Investing in Timberland: Frequently Asked Questions
At Saunders Real Estate, our land professionals understand the importance of having the necessary tools to make the best investment decisions. In this two part series, we’ll answer some of the most frequently asked questions about investing in timberland for sale in Florida.
Why do investors choose Florida timberland for sale as an investment?
Florida timberland is an attractive investment to investors for a multitude of reasons including portfolio diversification, hedge against inflation, low correlation with other investments such as stocks and bonds, and significant tax advantages.
What types of investors does timberland attract?
Because investing in timberland for sale in Florida offers a variety of benefits to investors, these investments attract both private and institutional investors, including pension funds, corporations, and foundations.
How long does it take to grow a tree stand?
The growth rate of a timber stand heavily depends on the species that are selected for a site and the conditions of the stand. On average, a white pine tree can grow between 8-12 inches per year. Properly managed timber stands will include a diverse mix of age classes and, occasionally, different species.
How will I generate a return?
Returns on a timberland investments are typically realized through the sale of timber products such as pulpwood and lumber, lease income and land sales.
What are the risks involved with investing in Florida timberland for sale?
There are three primary risks that are associated with investing in timberland: price, volume, and asset value.
- Price Risk: Price risk refers to the unpredictable nature of prices for timber and timberland in the future.
- Volume Risk: Volume risk is the risk that an investor bears that is associated with the under- or overestimating of the standing inventory in a timberland property.
- Asset Value Risk: Asset value risk, also known as liquidity risk, is the financial risk that the property is worth less than expected when it is sold.