Strategy 31 of 107
Put the land to work: hunting lease, timber sale, billboard or cell-site lease
What it is
List what the land has: wooded acres, road frontage, a high point, wildlife.
Steps
- List what the land has: wooded acres, road frontage, a high point, wildlife.
- For timber, hire a consulting forester and sell by sealed bid, not to the first buyer who knocks. For leases, use a written lease with liability terms.
- Ask your lender before granting any long lease or easement; the mortgage may require consent.
- Send each payment to principal.
Repeat: Yearly lease payments; timber every few decades.
Measure: Yearly lease or sale proceeds after tax.
Try it in the calculator Enter its amount in "Yearly amount to principal". Add a payoff goal of 5 years to see what is still needed.
Risks
- Timber prices swing, and cutting changes the land for years.
- A long lease can limit a future sale.
- Liability for hunters and workers on the land.
Who it fits
Grandmas and grandpas (62 and over), Married couples, Higher net worth, with assets, Business owners
Needs
Owns acreage or a large lot
How predictable
Depends on markets or variable rates
A worked example (hypothetical, not guaranteed)
Picture a hypothetical household (grandmas and grandpas (62 and over)). They owe $300,000 at 6.5% with 30 years left. The required payment is $1,896 a month, and that payment, which comes from income, never changes in this example.
They follow the steps: list what the land has: wooded acres, road frontage, a high point, wildlife.
Suppose it brings $6,000 once a year on principal. The loan would be paid off in 17 years 11 months instead of 30 years, saving about $173,949 in interest. To finish in five years, they would still need about $3,488 a month more from other strategies. That is why the five-year sequences stack several at once.
The amount above is chosen only to show the arithmetic. It is not an estimate of what this strategy will produce for anyone. Put real numbers from the fact finder into the calculator.
Sequences that use it
- Landowner stack: Lease income and the tax saved by a genuine easement go to principal each year; a large timber sale can be a lump sum followed by a recast.
Sources and more information
Where to get help
Related strategies
- 30. Rent out the driveway, garage, shed or attic for parking and storage
- 29. Rent the home by the day for photo shoots, filming and small events
- 27. Build or convert an accessory unit and rent it
- 35. Home sharing through a nonprofit matching program
- 26. First-time buyers: a Mortgage Credit Certificate
- 36. Landowners: a genuine conservation easement on land you keep