Posted on November 15, 2022 @ 09:14:00 AM by Paul Meagher
I am working on adding real estate development to our farm enterprises. Specifically, I have 12 acres of vacant land that I purchased in 2018 that has some desirable features that I would like to enhance one step at a time in the next 2 or 3 years. The land is registered under our farm name but is not land that I want to develop for farming per se because it is located too far away from the farm land where our farm house and buildings are located (about 40 minutes drive away). I think it has a better use. The vacant land parcel is at a higher elevation that has a nice view of a lake, has a power line nearby, is semi-cleared land, and has a great mobile signal (4 and 5 bars) considering the remoteness of the area. Currently, the biggest obstacle to developing the area further is lack of road access to the area where the view below is taken from. Creating road access to this view location is what I am trying to do more work on before the winter closes in on me which is coming soon.
I've encountered some developers who survey remote properties into remote lots that are not selling very quickly or at all. Getting land properly surveyed is important if you want to sell land, but it doesn't add alot of value to the parcels to make them more attractive. Some land investors are happy to buy and hold land, put in the minimum amount of work to add a bit of value (i.e, survey it into smaller lots) then sell when they can make some threshold level of profit. The person I purchased the land from mostly just held the land as part of a portfolio of vacant land properties. He held this one for around 8 years and approximately doubled his profit on the resale.
I purchased this property as a 19 acre purchase with 7 acres on one side of the road, and 12 acres on the other side. The more property ids the better when purchasing land. In this case there were 2 property ids. The other 7 acres has wild blueberries growing on them along with a cleared field and some woodland. I don't plan to sell that land as I want to keep it as part of my farm for the blueberry crop that I use to make wine with.
I would like to run power to the area I want to develop but as soon as I do that I may increase the taxes I pay on that land as it may no longer be
classified as vacant land. The amount of yearly tax I pay is very small now. Adding electricity would likely increase it by quite a bit by tilting it
towards residential rates making a buy and hold strategy less profitable. So you would want to time the addition of an electrical service to minimize land taxes. I can run things off a generator for quite a while before I would need to hook into the grid, although it is nice to know that the grid is there if I want to access it.
When you are developing land as real estate it is important to have a target in mind as to what you might sell that land for in the future as it may dictate the amount of investment you might make. In my case, it would be more like a figure that would motivate me to sell the land because I have difficulty parting with land and once I improve the land it may become even more difficult to do so. I estimate that I paid around $10,000 for the 12 acres. With a minimal investment just to get a road in place and do some landscaping to reveal the potential, I think I could get the resale amount up to $30,000 in 2 or 3 years? If I installed water, septic, power and landscaping then I might be looking at $80,000 to $100,000?
Developing remote land can also be an excuse to spend time in nature and engage in physical work that is productive while also providing exercise. Selectively clearing land with a chainsaw and moving it with an ATV is not a bad way to spend a day. I do alot of work at the farm that can seem like drudgery. The chance to hang out in some wilderness land with the objective of making it desirable for habitation is something I look forward to working on when I can.
Starting with A Nice View