Explanation of Property TypesLand is a unique asset with no two parcels identical, creating a broad array of property types available to buyers. Selecting a property investment first requires understanding your ownership goals and objectives. Will the property be used solely for investment purposes or is there a combination of goals expected from the acquisition? This section categorizes the various types of land investments available. fountains land markets three general property types:
Timberland investment properties provide long-term appreciationThese properties are commonly purchased as a lineal investment asset where the land’s capital timber value (CTV) primarily drives investment returns over the long term. CTV is the net standing timber value to the landowner of all trees 7-8 inches and greater (measured at breast height) in diameter. Returns are generally realized as a combination of income generation and asset appreciation. Income is generated from the harvest of standing timber, with the amount of income available depending on forest conditions and landowner goals. Asset appreciation is usually the driver of this investment’s return, which is realized as the CTV (and subordinate underlying land values) increases over time. Appreciation of CTV has been documented in many studies and investment white papers (see "About Timberland Investing" for more detail), with fairly consistent long-term appreciation rates depending on species composition, quality and age. Additional asset appreciation is realized from the land’s other inherent attributes, which may include subdivision, recreation, conservation and housing opportunities. Timberland investment properties are generally available in a size class of 250 to multi thousand acres and lie in more remote locations, distant from town services.
Multiple-use properties offer flexible optionsMultiple-use properties are often located closer to both populated areas and town services such as maintained roads and electric power. Highest and best use (HBU) for these parcels is generally broader, providing buyers with multiple purchase options. These properties are often purchased to fulfill a multitude of goals, which may include:
Although CTV may play a part in the purchase price, it usually contributes below 75 percent and at times well below 50 percent. Prices for such properties vary, depending upon location, structures, sub-division opportunity, timber resource, and site-specific features such as water features, open fields and view shed. Easement-protected land contain set restrictionsEasement-protected land refers to parcels available for purchase where all or a component of development and commercial use rights are held by a third party, usually a conservation group or state agency. Deed covenants usually include restrictions on building, subdivision, commercial use, timber harvest, and certain types of recreation. In many cases, the public is afforded certain recreation rights to the land. Although most easement-protected land restricts nearly all forms of housing opportunity, some allow a single building envelope. Timber harvesting is generally permitted under pre-approved forest management plans. Property deeds and the associated conservation easement detail the specific rights of the grantee (easement holder) and grantor (landowner). |
