity; if a tract is priced too high, people will not even click on the listing.

I hope this helps. Please comment if you have any questions or additional ideas.

Tuesday, May 29, 2012

Mapping Tools

Whether you are buying, selling, or managing your timberland, accurate and easy to use maps will always be beneficial.  This technology is evolving at a rate that is sometimes difficult to keep up with.  Two of the newer tools are cloud based maps and applications for your mobile devices.

We have added all of our listings to a cloud database that can be viewed by the public.  This technology can be expanded to be used for individual clients meeting their specific needs.



View Larger Map

Tuesday, March 27, 2012

Timberland as an Investment

I ran across the following article that discusses the benefits of investing in timberland.  It's in an interview format and the answers are brief and to the point. I thought it was worth repeating.

The Ultimate Agriculture Investment

From the Daily Crux Interview Series
Saturday, May 7, 2011

The Daily Crux: You've done a tremendous amount of research on timberland investing over the years... and you've been a big proponent of this idea. What is so special about timberland?
Steve Sjuggerud: Yes... I've literally been all over the world researching timberland investing. I've spent hundreds of hours on it. I've recommended many timber stocks to my readers over the years. And I've personally invested in timberland.
There's a long list of reasons why investing in timberland is a great idea... and consistently produces big returns.
First of all, trees grow year in and year out. Trees in good growing regions in the U.S. grow at 6%-8% per year. They grow through recessions. They grow through wars. They grow through stock and real estate crashes. They grow through everything. They give you built-in investment growth that isn't guaranteed with a stock.
Along with the tree growth, the price of wood has grown at a consistent rate throughout the years. It's extremely difficult for a company to increase the prices of its goods by 6% every year. But the price of wood, according to legendary money manager Jeremy Grantham, has increased by that amount for the last 100 years. Specifically, he says "stumpage" prices – the value of all the wood on the stump – have beaten inflation by 3% a year over the last century.
Another nice thing is timberland is a resource investment, but it's not a constantly depleting one like a gold mine or an oil well. Trees will grow back. It's a sustainable resource investment.
And not to ramble on, but you should know, timber is uncorrelated to the stock market. It makes sense... the trees have never heard of the Nasdaq bubble... and they don't know what a "War on Terror" is. This makes timber a great place to park money in big portfolios... where you need diversification.
Crux: But what happens to your timberland investment in a down year, when lumber prices crash?
Sjuggerud: That's a great question. What happens when the market is slumping? When you can't get the price you need to make the business profitable? Did you just waste eight... 15... 25 years on an investment with nothing to show for it? The answer can be summed up in five words: "Bank it on the stump."
In the industry, it's a phrase that means if conditions aren't right for harvesting your crop, you just keep letting it grow. You keep the profits on the stump and wait for a more profitable time to sell your timber – most likely, when timber prices are in your favor.
One of the great benefits of owning timberland is you don't have to harvest it every year. It's not like fruit, where it's ripe just once and then you have to pick it. Instead, it grows exponentially on the stump for years.
This is not to imply that timber is an absolutely risk-free investment... But with the ability to bank it on the stump, investing in timber does come with an extra safety net. "If the rain rains, the sun shines, the suckers grow," Jeremy Grantham once said. "If you don't want to sell, they get bigger and more expensive."
Crux: Those are tremendous attributes. How has timberland performed over the years?
Sjuggerud: Take a look at this chart of the period from 1971 to 2010... which was filled with all sorts of bull and bear markets for stocks...
From 1971 to 2010, an investor in timber saw average annual returns of over 14% – turning $10,000 into over $1.5 million. That's better than stocks and bonds over the same period.
Here are the rough numbers on where timberland returns come from:
* 1% Land value increase
* 6% Biologic growth of the trees
* 3% "Stumpage" price increase (the price of the actual tree)
Crux: So timberland can serve as a good alternative investment when stocks are in a bear market?
Sjuggerud: Absolutely. One of the worst-ever bear markets in stocks began in the late 1960s and lasted until about 1980. An investor in stocks during that time lost money, due to inflation.
However, as the table shows, an investor in timber never had a losing year during that period. More often than not, the returns were in the double-digits... with a 59% return in 1973 and a 49% return in 1977.
To sum up, timberland offers high returns... It is a sustainable asset that can provide returns for centuries... It has no correlation to the stock market... It's less volatile... And it constantly grows in value.
Crux: So, how do you go about buying timberland? What's the easiest way to own it?
Sjuggerud: It's important to point out that rather than just going out and buying a forest, you want to make sure to invest in managed timberland.
The reason it's important to make the distinction is simple: Managed timberlands, according to a study conducted by the University of Georgia and published in the Journal of Forestry, generate returns almost four times higher than non-managed lands.
With managed timberlands, you get just what it says. You get professional managers who cultivate the trees, look after them, and harvest the trees and their products at the right time.
They look to earn extra cash by selling hunting rights to the land. They harvest and sell the straw and seeds that fall from the trees. Good managers even look to sell chunks of your timberland if a real estate developer comes along and offers a sky-high premium for your land.
My point is, everything on the "tree farm" – even the tree farm itself – is for sale. You can make these types of managed timberland investments privately, or there are usually a handful of publicly traded timberland companies on the exchange at any given time.
The big names in the U.S. are Weyerhaeuser (WY), Rayonier (RYN), and Plum Creek (PCL). To spread your risk, you can buy the big U.S. names through an exchange traded fund (or ETF) with the symbol WOOD. You can get much broader international exposure through the Guggenheim timber ETF (symbol: CUT).
Crux: There are many good points to timberland investing. Any negative ones?
Sjuggerud: When you compare the built-in yield of timberland to any other asset class out there, timberland wins hands-down.
The only problem is timeframe – you can sell a stock or bond immediately, but you can't get rid of acres of timber like that. It's illiquid. You've got to hold it for some time to maximize its value – the ideal timeframe is infinity. It's definitely not for traders... it's for long-term thinking investors.
And keep in mind... like all investments, you have to make sure you buy timberland at a reasonable price.
Crux: Thanks Steve.
Sjuggerud: You're welcome.

Wednesday, February 8, 2012

Financing Your Timberland Investment: UPDATE, February 2012

I just spoke with a representative of Alabama Farm Credit.  He stated interest rates are excellent and are as low as he has ever seen.  He went on to say that if anyone has ever seriously considered purchasing rural property, now is the time.  They have several rate options for qualified buyers less than 5%.

Friday, September 30, 2011

Financing Your Timberland Investment

Many people are aware that timberland has become a good and stable investment, especially given the recent performance of the stock market.  But, how do you pay for it?  Most people, like myself, do not have the cash.  As noted in the attached article, http://finance.yahoo.com/news/Rate-on-30year-mortgage-falls-apf-1324230167.html?x=0&sec=topStories&pos=main&asset&ccode, interest rates for homes are falling.  Does this apply to land loans, more specifically Alabama?  Most of the time, yes.  The trends are similar but it is unusual to get as low of an interest rate for rural property as you can get for a home.  The conventional banks tend to have tougher standards for land loans and usually require a higher down payment.  I’ve talked to a representative of a lending institution and given certain criteria and qualifications, they can lock in an interest rate up to five years for less than five percent and will loan up to 80 percent of the appraised value.   The two institutions that specialize in lending money for rural land in my part of Alabama are Alabama Farm Credit and First South Farm Credit.  


Whether it’s for recreational land, timberland investment, or a combination of the two, these two institutions have money available to lend.

Tuesday, May 17, 2011

THINNING: a valuable tool when managing your Timberland Investment


When managing a pine plantation, which is a very good timberland investment, thinning is a very important tool to maximize growth and consequently total return on investment.  When thinning, the objective is to remove the inferior trees leaving more room to grow for the higher quality trees.  The remaining trees will have more sunlight and available nutrients.  It increases the vigor on the remaining trees and because they are more healthy, they are more resistance to disease and attacks from pine beetles.  I recently inspected a harvesting operation on a property where I am working with the landowner to insure the thinning is implemented properly.  Please take a look at the following short video clips and photos.




 The photo shown below shows a loading deck where the logging contractor is almost finished in this area.  You see the small piles of tops.  He has pre-staged these tops so he can send them all as one load to the pulpwood mill.  This shows a very efficient use of the resource.




The next photo shown below shows the trees as they are being sorted in the loading deck.  The trees on the left in the foreground will be sold as small pine saw timber.  The trees on the left in the rear will be sold as pine chip-n-saw and the trees and the right will be sold as pulpwood.  A properly managed thin will provide for a healthy forest in the future.  Proper separation and  marketing of the various products will provide for maximum revenue to the landowner.


Saturday, April 23, 2011

Managing pine beetle risk when investing in land

For years I’ve been working with people in Alabama with their forest land, whether as a forestry consultant or as a Realtor helping with a purchase.  Frequently, I’m asked about pine beetles and its associated risk and how that risk should influence management decisions.   I could write a book on the amount of misinformation I’ve heard.  When looking at land for sale, I’ve seen the pine beetle risk influence buyer’s decision.  I’ve also had landowners cut their timber and then refuse to spend the money to replant their land, citing pine beetle risk.  Worse, I’ve seen unethical wood buyers use the scare of a pine beetle infestation, whether real or not, to convince the owner to sell their timber, many times at less than market value.   So, are pine beetles a significant risk?  They are a risk, but that risk can be managed.  I use the following analogy when asked about the risk: If you bought 100 head of cattle as an investment, would you put them out to pasture and not check on them?  The same thing applies with a pine forest.  Periodic inspections combined with a little knowledge regarding what you are looking for, can prevent a large area of lost timber.  I’ve attached the link to a Publication by the Mississippi State Extension Service.  It explains how to identify a beetle attack and how to manage.  It also gives a link to more detailed information.