Our friend and former banker, Steve Rosberg, has three forestry properties he is working on in Argentina:
The first has been bought, was offered to investors was oversubscribed.
He is buying the second propertry, Federacion, on Dec 15. This is a 366 Hectares (904 acres) piece of land that will be divided it into 11 plots. Some of these have mature forest ready for harvest. Some of the plots are clean ready for planting, and some are in between. Each will have a different price ranging from
US$56,000 to US$90,000. This INCLUDES the land itself, valued on
average at US$1400 per hectare (US$566 per acre).
The third property will be purchased in the first quarter of 2004, Nueva Escocia,
And will be a pooled investment of 100 heactares (247 acres), with an all-in
investment of US$2,650 per Hectare (US$1,057 per acre), with a minimum 5 Hectares ($US$13,250).
The profitability in these forestry investments can be high. Without taking any resale value and or appreciation of the land, a eucalypts planting requires an investment in planting, care and management of approximately US$610, and brings about US$5,250 at harvest in 10 or 11 years. This is a return of 21.5% per annum.
Pine plantations require an investment in planting, care and management of
approximately US$310 and bring about US$6,750 at harvest in 18 or 19 years for a
17.6% annual return.
There are some other advantages. Steve has chosen land that also has rental value, close to towns, but far enough away that those who wish a little hideaway can get away from it all. All the land is on good roads, near tourist attractions (an open air sports, thermal springs and other spa services, etc. is just minutes away). This is beautiful, unspoiled landscape that may generate extra income now or have appreciated value upon harvest.
There are of course risks. The first is the general risks associated with forestry anywhere. The company does not insure for fire risk, (local insurance is too expensive). There is some political risk of disease, mismanagement or a collapse of wood prices as well. In this, as in so many other things, prudent management is better than insurance, so my recommendation, if this appeals to you is to visit Steve and his management team in Argentina. I have known Steve for many years and would not write about this investment if I did not have a great deal of confidence, but you should satisfy yourself before you buy or invest.
If this makes any sense for your portfolio, you can learn more at https://garyascott.com/courses/ibezecuador.html Then plan to visit Argentina to meet the managers before you invest.
Until next message, good investing!