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Post by batman on Dec 27, 2019 15:45:08 GMT -6
Closed on 315 acre parcel in Mille lacs County today. $1,222 per acre ($385K - right in line with comps, but has $140k timber on it right now) $5k taxes $5k billboard income $5k SFIA rebate $5k leased for hunting value 3 options - 1 - Take $140k timber out first year, add a few plots/trails, lease hunting rights out at $5K per year, and sell 3 to 5 years later for 10% more than I paid when regrowth covers logging debris 2 - Take $90k timber off first year, and an avg of $7k every year thereafter (harvest oaks every 12 years) and have it cash flow at an adjusted 6%. 3 - Approach the county and sell them the land for an ORV park they have funding for after I pull some timber if I can keep the hunting rights What would you do?
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Post by Freeborn on Dec 27, 2019 16:16:42 GMT -6
Closed on 315 acre parcel in Mille lacs County today. $1,222 per acre ($385K - right in line with comps, but has $140k timber on it right now) $5k taxes $5k billboard income $5k SFIA rebate $5k leased for hunting value 3 options - 1 - Take $140k timber out first year, add a few plots/trails, lease hunting rights out at $5K per year, and sell 3 to 5 years later for 10% more than I paid when regrowth covers logging debris 2 - Take $90k timber off first year, and an avg of $7k every year thereafter (harvest oaks every 12 years) and have it cash flow at an adjusted 6%. 3 - Approach the county and sell them the land for an ORV park they have funding for after I pull some timber if I can keep the hunting rights What would you do? I have not run any numbers but in 3-5 years you will probably be in the middle of a recession so with that in mind I would think turning the property quickly is a good idea.
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Post by biglakebass on Dec 27, 2019 16:25:49 GMT -6
Rum river frontage. Cool
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Post by sd51555 on Dec 27, 2019 16:31:29 GMT -6
1. You're coming from behind even if you can get those numbers. If you get $140k in timber revenue and have a new basis of $245k, and you net $10k (not counting driving up there and trail improvements), you're pulling in 4% pre-tax, 3% or less after tax.
What kind of buyer would you try to sell this to?
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Post by batman on Dec 27, 2019 16:39:04 GMT -6
1. You're coming from behind even if you can get those numbers. If you get $140k in timber revenue and have a new basis of $245k, and you net $10k (not counting driving up there and trail improvements), you're pulling in 4% pre-tax, 3% or less after tax. What kind of buyer would you try to sell this to? 22k in and 5k out is 17k divide by 245k is 6.9% return. Don’t forget the avg 7k a year timber amortized My buyer is the guy who qualifies for a loan who believes that 315 acres with food plots and trails yields booners because he is gods gift to deer hunting. They are everywhere.
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Post by sd51555 on Dec 27, 2019 16:44:55 GMT -6
1. You're coming from behind even if you can get those numbers. If you get $140k in timber revenue and have a new basis of $245k, and you net $10k (not counting driving up there and trail improvements), you're pulling in 4% pre-tax, 3% or less after tax. What kind of buyer would you try to sell this to? 22k in and 5k out is 17k divide by 245k is 6.9% return. Don’t forget the avg 7k a year timber amortized My buyer is the guy who qualifies for a loan who believes that 315 acres with food plots and trails yields booners because he is gods gift to deer hunting. They are everywhere. You'll get the $7k each year after the $140k harvest too?
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Post by batman on Dec 27, 2019 17:10:22 GMT -6
7k if I pull 90k first year. Lots of good oak and residual depends upon initial cut
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Post by Freeborn on Dec 27, 2019 17:59:33 GMT -6
I ran these numbers, I did not have the exact timing of the cash flows but it appears pulling the 140k off immediately will provide you a better rate of return. These numbers do not include the increase in return you will get by investing the 140k over the 90k. Edit Date Amount 1/1/2020 ($385,000.00) 7/1/2020 $90,000.00 7/1/2020 $17,000.00 7/1/2021 $17,000.00 7/1/2022 $17,000.00 7/1/2023 $17,000.00 7/1/2024 $423,500.00 Profit (-Loss):$196,500.00 Number of cash flows:7 Number of days:1643 Calculated balance:$0.52 Number of iterations:100,000 Internal Rate of Return:12.80 Edit Date Amount 1/1/2020 ($385,000.00) 7/1/2020 $10,000.00 1/1/2021 $140,000.00 7/1/2021 $10,000.00 7/1/2022 $10,000.00 7/1/2023 $10,000.00 7/1/2024 $423,500.00 Profit (-Loss):$218,500.00 Number of cash flows:7 Number of days:1643 Calculated balance:-$0.25 Number of iterations:6,583 Internal Rate of Return:14.34%
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Post by batman on Dec 27, 2019 18:01:53 GMT -6
I ran these numbers, I did not have the exact timing of the cash flows but it appears pulling the 140k off immediately will provide you a better rate of return. These numbers do not include the increase in return you will get by investing the 140k over the 90k. Edit Date Amount 1/1/2020 ($385,000.00) 7/1/2020 $90,000.00 7/1/2020 $17,000.00 7/1/2021 $17,000.00 7/1/2022 $17,000.00 7/1/2023 $17,000.00 7/1/2024 $423,500.00 Profit (-Loss):$196,500.00 Number of cash flows:7 Number of days:1643 Calculated balance:$0.52 Number of iterations:100,000 Internal Rate of Return:12.80 Edit Date Amount 1/1/2020 ($385,000.00) 7/1/2020 $10,000.00 1/1/2021 $140,000.00 7/1/2021 $10,000.00 7/1/2022 $10,000.00 7/1/2023 $10,000.00 7/1/2024 $423,500.00 Profit (-Loss):$218,500.00 Number of cash flows:7 Number of days:1643 Calculated balance:-$0.25 Number of iterations:6,583 Internal Rate of Return:14.34% Thats some crazy compared to my yellow scratch pad notes! Thank you Jerry-
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Post by Bwoods11 on Dec 27, 2019 18:28:30 GMT -6
Congrats on the purchase ... nice looking stuff!
My only advice is you are rich, no need to lease land out for $$. Life is short, use it! Have fun.
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Post by batman on Dec 27, 2019 18:41:34 GMT -6
Congrats on the purchase ... nice looking stuff! My only advice is you are rich, no need to lease land out for $$. Life is short, use it! Have fun. We will chase turkey and maybe bear, but I have no desire to chase wild deer in that part of Minnesota. Take that check for $5k and lease a parcel where the game has real value. Even if for 2 or 3 days per year.
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Post by kooch on Dec 27, 2019 19:00:14 GMT -6
Put a fence around it all. Grow heirloom pigs, fancy goats, peacocks, and deer.
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Post by Foggy on Dec 27, 2019 19:12:00 GMT -6
Sounds like a nice property for you. Jerry's math looks good to me. Enjoy!
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Post by biglakebass on Dec 27, 2019 19:17:13 GMT -6
Put a fence around it all. Grow heirloom pigs, fancy goats, peacocks, and deer. And pot! Batmans wholesale medicinal emporium
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Post by batman on Dec 27, 2019 19:19:30 GMT -6
Put a fence around it all. Grow heirloom pigs, fancy goats, peacocks, and deer. And pot! Batmans wholesale medicinal emporium I knew you guys would come through! Heading north right now with 5 gallons of infected deer brain mixed with corn for Koochs place. CWD hot zone in the Kooch.
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