Timberland Flips for 1031 Exchange - Tips and Insights Wanted

Has anyone done a longer term flip in timberland? I need to buy a replacement property for a 1031 exchange and am looking for something that can be leased for hunting, but also might produce a bit of income in timber. I will use a land agent who has expertise in timberland to identify the property and to help educate me on how to manage it. Then, will sell (flip) it in a couple of years to someone who wants to hold it longer term until harvest. Any words of wisdom would be appreciated. Thanks!

btw - I am a new member and will very soon begin the process of the more typical land flipping, starting with smaller properties. I’m taking the foundations course now. About to transition out of my corporate job and jump into land flipping!

Hey @bethlee - welcome to the forum! If you haven’t seen this blog post, it’s worth checking out.

When harvesting timber, it’s not just about whether the parcel has trees, you also have to consider the type, age, quality, quantity, size of the parcel, and how close (or far) the property is from a local sawmill. It needs to check all the right boxes, and if one is missing, it can squelch the whole deal.

You can have the best timber on earth, but if it’s a thousand miles from a sawmill, the cost of mobilizing the people and equipment to get it may not make sense.

I recently had a property with some mature trees and there was a local sawmill that could’ve used them. I even offered to give them all my trees for free (because I needed to clear the lot anyway), but they still didn’t want them. Why? Because the timber was low quality and my parcel wasn’t big enough.

Anyway, I don’t say any of this to discourage you, but just to point out that it’s a dynamic field of endeavor and there are plenty of variables to consider when making a deal happen.

@retipsterseth Thanks for the reply, Seth. I will read the article and definitely talk to the land agent about sawmill location. I’ll need to rely on the agent to help with the timber quality. Thanks so much for the input!

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@bethlee you bet! If you make any progress on this, I’d love to hear how it goes and what you learn in the process.

@retipsterseth Here’s what I’ve learned. As you said, it is indeed all about the local mills. The major consumer of pulpwood in my area (Western NC) was the papermill in Canton, NC. It closed in June, so there’s literally nowhere to sell pulpwood around here at this time. Apparently, they were the major buyer in the region, even stretching into the Piedmont. The timber veterans are trying to figure it out, so it’s definitely not the time for a rookie to jump in.

Great advice, Seth. It was spot on. Thanks!

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@bethlee good to know. Surprisingly, it seems the best resources on earth won’t be touched simply because of their long distance from sawmills.

Imagine if anyone ever finds a way to travel to faraway lands and transport large quantities of heavy trees without breaking the bank, they are going to strike it rich with whatever technology or system enables them to do that.

The way that used to be gone was to float the logs down the nearest river to a sawmill.

In the northeast they piled the logs on a frozen waterway in the winter, and waited for the ice to melt in the spring.

@landolease oh yes. I live in a city where that kind of timber transportation was a big deal 150 years ago.

@bethlee I just finally sold a property that’s just what you described. 290 acres, only 60 acres timbered 5 years ago. I’m told the hunting was great. There were roads built around the perimeter for timbering and it was flat to rolling terrain. However – there is a very small buyer pool for a specialty property like this. I saw it as development potential given the terrain and location, or at minimum a subdivide. But the area didn’t support that scale of development. My potential buyers were either investors or hunters. The guy that bought it is planning to do exactly what you described. He will have the same difficulty selling it in a few years that we did.

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