Alternative Sources of Revenue
Owning timberland means the need to pay real estate taxes. Also involved in timberland ownership is the maintenance of roads into the tract for access.
One of the trends that we see in working with timberland is the increasing difficulty of hunt clubs to find tracts of timberland where they can hunt. In the past, many hunting leases were informal and very few, if any, rental dollars were involved.
However, the shortage of tracts to hunt means that hunt clubs are today paying increasing rents for the privilege of hunting. This is not yet a huge source of revenue but it is increasing annually.
The compensation from a hunt club usually comes in the form of a combination of maintenance of any interior roads as well as cash rent. The amount of the annual cash rent today is typically equal to or greater than the annual real estate tax.
This trend of increasing rents for hunt clubs will probably continue. While no one today would buy timberland for the annual hunting lease rental income alone, it is an important source of income for a timberland owner.
We hope that the information we are sharing will assist you in making a timberland investment. We believe doing so will make you look brilliant over the next 10 years. Call us, at Grant Massie Land Company we love to help our clients look brilliant.