Timberland property is an excellent option for improving your investment portfolio. Indeed, timber returns 6.5% per year on average, and it is expected to average 4.8% over the next seven years.
If you are looking for a new investment property in Arkansas, here is a guide to investing in timberland and how to get the most out of your land.
Types of land investments
Individuals and companies have bought and sold timberland for centuries. Moreover, because of its many purposes, it is also one of the best types of land investments to improve your portfolio. You can buy and lease it to enjoy the recurrent revenues, hold pastureland, or use it for recreational purposes.
Recreational use, in particular, is always in demand. If you love the outdoors, you can go fishing, hiking, or use your property as hunting land to enjoy some quiet time with family and friends.
What is timberland?
Timberland is defined as land that produces trees for use as timber. Its true meaning being that any tree that can be used to produce timber for anything from paper making to constructing houses. If you are interested in land management or if you are an outdoors person, learning to identify different types of trees can be educational but also just make hiking more fun.
Why you should invest in timberland
Trees take years to mature, but that is precisely the value of investing in timberland. As their height and girth increase, so too does their value. The longer you wait to harvest, the bigger they will be, thereby increasing returns in the long run.
Timber is less risky compared to other assets, and investors can use it to hedge against inflation. Inflation tends to reduce the value of other investment assets, such as stocks, but because rising timber prices do not reduce its value, timber tends to be more stable and can be used to diversify your portfolio. Instead of holding all your eggs in one investment basket, investing in farmland and recreational land can help hedge against inflation while also protecting your portfolio from major shifts in value. Remember that trees will continue growing and increasing in value even when the economy is on a downturn.
Although timber is a profitable venture, a more attractive benefit of timbering your land is that you can use it for recreational purposes. You can go hiking, or use it as hunting land on those long, lazy weekends. If you love horseback riding, holding a few acres of farmland makes for a great outdoor riding site. You can also use your hunting land as a shooting range, and go practice your moves with no one charging you for the sessions.
Make the right investment property decision
Buying land in Arkansas for use as timberland or farmland is a sound investment decision. Land is a finite asset whose value increases with time, making it a great long-term asset. However, there is often a substantial capital investment required when purchasing land, which obviously demands caution before investing.
For example, if you do not conduct proper due diligence, including land and timber appraisal, you risk getting the short end of the deal if the appraisal is done later then it comes back low. That is why you need to engage the services of land management experts who can guide you through the process, give you top tips in timber and land management, and help make sure you are getting value for your money.
For more information
If you are looking for recreational land for sale in Arkansas, we can help. At Davis DuBose Knight Forestry & Real Estate, we have a team of land management experts who can answer all your questions related to buying land in Arkansas.
For more information, contact us today at (501) 219-8600, and we will be happy to help you make the right decision for your timberland investment property.