Price Disparities Among Bids Why??

[cunrya]

Ok, Posting this because I have a desire for knowledge and want to be better educated on this industry, have a ton of respect for you loggers and do not want to offend anyone trust me.

This is my situation, I own aproximatly 100 acres of timber, primarily red white and some bur oaks. Recently went through with a log buyer/ forester and surveyed the timber, marking trees that were mature or had problems. All trees were over 20" none were far over that, I'd say average 23". As for quality I'm educated on it to a on it but certainly not an expert I realize. By my Novice Grading skills I'd say we're dealing with selects and higher promarily. And trust me I don't think I'm over estimating the quality here, not one of those guys who walks through the woods with you and asks If that 8" Ironwoods veneer.

The Buyer that I went through with Said we were dealing with mostly pallet grade logs, and offered $6500 for the 102 marked oaks, but said he would rather do a cut and skid sale. Being Id let them cut then we'd agree on a price when they were on the ground. Yes fair for him, but any good buyer should be able to grade the trees while they stand. Should I be interested in this type of sale? Don't see were it could be at all to the sellers advantage.

Secondly, had a second buyer go through a week or so ago, and he offered $24,500 for the same trees. Why the disparity here? Wish I had a Timber list but neither buyer would provide me with one.

This industry seems to be a little less than professional in this area, buyers are a little ellusive, and have heard many horror stories of selling timber. How do You not get screwed boys? And like I said, I most certainly do not want to offend anyone here, I want to learn more about the industry, I'm not some ignorant SOB that thinks he's got a 100 acre stand of veneer. I'm not selling every tree in the woods, Just what's mature and will most likely deteriorate in the next 10 years. Know a little about forestry, and trying to develop a Timber Harvest Plan. Any help would be greatly appreciated. Thanks in advance

 

[Billy_Bob]

Well it is business and there is no honor or love when it comes to business!

Same as buying real estate - seller wants as much as he can get, buyer wants to pay the least he can.

I would try to get as many different companies bidding as possible. Then of course go with the high bidder.

The following association may be helpful. They have a "directory" for members only. I don't know if it contains logging companies or not?

Ohio Forestry Association...
http://www.ohioforest.org

 

[cunrya]

Thanks Billy Bob,

Yea business is business I realize that, Flipping houses is my business (buy, rehab, sell) and I'm fully aware a sucker is born everyday. I agree with ya its tough to make it on your own and exploiting the ignorant does pay. Just trying not to be one of them. I think a bit of the problem is my age a buyer sees a 27 year old kid and thinks he can take him. I've been around the block more than most my age. I realize patients is a virtue and education is a must, ones the logs are sold there gone and theres no second chance. thats why I'm looking for some pointers. Have debated back and forth on doing the logging myself. Have my own Skidder, Loader, and Trailers, fairly profficient with a saw and the whole winter free. To cold to heat and rehab houses in the winter here with current fuel costs, better to winterize them and hit it hard in the spring. I know doing the work on my own probably seems like an arrogant statement, but I do have the equipment and feel capable. Also have a friend who used to be a sawyer and needs some work over the winter. What's the premium for logs delivered to the mill as opposed to standing timber? Again don't want to offend anyone here, just looking for guidance from those in the know. Not dealing with that huge western timber here just some mid sized oaks.

 

[Billy_Bob]

I’m no expert on this, but I tell what I have heard…

From what I hear around here (Oregon), every price is different depending on grade of wood, etc.

Certain mills will only accept certain specifications of logs, others – other specifications, etc.

Then there are contracts which I understand can differ depending on negotiations.

And sometimes they only buy what they need for the day – then no more. (These are big corporation mills which want to keep their inventory to a minimum – a bean counter thing.)

You have big name corporation mills and smaller mills. Then some logs are driven all the way to the coast to be shipped to Japan or elsewhere.

It is really interesting – lots of trees, mills, and log trucks around here. Yet a locally cut truck full of logs will be driven 100 miles to the coast for shipment to Japan. And a local mill will get a load of logs on rail cars from somewhere else than here – possibly from hundreds of miles away? I don’t know where they come from.

So you have local mills getting their logs from all over. And locally cut timber is sometimes shipped thousands of miles away.

So I guess if I were you, I would find some mills in your state and ask who is buying what and for how much.

 

[cunrya]

Yeah have been looking more in that direction, Timber seems to be a very complicated business nowdays. And the price of Oak at the lumber yards and price of trim just seems to keep climbing. Have kicked around the idea of getting a portable sawmill for some time. In doing a little more research as of late and talking with my contractor friends I am seriously considering a mill, Kiln, and molding machine. I have the space, around 5 thousand sqft of free barn space in two currently unutilized buildings. Should be more than enough room. Already have a skidder and loader, plenty of equipment and trucks to get the wood moved. I really don's see any reason on earth why I couldn't put this thing together. Theres plenty of cheap labor available here, and the equipment isn't all that expensive, well bellow $50 Thousand startup cost. And since I own the Timber raw material is free. Priced trim for the house today, $2.75 a foot for the casing I wanted and $3.40 a foot for the base. Wouldn't take to long to recover start up costs sice I already have the heavy equip. To boot, the first $8000 was going to be spent on store bought trim anyway. Something to seriously ponder.

 

[Gypo Logger]

It's hard to cruise timber over the net, but lets say the average volume per tree is 400 ft. that would give us a round figure of 40,000 ft.
Oak timber is at the lowest it has been in a long time, so lets say the lowest grade is worth 250/thou. and the highest grade is 1$/ft. then that gives us and average price of approx. 600 per thousand and that's at the mill after it has been logged and trucked. That makes it have a gross value of 24,000, the same amount you are being offered, so somethings rotten in Denmark. White Oak may be a bit higher than Red, but I would grab the 24000 or leave it on the stump. If you sell, make sure only the marked timber is cut and that the neighbour watches his timber closely.
John

 

[Gypo Logger]

Cunrya, I know it would be nice, but it's not wise to set a price on saw timber based on what a board costs a Home Depot. Last time I checked there are at least 36 prosesses from stump to store.
Maple and Cherry are the hot items now, so maybe leave the Oak on the stump till it comes back. Till then it may be best to take only low grade trees out to enhance value and growth of the more valuable crop trees.
John

 

[Ryan Willock]

John, were you figuring on Doyle or int.? cunrya, the highest bidder isn't always the best.... Its like going with the lowest bidder on your house, he almost has to cut corners somewhere to get the price that low (or in timber that high, the more he pays you the LESS he makes!). Get your county forester out there to have a look at it. If you are interested in buying a saw mill then PM me as I have a '98 woodmizer LT40 Super Hydrolic for sale.

 

[cunrya]

I'm with ya on all your points Gypo, they are very valed. However, red oak is on the rise a here as of the last month or so. And honestly, don't really trust the buyer, thats why i didn't take the money and run. Not in a financial situation where I need it at this point. As for the mill, kiln, and molding machine. Oak trim sells at a very very high premium here cheapest 3" stuff is 75 cent a foor from the amish, and my contractor associates hate dooing business with those guys. So what Im thinking is what will one board foot of lumber amount to in 3" casing? at lest 3 linear ft correct? If so that values the timber at around $2.25 a bd ft. With your yeild estimations that puts the raw value of the timber at about $90K Now I know round numbers no room for waist, hard costs not factored in ect. Might be a pipe dream I realize that, thats why I'm here, thats why I'm consulting those of you in the know. I buy oak boards plained and edged from the mill regularly, averages about $1.70 a bdft. Still comes out better than selling them standing. I have the time, real estate market is going to ???? around here (I rehab houses) and for the capital it takes to play that game I could have one he** of a mill set up. I'm sitting on 250K in houses right now and getting ready to wholesale them off. So theres plenty of capital to start up whatever I want. I feel there is a definent need for another molding operation in the area most guys are driving a couple hours out in the sticks to amish country and would be more than happy to pay even a buck a foot to not deal with them.

So i guess Im asking does this seem like a viable plan? I realize the risks, hidden costs ect. am interested in setting up another business line, and in the process of doing the reaserch at this point. And Billy Bob those prices weren't based on Home Depot 8inch base and 4inch casing, not the clear red oak wrapped in fancy plastic, who buys that crap anyway?

 

[Billy_Bob]

... Priced trim for the house today, $2.75 a foot for the casing I wanted and $3.40 a foot for the base....

That is a good idea - make molding! This stuff costs a fortune. I don't know who is making all the money from this stuff, but I know it is not the loggers. So must be the mill or the stores???

Something even more expensive (at the retail level) is picture frame "molding" or whatever you call it. Go to a custom picture frame store and ask how much per foot for picture frames. Its not made of gold, but you would think so with their prices. I used to know a guy who owned a picture frame store. He was paying a fortune for the uncut molding wholesale.

 

[cunrya]

Thats, the type of stuff Im talking about. Molding machines around $10K wouldn't take to long to cover that cost. Say picture frame wholesale what about $2.25- $2.50 a foot? Same 3 linear ft out of 1bdft principle, 25cent a foot fuel labor ect. That equates to $6 a bdft profit. not to shabby right makes that $24000 stand worth about $240K. Yeah, yeah exaduration I know guys but you get the point If I could do this and get started with a totally in house operation I might have a chance of making it.

Thanks for seeing what I'm saying here Billy, I got a ton of respect for you guys, you work your tails off and you aren't the ones that are really cashing in. I appreciate you sharing your wealth of knowledge here. Got a list of those 36 processes to retail? Be interested to see the whole picture. Not planning on buying a rig in the morning or anything but I think this idea might be worht some further RnD.

 

[Gypo Logger]

It sounds like you have a good entreprenurial spirit and you will do well.
Another thing to consider is that 40,000 ft. on the Doyle equates to at least 50,000 ft. of lumber and that is a conservative estimate.
I haven't met a mill yet that will tell the truth about what the over run is in a load of good logs. One guy said 2X, but I doubt that unless someone had their thumb on the ruler when they were scaling the logs. 30% is not an exageration.
It's not so much that someone is pulling a fast one, it's just that the Doyle is an antiquated log rule allowing for a 1/4" kerf unlike the thin kerf band mills.
You should do well with flooring or molding, especially with species like Ash which you cant even give away now in log form.
Also, make sure you know your Oak species as there are several that look like White but aren't and are worth pallet price.
John

 

[cunrya]

Mostly nice reds here a few whites, and several of those weird cross burs, Didn't even think of the ash, I have 2-3 hundred of them in the bottom ground I own, have to dose a skidder trail to get em, but there monsters, and fortunately not under quarantine yet, stinkin ashbores there around but north and east a couple counties from here. Whats ash used for besides bats? Excuse my ignorance.

What would you recomend mill wise, band saw (woodmizer ect.) or a circular blade model (like the lucas on bailys) I like the looks of that one and no log rolling means easier work for me. Have an Opinion. Also looking at the PH261 molder there, looks like a good product and offered in single phase, last i checked about $5K to get three phase up at the barn ouch.

 

[brian660]

I built my own based loosely on procut plans, i`ve got no complaints with the wood coming off it.

 

[bottlefed89]

got any pics of it brian??

 

[Husky288XP]

What type of cut are you after, Shelterwood, Thin from Above, etc? What do you want to manage for? It sounds like you have an Oak-Hickory type forest. Hire a Cert. Forester and have him cruise your timber, or for a small fee you could have a Penn Stater to come give your tract a walkabout. These are all things that a landowner must take into consideration when managing a stand. Just cutting all the big timber of a certain genus, parent generation, may be detrimental to your management plans.

Ask Jokers or Gypo, what do I know I am only a Forester.

 

[Gypo Logger]

It's bad news to listen to foresters. They think they are the only ones who should make $$ lol.
Actually foresters can give pretty sound advice with regard to what is best for the forest, however, landowners and loggers must make a living.
The truth of the matter is that it is a 3way co-operation between landowner, forester and logger.
Keep in mind that forests are extremely resilient and their worst ememy is over cutting. The best is to strive for species diversity and an uneven aged stand of trees.
Anybody can play, "Mr. Select Cut Logger", but it takes skill and experience to not damage the residual stand.
Hope this helps.
John

 

[Husky288XP]

You got it Gypo,

In a sense "You can have your cake and eat it too." meaning you can manage a forest, yet still harvest timber and generate revenue. The landowner must deviate between the logger and the forester, getting the best of both worlds. Loggers aren't foresters, and Foresters aren't loggers
(usually).

 

[Husky288XP]

Strive for Biodiversity too! Don't just want too grow all Black Cherry, thats what Kane, PA is for.

 

[Sizzle-Chest]

thats a pretty big price difference, so I would get a third opinion from someone who can look the stand over. but I'm a little unlcear, you have a skidder and a loader and a whole winter and your thinking about paying someone else to do the work for you? Thats all your costs right there, except fuel and incidentals. You put in the work and cut out the middle and you got yourself the best deal you could ask for.