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Posted on March 13, 2019 @ 05:02:00 PM by Paul Meagher
In my last blog on remote land investing I discussed some of the factors that drove me and my wife to purchase a remote 9 acre lot. That investment, however, is only a small part of the remote land investing me and my wife did within the last 8 months. We also purchased some nearby lowbush blueberry fields, forested land, and wetlands on the other side of the road from the recently purchased 9 acre parcel.
The decision to purchase the first wild blueberry field was driven by different factors than the 9 acre parcel:
My main farming enterprise was focused on making grape-based wine but it was proving to be a long hard slog to get the 2 acres of production required to apply for a mini-winery license. The prospects for selling grape wine from the farm were too far into the future with alot of unpaid work in between. I'm not getting any younger and can't afford to keep doing farming for exercise. What to do? It is hard to fully pivot from 1.70 acres of planted grapes vines even if you are making unsaleable wine from them every year.
Where the wild blueberry fields are located is near a place where a good buddy of mine has a cabin. I grew up in a nearby village so I've been traveling these remote back roads since my childhood. My buddy took me up to the upper blueberry field where he likes to watch the sunset. Wow!
Local wild blueberry prices have been in the toilet for the last few years. Many blueberry growers are not harvesting/maintaining their fields and are selling unique agricultural land cheaper that it might otherwise sell for. I was offered a deal I couldn't refuse to acquire the largest parcel.
Before we started acquiring more land last year our farm was 61 acres in size. It is now around 190 acres in size. A 3x scaling. What growing the acreage of the farm does for me is give me hope that the farm has a plausible chance of breaking even in the near future. The 14 acres of wild blueberries on it gives me that hope. This allows me to apply for a non-grape winery license because I have more than 2 acres of non-grape crop in production. I intend to make the argument that my grape berries are for blending and can also be used to make my wine. I have 30 carboys of wine brewing from last year's harvest. I am trying to determine which blueberry/grape blends might be the ones to scale up in next year's wine making.
The point of telling my personal investment story is to make the idea of remote land investing more complex and textured. It is not just about dollars and cents. In my case it resolved the issue of making a necessary pivot away from grape-based winemaking while not totally walking away from a sunk investment. The peace of mind that resolution gave me was priceless. I don't have to declare the farm startup a failure just yet. The sales taxes we spent to acquire the land will be coming back to the farm because it is "losing money" so that will help when tax season comes this year. Finally, I do think the price of lowbush blueberries will go up again and people will begin paying more for land with this incredible agricultural resource on it. Real estate prices in the nearby rural villages and towns are going up and could spread into the more remote areas we now own. My strategy for most of the acreage is to hold and improve and see what happens. I do want to dabble in developing some permaculture inspired vacant lots for sale.
Here is a video of the blueberries used to make my 2018 vintage blueberry wines. A light phenomenon known as golden hour appears to kick in at the end of this video.
Black bears (Ursus americanus) also like wild lowbush blueberries (Vaccinium angustifolium) and may be a significant source of manure in the fields. I was in my truck when I encountered this black bear. This photo was from 2013 and was the last time I saw a black bear. I do see fresh scat in the blueberry fields so they are around. I intend to continue sharing the blueberry bounty with my wildlife neighbors.
Below are a couple of videos by the Pretty Archie band that I've been keeping my eye on. I had a chance to see them performing recently. Great show. I'm listening to alot of their music lately. Poor Boy is a bluegrassy song about having no money and the joy of drinking homemade wine with your girl. Also the pain of losing your girl because of the homemade wine.
Hardwood Floors is another song from the same recording session that is also worth a listen.
This was the book that made me a fan of Joel Salatin. The book is an agricultural classic and often recommended to farmers, but I would recommend it to any entrepreneur.
A few years ago I read a library copy of this book and was inspired to write a blog called Dealing with Gate Keepers. The book discussses the creative ideas, arguments and maneuvers that Joel used to navigate around some of the costly demands of different gate keepers. Joel's farm, Polyface Farm, is a very successful and innovative enterprise so he had more victories than defeats in his dealings with gate keepers. His hard won battles offer lessons that might be useful to entrepreneurs getting bogged down in costly regulations.
This is a great passage from the book that I recalled from my first reading of it:
Some might ask, "Why don't you just put in the infrastructure and comply with the requirements?"...
Here's the answer, and it deals with the whole issue of innovation. All new things start small. Mighty oak trees begin from a tiny acorn, not 20-foot baby trees. Humans are born as babies, not teenagers. Innovation demands a prototype first, and a prototype must be as small as
How do I know if I have a cheese that people will want unless I can experiment with a few pounds and try to sell some to folks? How do I know I have a decent ice cream until I make some and sell it to taste testers? Innovation demands embryonic births. The problem is that complying with all these codes requires that even the prototype must be too big to be birthed. In reality, then, what we have are still-birth dreams because the mandated accoutrements are too big. p. 18
For those who would like to listen to the author discuss the book, this interview is the only extended discussion that I can find.
Posted on March 8, 2019 @ 09:45:00 AM by Paul Meagher
In my last blog on Remote Land Investing I discussed some of the thought process that might go into investing in a remote parcel of land and how you might make money from doing so.
One issue I left unanswered was what exactly does "remote" mean? I believe I meant being far away from other people, but how far away does the land have to be from other people to be considered "remote"?
What is considered remote for me is likely nowhere close to what someone living in high northern areas of Canada and the US would consider remote. The distance from my remote property to the nearest resident would be considered a short hop for people living in the sparsely populated high north. To understand how people survive in truly remote and challenging landscapes, I would recommend reading the thought provoking and beautifully illustrated book Many Norths: Spatial Practice in a Polar Territory by Lola Sheppard and Mason White / Lateral Office, Actar, 2017.
To conclude this train of thought, when investing in remote land you need to figure out how how remote you want to go when you decide to invest in remote land.
The type of remote land I am interested in was land that was formerly inhabited but which people left because they could not make money to support modern needs, they were too far from markets to buy and sell goods, their access to the world was too difficult (up and down long steep hills) relative to people in other areas (traveling over relatively flat terrain), and where young people left and never returned. There was a time when people lived there and perhaps there will be a time again when people will want to live there to grow their own food, cut wood for heat, put up solar collectors and wind turbines for hot water and electricity, and be as self-sufficient as they can be like they were 100+ years ago. The modern homesteader.
I do think we need to start prepping for a future that could be very different that the one we experience today because of climate change, peaking supplies of energy/materials, and growing populations. How can we do that? One way might be by investing in remote land not simply because it may be cheaper than land in suburban areas, but to have a place where you might grow food, collect wood, and survive if things get worse in the next ten years. If we stay on our present course of continuously increasing Green House Gas emissions for the next 10 years, then IPCC climate scientists are warning us that we may shift into a more turbulent climate regime characterized by more extreme weather, drought, flooding and the need for significant adaptation of plants and animals to the new normal. Getting back to previously inhabited lands may be one strategy that will be important in adapting to the great simplification as outlined in The Future is Rural: Food System Adaptations to the Great Simplification by Jason Bradford (Feb 19, 2019).
Perhaps prepping for a less hospitable future will drive demand for remote land and make remote land investing an increasingly profitable form of venturing?
Posted on March 1, 2019 @ 04:50:00 PM by Paul Meagher
This week me and my wife finalized the purchase of 9 acres of remote vacant land. Here is an aerial photo of the parcel we purchased.
You can generally purchase remote vacant land much more cheaply than land in suburban areas, unless the land has valuable agricultural/forestry resources on it, has particularly nice views or is improved in significant ways.
One question you might ask about vacant land is how much it might appreciate without doing anything to improve it. We purchased the land for $9,000 but it came to $11,390 after sales taxes and lawyers fees. I will be able to claim the sales tax back ($1,350) as part of our registered farm partnership so an accurate final acquisition cost is $11,390 - $1350 = $10,040.
Let us assume that 5 years later I was able to sell the land for $15,000. The sales taxes I collect on that amount are irrelevant to calculating my rate of return as I have to return the collected taxes to the government. I would, however, have to deduct my lawyers fees from $15,000 to calculate my rate of return. Over a 5 year period I assume the lawyers fees would rise from $1,040 to $1,400 so the final amount I might make from this transaction is $15,000 - $1,400 = $13,600. Obviously, lawyers fees can play an important role in determining the amount of profit you make on a transaction this small.
Finally, let us assume that land taxes are $100 a year so over 5 years that amounts to $500 to hold onto the property. To compute my rate of return I need to subtract the land taxes as well: $13,600 - $500 = $13,100. An important thing to note is that as soon as you start improving your land your land taxes may go up, especially if you add a building to it. This is why some remote land investors specifically look for vacant land to invest in.
So $13,100 - $10,040 = $3,060 is the overall profit in a passive investment scenario (ignoring sales broker costs if you can do a private sale like I did to purchase this property). If we divide $3,060 by the 5 years we held the land that amounts to $612 per year in profit. If we divide $612 by the original investment of $10,040 that amounts to a 6 percent annual return on our original investment amount. Not great perhaps, but better than putting it in a savings account earning very little interest. If you don't get the profit you are looking for, maybe you will have to hold it a bit longer in the hopes that you will get the return you want.
If you leave vacant land alone it may appreciate or depreciate in value. If it was an open field, and it grows up in alders and low value wood, perhaps the land value will depreciate. If the land was a growing forest, then after 5 years of holding it may have marketable wood that can be used or sold by the new land owner. Maybe that takes 8 years to happen. Often it will be real estate values in nearby areas that are more populated, and the scarcity of available land to meed demand, that will have the most impact on the price you can ask.
My intention is not to hold this particular piece of property as a passive investment but before spending money to improve the land it might be worth trying to estimate its value as a passive investment so you can decide if your improvements are going to generate a significantly higher return or whether you are just spending alot of time and money for very little gain. There is risk in developing vacant land because there may be a good reason why it is vacant. In this case, road access in the winter is very challenging as snow plows don't service this road in winter unless the only person who lives on this road is staying in his cabin. He takes off after xmas. There used to be many more people living in this area 100 years ago but it was too remote for them so they gradually moved away.
On the other hand, we aren't making any more land, there are some spectacular views around here (i.e., view of lake on one side, ocean on the other), real estate values are increasing substantially in nearby rural towns, and people may want to get back to the land and enjoy greater privacy and freedom during warmer parts of the year. Maybe 3 acre lots could each be sold for $15,000+ a piece if they were surveyed, deeded and moderately improved?
The key to this particular land investment for me was that the path of the power line runs through the length of the property next to the road. Delivery of electricity to potential lots could be provided relatively cheaply. Access to electric power in remote vacant land can be expensive to get and you might need to explore some off-grid option to provide power. Here the power lines run along the road and are physically on the property. Another consideration is that we have already invested in farm equipment that can be deployed to help improve the land (e.g., tractor, bush hog, plow, rototiller, chain saw, brush cutter saw, wagon, etc..). Frankly the farming hasn't been much of a revenue generator for us so far which is ok because losses from the farm enterprise can be used to offset income in other areas to reduce income taxes. It is my hope that one way to get the farm to be financially sustainable will be to make improvements on this vacant land so people can live there. Last year we purchased the wild blueberry fields on the other side of the road. I hope to be able to spend time on this remote site managing wild lowbush blueberries and improving this 9 acre lot. That is my definition of a vacation.
One approach to land development on remote vacant land is to use Permaculture ideas and techniques. For example, sector mapping
involves figuring out how various energies move through your landscape: the path of the sun in summer and winter, the prevailing wind
directions in summer and winter, how water flows, how wildlife enters and leaves, where the fire danger is highest, where your vistas are located, etc. The idea is that mapping these flows so you understand them better will help you to optimize any design you eventually impose upon the landscape.
On Youtube, Oregon State University ECampus regularly publishes Permaculture videos as part of their online and offline Permaculture Design curriculum. In this video, Andrew Millison offers a great instructional video on how understanding the slope of your landscape can be used in the design of energy efficient and agriculturally productive settlements.
Hope this blog provides some insight into some of the challenges of remote vacant land investing. This type of real estate investing is not talked about as much as other types but it could be a good way to get people back on the land again. It can be a good investment under the right circumstances. Spending time in remote landscapes also helps to improve physical and mental health and gives you a sense of privacy and freedom that is hard to put a price tag on.