Whether dropping your lease to buy land is a wise decision depends a lot on someone’s current financial situation and whether they can comfortably pay cash for most, if not all of it.
For example, let’s say you buy 70 acres at $3,500 an acre for $245,000. You put 20% down in cash - $49,000 - for a 30 year loan with $196,000 owed at 8.5% interest. That’s $1,523 a month, or $18,276 a year. You have paid nearly 600k for the land and 350k in interest. And that’s not including property taxes and maintenance over 30 years. You will make some revenue from timber, maybe 100k total from a full life cycle of planting, thinning, and clearcut, but don’t expect much with timber prices so low.
That 260 acre lease was probably costing you 3k a year in sunk lease cost. But it was freeing up 15k a year for you to invest for your retirement vs buying 70 acres of land. The land can’t help fund your retirement if you never want to sell it. And I can nearly promise you that 49,000 year one lump sum plus extra 15k a year all invested in your retirement account will make you more than double or triple what your timberland will appreciate in value over 30 years.
Bottom line, if you are financially secure, zero credit card debt or loans besides your mortgage, employment is very stable, you can cover an unexpected major life event without adding more debt, and your tax advantaged retirement accounts are already maxed out, then of course use your extra money on something you enjoy and make the investment in land. If buying land means you have a place to hunt at 62 but can’t afford to retire with financial security the rest of your life, it’s a terrible investment.
