Investment in Timberland

If I plant trees on 100 acres of land,
how much income will my investment produce for me?

a) Assuming the land is already owned, site preparation and reforestation expenses will approximate $17,500. This takes place in year 1.

b) Estimated return on investment at first thinning in year 12: $26,000.

c) Estimated return on investment at second thinning in year 22: $102,000

d) Estimate return on investment at final clear cut in year 32: $328,000.

e) Assume annual property taxes are $1/acre, or $100/year total.

f) Total estimated annual rate of return: 13.3%

g) Assume further that hunting rights are leased during this time, resulting in income at $5/acre, or $500/year total.

h) Total estimate annual rate of return increases to: 14.6%

i) Projected incomes are based on various growth and yield tables. Actual results may vary.

First cut after 12 years produces
$26,000.

timber2

Second cutting 10 years later produces
$102,000.

timber3

Final clearcut 10 yrs later produces
$328,000

timber4