A thinning on 160 acres of planted pine can net far less than the model predicts

Your cruise was not the problem. 2,410 tons off a thinning where you modeled 3,360 is within the normal range once the contractor picks rows and leaves the poor stems, and volume is the one thing a cruise is actually good at.

The error was geography, and it's the error I see in every timber pro forma I read. Pulpwood is a haul distance business. Stumpage price is a residual, delivered price minus cut and haul, so at 71 miles the trucking took the entire margin and the mill's quota decision just moved the number from thin to bad. State average price reports are averages across regions that each have a mill within 25 miles, which makes them close to useless for a specific tract.

What I'd add to your checklist is mill ownership. If the nearest mill is owned by a company that also owns 200,000 acres of timberland in the same basket, you're the marginal supplier every time capacity tightens. That's a structural position, not bad luck.

$18,400 for a road and a culvert on a job that grossed $37,000. That ratio is the whole story and it's the kind of cost I keep missing when I price my own first deal. Was the access issue visible when you bought, meaning was there ever a legal or usable route for a loaded log truck, or did you assume the existing two track was enough?

A forester's fee running 8 percent of gross is a modest line item given the value of finding the right buyer for the harvest, including a sawmill willing to take the hardwood alongside the pulpwood.

I've hit a version of this ceiling on the renovation side, where the exit assumption came from a published average instead of a person who would actually write a check. The fix that worked for me was making one phone call the underwriting depended on, and refusing to close until I'd made it.

On your deal, would three stumpage quotes before closing have actually changed the price you paid, or would you have walked? I ask because sellers of timberland generally price on the cruise, and if the local market can't pay for the wood, the seller is going to tell you to find a different buyer rather than take $400 an acre less.

What stands out to me is that the land held its value while the crop story failed completely.

What if you'd just done nothing? Skip the thinning, don't build the road, pay the taxes, let the stand keep growing until a mill situation changed. The trees keep adding volume every year whether you cut or not, which is the part of timber that's different from a rental. Was there a biological reason you had to thin at 15, like stand density and mortality, or was the reason that your spreadsheet had a number in that cell?

Compass has the right question and the answer is usually somewhere in between. Overstocked pine does start losing growth to competition, with more disease and beetle risk, so leaving it indefinitely has a cost, though it's a slower cost than an $18,400 road. The deeper issue is that timberland has been the more cautious side of this category for a while. Institutional analysts have been lukewarm on it, arguing mid to high single digit expected returns don't pay for the illiquidity, even while recreational demand props up land values in a lot of counties. A tract like this one shows exactly that split, the land working and the timber not. Bought on bare land value with a hunting lease attached, the wood becomes a bonus harvested when the local mill market cooperates, rather than the load-bearing part of the underwrite.

Take a case that nets 14,350 on 344,000 over eleven months. The taxes on 160 acres presumably eat a chunk of that. Worth checking whether the county assessor values it as timberland under a use program, and whether harvesting triggers any severance or yield tax locally. That is the line most owners forget.

This is a reasonable case for cash rented cropland over timber, even with a lower yield. A cash rent check arrives whether or not a mill 71 miles away is taking wood that quarter, and there is no harvest decision that depends on somebody else's capacity. A net of 14,350 on 344,000 is a real number, but it took eleven months of active work on what was supposed to be a passive hold. What did those eleven months cost in time?

Worth adding to any diligence checklist: count mills inside 50 miles, ask who owns them, get written stumpage quotes before closing rather than after. Also ask a contractor what his minimum acreage is, because a 40 acre floor is the kind of practical limit that never appears in anything written for buyers. It's worth finding out whether a stated minimum is really about mobilization cost or crew scheduling.

Underwrite on the bare land and treat standing timber as upside. Take 160 acres of planted pine bought at $2,150 an acre, all cash: a cruise projecting 28 tons per acre at age 15 on a thinning candidate can look solid on paper, but stumpage pricing and actual thinnable acreage often come in well under the model. That's the whole lesson, and it's an expensive one to learn on a $344,000 purchase.