When it comes to investing, timberland may be a great option for you. Not only does the physical growth of trees add value to the land, but so does ingrowth (product-shifting) as well as price appreciation and increases in timber prices. Here’s a closer look at what you need to know.
Factor #1 That Makes FL Timberland a Good Investment: Physical Growth of Trees
When you invest in timberland, the physical growth of the trees adds value to your investment. This is due to the fact that as trees grow, they increase in both size and value. Though you may not see immediate returns on timberland (most people don’t), the payoff comes when the timber is ready for harvesting.
Related: 5 things to consider when you buy acreage in North Florida
Factor #2 That Makes FL Timberland a Good Investment: Ingrowth (Product-Shifting)
In addition to the physical growth of trees, another factor that makes timberland a good investment is something called “ingrowth.” This is when the value of the land increases due to the shift in products (such as from pulpwood to sawtimber) that can be harvested from it. This product-shifting typically happens every 20 to 30 years, which means that there is the potential for long-term appreciation in value for your timberland investment.
Factor #3 That Makes FL Timberland a Good Investment: Land Price Appreciation
Like any other type of real estate, timberland can appreciate in value over time. This appreciation is due to a number of factors, including inflation, market demand, and limited supply. Of course, timberland is a unique commodity, so it’s important to do your research before investing. But if you choose wisely, you could see a significant return on your investment when it comes time to sell.
Related: 3 tips for setting yourself up as a successful farmer
Factor #4 That Makes FL Timberland a Good Investment: Timber Price Increases
In addition to land appreciation, another factor that can impact the value of your timberland investment is the market price of timber. As with any commodity, the price of timber can fluctuate depending on a number of factors, including global demand, weather patterns, and supply. However, over the long term, the price of timber has trended upward, which means that if you’re patient, your investment could pay off handsomely.
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