Invest in lumber?

[Gregg Feldstone]

Got a brochure from Hawaiian Legacy Hardwoods and it looks intriguing. One can buy lots of 100 teak, mahogany or koa trees for $5800-$6100. When the trees are harvested you keep the profits. A $6100 koa investment is predicted to make you $280,000 over 25 years, but you can start getting profits in as few as 7-10 years. Has anyone else looked into this or other tree farms? Lots of variables and risk but they, of course, try to down play that.
It does look like something which may be profitable and play a part in keeping wood available in the future. The fact that the trees are planted on US soil also makes it seem more secure.

[Benjamin Dahl]

It could work out but I'd really want to know about the company, how long they have been around, how they plan to keep you updated, what their rights to the land are, what happens if the land is sold, etc.
Good luck if you decide to go with it.

[Daren K Nelson]

I would buy a sawmill with the $6100 and start profiting from day one, but that is just me :confused: As far as keeping wood available...
This is a quote from “Utilizing municipal trees from around the country” Stephen M. Bratkovich
“In the United States over 200 million cubic yards of urban tree and landscape residue are generated every year. Of this amount, 15 percent is classified as “unchipped logs.” To put this figure in perspective, consider that if these logs were sawn into boards, they theoretically would produce 3.8 billion board feet of lumber, or nearly 30 percent of the hardwood lumber produced annually in the United States."
Not to cram my philosophy down anyones throat, sorry, but urban logging is the answer.

[Mark Smith, too]

I would buy a sawmill with the $6100 and start profiting from day one, but that is just me :confused: As far as keeping wood available...
This is a quote from “Utilizing municipal trees from around the country” Stephen M. Bratkovich
“In the United States over 200 million cubic yards of urban tree and landscape residue are generated every year. Of this amount, 15 percent is classified as “unchipped logs.” To put this figure in perspective, consider that if these logs were sawn into boards, they theoretically would produce 3.8 billion board feet of lumber, or nearly 30 percent of the hardwood lumber produced annually in the United States."
Not to cram my philosophy down anyones throat, sorry, but urban logging is the answer.

And it will probably really catch on when the indestructible saw blade is produced.

[Daren K Nelson]

And it will probably really catch on when the indestructible saw blade is produced.

Ah shucks a little metal never hurt anyone
Sure I hit a spike in this log.
http://www.forestryforum.com/gallery/albums/userpics/12216/metal1.jpg

But I managed to get a few small boards out of it anyway :D
http://nelsonwoodworks.biz/pb/images/img2664146890fc2385f1.jpg

Bummer this walnut had 2 nails in it...
http://www.forestryforum.com/gallery/albums/userpics/12216/curlyw2.JPG

Under the nails there was 200 bft of curly walnut though :eek:
http://www.forestryforum.com/gallery/albums/userpics/12216/curlywalnut.JPG

I hit 1/2 a coffee can of tramp metal in this log :mad:
http://nelsonwoodworks.biz/pb/wp_a1909e0d/images/img243694329d5ecf0d58.JPG

But it sure did not slow me down because I was pulling 24" wide figured maple slabs off the mill ;)
http://nelsonwoodworks.biz/pb/wp_a1909e0d/images/img2922145af6bc1937d2.JPG


So urban logging may not be for the faint of heart and a few bandmill blades die of metal poisoning. I guess we can keep hauling logs like these to the burn pile/landfill because of the metal ? (not in my neck of the woods)

[Randal Stevenson]

It could work out but I'd really want to know about the company, how long they have been around, how they plan to keep you updated, what their rights to the land are, what happens if the land is sold, etc.
Good luck if you decide to go with it.


Besides above, what about damage due to weather/insects, etc. WHO maintains them? Who pays for all the farming fee's? Are you guaranteed a rate of return? Are these also being sold as or used as "carbon credits" (and that whole idea brings more questions, like can you lease them as that).

[Rick Hubbard]

The name Bernie Madoff keeps popping into my mind for some reason.

[Daren K Nelson]

Besides above, what about damage due to weather/insects, etc. WHO maintains them? Who pays for all the farming fee's? Are you guaranteed a rate of return? Are these also being sold as or used as "carbon credits" (and that whole idea brings more questions, like can you lease them as that).

Excellent questions. A "tree farm" out of your own control (like your own personal woodlot...then the afore mentioned natural devastators can still ruin you :() sound like too much of a gamble IMO. I am not aware of any "mail in" lumber jobs, it's hands on. As far as an investment...I would buy land and lease it to tree farms ;), no risk all return.
And who says the species being planted will be worth even a fraction of the projected price down the road ? I have personally seen American red oak logs drop 75% in the last 3 years. What is that 25 year profit # based on todays prices?
One last thing. OK the "tree farm" where you own your trees...but not the ground. Lets say in 3 years the landowners decide wind power is the best use for the land, or a subdivision, or they find a mineral deposit (just off the top of my head) "Your" trees are now in his way, so they gotta go. Harvested prematurely and at little market value, your out.

[John Lucas]

Slick website. Good idea. But not one picture or name of the individuals who are taking your money. No pictures of the place. No 10K or any other offering support material. Great links but not to them, just forestry. What was that about the Brooklyn Bridge?

[John Keeton]

Invest in lumber? The quick answer is yes, but your methodology is way too risky.

I purchase lumber whenever I see a really good deal, and store it. I can see it, feel it, use it, and sell it - anytime I want. I think good wood, at good prices, is always a good investment. If you can buy green walnut for $1/ft, and in two years, it is worth $3-4/ft, that is a good return.

No way in the world would I do this. You aren't investing in lumber, you are investing in someone's get rich quick scheme. I think Rick Hubbard has it right.

And, by the way, even though I would not be inclined to do it simply because of time constraints, I think Daren has a great plan. I bet he can make money doing it, and there is always that chance of a real payoff like the curly walnut:D

No such thing as getting rich with no effort (unless you are Madoff!), and all things worth having are worth working for.

[Quinn McCarthy]

Gregg,

What you need is somebody that can do some forest investment analysis like a consulting forester with a financial background. There is a chance that it is a good deal. Without finding out what the growth and yield is of those species on that site or soil you will never know. I am sure that the harvest in 7-10 years is a precommercial thinning on your woodlot. In order to do the analysis you need to know the rotation age of the species. What if the yield on your woodlot is more than advertized? Does that money go into somebody elses pocket. What if it is less? Every tree grows at a different rate. In an investment analysis shorter time period is better. The longer the roation age the less rate of return you get. Most companies look for better than 7% IRR to make the investment.

With any investment in timber you have risks involved. Like insect, diseases, fire and weather events.

When you think about the risk/return curve timber is considered as a moderate risk investment. Usually timber has a slightly higher return for the risk so it is considered a good long term moderate risk part of a portfolio. There are several companies and financial institutions like retirement funds that invest in timberlands.

I hope that help.

Let me know if you have any more question.
Quinn
Forester by day woodworker by night

[Steve Rozmiarek]

Gregg, if this is something that interests you, I bet there is a way to do it. There are good companies out there that grow trees for lumber, and I have yet to meet a company that turns away investors. Do a little legwork, and find a few of these companies, and see if they want an investor.

In my line of work, we have a fairly constant flow of outside investor activity. People apparently like to grow things, including money, and these investors do ok herel. I'd imagine that there is an infrastructure for supporting tree or forest investors similar to the one that exists for ag investors.

Cold calling on the other hand...

[John Keeton]

There have been some good, common sense ideas offered here on how to invest in the lumber business by those that are in that business. You will here those businesses speak of real risks, and reasonable profits.

But in my experience a business that stands to make huge profits does not go out and solicit people to share in those profits. They keep it a "trade secret", accumulate capital from venture capitalists in a closed environment, and reap the rewards - if any.

There are no free lunches, and a business that advertises "$6100 koa investment is predicted to make you $280,000 over 25 years" is a scam. That is an unreasonable profit, and not a legitimate venture.

[Jules Dominguez]

It's obviously a scam.

[Chris Konikowski]

There have been some good, common sense ideas offered here on how to invest in the lumber business by those that are in that business. You will here those businesses speak of real risks, and reasonable profits.

But in my experience a business that stands to make huge profits does not go out and solicit people to share in those profits. They keep it a "trade secret", accumulate capital from venture capitalists in a closed environment, and reap the rewards - if any.

There are no free lunches, and a business that advertises "$6100 koa investment is predicted to make you $280,000 over 25 years" is a scam. That is an unreasonable profit, and not a legitimate venture.

Honestly, that is only about a 16.5% rate of return for 25 years. I know that this is good, but that is not unfathomable by any means.

That being said, I would not bother with this. There are many other ways to make good money than this in markets and such...

[Peter Quadarella]

Actually I was just telling my wife we should invest in lumber today. I told her with the stock market down, real estate no good, and the possibility of inflation, it's time to put our money in commodities. For some reason she just thought this was a scheme to spend thousands on lumber for the shop. :D

Of course, telling her woodworking machines might be a good investment too might have been a little too far.

[jeff begin]

If this was truly a great opportunity (and honestly had anywhere near the return claimed), bankers and/or venture capitalists would be all over it. Instead, the company is forced to target "small people" with advertisements hoping that they might overlook some of the financial fine points because the industry interests them.

Sounds too fishy for me.

[Gregg Feldstone]

Thanks for your responses. Many of the points you all have made also crossed my mind. The website and literature they sent me talks about the coming scarcity of tropical hardwoods and how the land they are using on the big island of Hawaii is perfect for growing and free of risk from infestation, drought, volcanoes, hurricanes etc. They make it sound like I'd be buying gold real cheap. I did get the names of the two partners in the business but I had to ask twice. It's an interesting idea but I think I'll pass.

[Andrew Jordan]

Investing in a tree over 25 years....what if it grows crookedly, or doesn't grow? Are you buying an acorn for 6 grand, and hoping a tree develops? What if the tree is full of bugs and becomes punky? If a hurricane drops the tree, what happens?

In addition to the above, there's likely a catch - it has to be cut down in 25 years, and cannot be harvested before...gives the individuals plenty of time to run off...

[John Keeton]

Honestly, that is only about a 16.5% rate of return for 25 years. I know that this is good, but that is not unfathomable by any means.

That being said, I would not bother with this. There are many other ways to make good money than this in markets and such...
Chris, I think we agree on the issue of the original post, but I would respectfully take issue with the perception that "16.5% is not unfathomable."

While it may happen at times, in the investment world, the rule is risk vs. return. Over time Treasury bills average 3.7%(low risk), corporate bonds 5.9%(moderate risk), and the market 10.4%(I think we can all agree this has been proven to be high risk:eek:)

So, 16.5% is beyond, by a long shot, the market expectation. That puts it at or above an extremely high risk. If one likes to gamble, has money to lose, and enjoys high stake investments while still sleeping well at night - then it may be a consideration.

[Scott Wigginton]

Of course, telling her woodworking machines might be a good investment too might have been a little too far.

Not far enough! Tell her the Schwarz (http://blog.woodworking-magazine.com/blog/LieNielsen+Planes+For+38.aspx)has declared quality handtools retain their value better than your 401K!


"May the Schwarz be with you"

[Karl Brogger]

Investing in a tree over 25 years....what if it grows crookedly, or doesn't grow? Are you buying an acorn for 6 grand, and hoping a tree develops? What if the tree is full of bugs and becomes punky? If a hurricane drops the tree, what happens?

In addition to the above, there's likely a catch - it has to be cut down in 25 years, and cannot be harvested before...gives the individuals plenty of time to run off...

Has Hawaii ever been hit by a hurricane?



To me it seems like a risky investment. Granted $6k isn't much to lose, but their projections are probably figured at 100% rate survival of the trees, and that is just unlikely. I've kicked this idea around domestically, plant X number of acres into hardwood. The biggest downfall being that even at 28 I won't live long enough to see anything become of it. I think it would take a bit of education in forrestry to know what to plant in what kind of area, and how to care/protect them to net the greatest yield.

[Paul Johnstone]

Got a brochure from Hawaiian Legacy Hardwoods and it looks intriguing. One can buy lots of 100 teak, mahogany or koa trees for $5800-$6100. When the trees are harvested you keep the profits. A $6100 koa investment is predicted to make you $280,000 over 25 years, but you can start getting profits in as few as 7-10 years. Has anyone else looked into this or other tree farms? Lots of variables and risk but they, of course, try to down play that.
It does look like something which may be profitable and play a part in keeping wood available in the future. The fact that the trees are planted on US soil also makes it seem more secure.

If you are serious about investing in this, I think there is a much safer way.

In the southeast US, there are people that buy land relatively inexpensively, clear it, and then plant those pine tree forests. In 10 years, you can harvest for paper. 15 years, you can harvest for framing lumber.
The government gives you a subsidy for planting the trees.. I think it is $50/acre per year.

Note, this information was from a relative that does this. It may not be 100% accurate. Do your own research. :)

[John Keeton]

I've kicked this idea around domestically, plant X number of acres into hardwood. The biggest downfall being that even at 28 I won't live long enough to see anything become of it.And then Karl, there is that thing called the "unforseeable future." You go to all that effort, and 15 years down the road, a big developer comes by and offers you a small fortune for the land, bulldozes the trees, and "plants" houses!!

[Carlos Alden]

Gregg:

I concur with all the other suggestions that this is likely a scam. However if you want to pursue it you could call the State Attorney General office for Hawaii and ask them if they've heard of this idea, either specifically with this group or generically. My guess is they'll probably laugh and tell you they get calls all the time from people who have been duped. You could also call the Department of Forestry (or whatever the name is in Hawaii) and ask them how feasible this idea would be in terms of exactly what kind of trees would grow, what the normal anticipated growth-to-maturity is for those kind of tress, how long that would take, what the expected loss-to-disease rates are, what the environmental regulations and restrictions are for planting tree farms, etc. etc.

You could also call the company and ask them for the contact info for their legal advisor, their horticulture advisor, and their real estate person. IF they have the nads to actually give you someone's name (okay, that's presumptious - they COULD be legit) then double check those names with state licensing agencies and the BBB to make sure they are aboveboard, and call them.

I doubt you'd get that far, though.

Carlos

Let us know if you get more information. It might be fun to string them along: "hey, I know of an internet group that could get a BUNCH of investors together. How many acres can you cough up for me?"

[Benjamin Dahl]

Gregg, I'll second what Paul said. I have friends down here in Georgia who plant pine on plot of land when a child is born and then harvest when college time arrives and it pays for a good chunk depending on where the kid goes. My folks just had some timber harvested in northern Maine. They have owned the land for 25 years and had it partially cut when they bought it and partially cut in 2008. The forester made some good money and my folks were happy with what they got. Granted, buying a lot big enough to do something like this would likely be more than $6100.
Take care.
Ben

[Al Weber]

I wonder how many times they sell the same trees to different people? Unless you can pitch a tent or cabin in "your" trees and watch them grow, I'd forget it. However, I will sell you my 90+ acre tree farm in NH. I took about $10K out of it last year (no investment on my part since we live in the house on the property) in a housekeeping cut to take out the garbage (mostly firewood and pulp) in anticipation of a larger harvest when markets go up. Besides that I took down about 1000 board feet of prime rock maple, yellow birch, and cherry last year using a RipSaw. It is drying beneath my barn and will be ready sometime this year (except for the 8/4 and 12/4 stuff). If you really want to do this, buy some property that can be harvested periodically or plant some property close to you for future harvests. There are many documented cases of timber thefts, particularly in the Northeast where someone cuts property other than their own because the landowner is absent. The real reason for the Madoff and Stanford Financial fiascos is that people stopped thinking for themselves and allowed the "investors" - read "cheats" to do it for them without proper checks and balances. Sure it was easy and the profits were guaranteed. Right!

[David Keller NC]

One other comment about this that wasn't brought up is the risk of a change in climatic conditions that could esily render this sort of investment worthless. I don't know enough about Koa trees to say, but I'm betting they're pretty adapted to the climate that Hawaii has experienced over the last several thousand years. A big change in that climate profile could render the area that this tree farm is located in a hostile environment for the particular species.

And probably the biggest risk is an invasive species. This is a repeating story in the US, starting with the Chesnut blight in the early 20th century, followed by Dutch Elm disease, and most recently, the Emerald Ash borer, the Asian Long Horn Beetle and Butternut blight. The only reasonable way to minimize this risk is to invest locally in land that has timber value in a large number of species. If one gets wiped out by insect infestation the other speicies may make up for the loss somewhat.

[Jose Kilpatrick]

It would probably be more wise to purchase a plot of land and plant your own selection of trees to harvest in the future. You may also get a break on your taxes for it.
You can also buy wine by the cases or lot in the same manner as stocks and sell when you feel the price is right. The advantage is that you don't have to worry about storage and shipping.
I like the idea of starting a sawyer buisness best though.

[Jeff Mohr]

I would buy a sawmill with the $6100 and start profiting from day one, but that is just me :confused: As far as keeping wood available...
This is a quote from “Utilizing municipal trees from around the country” Stephen M. Bratkovich
“In the United States over 200 million cubic yards of urban tree and landscape residue are generated every year. Of this amount, 15 percent is classified as “unchipped logs.” To put this figure in perspective, consider that if these logs were sawn into boards, they theoretically would produce 3.8 billion board feet of lumber, or nearly 30 percent of the hardwood lumber produced annually in the United States."
Not to cram my philosophy down anyones throat, sorry, but urban logging is the answer.

Couldn't agree more!!!

[Brett Nelson]

I actually work in the financial industry, heavily involved in securities (including futures markets) as well as financial analysis for businesses. Chris K. is right in that the stated numbers only represent a 16.5% annualized rate of return. I consistently do better than that with my own investing. BUT.......There is a much easier way for you to invest in lumber that doesn't present so many unknowns for you.

Currently the front month (March09) lumber futures are trading at about $150. There were a few periods between 1993 and 2006 where lumber hit $450. It is quite likely that during the next 10 years we will see at least $400 prices again. If you really want to invest directly in lumber, then I would advise that you simply do it through futures contracts. If you want to invest in lumber in a more indirect fashion you can do so in a timber exchange traded fund like CUT, that is sort of a mutual fund made up of only timber companies. It is currently trading at $9.00/share and there is a fairly high probability that it will reach $30 within the next 10 years.

If you would like a little more direction on this, then feel free to pm me. I'd be glad to steer you toward the products you are looking for. This group has helped me out so much that I would love to be able to pay it forward in my area of expertise.

[Jim King]

If it was that good Wheyerhauser would be there trying to offset their Billion dollar loss. Dont do it. Go with Bernie even after he is in jail, a safer bet.

[Bruce Benjamin]

Dear investor,

We regret to inform you that your trees have died. We are very sorry for your loss. Our company is also taking investments in the commercial salmon fishing market if you would be interested. Thank you for your interest...And your money.

Bruce

[Chris Konikowski]

Chris, I think we agree on the issue of the original post, but I would respectfully take issue with the perception that "16.5% is not unfathomable."

While it may happen at times, in the investment world, the rule is risk vs. return. Over time Treasury bills average 3.7%(low risk), corporate bonds 5.9%(moderate risk), and the market 10.4%(I think we can all agree this has been proven to be high risk:eek:)

So, 16.5% is beyond, by a long shot, the market expectation. That puts it at or above an extremely high risk. If one likes to gamble, has money to lose, and enjoys high stake investments while still sleeping well at night - then it may be a consideration.

Why would you say the stock market is high risk? You just said yourself that the average rate of return on the stock market is 10.4% since the beginning. This includes the great depression pulling the average WAY DOWN! I understand that we are in a monster downturn, but you should never play the stock market over a short period of time nor look at short term results. The market will come back and the floating 10 year rate will be NICE once again (I guess this relies on what our new president has in mind for this country....)

Being that diversified is also something that I would not call high risk. If you are in higher risk markets, you ought to beat the market average pretty handily...given that you pay your dues on research and education about the companies and industries you invest in...

JMHO... :cool:

[Ben West]

Paul,

It isn't quite that easy. The govt. subsidy you mention is Conservation Reserve Program payments, it it is only for pines that were planted to reclaim ag. lands. Buying timber land, clearing it, and replanting with pines will not qualify you for the CRP payments. Buying old crappy ag fields can, but of course most of that has already been bought and put into pine CRP. The good ag acreage is too expensive to make pines and CRP and sensible investment.



If you are serious about investing in this, I think there is a much safer way.

In the southeast US, there are people that buy land relatively inexpensively, clear it, and then plant those pine tree forests. In 10 years, you can harvest for paper. 15 years, you can harvest for framing lumber.
The government gives you a subsidy for planting the trees.. I think it is $50/acre per year.

Note, this information was from a relative that does this. It may not be 100% accurate. Do your own research. :)

[John Keeton]

It would seem that the previous post violates the TOS????

Edited to note that the mods have removed the post referenced.

[Darrell Fox]

I don't understand how I violated the TOS?

[Jeff Cremers]

TOS :eek:


don't violate these guys they are very heavy handed. Take a look at their website.

http://www.tos.org/


Jeff
:D

[Darrell Fox]

I couldn't agree more about urban timber. I have a small mill in my backyard in Honolulu. I have been working with tree trimmers locally for a number of years and have had the good fortune to get some wonderful logs. A lot of trees outgrow their backyards in Honolulu and the sweeping changes that are taking place in Honolulu are causing the removal of many more. In my neighborhood the dominant salvaged wood is Mango. If you can get to it before the powder post beetles, it is magnificant. It is even more spactacular if you let it spalt a little, but then it is really a race to beat the beetles to the wood.

[Darrell Fox]

I belonged to TOS in my University years. You have a point there.

[sullivan mcgriff]

Reminds me of one I read of in post war England where a farmer was selling pigs in this manner, when someone went to investigate they found one pig with a whole pile of ear tags on it indicating it's owners. As a whole it seems that they are offering a legit investment, with the caveat that it is illiquid, as it has no secondary market, and speculative at best. I saw something like this with maple syrup a few years back where you bought the trees and could get the $$ when they stop producing and are cut down, I prefer the bacon myself, with maple syrup

[Roger Wilson]

A $6100 koa investment is predicted to make you $280,000 over 25 years, but you can start getting profits in as few as 7-10 years.


So money does grow on trees.

[Darrell Fox]

My wife and I followed a tree farm in Central America for over a decade. We even spent a month down there looking at similar operations. It isn't for everyone, but if I had invested in those guys I wouldn't have to listen to my wife say I told you so.

[Jamie Oren]

I live here in hawaii, and if this is the same add I got. they are on the big island, at any moment there intire operation could be over run by lava. :mad: food for thought.
good luck

[Darrell Fox]

The tree farms are on the Hamakua coast in lava zone 8. By definition there hasn't been a lava flow in that area since 1800 and less than 1% has experienced a lava flow in the last 10,000 years.

[Peter Scoma]

Not to knock the owner but when I see something like this I wonder, "if it is so profitable, why not just do it yourself?"

Kind of like the guys selling blackjack and roulette systems for 29.95

ps

[Chris Konikowski]

Not to knock the owner but when I see something like this I wonder, "if it is so profitable, why not just do it yourself?"

Kind of like the guys selling blackjack and roulette systems for 29.95

ps

Two points....

Why would the woodworker who can make money making custom furniture ever teach a class. Why not just keep it all to himself and make al the money.

And,

With this logic, no one would ever need to bring in outside capital. Not everyone has Warren Buffets bankroll. Some of us need a little capital boost to make their business grow.

[Lawrence Nitz]

Got a brochure from Hawaiian Legacy Hardwoods and it looks intriguing. One can buy lots of 100 teak, mahogany or koa trees for $5800-$6100. When the trees are harvested you keep the profits. A $6100 koa investment is predicted to make you $280,000 over 25 years, but you can start getting profits in as few as 7-10 years. Has anyone else looked into this or other tree farms? Lots of variables and risk but they, of course, try to down play that.
It does look like something which may be profitable and play a part in keeping wood available in the future. The fact that the trees are planted on US soil also makes it seem more secure.

AHA! Finally something I can use to show off all my math homework. First, let's get a couple of items clear--to get the use rights to a piece of land in Hawaii, particularly for many years, be prepared to pay an annual lease rent of at least 4% of anywhere from $10,000 to
$67,000 per acre at today's prices.

Let's keep the example at one acre, approximately 207,8 feet on a side--if it were square.
Koa seeds left in the soil and activated for germination by disturbing the soil may emerge at 40,000 per acre, easily. Hold on--43,560 square feet. That gives you a tree about every 13 inches. Now suppose that weather and sun kill back all the ugly trees and leave exactly one in each 10' x 10' plot, or 435 trees by the second year. These trees might be harvested in alternate rows in 7 or 15 years at perhaps 6" to 12" diameter in the 15th year. The usable log may be 12 to 15 feet in length. To clear crown space for growth of large trees, take out every other row and every other column to produce 20' x 20' cells. That gives you an acre with 108 trees or so on smallish plots. A mature koa tree (or a mature oak for that matter) is likely found in a 40' x' 40' cell, and the canopy is closed. Now go back to the square dimensions of the acre--207.8' on a side. That is about 5 cells by 5 cells, or 25 trees in the acre.

Assume there has been no wind damage, cattle have not gotten into the plot, and nobody has stolen your trees, and that the vendor has not sold the same plot to two or more different people. Take 25 logs at 16' to 20' long 24" diameter at the small end, and possibly another 15 logs 16' long, 12" diameter at the small end..

Calculate the board footage using any standard logging scale (Scribner or international 1/4 inch, for example). Calculate the cost of 4 log handling machines at $200/day for a week, and two trips at $500/trip haulage and $300 police fees for every machine. Calculate $500 per load of 8 logs to the mill. Calculate $.75 as the cutting price per board foot. Figure out how big your stack of lumber will be, at 4' wide and 8' high. Double that area and compute ground rent charges of $1.50/sf /month in a locked industrial park for the next year.

All done? Has anything happened to your $280,000 profit?

[Roger Wilson]

All done? Has anything happened to your $280,000 profit?

Well using that kind of "logic" the 20 trillion dollars our beloved president has spent, the 2 trillion per year deficit, and the 1 trillion dollar per year socialized medicine down payment, the nationalization of the car industry, banking industry, insurance industry, health care industry aren't going to work out well for the economy. I'm shocked, shocked I tell you. Money grows on trees, it really, really does.

[Neal Clayton]

I would buy a sawmill with the $6100 and start profiting from day one, but that is just me :confused: As far as keeping wood available...
This is a quote from “Utilizing municipal trees from around the country” Stephen M. Bratkovich
“In the United States over 200 million cubic yards of urban tree and landscape residue are generated every year. Of this amount, 15 percent is classified as “unchipped logs.” To put this figure in perspective, consider that if these logs were sawn into boards, they theoretically would produce 3.8 billion board feet of lumber, or nearly 30 percent of the hardwood lumber produced annually in the United States."
Not to cram my philosophy down anyones throat, sorry, but urban logging is the answer.

not to turn it into a philosophical debate, but not everyone wants to live in the equivalent of an LA/AZ/Vegas suburb. many residents and officials will divert buildings and walkways to preserve an old growth tree within a city that finds itself in the way of something here. as they should. i have no problem with selectively logging unsettled areas and having high prices on quality woods, however old growth trees in inhabited areas shouldn't be cut every time someone wants a new sidewalk.

after all cheaper lumber doesn't bode well for the longevity of a wood supply. go down to your local mill and tell them you want longleaf pine. the best common species of lumber we had was wasted on everything from ship keels to pulp for paper to just the sap for the flammable liquid, in the name of "inexpensive supply".

the only benefit to that practice was a bunch of hundred year old southern houses built out of rare lumber, and said lumber being all but extinct in many of the states it grew wild in.

[Rich Engelhardt]

Hello,
Never mind...

[Darrell Fox]

This was an interesting demonstration of math homework, but unfortunately, errors in assumptions lead to errors conclusions. You got a lot of things right but you got a lot of things wrong too. For instance, land costs..,. I am a Hawaii resident and I can tell you firsthand, you certainly can get good agricultural lease-land in Hawaii for way less than your calculations show. You are assuming that the seedlings are generated by scarification with no selection of the best parent stock. Land preparation and planting is at a spacing that encourages straight growth form, but not so close as to cause excessive thinning early in the project. Also, you give no timber values for any of the thinning harvests that occur in the years leading up to the final harvest. Thinning harvests generate significant lumber especially in the middle years. Your analysis required the services of 4 log handling machines for a week, (one month of equipment and man hours) to remove 41 trees. By your calculations, each machine would only be removing 1.6 trees per day. You should immediately fire the forestry crew since I’ve seen these machines take down trees in about 15 seconds. By doing this on a one acre example you miss the benefit of economies of scale. Doing things on a larger scale (say several thousand acres) dramatically affects costs. Also, you didn’t calculate the value of the harvest in your scenario. Milling and kiln drying greatly influence the market value of the lumber. Given the historical trend of price increases in tropical hardwoods and the deforestation driven shortages that are starting to materialize already, the value of the harvest will be way beyond today’s prices. You also assume a lot of other costs (like storing lumber for a year and police etc.) which simply don’t exist for an operation with staging, processing and storage facilities on site. You did however miss the expense of mai tais for the workmen.

[Jonn Ragle]

I was Googling Hawaiian Legacy Hardwoods and came upon your thread. It's an interesting read, but John I have to disagree with you here. You are contending that there is some trade secret to growing trees and that if it was such a good idea they would keep it to themselves. This isn't a "trade secret issue" it is simply a supply and demand issue. Data from all over the world supports the fact that we are running out of tropical hardwoods. Read any of the ITTO (International Tropical Timber Organization) Reports. The shortage isn't here yet, but it's coming; and it's unavoidable; and no amount of planting will stop the shortage from occurring. There simply isn't enough time. These are facts, not opinion. In addition, tree farms are only able to fill about 1% of the demand worldwide, so even if there were some trade secret issues, I don't think anyone is concerned about competition impacting their business model. There are plenty of other tree farming organizations around the world who have been successfully employing this methodology for decades. Most of these companies are closely held family run operations not run by Corporate America. Check out "Tropical American Tree Farms" (TATF) and "Finca Leone". TATF just planted their two millionth tree for their investors. I considered buying trees through TATF but was concerned about dealing with pending Central American import'export taxes and tariffs.






There have been some good, common sense ideas offered here on how to invest in the lumber business by those that are in that business. You will here those businesses speak of real risks, and reasonable profits.

But in my experience a business that stands to make huge profits does not go out and solicit people to share in those profits. They keep it a "trade secret", accumulate capital from venture capitalists in a closed environment, and reap the rewards - if any.

There are no free lunches, and a business that advertises "$6100 koa investment is predicted to make you $280,000 over 25 years" is a scam. That is an unreasonable profit, and not a legitimate venture.

[Tony Zaffuto]

If it is such a sure thing, then why don't the landowners keep the profits for themselves?

[Matt Armstrong]

Efficient market hypothesis

[Peter Luch]

Well.....

First off I live on the big island and I work with tree trimmers getting wood for turning.
I have gotten some larger pieces and had some monkey pod sawn by a local woodmill. We know this mill and owner via our club and a member who is with the state forrestry dept.
Here is the web site to the wood company, 100% legit.
http://www.hawaiiislandhardwoods.com/

If you e-mail Jim he could confim if this is for real or not.
I will not say if he knows them but if he does he will tell you the truth I'm sure.

On some of the other issues.
From what I do know this is not an impossible thing to do here. Some of the leases on land could be quite cheap and for long term. One of the biggest things is what the elevation of the land is for Koa. The lower elevations are not producing the high grade woods.
The location on that coast is great weather, lots of rain and very little chance of lava.
Hurricane......I doubt it on this island.
This island is so big with tall mountains that most weather systems like that tend to go around us rather than right into us.
Development....HA! If they started a big development planning right now for that land it would take them 25 years MINIMUM to even get close to breaking ground. Some of the projects going right now on this coast were started 20 years ago!!!
That coast nobody is even thinking of doing big developments, trust me on this!

They planted huge tracts of land in some tree for future pulp for paper and it never panned out and these tracts with trees are still there at least 20 years later.

The forrestry industry on this island is just starting to get commercialized and organized in a moderen manner, like what these guys seem to be doing.

I'm not investing my money in this but I would not label it a scam so quickly. Don't say things like that until you know for a fact and you know more about the local happenings, it's not very nice.

I have no connection to this company at all.

Aloha, Pete

[Peter Luch]

If it is such a sure thing, then why don't the landowners keep the profits for themselves?

Most of the land here is owned by huge trusts or the Hawaiian Homelands that don't do anything and all they do is lease out the land for long term usage. Ag land for farming etc. They have so much land they would never get around to doing anything with it.

Aloha, Pete

[Eric Larsen]

not to turn it into a philosophical debate, but not everyone wants to live in the equivalent of an LA/AZ/Vegas suburb.

We have hardwood growing in Vegas? News to me. All I ever see are palm trees and tumbleweeds.

We really don't have "suburbs" either. North Las Vegas, Henderson and Summerlin may as well be called Las Vegas. Once you get 1,000 feet away from the strip, it's all the same.


But I'm all for urban logging. Point me in the direction of something I can turn into furniture and I'll cut it into usable lengths and run it through my band saw -- no sweat. (Well, lots of sweat. We are talking about Las Vegas, after all.) Best of all, who needs a kiln? I can air dry in my livingroom!