This guest post is courtesy of the REALTORS® Land Institute. For more information, visit www.rliland.com.

Timber prices are at a record high (for most areas)! Between the tragic wildfires of last summer and trade disputes and an increase in demand for new residential housing, the price of timber has started to skyrocket. With low supply and high demand, timberland owners are sitting on a potential gold mine. To make the most off of the high prices, you’ll need to tread carefully though. Here’s how to make the most out of the booming timber market.

Check The Mills

Is your local log mill looking for a particular kind of log? Many mills are willing to pay extra for logs that meet their specific standards or may dock your pay if they do not. Some mills even pay less for logs that are larger than usual. This means you are getting less money for more timber! Scope out the pricing of your local mills to find out where your timber will make the most money.

Long-Term Gain

Patience is the name of the game when it comes to timberland. Prepare to lose money for the first few years because you will need to spend money planting and taking care of the trees. Since timber doesn’t provide immediate returns, many people might be hesitant to invest.

However, timber has historically produced strong long-term returns. Many financial websites, such as CNN Money and Investopedia, recommend investing in timber as a way to diversify your portfolio. The returns for timberland real estate tend to move countercyclically to other markets, balancing your portfolio and providing a safety net. Not only is investing in timber a smart financial move, it is a good investment in your land. Timber is a hearty, relatively low maintenance tree that will produce steady returns for years.

To Cut Or Not To Cut?

When you cut your trees, not only does it affect your current timber but it will also determine the growth and health of the next generation of trees. With timber prices at a record high, it can be tempting to cut down your trees as soon as they mature. Try to plan timber harvests around times that would benefit the saplings as well as when your timber is at its highest value.

Best Practices

Taking care of your timber now will result in high-value trees down the road. Regular thinnings, regeneration harvests, and timber stand improvements (the culling of undesirable trees and saplings) are all practices that result in healthier (a.k.a. more valuable) trees. Healthy trees mean healthy saplings and a whole new generation of high-value trees. It’s a never-ending cycle of profit!

Sky-high prices and an increasing demand for timber have created a modern day gold rush. Although it can be tempting to chop down all your trees and cash in on the craze, long-term planning is the best option for you to make the most money off of your timber.

To learn more about timber, be sure to check out the newly updated LANDU course Timberland Real Estate on August 1st being hosted by the RLI Alabama Chapter.

The Realtors® Land Institute, “The Voice of Land,” continually strives to maintain its status as the acknowledged leader for all matters pertaining to the land real estate profession. RLI endeavors to remain the essential membership organization for the extraordinary real estate professionals who broker, lease, sell, develop, and manage our most precious resource: the land. The Realtors® Land Institute, provides the expertise, camaraderie, and valuable resources that are the foundation for all land real estate professionals to become the best in the business.