As you consider making a land investment, buying a forest may not be the first thought that comes to mind. (If you’re a camper or a forester, maybe it is!) But the timber on any piece of the property you buy can contribute to its purchase price and value. And if you happen to be looking at tracts in heavily forested regions of the country, all those trees that you will wind up owning could figure very significantly in how your land investment appreciates and pays off for you in the years to come.

Increasingly, investors focused on asset allocation are moving into timber for its solid track record in outperforming stocks, bonds and commodities. Timberland today is an excellent investment, showing annual average returns in the period 1972-2006 of over 14.5 percent – with less volatility than the stock market or even commercial real estate. A recent story in The Economist notes that "Average annual returns on timber have outstripped those from leading global stock indices, property, oil and gold for the past decade."

Trees grow. That’s a simple fact of nature and the good news for forested property owners. Your forested tract affords you capital appreciation from the rising value of growing trees along with current income from logging sales. Of course, timber is a long-term play: you can’t stop the trees from growing, but neither can you do much to hasten their maturity. As trees get larger, their value increases along with the value of the land they are on. Your investment in timberland, whether you harvest the trees or leave them in the ground, grows every year.

Buying stock in paper companies that own millions of acres of valuable timberland is one way to invest in this area. Large pension funds have long been power players in timberland. Lately, timber investment management organizations, or TIMOs, make it possible to take a more modest position in this market. But individual landowners can also do quite nicely with their own forested tracts, investing on whatever scale their interest and budget will support.

It’s not uncommon for timber value to equal or exceed land value. Knowing something about identifying and measuring trees and determining wood volumes is important to make successful investments in timberland. Property listings on LandWatch.com often include terms such as “regeneration” (the replacement or renewal of a forest stand by natural or artificial means) and “timber cruise” (an inspection of a timber stand made to estimate the volume, quality and value of the trees), which are specific to the timber industry. But don’t fret if you’ve never taken a course in forestry: brokers who specialize in this area and forestry consultants can help you sort out the valuation and economics of owning tracts of forested property.

There are likely to be costs as well as revenue to manage over the life of your ownership of the land. Though you may only sell the timber on your land two or three times in your lifetime, you’ll want to learn a bit about the timber market and get proper advice on entering into a sale contract that protects you and provides the greatest revenue.

The pleasure that comes from owning and spending time on a beautiful piece of timber-laden land is, of course, priceless. Using keywords in the LandWatch.com text search feature like “hardwood,” “bottomland timber stand” or “upland pine stand” will bring examples of properties, ranging from “bottomland hardwood acreage” to “pine plantation,” that are both picturesque and sound financial ventures.

It’s good to know that timberland is – and will continue to be – a sound investment. The United Nations Food and Agriculture Organization predicts that world consumption of industrial wood will rise 60% over the next 25 years. (In fact, over the past century the price of wood has averaged an annual increase of six percent.) That means that thinking green by investing in timberland is bound to pay off in a big way – not only ecologically, but economically as well.

Click here for current listings of timberland on LandWatch.com.