Congratulations on your new forestland property. As a first-time landowner, you likely don’t have the knowledge to optimize the return of your investment. Larger landowners employ and rely on teams of forestry professionals for specific advice on how to manage forestland in accordance with their goals and objectives, state and federal law, as well as environmental and societal expectations.
So, how does a first-time forestland owner establish a foundation for the success of their forestland investment? Above all else, we recommend completing two steps: 1) establishing your cost basis and 2) developing a forest management plan.
Establish Your Cost Basis
Establishing your cost basis is tantamount to understanding the tax implications of your property, especially if you inherited the property. A qualified forestry professional can separate your property into two values: how much value is in timber and how value much is in land. Separating those values has tremendous tax savings when you decide to harvest timber and when you sell your land in the future or transfer it to family.
Standing trees on your property have real monetary value. This timber value is determined by several factors such as density, quality, size and other factors such as distance to a mill. Since there are several factors that influence your timber value, it’s important to hire a qualified professional forester to do this timber inventory and establish the timber basis.
Develop a Forest Management Plan
A timber inventory will also support and direct the recommendations in a forest management plan. Recommendations in a management plan will be based on your goals for the property and the current state of the property. Whether your goals involve timber investment, hunting, improving wildlife habitat, recreation, or carbon sequestration, your forester will help you capture your vision and make it a reality.
Finally, we recommend becoming familiar with your local public resources, like Texas A&M Forest Service, Arkansas Forestry Association, or UofA Division of Agriculture Cooperative Extension Service.
As a first-time landowner it is important to gain momentum in an orderly direction and the first steps are to establish your cost basis and to develop a forest management plan with a qualified professional forester. With these steps complete, you will be ready to start the legacy of your forestland ownership.