The thinning on my 160 acres of pine netted $14,000 against a $60,000 model

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?

The forester's 8 percent on a $37,000 gross is about $3,000, which feels like the cheapest line on your list given he found the sawmill that took the hardwood. of your $14,350 net.

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 and you get more disease and beetle risk, so leaving it forever 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 whole 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. thatch's outcome is exactly that split showing up on one tract, the land worked and the timber didn't. If you buy on bare land value with a hunting lease attached, the wood becomes a bonus you harvest when the local mill market cooperates.

So returned $14,350 on $344,000 over eleven months, and the taxes on 160 acres presumably eat a chunk of that. Does the county assessor value it as timberland under a use program, and does harvesting trigger any severance or yield tax where you are? I'm asking because that's the line I'd forget.

This is why I keep landing on cash rented cropland instead of timber even though the yield is worse. A 3 percent cash rent check arrives whether or not a mill 71 miles away is taking wood this quarter, and I don't have to make a harvest decision that depends on somebody else's capacity. Your net was a real number and you got it, it just took eleven months of active work on what was supposed to be a passive hold. What did the eleven months cost you in time?

Adding to my file: count mills inside 50 miles, ask who owns them, get written stumpage quotes before closing rather than after. I'd add asking a contractor what his minimum acreage is, because the 40 acre floor you hit is the kind of practical limit that never appears in anything written for buyers. Did the second contractor ever explain what the minimum was really about, mobilization cost or crew scheduling?

Underwrite on the bare land and treat the trees as upside. That's the whole lesson and it took you $344,000 to write it down.