Business in Vancouver, May 12-18, 1998
On Wawn Lake four years ago, Jim Brown-John finally found the property he wanted. He had scoped out and walked away from at least 20 potential deals before deciding on this one. But now he was sure. This was the right chunk of land- at the right price. All he had to do was convince his wife, Heather Brown-John. Certainly, she had good reason to be cautious. The couple didn't have the money to invest in the property and would have to borrow against the equity in the family home. Although the 140-acre property east of Williams Lake has investment potential, it was still unrealized and $155,000 was a lot of money for the Brown-John's to invest.
Four years later, the couple can rest easy. Arrowhead Investments Ltd., the company through which they bought the land, successfully subdivided the property into six lots and sold one of them for $59,000. A house on one of the remaining lots is rented out for $600 a month, which covers the mortgage. There's an estimated $185,000 in land equity in the three remaining lots to be sold, and that doesn't even include a house and 47 acres of land that the Brown-Johns want to keep.
Admittedly, there are costs.
Arrowhead Enterprises has to cover real estate sales commissions as well as the cost of surveying the land, doing soil tests, and filing applications for subdivision before the Brown-Johns realize the full return on their investment. However, Jim Brown-John expects to net more than $100,000 from this investment- and still be able to keep the 47-acre chunk of land with the house.
Today it's a buyer's market
A few years ago, that kind of return would have been considered unspectacular. When the recreational real estate market was booming, many properties doubled from one year to another. In April 1992, for example, a Nelson-area property of 3,137 acres- almost 1.4 times the size of the downtown Vancouver peninsula, including Stanley Park- was bought for $541,000. A year later, it was flipped for almost $1.4 million. And now it's listed for $2.5 million.
But the recreational property market in BC is no longer as strong as it was just a few years ago. In many areas, prices for recreational property haven't budged in the past year and, where they have, they've dropped. One investor, who asked not to be named, paid $25,900 for a fully treed lot on Cluculz Lake west of Prince George in August 1994. By last year, that lot had gone up in value to $49,000. Now the price seems to be stuck- it hasn't moved in the past year.
In other areas, prices have actually fallen. Richard Osborne, vice-president of LandQuest Realty, said a five-acre lot overlooking Lac La Hache was listed early last year for $45,000 and didn't sell. Last month, the asking price dropped by 35 percent, to $29,000. "That's a pretty large decrease, but that's the kind of thing we're seeing out there."
Clearly, the recreational market has turned in BC and now it's a buyer's market. That means recreational property owners have more work to do more work to get the prices they want- and buyers need to do more homework. Buyers must do the homework.
That suits Rudy Nielsen, president of NIHO Land & Cattle Company Ltd., just fine. Nielsen, arguably the biggest recreational real estate investor in BC (with roughly 140 deals in a typical year), is well known for extensively researching deals and repositioning properties once he has bought them.
"The thing is not to hop into your car and look at 10 deals. You've got to stay at home and research them with the best system you've got and get it down to three and then go look at those," Nielsen said. "I spend 60 percent [of my time] on research."
"It is almost impossible to get a reservation at a government campsite within a seven hour drive of Vancouver. Ferguson is a beautiful town in the mountains with good fishing. I financed the lots at $60 a month with 10 percent down," said Nielsen.
The recreational real estate expert routinely checks out what's available in the marketplace by getting realtors to give him lists of what they have available and what might be coming up on the market. Nielsen also subscribes to 36 BC newspapers and checks out the listings in them. He sorts through this pile information by first eliminating anything that's not in his price range. Then he does title searches on what's left and carefully pores over several maps to find out what's on those properties.
The legal description of the lot is, of course, necessary to conduct a title search, so Nielsen starts off with a map showing the lot's legal description. He then checks out a contour map, which shows rivers, lakes, swamps, and the steepness of hills on the property. (Marie-Helene Tessier, a sales clerk at Worldwide Books and Maps on Granville Street, said these maps are easily available for $9.50. plus taxes.)
Nielsen also checks out land status maps which show what land is private and what is ordered by the Crown. Finally, he looks over forest cover maps to determine how much timber is on the property. (Don Brickwood, supervisor of administrative supply for the Ministry of Forests, said each forest cover map cost $4, but there is a $4 handling charge and taxes added to that, bringing the total cost to $9.12. When these maps are ordered by phone, it's best to allow up to three weeks for delivery.)
Contact Information: #200 - 313 Sixth Street, New Westminster, BC V3L 3A7 CANADA
Telephone: 604-606-7900 | Toll Free: 1-866-987-NIHO | Email: [email protected]