Selling timber in southwest Missouri

Best Practices for Selling timber in southwest Missouri

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You won't be selling "lumber" you are going to be trying to sell logs.  And a 20 inch log thats 12 foot long will have more than 150 BF in it unless you are measuring from the big end...which is not the way to do it.  Also the difference between a great, possibly veneer log and a junk log is the difference between day light and dark.  I know that is not much help, but you gave very little to work with.  Tim

Ok, yes I understand I'm not selling lumber, heck I might not even be selling logs. Just trying to ascertain if there might be some hidden value here by trying to harvest the wood that will need to be taken down. For instance if I take down trees to sell, I have an advantage over someone who pays someone to take down the same trees. As far as quality, I cannot say, although I hope to take a look at the property in person and get a better idea of what might be there. So I guess a better question is what might a mill pay for the prior mentioned logs for pulp vs saw log, not even considering veneer quality.Again this is just a post to reach out to see if there's any hidden value on a property that I'm already interested in. Hopefully I will visit the property soon and have better information about the timber I encounter. Here are a couple pics from the property, but again you cant garner much from the information I have currently. Just trying to get some ideas of what might be there value wise.

Your first step really needs to be getting a consulting Forester involved.  The description you gave and photos you showed made me think that you would end up high grading the lot without realizing that was what you were doing.Set your goals, decide what timber will come out, then look at the markets.  You are going to have a hard time being profitable, potentially even being able to sell anything, at the size you mention.  Every tree has pulp in it, even the veneer white oak will have pulp and chip wood in her.  The question is what are you going to do with it?  Can you pile up the pulp and have someone get it?  Sell firewood?  Let it rot in place?  All valid options, depending on your goals, financial needs, ability, and the conditions on the ground.Do you need any sort of certification and insurance to deliver to area mills? DOT compliance, equipment that can be unloaded?  Are there any micro mills around - like many of us on here - that buy logs?  They would be a better option, likely with a lot less red tape, but they may not buy every grade of log that you want to sell.  I buy grade pine and pay a good premium for it.  Bring me a load of #3 saw logs and I won't even start the loader to unload your trailer.  Merchandising is key, just like any other business.Not saying you can't do it, but you need to do your homework first.

Well put it this way, that's 50 acres and if you have 50 mature hardwood trees per acre you are right on target.  That's only 2500 trees.  Maybe 1/4 are really merchantable.  That's 625 trees.  That's roughly 12/acre.  Taking down 12/acre is going to damage a few too, so cut them too and say 15/acre.  Plus you need to cut the unmerchantable that are in the way so another bunch to cut.  That's a good bit of work.  How tall are they?  Do you have 20' til you hit big branches or 40'.  40' is nice but then you need a market for lots of different products.  You need to get that out to a clear field or some other spot an Truck can get to, you need to find a buyer for product classes.  You need to cut the trees for each type of buyer.  You have to haul the logs through the forest without scraping the other trees.    You have 2 weekend days to cut.  You get 20 trees cut and dragged out.  You have 3 species, you have 1/3 with high quality butt logs.  That will give 2-3 high quality butt logs/species per weekend.  After 10 weekends you'll have 20-30 high quality butt logs and that is sort of a bare minimum to get a serious buyer.  You'll start to have a mountain of other stuff that is not high quality and it becomes a problem, can be sold or left to rot you choose.Bundling for buyers:Log buyers want to truck loads of roughly similar species.  Say high quality WO and Walnut saw logs, or WO and Walnut veneer.  What they don't want is 2 walnut veneer, 1 wo veneer, 4 red oak butt saw logs, and 6 maple palet logs, 6 wo saw logs, and 4 red cedar.  There are log buyers that will buy all of that and then combine with others, these guys run concentration yards (they concentrate little loads till they get 3-4 loads of a certain type of log for a buyer).  Concentration yards have lots of costs, they have to pay you less than the logs are worth to the highest buyer.  However they would come and buy loads of logs, they won't pay but maybe 70% of the actual value and maybe less.Pricing (see the log price thread)Right now WO is hot (above historical norms), followed by Walnut (which pays most for good logs or poor logs but the pricing is not so far off historical norms).  RO pricing has recovered.  Hickory is stable, YP is moving up.  Its a good time to sell logs but just 12 months ago it stunk, it sucked all summer too.  Horrible.Your picture shows a WO tree, personally it looks to me that it is a tree that would be of interest to a stave log buyer (nice but not too big) and not a veneer log buyer so we'd let that grow 10 years and double in value.  If your whole forest is composed of mostly merchantable WO than congrats, that's easy on the wallet. I see another in the background.In the winter look up at the underside of the oak branches, WO is flakey.  A WO log that is 22" in diameter at the small end is has lumber worth 2x /bdft from that of a WO that is 19-20" at the small end.  Takes 10 years to add 2".  Volume increases by a good bit in 10 years and the price per bdft doubles.  WO is currently worth 3x that of RO.Also you can ask a county extension agent to help you cruise a few plots to understand what species you have and how many and what grades, they'll probably help you do one or two, maybe they can do more- depends on the state and county.  They usually don't really know values but just some vague direction of values.Next thing about your time value, it has to be close to 0 for you to do this and make money, can be rewarding but not actual financially savvy.Last, you can hire a consulting forester aim for a very light harvest and he'll sell it and give you a check and someone else does everything else.  He'll want 5-15% and after a few weeks cruising and guessing and calling for pricing, etc you'll find out that's not bad money spent.  He'll keep you from getting ripped off and should keep the loggers in line, loggers will have equipment meant for the job and are almost never every wealthy people.  Loggers don't make much money, nature of the business that they need a policeman.  As southside said, make sure you define goals and make sure that the medium sized valuable species don't leave with the logger.  The forest consultant might also want to sell those to make a $.  This is particularly important with WO.  Don't cut small/medium WO.  Just don't, everyone else has and in 10 years there is going to be an issue finding good WO.Me in your shoes, I'd meet with the county extension agent and get some idea of species mix and markets in MO.  I'd measure a few of the largest largest trees you can find.  If you don't have any over 25" DBH than I'd not be cutting for income and would not bother calling a consultant for income purposes.  You may cut to create income in the future but that's another long long story.   Looks like an ok forest to me, wish I were closer we'd take a nice walk.

Thanks Southside,Some good things to think about. Trust me, the logging part of this idea is the least of my worries. I don't want to get involved in processing firewood, but if I'm cutting trees down to fit my other plans, it'd be a bonus to possibly sell some logs to help offset some of the other costs. I've read, several guides on grading logs, and I don't think what I'm expecting to try to sell will be in the grade 3 area. I'm limited to load size by my truck and trailer.I think perhaps selling to a local sawyer may be my best approach due to the quantity I'll be able to process. I know one locally that buys cedar, I will contact him and see if he's interested in other logs or if he has any suggestions.

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Check with Turner Logging he is down that way

If you have to rape the place to afford it, dont buy it.If you want to be in the woods doing stuff yourself, start by cutting the worst trees out for firewood especially if they are near good trees. You want your best trees getting clear direct sun on all 4 sidesof the top so they fan out into big brocolli tops and get heavy with leaves and new shoots.Everyone screws up in the beginning so dont be in a hurry to do that.  If you start with your trash and work your way up youll make less basic felling, skidding and bucking mistakes on your good timber.  Hauling in a load of your best trees and leaving with a $260 check is a special kind of burn when you were hoping for a grand.This is a vague number but it suits your vague information.  Plan on $1k to 4k per acre from amatuer logging. and halve that if you have a logger cut on shares.  Making money on the pulp and firewood are critical because youll get 10 loads pulp per 1 load prime. And itll be piled up EVERYWHERE if you arent doing something with it.You might be better off to plan on doing your own TSI for a few years, pulling out firewood on the weekends and stacking this site full of prime trees, then whenever the next hot market period comes along having a forestor do an auction sale and let the buyers compete for your best trees still on the stump. Called selling stumpage.  You get paid in full upfront and they get a time window to harvest at their expense.  Take the money and refi the mortgage or hire a stumper to come turn it into pond and pasture to lease out... Something like that.Dont forget about the taxes on a timber sale.  Yer gonna want a tax basis report and yer gonna want to put the sale proceeds into atleast a portion of deductibles to offset the tax hit, imo.

Looks to be a decent timber site. A very competitive market for White Oak stave logs exists in MO as well as RR Tie, flooring and pallet markets. Marketing logs should not be an issue.Good "forestry" practices and maximizing income from selling lots doesn't always go hand in hand. I see nothing inherently "wrong" about high-grading ground that is destined to grow houses and not timber.From a tax point of view you need to consult with someone familiar with timber tax issues before you cut the first tree. Generally you can allocate the fair market value of the stumpage as part of the purchase price and possibly deplete any timber sales from your basis without tax liability if;a: you have a timber inventory done by a qualified professional to establish your basis prior to the saleb: you sell the timber lump sum to a logger or sawmillMost generally if you do your own logging all the timber sale proceeds will be treated as ordinary income for tax purposes.I have the knowledge, equipment, and connections to log my own timber but choose not to because of tax liability. I pay for a timber inventory and then deplete the timber sale against my basis. When the land is eventually sold the gain will be a capital gain and taxed at the lower capital gain rate and not subject to any of the payroll tax add on's. I do pretty well in my day job so any added "logging income" in my situation would be taxed at a high rate.I am not a CPA and not qualified to give tax advice. Your situation and tax advisors may treat things differently. Be advised that many CPA's are not all that well versed on timber tax law.Species composition, quality, quantity etc. etc, etc all influence what the final value is. But reality is most things in life come back to averages. An average timber sale might have 4000ft/acre at $.30 a foot stumpage value. That would over-value junk and not touch a super tract but would be within shotgun range on a bunch I have cruised in the Ozarks.

I'm south of Stl and occasionally buy logs from someone selling them on FB, if the price is right and I don't have to do do a ton of work.  I have looked at prices in MO by googling and finding prices listed by MDC.  That lead to me to pay up to $1 for walnut and about 25 cents for anything else.  I'm not sure its worth your time with the scale you're talking about.  You might be better off buying a mill and milling for your own use and maybe selling some lumber.

Thanks for all the information guys! I'm having a minor outpatient elbow surgery tomorrow, so I'm thinking Tuesday might be a good day to take a trip to go look at the property. Probably won't want to be using the arm much so I might as well get some hiking in. I'm going to try and get a better idea of what kind of timber might be there. I'll take some pictures and post an update later.

When youre out there, remember that trees dont get valuable until they are the right species, big, straight and free of any limbs or forks for atleast 2 humans, preferably 4 or 8.  When youre new at it... its easy to get drunk on the idea of owning wood to log and remembering stories of "highly valuable" walnut or whatever.  If you can hug it and touch finger tips it aint big yet.  And just cuz its big and pretty on the stump dont mean it aint hollow, full of ant tubes, bacterial stain, shake, you name it.  Not all of the eggs you see will hatch.Stay sober about the potential value.  Its probably not much or itd either be cut before the sale or priced into the sale.The era of undiscovered timber goldmines on the other side of the ridge are pretty well over thanks to technology and the prevalence of debts people are scrambling to pay.

Quote from: stavebuyer on November 21, 2020, 02:27:22 PMFrom a tax point of view you need to consult with someone familiar with timber tax issues before you cut the first tree. Generally you can allocate the fair market value of the stumpage as part of the purchase price and possibly deplete any timber sales from your basis without tax liability if;a: you have a timber inventory done by a qualified professional to establish your basis prior to the saleb: you sell the timber lump sum to a logger or sawmillMost generally if you do your own logging all the timber sale proceeds will be treated as ordinary income for tax purposes.I have the knowledge, equipment, and connections to log my own timber but choose not to because of tax liability. I pay for a timber inventory and then deplete the timber sale against my basis. When the land is eventually sold the gain will be a capital gain and taxed at the lower capital gain rate and not subject to any of the payroll tax add on's. I do pretty well in my day job so any added "logging income" in my situation would be taxed at a high rate.I am not a CPA and not qualified to give tax advice. Your situation and tax advisors may treat things differently. Be advised that many CPA's are not all that well versed on timber tax law.I'm not a CPA either but my understanding is that any income from timber harvested less than 1 year after acquiring the property is considered normal income. After 1 year it is a capitol gain.Also, you don't have to sell the timber lump sum to take advantage of a timber basis.You're right though, very few CPA's have a grasp on timber tax issues.Timbertax.orgis our friend. All of this presumes you haven't owned the property for years, didn't inherit it and didn't buy it in a way that the IRS can't track.Clark

Quote from: Clark on November 22, 2020, 10:45:36 PMQuote from: stavebuyer on November 21, 2020, 02:27:22 PMFrom a tax point of view you need to consult with someone familiar with timber tax issues before you cut the first tree. Generally you can allocate the fair market value of the stumpage as part of the purchase price and possibly deplete any timber sales from your basis without tax liability if;a: you have a timber inventory done by a qualified professional to establish your basis prior to the saleb: you sell the timber lump sum to a logger or sawmillMost generally if you do your own logging all the timber sale proceeds will be treated as ordinary income for tax purposes.I have the knowledge, equipment, and connections to log my own timber but choose not to because of tax liability. I pay for a timber inventory and then deplete the timber sale against my basis. When the land is eventually sold the gain will be a capital gain and taxed at the lower capital gain rate and not subject to any of the payroll tax add on's. I do pretty well in my day job so any added "logging income" in my situation would be taxed at a high rate.I am not a CPA and not qualified to give tax advice. Your situation and tax advisors may treat things differently. Be advised that many CPA's are not all that well versed on timber tax law.I'm not a CPA either but my understanding is that any income from timber harvested less than 1 year after acquiring the property is considered normal income. After 1 year it is a capitol gain.Also, you don't have to sell the timber lump sum to take advantage of a timber basis.You're right though, very few CPA's have a grasp on timber tax issues.Timbertax.orgis our friend. All of this presumes you haven't owned the property for years, didn't inherit it and didn't buy it in a way that the IRS can't track.Clarktimbertax.orgis a nice tip for everyone.  We should post in a general thread on forestry & logging subsection.  Thanks Clark!

Quote from: nativewolf on November 23, 2020, 06:22:27 AMQuote from: Clark on November 22, 2020, 10:45:36 PMQuote from: stavebuyer on November 21, 2020, 02:27:22 PMFrom a tax point of view you need to consult with someone familiar with timber tax issues before you cut the first tree. Generally you can allocate the fair market value of the stumpage as part of the purchase price and possibly deplete any timber sales from your basis without tax liability if;a: you have a timber inventory done by a qualified professional to establish your basis prior to the saleb: you sell the timber lump sum to a logger or sawmillMost generally if you do your own logging all the timber sale proceeds will be treated as ordinary income for tax purposes.I have the knowledge, equipment, and connections to log my own timber but choose not to because of tax liability. I pay for a timber inventory and then deplete the timber sale against my basis. When the land is eventually sold the gain will be a capital gain and taxed at the lower capital gain rate and not subject to any of the payroll tax add on's. I do pretty well in my day job so any added "logging income" in my situation would be taxed at a high rate.I am not a CPA and not qualified to give tax advice. Your situation and tax advisors may treat things differently. Be advised that many CPA's are not all that well versed on timber tax law.I'm not a CPA either but my understanding is that any income from timber harvested less than 1 year after acquiring the property is considered normal income. After 1 year it is a capitol gain.Also, you don't have to sell the timber lump sum to take advantage of a timber basis.You're right though, very few CPA's have a grasp on timber tax issues.Timbertax.orgis our friend. All of this presumes you haven't owned the property for years, didn't inherit it and didn't buy it in a way that the IRS can't track.Clarktimbertax.orgis a nice tip for everyone.  We should post in a general thread on forestry & logging subsection.  Thanks Clark!Yes this thread is a gold mine, unlike buying land for short term timber speculation

Quote from: Clark on November 22, 2020, 10:45:36 PMQuote from: stavebuyer on November 21, 2020, 02:27:22 PMFrom a tax point of view you need to consult with someone familiar with timber tax issues before you cut the first tree. Generally you can allocate the fair market value of the stumpage as part of the purchase price and possibly deplete any timber sales from your basis without tax liability if;a: you have a timber inventory done by a qualified professional to establish your basis prior to the saleb: you sell the timber lump sum to a logger or sawmillMost generally if you do your own logging all the timber sale proceeds will be treated as ordinary income for tax purposes.I have the knowledge, equipment, and connections to log my own timber but choose not to because of tax liability. I pay for a timber inventory and then deplete the timber sale against my basis. When the land is eventually sold the gain will be a capital gain and taxed at the lower capital gain rate and not subject to any of the payroll tax add on's. I do pretty well in my day job so any added "logging income" in my situation would be taxed at a high rate.I am not a CPA and not qualified to give tax advice. Your situation and tax advisors may treat things differently. Be advised that many CPA's are not all that well versed on timber tax law.I'm not a CPA either but my understanding is that any income from timber harvested less than 1 year after acquiring the property is considered normal income. After 1 year it is a capitol gain.Also, you don't have to sell the timber lump sum to take advantage of a timber basis.You're right though, very few CPA's have a grasp on timber tax issues.Timbertax.orgis our friend. All of this presumes you haven't owned the property for years, didn't inherit it and didn't buy it in a way that the IRS can't track.ClarkOne year is capital gain treatment and is not specific to timber. Any gain or less for property held less than a year is ordinary income or loss. If you buy something and sell it for what you paid there is no gain and thus no taxable event has occurred.If I buy 50 acres for 100k and have a forester do an inventory cruise that values the timber at $50K on the date of purchase. My basis in the dirt is 50K and the basis in my timber is 50K. I sell $25k timber a week after I close to ABC Sawmill. My land basis remains 50K, my timber sale reduces my timber basis from 50K to $25K. There is no income as the 25K reduced my basis. There would be no gain until the timber sales amount exceeded the basis.The one year capital gain/loss on a timber sale would only to apply to any amount sold in excess of your basis.

Quote from: mike_belben on November 22, 2020, 07:21:40 PMWhen youre out there, remember that trees dont get valuable until they are the right species, big, straight and free of any limbs or forks for atleast 2 humans, preferably 4 or 8.  When youre new at it... its easy to get drunk on the idea of owning wood to log and remembering stories of "highly valuable" walnut or whatever.  If you can hug it and touch finger tips it aint big yet.  And just cuz its big and pretty on the stump dont mean it aint hollow, full of ant tubes, bacterial stain, shake, you name it.  Not all of the eggs you see will hatch.Stay sober about the potential value.  Its probably not much or itd either be cut before the sale or priced into the sale.The era of undiscovered timber goldmines on the other side of the ridge are pretty well over thanks to technology and the prevalence of debts people are scrambling to pay.Lots of fools gold out there. Although you can become jaded. There was one local to me advertised in the local paper with a higher timber value than the asking price of the farm. It was fall and I was busy and log poor to start with. I figured they were estimating the mill value and not stumpage so I never even looked at it. Big mistake. One of my log suppliers bought it and hauled to me. Turns out there were 4 relatives that couldn't get along over deer hunting and three sold it just to spite number 4. Rare but it happens.You have to keep both eyes open and look for the pitfalls but you always got to look!

Quote from: stavebuyer on November 23, 2020, 01:08:48 PMThe one year capital gain/loss on a timber sale would only to apply to any amount sold in excess of your basis.You're right. I'm thinking of the majority of landowners who never have a timber basis established. They get into trouble if they decide, as so many do, they can buy the property and sell the timber to pay for it. Poor management of both their money and their forest.Clark

I bought 57 acres about four years ago of which about 46 acres is forest. Really nice hardwood forest; the pines (most of them) were cut 20-30 years ago. Having no intent to sell, should I get a basis established? I will need to reread this thread, maybe there is info on how to do that. Never say never, I am not married to never selling if other land became available! I actually LOVE this land, it's rare to have a great hardwood tract but there is a neighbor who has a pen full of dogs and they seriously ruin the vibe of enjoying the woods when they start their barking. It's unreal. A whole pack barking for a longgggg time. I've actually thought to myself that man, I don't know if I can take this!

If you never sell it, it does not matter.  If your move on the the Happy Hunting Ground, the fair market value at the time you load up and go the the Happy Hunting Ground becomes the basis for your heirs.

A qualified forester could cruise today and give you current numbers, estimate your basis "backwards" to 4 years ago, and give you annual net growth projections going forward. All very useful numbers even if you are not cutting or selling; watching it grow andknowing what you have and how it is performingis some of the best money you will ever spend.

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