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Cash Really Can Grow On Trees!

April 28, 2009Article by Ray Withers

Making your money grow while helping forestry management, workers in Asia is an investment in life as well as just mere cash. Encouraged by the government to reduce our carbon footprints and to live a greener lifestyle, branching out to put some cash in to trees and watching your money grow seems a good idea.

Investing in Sri Lankan sustainable hardwood forests in partnership with a local community is a novel idea with benefits for both sides.

Not only do UK residents receive serious tax breaks for investing in woodlands, the local community farming the forest has a higher standard of living and better facilities as a result of the cash input that otherwise would not exist. Your investment helps create jobs with above average salaries in poorer areas.

The money from the project gives a good return on investment and generates wealth to improve schooling, sanitation and housing in communities. On top of that, you and your family can have a pat on the back for off setting your carbon footprint and helping saving the rainforests with sustainable hardwood plantations.

The strategy is simple – put your money in to timber investment management, with a partner in Sri Lanka.

  • You pay for the trees and contribute towards maintenance costs
  • Your partner looks after your investment by planting, thinning and harvesting your trees
  • You and the partner split the profits

Generally, a UK family of four produces 18 tonnes of carbon emissions a year. Investing in 300 trees would more than offset that carbon footprint. A typical investment is Sustainable Timber Hardwood, Anuradhapura, Sri Lanka, offered by UK consultants Property Frontiers, of Oxford. Projections are based upon a conservative estimate of yield from research carried out by the University of Minnesota regarding agar wood growth rates, in conjunction with the price of agar wood chips based on current and historical market values.

For a minimum investment of £10,000, the investor buys 300 agar wood or teak trees and contributes £5,000 – £6,000 towards maintenance costs.

  • Agar wood trees are harvested after six years, producing a gross harvest value of £60,000, deduct the timber company’s profit share and the investor’s net profit is £41,000.
  • Teak trees are harvested after nine or 15 years, when the gross harvest value is £246,450, leaving the investor with an anticipated net profit of £271,540.

A shorter-term option is available for teakThese projections are based on a lumber price of £0.72 per board foot for the first thinning, increasing at an annual rate of 6% for the subsequent thinning and final harvest. The 5% profit share is retained as a harvest fee.The timber company has allowed a generous 10% for harvest and processing costs, which covers the milling the trees.

For more information contact Property Frontiers on +44 (0) 1865 202700.

Author

Ray Withers

Ray has over 17 years’ experience in the international property market and bought his own first international property investment back in 2002. Aside from running Property Frontiers, Ray has been involved in residential, hotel, student and commercial property investment and development in both the UK and overseas and co-wrote "Where to Buy Property Abroad - An Investor's Guide". As Founder and Trustee of the Frontiers Foundation, Ray is directly involved with many of its projects to ensure they have a direct and tangible impact in individual communities across the globe. He is passionate about property, travelling, scouting out new opportunities and finding time to spend with his young family.
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