Crisis Proof Investments
Timberland as an investment is showing increased interest from a broad group of investors including the traditional timberland buyers, first time investors looking for a safer haven for retirement funds, and foreign buyers capitalizing on the weak dollar. The largest personal Timberland owner in America is Ted Turner, who owns approximately 2 Million Acres of Timberland property.
In the past two stock market downturns, money has moved away from stocks and bonds to forestland as an investment alternative. While many stocks were severely depressed, forestland lost little or no value and accelerated in value very quickly as the economy rebounded. The bottom line fact is while equities are getting pummeled, trees continue to grow.
Depending on which source you feel comfortable with, Timberland as an investment has shown returns of 8-12% annually since the early 80's. Land is an asset that, like timber, appreciates over time due to high demand and scarcity. Timberland as an investment offers three very positive investment characteristics: 1) The growth of the timber is guaranteed and secure; 2) The commodity price of timber fluctuates and may gain significant value as demand for lumber increases; 3) The land value increases over time, especially if the land purchased is close to a developing area or in a high demand recreational area.
Income may be derived from the harvesting of timber, the sale of hunting and/or recreational leases, sale of minerals and mineral rights, and the leasing of acreage for commercial use and conservation easements. Transitional properties may be sold into the commercial, recreational and development markets. Timber is an attractive asset, in that it grows annually in volume and value regardless of the economic cycle.
An additional attractive feature of Timberland ownership is the personal recreational use the owner may enjoy during the course of the growth of the asset.