Before even focusing on what influences the price of timberland, you have to first ask yourself if purchasing this type of rural land is right for you in the first place.
According to Rick Taylor, registered forester and Certified Land Specialist at Mossy Oak Properties Forest Investments, Inc. in McComb, Mississippi, chances are the answer is yes.
"Timberland has historically been a conservative investment with very good returns and very little downside risks," Taylor said. "It's tangible and offers the investor the opportunity to enjoy his investment while waiting on it to appreciate. It meets a basic need for an individual to get 'back to nature' or participate in land ownership and be a part of something bigger than himself, to leave a true legacy."
And while all land investments can be transitioned to a "higher and better use," timberland offers buyers an extra bonus.
"The difference with a timberland investment is in its ability to generate cash flow through periodic timber harvests and the recreational value that is intrinsic with a timberland investment," Taylor continued. "With proper timber management, both the wildlife and recreational opportunities can improve as well as the aesthetic appeal, all further enhancing its appeal as an investment or recreational property. With timberland, you have the ability to harvest when the market is right. And if the market is not right, you still get biological growth of the fiber, so when you do harvest, you have more product."
Taylor went on to say that on a good site, the volume of timber could easily double in a few years' time.
Still, when buying land, price will likely be an important factor for you. With that in mind, it pays to understand what may impact the price of timberland.
A forest of influences
They say that no man is an island, but that adage could easily apply to timberland as well.
There's no shortage of factors that may impact timberland prices, according to Taylor.
Supply and demand, location of mills, topography, grade, volume of timber per acre and per tract, local conditions, building starts, economy, weather - the list goes on and on.
Obviously the importance of certain factors will differ from region to region, and sometimes on the time of year, but like other types of rural land investment, the price of timberland comes with a cornucopia of influences.
For this reason it can be incredibly helpful to work with a land specialist who has experience with the buying and selling of timberland in your local area. By working with a professional land broker, you can get a leg up over the competition and be in a position to contend with different price factors head on.
