While every investor will have a different experience – based on many factors, including location and type of property – there’s a reason that many people choose to invest in timber.
So what makes timberland valuable, and what makes the price of timberland go up?
Here’s what you need to know if you’re thinking of investing in timberland.
What Drives Timberland Appreciation and Profits?
Several factors drive timberland profits, including:
- Population growth in the area
- Continuing demand for wood
- Tree height and diameter, which increases the value of the timber on the land
- Environmental value through the donation or sale of a conservation easement
- Proper management to receive payment for CO2 retention
- Rental or lease income from allowing recreational use, like horseback riding, camping and hunting
While there’s no guarantee that any investor will make money on timberland, historically, it’s paid off for many. You should always talk to your financial adviser before you make a big investment like a timberland tract, though – that way, you’ll be able to make the right decision.
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