A Few Questions & Answers
Do you really need help in managing your forest?
Perhaps. Forest management follows basic financial and biological principals; it is a defined science. Mistakes in forest management may take several decades to remedy. Conversely, once a forest is in a managed state, maintenance is relatively simple. The most important assistance a forestland owner can request is in the selection and marketing of mature trees.
Why is assistance in Timber Marking and Marketing important?
Most forestland owners sell standing timber only once or twice in their lives. Not only is the sale of timber a major financial activity, it is also the most important forest management tool one can employ. The real secrets to correctly selling timber lay in these few statements:
- Sell only the trees that should be sold, versus the trees that could be sold.
- Know the species, volume, grade and value of what you are selling.
- Advertise your timber offering to a wide range of timber buyers specializing in your specific timber package.
- Maintain control of your sale and receive the greatest market value through a Sealed Bid sale.
What Trees should be Sold?
Selection of trees for marketing is a critical decision based on many factors. Trees should be sold if they are truly mature, or negatively impacting the growth of other higher valued trees. Additionally, trees that are less vigorous and afford a rate of return that is less than your other investments may be potential sale trees.
What does Forest Management cost?
Essentially nothing. Although there is a real cost involved in managing a forest, the result of forest management is increased growth of higher value trees. The net result is a greater rate of return from the forest. Forest management is simply a good investment with a short "pay-back" period.
Can a Forest truly be considered an investment?
Absolutely! A high quality, well-managed Midwestern forest can easily grow up to 400 board feet per acre per year, which equates to approximately $150 to $225 per acre per year. Management costs are minimal, as are holding costs especially if tax reduction programs such as the Indiana Classified Forest are utilized. Gains from forestland are not taxed on an annual basis, and income from timber sales can be timed to meet your financial or tax management needs, are eligible for Capital Gains tax treatment, and can be further reduced by correctly establishing a forest tax basis. Forestland investments are tangible and appreciate similar to most prudent land investments. Contact Bob Mayer for a few excellent past articles on forestland as an essential facet of any well balanced portfolio.
Have your own question? Please don't hesitate to contact Bob Mayer for a prompt, personal and professional reply.