LandInvestors.com Forums **Ask A Question** Timber Rights

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    Mike Jackson
    Participant
    Post count: 7

    Hey guys. I’m new to the business and am looking to buy 80 acres in MS. It’s my understanding that timber rights are a big deal in that state. I would appreciate some input as to what I need to be aware of going forward with conversations with the potential seller of this property. Thank you!

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  • Kevin Farrell
    Moderator
    Post count: 1962
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    Mike – the big question will be “What is the value of the timber now?” The seller may have one number in mind. An independent timber cruiser may have a different number for you. When was the last time timber was harvested on this land? Is the seller selling for the land value only or is the seller asking for more on top of the land value for the market value of timber? If the seller is just getting rid of the property at a low offer, then you can’t lose.

    I have purchased large parcels covered with mature timber but the actual timber value was low because of the steep slopes. I did not buy or sell with timber value in mind, but slope can be a factor.

    Let’s hear from other LA members who are more involved with timber land.

    Kevin Farrell - Moderator
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    K Turner
    Participant
    Post count: 15

    Mike:

    I have been a LA member and investor for a little over 5 years. I have also bought and sold mostly smaller tracts with timber on them, and live in Louisiana where lots of folks buy timbered property here in LA and in MS for hunting purposes. I’ve read up enough on timber to be slightly dangerous but choose to stay out of timber rights.

    I have actually had some buyers buy from me that specialize in taking timber off a smaller property, and reselling once it is removed. But those people have local logging related connections, and are usually very knowledgeable about timber in their local area, and know enough about timber to be able to make money off even a small tract where the margins can be slim.

    My advice to you is to keep it simple and not purchase property where you give the timber rights away. Too messy, and since you are buying to resell – a tract of 80 acres in MS is typically going to be purchased as a recreational property, hunting property, or homestead – but regardless, the end use buyer you will sell this to will expect to continue to have that timber stand on it and to be able to hunt it. If you sell the timber right, you greatly reduce the buyer pool.

    If you give timber rights away, the value of the tract is greatly diminished, and once harvested the property will be ruined for the near future with respects to being able to use it recreationally as a hunting tract. The prior owner can cut the timber usually when they want within a timeframe, and could leave an entire mess behind after they do it that you may have to clean up, could cut down others timber accidentally which may bring you into the fold, all sorts of issues can occur.

    If you try to negotiate that aspect it creates a lot of new contractual variables that you probably will be in over your head on without an expert helping you, since timber is not something you and I deal with day to day.

    Something else to consider- HOw will you value the timber to give the rights away? Not all timber is treated the same, just because there is standing timber on a property does not mean that timber is marketable, and people usually want top dollar for their timber even if they have never cared for it. It could have diseases, or not been cared for over the years, creating less valuable timber. The type of timber on it also affects value. An expert needs to assess the value. That requires a very specialized industry knowledge which if you are like me, you likely do not possess.

    Timber creates an entirely different dynamic, where the pricing is variable depending on price of lumber, location to nearest mill, etc. and people that are savvy sellers usually know a lot more about timber on their property than you will. You won’t win that game.

    Just keep it simple and stay out of timber rights is my advice.

    Mike Jackson
    Participant
    Post count: 7

    Thanks so much for the input Kevin. It was very helpful.

    Mike Jackson
    Participant
    Post count: 7

    Thank you K Turner. That was some great insight and very useful. I’ll refer to it as I go forward.

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