Frank O’Brien, Western Investor, June 2008
Legendary recreational land investor, Rudy Nielsen, president of NIHO Land & Cattle Company of New Westminster, who has owned more raw land than most small countries, has published a handy guide, “The secrets of investing in recreation land.” We are publishing Nielsen’s top tips as part of our annual recreational property investment sections.
In this second and final report, we focus on Nielsen’s advice on finding a property, pricing, negotiating and closing the deal on a recreational property
Look at lots of properties. The more properties you have to choose from, the better the odds are of finding your dream investment at the right price.
When looking for a property, use realtors, Internet sites like mls.ca, buyandsell.ca and private sites like niho.com, local newspapers for the areas of interest, recreational magazines, word of mouth and, of course, the “For Sale” signs you spot while touring the target area.
Start by calling the owner or realtor and asking them to send you as much information as possible, including pictures, maps, aerial photos, etc.
Sort out the properties by priority as information is received. To do so, use an info sheet that covers all the important facts. Organize the interesting properties into a numbered priority system by area, price and size.
The key information required to make a smart investment includes the following:
- Size and location of the property
- Map reference or GPS coordinates and legal description
- Access details and restrictions
- Recreational appeal
- Services in place and any future restrictions
- Area data
- History of property and surrounding area
- Economic indicators for investment growth
- Taxes and zoning
- Soil and vegetation details
- Agricultural Land Reserve (ALR) status
If you are dealing with a private owner, it is advisable to do a title search. Make sure you receive the full and correct legal description on each property, and then order a title search through BC Online or Landcor Data Corporation.
Finding the property
Be prepared. Bring your maps, pictures and survey notes so that you can clearly identify the property when you get there. Take navigation tools like a compass or GPS, adequate transportation (a truck, SUV or boat) and supplies to spend the night, even if you’re not planning on staying. Take lots of pictures.
Use the survey notes on large parcels to find the original bearing trees, which indicate the property lines. If in a subdivision, use the plan to locate the white triangular corner pegs or steel pins. Look for blazes on the trees to identify the perimeter and keep your eyes open for timber, creeks, gravel and your potential building site. Also watch for any potential problem, such as swampy or contaminated land, and rocky or steep slopes.
Assessing the property
When at the property, ensure you assess the improvements and their value. If there is an existing septic system, make sure it is working properly and not seeping into the ground. If there is a well, check out how many gallons per minute of pressure it provides. If there is a building on the property, check out the foundation, electrical, plumbing and roof to ensure there are no major problems.
You can find recent and similar sales data BC Assessment or Landcor Data Corporation.
Looking at the property’s potential can assess the highest and best use. Can it by subdivided? Is there valuable timber on the land, or a quarry or gravel pit? These features should be evaluated when determining if the current asking price takes into account the highest and best use.
Offers and Negotiating
This step is all about risk, guts and knowledge. Know how much you’re willing to spend, what the market value of the property is and take confidence in the research you have gathered.
If you’re not comfortable negotiating, hire someone to do it for you.
When negotiating in person, it is important to read the vendor, find the cracks in their armour and play to those weaknesses.
Never negotiate via email.
When forming the deal, be sure to control the interim agreement. Try to make your “subject-to” clauses as long as possible, preferably for 2 to 3 weeks, giving you enough time to view the property and arrange financing.
Always remember – there is no deal that cannot be financed if it is below market value.