How to foliage instances work?

Hello! I have a system where when walking up to a tree, it spawns another blueprint that is an interactable tree that you can cut.

It uses the chaos system to split the trunk into pieces.

I have a forest I want to fill up with bunch of trees since its a crafting game.

What I noticed was that after walking up to a tree and interacting, it takes up to 8-10 seconds before the tree spawns the chaos mesh and lets it break.

So my question is, how do foliage instances work? Does it loop through ALL the instances to find what tree is supposed to be switched, and is that why it takes so long for the chaos to spawn? All Im doing is using a box around the tree to check if player is overlapping.

And if so, what best practices are there for issues like these? Culling doesnt make a difference and streaming level doesnt seem like an option since I would have to save and load what tree has been cut.