Hunting Land

[EricD]

It seems to be getting harder to find hunting land that's not too crowded up here in Northwest Minnesota. I've toyed with the idea of buying 40-80 acres to hunt on. It would be a bit of a financial stretch for me so I'd want to be careful. I'm not looking for a huge return on investment but I'd like to be able to sell in down the road and not lose anything. Is hunting land a reasonable investment? It's hard to find resources on this sort of thing.

[Billy_Burbout]

it is a great investment. they cant make more land!

[EricD]

it is a great investment. they cant make more land!

Yes, that's true. But they sure can devalue it. I've seen some pieces of land on the market for a long time. I'd just hate to be stuck in that kind of trap.

[TooTallTom]

Hi EricD

Land is usually a pretty safe investment in the sense that you're not likely to lose your entire investment (as in a company going bankrupt) if the market turns downward. But, as you have seen, this relative security comes at the cost of (potentially) very illiquid capital. You can't spend land.

If you've seen pieces on the market for a long time, you might take that as evidence that the asking price on those pieces is too high. It might just also be that there is a regular supply of "better" land for sale in that market, and that is what is selling. These two things are related.

If you find something that is within your means ("A bit of a stretch" is one of the ways the housing market got where it is right now.) and fits your goals for the land (huntable/ rental income/ CRP income, whatever you decide they are). Then it might be a good investment FOR YOU. If, in the future, you need to sell quickly, there is always the potential for you to lose money. (Also: don't forget about taxes and transaction costs!) But, if you are comfortably able to carry the property, and can take your time to sell it, you might find that it is a good investment for you.

[bikeoutback]

I know your looking at buying but another option is to lease hunting land. You wouldn't have the risk of "a bit of a stretch". I'm just thinking in my head what would the taxes be on the land vs. paying a yearly amount to lease a chunk of land? Just another option.

[tedl]

You need to think of the taxes! If you do any improvements such as build a shack your taxes will go up dramatically. My taxes go up 35% to 70% every year with out any improvements.

[EricD]

You need to think of the taxes! If you do any improvements such as build a shack your taxes will go up dramatically. My taxes go up 35% to 70% every year with out any improvements.

That's a good point.On a piece I considered recently I figured the value would have to up 2% a year just to cover the taxes. I don't think I would improve the land because I'd want something within a few miles of my cabin so I could use the land and stay at the cabin.

[EricD]

Hi EricD

Land is usually a pretty safe investment in the sense that you're not likely to lose your entire investment (as in a company going bankrupt) if the market turns downward. But, as you have seen, this relative security comes at the cost of (potentially) very illiquid capital. You can't spend land.

If you've seen pieces on the market for a long time, you might take that as evidence that the asking price on those pieces is too high. It might just also be that there is a regular supply of "better" land for sale in that market, and that is what is selling. These two things are related.

If you find something that is within your means ("A bit of a stretch" is one of the ways the housing market got where it is right now.) and fits your goals for the land (huntable/ rental income/ CRP income, whatever you decide they are). Then it might be a good investment FOR YOU. If, in the future, you need to sell quickly, there is always the potential for you to lose money. (Also: don't forget about taxes and transaction costs!) But, if you are comfortably able to carry the property, and can take your time to sell it, you might find that it is a good investment for you.

Yes, the stretch thing is a big concern. I'm pretty conservative on these matters but I don't think I'd buy it if I couldn't come very close to paying it in cash. I came into a little money recently and I wanted to put it someplace that would be useful as well as beneficial. Kind of a memorial if you get my drift. But I didn't want to be stupid, either.

[TooTallTom]

Fair enough. If you can pay cash, or close to it, and cover the taxes, you'll always have the land for your own private use. If you're thinking of a useful and durable way to spend your money, it would be hard for an outdoorsman to beat a land purchase. That would certainly be an enduring memorial in a way that many other investments (stocks, etc.) would not be. Being a cash buyer puts you in a very stong position relative to other buyers who would have to line up bank financing. Keep in mind that asking prices on real estate are just that asking prices. Don't be afraid to offer less than the asking price, especially in this market, and especially with cash.

And, depending upon the specific piece, you might be able to find a government program to pay a little cash or a farmer to rent some cropland to cover the taxes.

You might set up a meeting with a local realtor to talk about your limitations and goals. You don't have to sign any sort of representation agreement. (Any insistance on doing that just for general conversation would, to me, raise a red flag.) You also don't have to have any relationship with a realtor to call one up and ask for information on a property that they have listed. But, having a buyer's representative who is not the listing agent will help to watch out for your interest when making any offer you might choose to make.

Keep in mind that, if you do decide to enter into a formal relationship with a realtor, they make a commission based upon sale price. The more you pay, the more they make. That's not to say that they're trying to stick it to you (the vast majority of realtors are not) but any buyer needs to be aware of the tension between their interest and the realtor's interest in the transaction.

Tom.

[EricD]

Thanks for all the advice. It's complicated around Northwest corner of Minnesota because there is such a variety of land. Some of the best land of hunting is tucked in the middle of public land and has limited access perhaps by forest roads. I looked at one 80 acre piece that's on a forest road surrounded by county land. The forest road is pretty well maintained but in the winter it turns into a state snowmobile trail. That means you couldn't get a loan to build on it. I don't intend to, but it narrows the market quite a lot. It would be great for the outdoorsman who snowmobiles and wants to hunt the rest of the year, but will that be a big enough market down the road to make it a good investment.

[TooTallTom]

You're right that buildabilty will probably impact the potential resale of the property, and that should be reflected in the price paid by the buyer. It is possible that what is a snomobile trail in winter today could become a year-round road in the future. Of course, it's also possible that it could become an atv trail in the summer...

You seem like a pretty careful person, and that will be a good trait to have when you're looking at property.

[TRZ II]

I bought 40 raw acres all heavily wooded acres 5 yrs ago. I have all ready "lost" about 10k in value but i would not trade it for the world. The great hunting, the fun in making "my road" and making "my stands" all priceless memories. Now i bought the adjoining 40 too so i have 80 and could not be happier with the move, it is expensive for me (about 500 a month, with a partner) but worth it if you love the outdoors. Never again will some D-bag walk under my stand at 8 opening morning and ruin my hunt, or will i hear a shot 40 yds away from a guy on a bucket. Public land is becoming more and more crowded and i had to get my own land or go crazy.

[TooTallTom]

Hi OldenDays,

I think you've got the right idea putting your loss in quotes. People often forget that, when any market drops, the loss is only an actual loss if you sell what you're holding. Otherwise, it's all academic.

And it's also a good thing that you are getting a lot of enjoyment from your investment. I can't imagine putting a road or stand in on your stock portfolio.

[EricD]

I can't imagine putting a road or stand in on your stock portfolio.

That's why I got to thinking. Now the trick is to try and figure out what land is worth out here. So many variables...

[TooTallTom]

It's worth whatever a buyer is willing to pay for it. That sounds more snarky than I mean it to be, because I do really believe that. But I also don't think there's any one good answer as far as $/ acre. At best, you can get a general ballpark for area, quality, and type of land.

When comparing different pieces, use the rate ($/ ac) so that you can quickly compare them. You might want to make a map highlighting parcels you've looked at, a real brief summary of the good and bad features of the individual pieces, and the asking price/ ac. That should help you to get a broad idea of what people are asking, and might help you identify if there are any pieces that have unusually low or high asking prices, or if there are nearby areas that tend to have lower prices than the norm.

You might also go into the local assessors' offices (The people are usually pretty helpful. Just open your eyes real wide and give 'em the scared puppy look.) and pull CREVs from the last two or three years for the areas you're interested in. This will tell you what people are actually paying for land in those areas and can be added to your map for solid data points. But remember that the strong/ weak points that you see in a property might be irrelevant to the buyer, and vice versa.

[TRZ II]

Get a good realtor and look at ALOT of land. I looked at 50+ parcels before i finally found "the one". Land is a great investment but i sure hope i never have to sell. I'm really investing in my happiness and piece of mind. Hopefully my family will always have a nice peaceful place to get away and hunt. A good realtor can look up what land has sold for in the area and let you know a good ballpark figure to make an offer.

[Musky Buck]

There's a few tricky details in the land business as well like them reclassifying my land that forever was called timber, timber prices fell so how can we squeeze an increase we'll re-classify it as vacant land or recreational land or whatever and my 80 allegedly went up 17 grand somehow last year in our recession, now it's valued higher than what anyone would buy it from me for. If the county would buy it for what they claim it's worth I'd sell it in a heartbeat. If I were to do that I'd get pounded in capital gains tax. Time for me and my boys to go to Fergus Falls and dispute our properties this spring. So my land value is increasing at well over a grand per month, whatever. Remember it's on public record to go the county and view the land you are looking at to research like the current owners etc.

[gurkster]

I have bought and sold 2 pieces of hunting land. I think it is a safe investment, as stated they are not making any more land. However, it is not liquid if you need to cash out you probably would have to sell low to get out fast. With the way things are now, high unemployment, low housing costs, bad economy, etc I do think it is a good time to buy assuming you can afford it. I would be cautious on anything that is a stretch - nothing worse than going to your hunting land and being resentful as it is a reminder of all the things you can't do/afford because of it. Like others have said is there a way to get some small income out of it - CRP, rental to farmers, timber harvest?? Is there some multiple use also. Instead of just hunting can you fish it, farm it, is it a camping destination, etc. Taxes are easier to swallow if it is more than just one or two hunts a year. The PROS are obvious some CONS for me were that I didn't get as much year round use out of it and it turned into deer hunting land only (some grouse too), not much for multiple use. I hunted the same land for 12 years straight, good success most years, but not real exciting or new. If the area game cycles (hard winter, predators, neighbors move in, etc) are down or surronding land is changed (developed, farmed, drained, clear cut, etc) it can impact the hunting on your land, but you are stuck there to hunt it. Overall I enjoy owning hunting land but it was a bit more romantic in theory than reality. IF you can afford it go for it, selling it years from now you will probably make some $, but don't pay more than you can comfortably afford. Maybe look at it as a retirement nest egg to cash out later down the road. One last point - as a buyer you will pay no realitor fees, that is all on the seller (which you may become some day). Good Luck.

[TRZ II]

Gurk-The key is to buy land connected or close to public land. My land is less than 2hrs from downtown St.Paul and i can walk for 9 miles on public land connected to mine. I never get bored and hunt several new spots every year, after i bag one! Buying land is not a big moneymaking venture, you buy it for use, not to make $. I hunt and heat my house with wood cut on my land so i get alot out of it.

[knoppers]

how many of us look back and say, why didn't I buy this back then. I know I have many times. I think its a good investment. I bought my lake place at the right time in the late 90's, and that value has gone up 4X, since., even though it has leveled off, it will take off again. I have been looking for hunting land near my cabin, and it seems the prices have not moved over the last 3 years.

[EricD]

I'm looking at land close to my cabin. There's a piece about 3 miles away so it's pretty accessible but it's on a forest road so it's snowmobile only in the winter. There's not much there for multiple use, I'm afraid but it's surrounded by public land so there's lots of variety. But I am certainly aware that it may be more appealing in my mind that in reality.

[gurkster]

OldenDays - I agree. My first land was only 20 acres, but it boardered 200 acres of land locked tax forfeit land. The other parcels that boardered the tax land were larger tracts, so I basically had almost sole use of the 220 acres, so I hear you there. However, I would personally shy away from land that boarders well known public land like WMA's, State Forests, etc. as they get pressured and often people may not know or care about the boundaries and tresspass. Plus the pressure on the game in the area.

[TRZ II]

All solid points. There are alot of things to consider when buying land. Private land near highly used public land can get trespassers, but it can also be a sanctuary of sorts for deer and can give you chances to shoot deer any hour of the day. Land that is connected to public land but has limited access is probably ideal. My land is in that situation and i have been very happy.