Investing in timberland in Arkansas is a walk in the park. Or should that be a walk in the woods? More investors are adding tree farms and managed natural forests to their portfolios — and generating a huge return on their investments.
The biggest returns come from timber and land price appreciation, biological growth and upward product class movement. All of these things are difficult to understand, so we put together this quick guide to help make your decision easier when looking for land.
What Is a Timberland Investment? Who Should Invest?
Timber investments might not be a conventional choice — stocks, shares and pensions attract the bulk of investors, of course — but research shows it’s a massive money-maker in Arkansas. Timber has risen in price during the last 200 years and returned, on average, 6.5 percent a year over the last century, according to Boston-based investment company GMO. Moreover, experts predict a 4.8 percent return on timber over the next seven years — significantly more than the 2.3 percent return on large-cap U.S. stocks.
Timber increases in quantity through biological growth, which boosts its price appreciation. As an investor, you can earn a yearly income from leasing a tree farm or natural forest. Although there are no tax advantages on timberland real estate, it’s a fruitful venture as some people spend $45 billion on timber investments.
Don’t bark up the wrong tree, though. You need to understand the basics of timer investments before you part with your cash.
What Factors Should You Consider?
Forget what you’ve heard — there’s no shortage of trees. Forests cover 31 percent of the world’s land area and 49 and 45 percent of Latin America and Europe, respectively. Here in Arkansas, you can find forests with fertile land and towering yellow pine trees, making it a great place to invest.
The minimum U.S Trust investment is $5 million. (Tree farms with older trees can work out more expensive when you factor in maintenance costs). However, a forest management and consulting company in Arkansas can help you find good investment opportunities.
Don’t Go Out on a Limb
You can purchase a tree farm or natural forest and manage timber on your own. Using a forester or land manager, however, will allow your investment to blossom without all the hard work. Check out the Association of Consulting Foresters of America — foresters need a bachelor’s degree in forestry, at least five years’ experience and have no conflict of interest with timber buyers.
They say money doesn’t grow on trees, but timber investments prove this isn’t the case. When you use forestry management and consulting company, such as Davis DuBose Knight Forestry & Real Estate you could generate a hefty return. To make the most of your new timber investment, contact us today at (501) 219-8600.