First timberland position, bought a third of a 210 acre pine tract with two other passive partners
Closed six weeks ago and I want to write down how it actually went while I still remember the annoying parts.
The tract: 210 acres of loblolly pine, average age around 18, one block of 30 acres of mixed hardwood along a creek that nobody's cutting. Price was $2,450 an acre, so $514,500 all in. No debt. Three of us in an LLC, roughly $172k each plus a shared $18k reserve.
Before we wired, I paid a consulting forester $2,900 for a cruise. A cruise is just a sampled inventory of what's standing, by species and size, converted into tons. His number: about $310k of merchantable timber, mostly still in the pulpwood and chip-n-saw classes, with maybe 20 percent already big enough to call sawtimber. Sawtimber is the large, straight stuff that goes to a mill for lumber and it's worth multiples of pulpwood per ton. So we paid roughly $205k for the dirt, or about $975 an acre bare, which lined up with what the forester saw locally. Note that in a fair number of states sale prices aren't public at all, so "comparable sales" can mean somebody's memory of a closing.
What nearly broke it wasn't the price. One partner wanted a distribution schedule. The whole reason I like timber is that you can sit on a weak stumpage market and let the trees keep growing, and a schedule takes that away. We spent three weeks on the operating agreement instead of three days. Harvest decisions now need two of three votes, there's a buyout formula at appraised value, and nobody can force a cut to fund their own liquidity.
Carry so far: property tax $3,100, forester retainer $8 an acre, and a recreational hunting lease at $12 an acre that brings in $2,520. So the land roughly pays its own taxes. First thinning is probably two growing seasons out.
What I'd keep: paying for the cruise before the offer, not after.