Money Does Grow on Trees

By Jimmy Mengel, Outsider Club Outsider Club’s Nick Hodge and I just got the deal of a lifetime… Last weekend we were able to purchase four 7-foot “big trees” from our local county sustainability department. They typically run about 140 bucks but we picked them up for a measly $20 each. It was a steal. Nick made off with a swamp oak and a white oak, while I snatched up two red maples. While we were loading them into Nick’s truck I struck up a conversation with the arborist. What started as a few simple questions about native trees turned into a discussion about how incredibly valuable trees can be. It turns out that — contrary to popular belief — money does grow on trees. You can make a king’s ransom by actually planting and selling trees. If you have an acre or more of land and a few years to watch your investment grow, you could stand to bank up to $100,000 an acre from your harvest. Now, before you say, “I don’t want to wait around watching trees grow,” think about some of the most popular long-term investments: real estate, bonds, even “orphan and widow” stocks. The one thing they have in common is they all take a decent chunk of time to mature into a serious return. So if you have the time and a little know-how, it would be crazy to write off such alternative investments like the one I’m about to share with you… Watch Your Investment Grow We’re not talking about just any trees here. We’re referring to the valuable and cherished black walnut trees. These trees are so valuable that criminals used to steal them from national forests. Armed with chainsaws modified with mufflers, the thieves would stealthily chop them down and sell off the wood. Depending on the size and quality of the tree, some can fetch from $1,000 to $20,000 a tree. Considering most Americans have under $25,000 saved for retirement, just a few of these trees could bolster their retirement years. No wonder some people call this strategy the “Walnut IRA”. Jim Grant, editor of Grant’s Interest Rate Observer and Ron Paul’s economic advisor, has suggested ditching Treasuries and planting black walnut trees:

A seedling of a properly trained black walnut costs you five bucks — at maturity it could fetch $1,000. The internal rate of return its like a zero coupon bond from yesteryear. My thinking is that instead of taking one’s entire risk with the Federal Reverse, you give nature a shot at it.

I can’t help but agree with his logic. Black walnut is one of the most expensive hardwoods on the market. It is used to make cabinets, flooring, furniture, and shotgun stocks. It has been very much in demand for decades. It used to be that you’d have to wait between 50 and 60 years for a black walnut to fully mature… and by then, the tree would be so gnarled that it was difficult to cut decent logs from the trunk. But Purdue University has engineered the Purdue #1 Black Walnut to solve that problem with a faster-growing tree that reaches maturity in 25-30 years. That may seem like a long time, but in the race for riches, the tortoise always beats the hare. So, how do you cash in on this opportunity? First things first, you must have a bit of land. You don’t need a massive farm, nor do you need to clear cut your existing woods, but you’re going to need at least an acre or two to really get this thing moving. Once you’ve decided where you want to plant your investment, there are a few steps for getting these suckers into the ground… I spoke with Cheryl Jones from Greenwood Nursery in McMinnville, Tennessee, and she helped shed some light on exactly what this sort of arrangement would entail. Here’s a simplified rundown based on my conversation with Cheryl:

1. Plant the saplings. Space the Purdue #1 Black Walnut plants in rows that measure 12×12 feet (rows spaced at 12 feet apart with plants spaced at 12 feet apart in the rows), which will initially give you space for 300 plants per acre. This allows for thinning and for plants that don’t make it. 2. Let them grow. Allow saplings to grow until approximately 12-14 feet in height. This can take up to two years, depending on how large your saplings were when you purchased them. 3. Start pruning. At that height, you should start pruning. Pruning encourages the black walnut to grow faster and actually keeps it healthy. It is crucial and may be the most important thing you can do to improve the value of your black walnut. Cut branches that are under two inches in diameter, but leave the branch collar on the tree. According to Purdue, the main goal in pruning is “removing forks and branches that compete with the main stem for dominance.” I’d recommend reading its detailed pruning report. 4. Harvest your walnuts. After a couple years, the trees should start to produce walnuts. Harvesting and selling your walnuts is one way to profit from your trees while you wait for them to mature. Prices vary around the country. 5. Thin your trees. If your walnut trees become too crowded, their growth will stunt. From Purdue University:

In larger plantations measurement plots should be established and accurately mapped so that the same trees can be remeasured annually. Plots should be scattered over the entire plantation and may be rectangular or portions of rows. Three or four plots per acre containing 10 trees each should be sufficient to give satisfactory growth information. Either through mortality or thinning, about 90 to 110 of the original 300 trees per acre should remain for the final harvest. Therefore, trees will be spaced at an average of 20-foot intervals. Of course, in some places trees may be 12 feet apart and in others 36 feet apart. The first thinning should be made at about 12 years and is the easiest. Poorly formed trees with no potential for straightening , diseased, and very slow-growing trees should be removed. Stumps will re-sprout but should not be sprayed with a translocated herbicide since root grafts could link the stump to adjacent trees and kill them also. Sprouts should be mowed frequently until dead.

6. Cash in. When the time has come to cash in on your investment, you’ll want to have a forestry professional determine what your timber is worth. You can do so by hiring a professional forestry consultant… but there are also free or low-cost services provided by the state that can also help you assess the value of your black walnuts. You can find a list of your states service forestry agency here. You can also contact your local forestry service to see if they offer any free or discounted services.

Cheryl did caution me that maintaining “an entire plantation of these plants is no easy task, and is generally better if a manager is hired to oversee the project long term as it will require dedication of pruning, weed control, fertilizing, mowing, mulching and checking each plant for potential problems.” But if you aren’t planning on an entire plantation, you could certainly get away with planting a few acres and maintaining them yourself. You’ll only get better at it as time goes on. I’d also suggest getting your children or grandchildren in on the action to teach them some good, old-fashioned outdoor labor. You can cut down on the work you have to do yourself while enjoying an enriching activity with your family and friends — all with the knowledge that your work will pay off big in the end. It’s all too easy to be tempted by the next “get rich quick scheme.” But by hedging your stock investments with something tangible and sturdy, you can set yourself up for a rich, rewarding retirement… and investments don’t get much sturdier than a magnificent black walnut tree. Plus you have the luxury of sitting underneath these beautiful trees and literally watching your investment grow. If you are serious about this kind of investment, I would also recommend reading the Black Walnut Plantation Management report from Purdue that outlines the entire process in greater detail. It will also give you some helpful tips on weed prevention, mulching, pruning, and fertilization. If you are ready to get your hands dirty, you can buy Purdue Black Walnut seedlings from Advanced Tree Technology.

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