Investing out of Town
Profit From Buying Out Of Town
Every piece of recreational land has a use. There are some truisms when
it comes to selecting recreational property, property from which you
can realize a profit.
The first hurdle: selecting the right land for your pocketbook and
investment goals and timeline. According to those who know, the right
setting is often more important than the per-acre price. A small but
lovely piece on a knoll or next to a fishy creek will be often worth
more and show better appreciation than that really big chunk of dull.
Whenever possible, think quality, either present or latent.
In general, the farther north you go, the cheaper the land. The buying
competition is also less. With more than 20 years of experience chasing
down recreational property throughout B.C. Over the last few years recreational land sales have
been booming. To a point.
The closer to the urban centres, the more the likelihood properties
have already gone through the first and often most rapid price
appreciation. All of which means that if you're looking for the best
appreciation for your investment dollar, take a hard look at properties
which are currently seen as being a little bit "too far" away and thus
relatively cheap.
As the B.C. population grows, these properties will feel closer and
closer and the appreciation curve will grow higher and higher relative
to more southern properties.
If possible, buy locally but when you're ready to sell, list the
property outside the area. We humans have a tendency to downplay things
with which we're familiar. In areas which haven't experienced a
recreational-land boom, the local vendors and prices can be reasonable
indeed. Go into an area, ask around and it's possible to dig up some
very good deals. But when selling, go outside the area and list or
advertise your property in the larger urban areas; often, it takes an
"outsider's eyes" to recognize the potential worth or true value of
something.
And now, the 20 ways:
1. Buy big and sell small. Large acreage often contains a
number of smaller, separate titles which can be split off and sold
separately for a profit. For instance, an old abandoned townsite might
be on the market as one block, but be registered under literally dozens
of titles. Assuming the place is accessible and reasonably pleasant,
these narrow town lots are perfect for RV owners tired of having to pay
camping fees every time they head out.
2. On a slightly larger scale, the land might have
recreational sub-division potential. Check with the local authorities
in regards to the access, sewage/septic field requirements, ALR
constraints, minimum allowed lot size and so forth. Be mindful that
while some regions are easy winners for this type of product, other
areas (such as north-central B.C.) are a tougher play. Time it right
and you can make lots of money. Time it wrong and you won't.
3. Find land with marketable timber on it, selectively log
it and use the profit to augment or even pay for the cost of the land
itself.
4. In certain regions where residential/commercial
construction is on the rise, gravel beds are another concrete profit
possibility.
5. Be a canny buyer. Put in the legwork needed to get
familiar with an area and then keep looking for property "priced right"
as in below market value. Buy it and then resell it. Just benefit from
the hard work of shopping. Just looking for deals, as it were.
6. If you can't spare the time, let David Valente refer
you to a local realtor. Give him or her an exclusive on your business
and have them sess out the best buys. Check area newspapers and listing
services, keep your eyes open and your wallet ready. Like buying any
investment, you must become utterly (or at least comfortably) familiar
with the market. The problem is you've got to be confident in the
market enough so that when the deal comes along, you will recognize the
deal for what it is. Unless you're just willing to take your real
estate agent's word for it.
7. Buy lakefront property. Oceanfront is almost impossible
to find (for cheap); its appreciation curve is leveling out. Lakefront
is still on an upward roll and has, up until now, shown the fastest
price escalation. People pay more to be close to the water. The
fascination and affinity for water seems to be almost coded into we
naked apes. Recreational waterfront homes are almost "no brainers”.
8. From the investor's viewpoint, waterfront isn't always
easy going. Most lots tend to be on the small side (under one acre)
which limits privacy and can mean problems with septic fields and well
water. If the lot is too small to legally accommodate a septic field or
your neighbour's existing system is too close to your planned well, or
vice versa, the lot might be legally unusable for residential purposes.
Waterfront lots have also undergone rapid appreciation with existing
owners having already enjoyed the resulting capital gains. In other
words, they've squeezed it for all it's worth. Often, prices are now
beyond the reach of new buyers and even if they can get in, the
appreciation as against purchase price is relatively flat. The high
prices also mean high taxes which in turn takes some of the steam out
of speculating.
9. If the actual waterfront is too pricy, literally check
across the street. Assuming they're near public-access points to the
water itself, non-waterfront lots are often undervalued, the potential
appreciation much higher. Compared to the busy waterfront lots, the
privacy level for the "out of the way" lots are also higher and many
people will pay for privacy. The better the plot (view, distinctive
natural feature such as a pond, rocky bluff, strand of old-growth
forest etc.), the better the resale.
10. Check around for undervalued areas. While dirt on the lake commands quite
a hefty price, most everything else doesn't. Not yet, anyway.
11. Buy an axe, buy a ratty looking piece of land with potential
and then clean it up. People and plots; first impressions make a big
difference. Pick a weekend during fall or spring when the woods are
dampish and the fire hazard low, go in with your family, remove the
underbrush, limb the dead bottom branches off the trees, burn the trash
(keep the fire small and manageable) and open the place up to make it
"park-like". It's surprising how much can be done in a couple of
weekends and what a difference it makes on the resale.
12. Hire a backhoe and do a big-scale cleanout. As the demand
for B.C. timber grows, more properties are being privately logged. Once
the trees are gone and the timber-profit realized, the owner often will
sell the cleared land for cheap. Properly cleaned and re-seeded with
grass (which makes for a dandy deer habitat) or replanted with trees
with perhaps a pond dug out or augmented, the value can be
cost-effectively enhanced for relatively cheap. It can take real
effort, but such land remediation represents a real opportunity for
profit.
13. Buy a resort property, sub-divide and strata-title it and
then sell the units to sub-owners or syndicated to groups of investors.
Each unit (cabin, small lot etc.) is privately owned with the rest of
the acreage (main chalet, lakefront etc.) owned communally. Such a buy
and divy-up can realize some good dollars. Be warned however; in some
areas of British Columbia the government won't allow public-access
commercial resorts to go private as it would remove tourist dollars and
damage the local economy and employment. But then sometimes the highest
and best use of a struggling resort is to go strata-title. Or if that
doesn't wash, perhaps it could be a combination of some privately-owned
units living alongside a commercial public-access lodge. (Such as in
Whistler where vacation-home and condo owners are required by law to
put their units back into the rental pool when not being used by the
owners.) Of course, this assumes the place can be overseen by a
reliable management company.
14. Guest ranches are becoming popular. As above, the strategy
is to split off and sell a portion of the ranch to defray or even cover
your costs. The key is to buy ranch properties which are either out of
the ALR or have a sellable portion which is non-ALR and thus can be
developed.
15. Buy into or develop owner-operated properties such as a
mobile-home park operated in conjunction with mobile-home sales and
small to mid-size owner-occupied hotels. If looking at hospitality
properties such as fishing/hunting lodges, neighbourhood pubs,
restaurants etc., check the prices and cash-return very closely. Often
these sort of places can turn out to be overpriced "vanity buys" and
not worth the trouble.
16. Oceanfront property with good moorage can hook into the
boating community's desire for an isolated place without any sort of
road access here they can drop and anchor, go ashore and have a cabin
or commercial resort waiting for them. Such "sail 'n' stop" locales
haven't really taken root along the B.C. coast, but they're becoming
increasingly popular down south. Strata-title cabins are another
possibility. A tremendous demand that hasn't yet been tapped. The
Central and West coast would be particularly good locations for such
ventures.
17. "Buy a little old junky cabin, tiddle it up and paint it up
and furnish it and make it real cute just like people do in towns.
"It's a tremendous way to make money." As in the city when renovations
are all the craze, sweat-equity can pay off. Or buy up a moth-balled
mining or whatever town and renovate the entire thing. As an end-user
or small investor, again, make sure the place or lot has proper sewage
and water.
18. Buy an "inaccessible" property, secure and/or create access
and profit from the resale. Sometimes a legal road from long ago will
be literally buried by underbrush and otherwise forgotten by the
locals. But if it's set out on the survey map, you have a right of
access. Sometimes adjacent owners can be persuaded to grant or sell an
easement for a share of the profits or some other consideration. If a
waterfront plot is impossible to reach by boat, consider installing a
small dock and boat to enhance the resale value.
19. Take advantage of the penturbia trend (urbanites moving to
small towns), target the small towns with potential and buy undervalued
residential and commercial properties. While it's impossible to find
the "ideal" town which fits all seven of the following criteria, many
places fit many of them: a) The population is increasing; b) access is
assured or is on the edge of a major improvement i.e. the new Vancouver
Island Highway; c) many properties are up for sale; d) there are few
outside buyers in the market; e) positive cash-flow (the achievable
rental income will carry the property's mortgage and other costs); f)
there is a trend for people to work and live in the same town; g)
there's a fundamental reason for property values to increase (i.e. new
large employer or business coming to town).
If it makes the first cut, check out the
target town's: a) general economic status, past, present and future; b)
history of real-estate prices with particular attention to the type of
property you're interested in acquiring; c) the current real-estate
market -- prices, demand, is it a buyer's or seller's market; d)
current and historical vacancy rates -- the local Canada Mortgage and
Housing Corporation office should has stats on this and other very
useful information.
20. Look for reasonably priced "really remote" properties. As
long as it has a good-sized lake on or near it, the boondocks are just
the thing for the "fly-in" crowd who have floatplanes, and want to
travel. These acreages are also getting harder to find. "There are tens
of thousands of them [floatplane owners] and they'd all like to find a
place they can fly to that nobody else can get to. I can't find enough
of these places." He laughs. "If you've got one, phone me."
21. If you own a recreational cabin, find an all-season
management company and have them rent it out for you when you're not
using it. Vancouver-based firms such as Great Spots! pretty well cover
the province and can help turn the "down time" into money. In the
summer time and in the right location, a cabin can pull in more money
in a few months of week-long rentals than a regular rental would make
all year. In winter, the income stream can be as equally impressive.
Of course, there are downside risks. Do your homework, find that good
management company and err on the side of conservatism when calculating
the returns.
Prudential Sussex Realty
Committed Service. Real Estate Sales.
Real Estate North Vancouver. Real Estate West Vancouver. Real Estate
Downtown Vancouver. Real Estate in the Lower Mainland. Buy and Sell
Real Estate. Specialized in Real Estate. Dave Valente