Duart Snow, Cottage Magazine, Fall 1994
Rudy Nielsen has this John Wayne replica Bowie knife. The president of Niho Land & Cattle Company- among the leading players on BC's booming recreational property market- keeps it as a reminder that his family firm became a winner by being different.
He takes the ornate, foot-long knife from a case in his office and stabs it into a well-used nick in the top of his rustic wooden desk: "It reminds me how it all works… It reminds me to be different. If I'm not using new marketing, new technology, then I'm not doing it right. It reminds me always to have a fort, a safe place. It reminds me to be economical. It reminds me to be humble."
But long before you see the Bowie knife there are many other signs in Niho's New Westminster office that tell you this real-estate firm is "different". The lobby's "cow-country" décor- wagon wheel, pony skins, cattle skulls, frontier photographs and paintings- fits the company's name. The steel star on Nielsen's office door says "Marshall."
But the heart of the company hides behind a simple barnyard door. This is the computer room where a handful of hard-drives, tape-drives and terminals hum softly. This equipment holds the unique and comprehensive property database which Nielsen uses to catalog recreational properties, track sales, find and close "deals", turn over properties at competitive prices, and track the trends which will shape his business.
Colour-coded wall maps record land-ownership status and banks of cabinets hold recreational and forestry maps. The electronic database maps 90% of the province in digital form. It adds up to "the best map system in BC.," Nielsen says. In the library, collections of real-estate publications and colourful BC histories are dwarfed by shelves of software manuals.
This mix of rugged frontier and high-tech business is a reflection of the boss himself. The 53-year-old trapper's son is a colourful, hard-driving, straight-shooting, hands-on operator, who'd rather be out on the land surveying properties, hunting "deals", and enjoying BC's outdoors than working in his office. But make no mistake: he's an astute entrepreneur and salesman with a taste for "deals" and a formidable grasp of the intricacies of his business.
He talks articulately and openly about Niho and real estate in general, pulling statistics from memory to illustrate his points. He slips effortlessly from the nuts, bolts, and numbers of business to the joys of nature and the outdoors: tramping and clearing properties, catching trout for dinner and sleeping in the mountain under clear, starry skies. In the recreational land business, that's good salesmanship.
"A beautiful sky…a creek running behind us…fresh trout cooking. I tell you, it's the ultimate. I haven't gone to work in years," he laughs.
"I'm an explorer by heart. I want to be out there. I get a feeling about what's over the next hill…it's like Christmas-you never know what presents you're going to get when you look at a piece of property…" like the 1938 edition of The Province he found on a table in a long-abandoned cabin at Cunningham Lake near Fort St. James. "I don't know where the owner went, but he left his clothes, his boots, his paper."
Niho's stock-in-trade is "rural unimproved" land, an excellent low-risk investment as Nielsen sees it. This summer, Niho put about 100 of its 400 titles on the market, and the result has been the most demanding year in company history, the busiest Nielsen says he has seen in 30 years in real estate. As he and his staff fielded up to 150 or 200 inquiries a day, and sold 40 properties in just two weeks, he chafed at being tied to the office instead of finding and "doing" deals or enjoying the outdoors.
"I like all my land. I cry every time I sell a piece," he laughs. "It wasn't supposed to be this big. I don't have enough time to go fishing with my sons."
The history of Niho (Nielsen Holdings) parallels the boom-bust-boom cycle of BC real estate. Nielsen became a realtor in 1964 and built a successful real estate business based in his native Prince George. Then, recreational land was only a "hobby". Niho started in '72 with nine islands in the Fraser River at Crescent Spur, near Prince George, which he bought as a private, canoe-access hideaway where he taught his sons Dean and Darin, now aged 30 and 28, about nature and wilderness survival.
The crash of '81 hit small centers hard, and Nielsen was among its victims. "One day I was worth $5 million; the next day my lawyer and my accountant told me I owed $2 million." He lost 16 of his 17 companies, keeping only Niho and its islands. After the sort of "retreat" into the outdoors which he still makes to solve problems or reflect, he moved to Vancouver, and worked to pay off nearly $750,000 in debts. He dug his way out with sales which included the $100 million estate of Bill Weinberg, once BC's largest landowner and an inspiration for Nielsen.
In the mid-'80s with little money but lots of ideas, Nielsen and his family transformed Niho from a hobby to a fledgling development firm. Always a "pack rat" for information about land, Nielsen had amassed data in loose-leaf binders. He also had a drawer full of maps. Once burned in commercial real estate, he reasoned that recreational land was a safer bet over time. When personal computers were introduced, he saw their potential for storing and cataloging information. With computer expertise supplied by his sons and financial backing from wife Joanne, he set about building a recreational real estate database.
At the same time, he sold the original Fraser islands, reinvested in other properties and over six years, bought some 30 titles. In '89, he stretched his resources to acquire 230 properties from the Weinberg estate- including "some of the primeest real estate in BC"- which he'd sold to Imperial Life a few years earlier. Within two years, Niho paid off the purchase through cash sales and subdivisions of other properties, as well as selective use of timber and other resources on its holdings.
1992 was the first year Niho marketed a large number of properties at once. Last year, it sold about 60 properties priced from $2,000 to $195,000, for proceeds of $1.5 million. This year should be Niho's best ever. Return on investment has been about 28% over the past decade, 43-45% over the last five years.
Niho's current recreational holdings comprise 65,000 feet of ocean frontage, 96,000 feet of lake frontage, and 60,000 feet of river frontage, plus "mini-ranches", timber stands and logged properties which the company cleans for future sale. Nielsen believes this unique portfolio makes Niho the largest player in its field in Western Canada "I'd rather be a big fish in a small pond. Compared to commercial real estate, where there are lots of people chasing deals, I'm one of the only guys in it on a large scale."
Niho's "large scale" relies on research, research, research. The company invests more than 60% of its capital in research, less than 40% on actually acquiring land. Its database stores in readily accessible form a mind-boggling volume and depth of information on BC land:
Digitized maps of 90% of the province, each "sheet" containing 64 layers of information, including topographical contours, water sources, roads, timber and other natural resources, agricultural reserves, wildlife and ownership boundaries.
Satellite images, aerial photos and the thousands of photos which Nielsen and his staff take on trips to inspect properties- all digitized and catalogued. From these images, Nielsen can tell you timber species and acreage on a property, or where strawberries are grown in the Fraser Valley.Sales records, including prices on more than 400,000 properties.
Detailed entries on properties which Niho has purchased or considered, including locator maps, large-scale map, aerial photos, legal descriptions, note from original, turn-of-century surveys and Niho's own inspections, history, and other information.
The hard driving Nielsen backs up his computers with more traditional methods. Research trips by Nielsen, son Dean, and other staff typically take them into the field two weeks a month in summer, less in winter. They travel the province by 4X4, ATV, chartered helicopter, or on foot. Because trips may find him spending unscheduled nights "under a tree," he keeps a lightweight pack ready with sleeping bag, stove, and fishing gear. One recent trip took 25 hours helicopters time and produced 1,000 photos.
He reads 36 newspapers from around the province to monitor what's selling and for how much, and he stays in touch with a small number of realtors who are his main source of "deals," as well as other contacts.
"I live on the phone," he says. He doesn't say so, but one suspects he also follows government designations of parklands and recreational areas which affect the potential of nearby private holdings, however remote.
Data is packaged in assembly-line form- legal descriptions, maps, photos, notes- for him to assess individual "deals," 30 or more a week. He may make offers on five or six a week, always subject to viewing, and ultimately buy one or two. No detail is ever thrown away, and the database keeps growing; even today, information he collected a decade ago still pays off in purchases.
And the bottom line is the bottom line: Nielsen works hard to buy below market value so he can turn properties over at reasonable prices which make them easier to sell. He believes his research helps him make evaluations which are more accurate than those of government assessors, few of whom are familiar with unimproved, recreational land.
"I look for the number-one deal, I hate the numbers two, three or four." He's proud of the fact that even after he has bought for a fair price, his properties sometimes sell subsequently for much higher figures- one 3,000 acre parcel he sold for $550,000 has since fetched $750,000, $850,000 and $1 million, and he figures the current price is as high as $2.5 million!
Because banks simply aren't interested in financing land-or computers-he adds wryly-Niho arranges its own financing for buyers, usually with 25% down and interest at 12% this year, keeping monthly payments below $500 for five to ten years. Properties under $10,000 may be sold on a lease-purchase basis over five years. He says customers have missed few payments in the past eight years.
Nielsen tries hard to keep Niho, with its staff of seven, a close-knit family: "I don't want them to come to work- I want them to have fun." Dean Nielsen is an integral part of operations in the office and in the field. "I'm a loose cannon- he picks up the pieces for me," says his father. Darin Nielsen works elsewhere now, but finds time to maintain the computer system. Rudy's mother Dina is company chair: "I pay her a salary just so she'll talk to me once a week," he jokes.
Forecasting trends is another strength of Niho's database. Nielsen checks sales trends each month, as well as over longer periods. He sees the markets shifting away from developed properties to unimproved rural lands, and therefore away from popular coastal areas such as the Gulf Islands or Sunshine Coast. The share of southwestern BC's rural transactions (including Gulf and Vancouver Islands) fell from 56% in '88 to 24.9% last year, with central, southeastern, and northern regions rising correspondingly. In the same period, the rural property market has grown by 143% to 9,994 transactions last year with a dollar value of $415.6 million, out of total recreational sales of $2.5 billion.
Nielsen believes that interest in developed areas will continue to fall in favour of remote parcels on the north coast, while demand in areas such as Lytton, Cache Creek, Tulameen, Princeton, 100 Mile House, Williams Lake, Quesnel, Prince George, Burns Lake, and the Kootenays is just starting and will be "huge"
Wherever his computer system, his contacts and his instincts tell him the trends point, you can bet that Nielsen, fast on his feet and quick on the draw, will be there.
Rudy Nielsen looks at two major factors- growing population in the Lower Mainland, plus spiraling sales of recreational gear- and figures that even with occasional blips, the market for recreational land should be buoyant for years to come.
The vast majority of Niho customers-70%- come from the Lower Mainland, a further 25% from Interior towns, and the remainder from the US or abroad. A decade ago, Nielsen says buyers of unimproved land were either "recreational weekenders" or survivalists buying against the threat of nuclear war or some other catastrophe. Now he sees up to a dozen types of buyers, including:
Recreational weekenders, looking for land within five hours' drive from Vancouver.
Recreational long-termers, after larger parcels or small ranches within a day's drive of Vancouver. Occupation allows then to spend extended periods at their second home.
Short term investors, who make a few improvements and sell right away, with the potential for excellence return with little risk.
Long term investors who buy at long bargain prices and let values appreciate while they wait for a strong market.
Oceanfront, lakefront, and islands which can be subdivided are excellent investments. Increasing numbers also buy now for the benefit of their children or grandchildren in future.
Retirement planners build a second home on rural property, then sell first home in Lower Mainland and live on equity. Tulameen, Creston, and Cranbrook are popular for this group.
Penturbia development sees stressed-out urbanites moving away from cities to smaller communities with more relaxed lifestyles and outdoor recreation.
Back-to-nature buffs believe "the whole system is in trouble" suggests Nielsen, and they escape by working or living off the land in rural areas, in numbers that surprise him. He offers the example of a man who bought part of a ranch and drove his bus straight through the bush onto the property where he now lives while he builds a cabin.
"Safe-haven" buyers look for land as refuge in case of catastrophe.
"Satellite" workers or "electronic commuters" work from smaller communities or rural home, commuting occasionally to the city or connecting via computer/modem.
Getting into the Market
Niho's motto says: "Real estate is the basis of all wealth. To profit, don't wait to buy land- buy land and wait." There is still lots of room for new players, says Nielsen, and lots of money to be made. His tips for those interested in entering the market:
Look for 30-160 acres of unimproved land
Make sure it has water
Make sure it has no liabilities, including slash as a fire hazard if it has been logged
Keep access in mind, but it's not usually a problem and can almost always be found or negotiated.
Don't buy too high- $30-75,000 is a safe range. If you spend $150-200,000 and the market falls, you could get burned. If you want to spend more, spread the risk over several pieces at lower prices rather than a single high-priced parcel.
Keep it fun. "Don't stick your neck out so far that you worry about how to make your next payment."