wind energy

Does Wind Cool a Hot Housing Market, or are Wind Farm Worries Overblown?

For most of us, buying a home is the most financially consequential decision we make. So it makes sense to protect that investment—and find out how major developments in the neighborhood will affect our most valuable asset.

Traditionally, three factors have an outsized impact on home values: strength of the local economy, low taxes, and access to good schools. For rural communities that may go years between major investments, the arrival of a wind farm has large benefits in all three areas.

Over 99 percent of wind power projects are built in rural America and on private land. That means project owners lease small segments of property from large landowners—usually farmers and ranchers. The concrete pads on which they build wind turbines, and the gravel lanes to reach them, typically leave 98 percent of the land undisturbed and available for other uses, such as crops, livestock, hunting, and off-road vehicles.

And the checks start arriving for thousands of dollars per turbine per year.

Those lease payments can really add up: in 2016 alone they totaled $245 million across America, a figure that is steadily rising. That creates a steady source of income for landowners, as well as a new tax base that agricultural communities can count on. It’s especially meaningful during years of drought, poor harvests, or crashes in commodity prices. In fact, many farmers call wind their new drought-proof cash crop.

“It will not change how we operate, it will not change anything about our lives. But it will be an additional income stream that I suspect will be very handy,” said John Dudley, whose family has been ranching in Comanche, Texas, since the 1880’s. “It’ll allow [our] family to have that ranch for a long time.”

Dr. Sarah Mills of the University of Michigan’s Gerald R. Ford School of Public Policy recently examined the concrete benefits of wind income for Michigan farmers. Among her findings:

  • Farmers with turbines on their land have invested twice as much in their operations over the last five years as those without them.
  • Turbine-hosting farmers have purchased more farmland in the last five years than non-hosts.
  • Farmers with turbines are more likely to believe their property will be farmed in the future, and they’re more likely to have a succession plan in place for when they retire.

Crucially, Mills also found that landowners with wind turbines spent significantly more on improving their homes and farms.

Beyond income for farmers and ranchers, wind projects also create jobs in the local community. Wind turbine technicians, one of America’s two fastest growing jobs according to the U.S. Bureau of Labor Statistics, are needed to operate and maintain projects. That offers new career opportunities for young people.

It also helps small businesses thrive, another key component in keeping local economies healthy. For example, Auxilius Heavy Industries, based in Fowler, Indiana, performs services for many of the area’s local wind farms. The company has been able to double in size each of the four years since its founding.

Community members don’t need to work in wind or host turbines on their land to realize its benefits, however. Because they are usually built in rural areas with low tax bases, wind farms often become a county’s largest taxpayer. That boosts local budgets and can help pay to fix roads or build new hospitals, without having to raise taxes. In fact, in some communities, wind revenue renders local taxes totally unnecessary. In Sheldon, New York, for example, the town abolished local taxes for eight years because wind revenue covered all of its budgetary needs.

Wind’s extra revenue also strengthens the third pillar of home valuation: access to a strong school system. New financial resources from wind allow rural school districts to offer services they otherwise would not be able to.

“Oh my gosh, it’s been a game changer for us,” said Jeff Synder, superintendent of the Lincolnview school district in Van Wert, Ohio. “Now we have the windmill money opportunity, we have $400,000 per year for 20 [years]. I didn’t have to pass one levy, ask [our taxpayers] for anything.”

The Lincolnview school district was able to provide every student grade K through 12 with a laptop, and fully fund the repair and replacement program. In New York, the Lowville school district used wind revenue to build a new athletic field and offer advanced placement courses, and it has a swim team called The Turbines. In fact, students from the Lowville district perform so well on standardized tests, compared to areas with similarly low average family income, that researchers from Syracuse University are now studying Lowville to see what makes it so successful. The added programs funded by wind surely play a role in the system’s success.

For those concerned about the impacts of wind farms on property values, the evidence shows there is no cause for concern — long-term, comprehensive studies show wind power doesn’t affect property values. In 2014, Lawrence Berkeley National Laboratory (LBNL) along with University of Connecticut examined 122,000 home sales near 26 wind facilities in densely populated Massachusetts between 1998 and 2012, comparing transactions within a half-mile (1,500 of the sales) to similar transactions up to five miles away. Based on a detailed analysis the researchers were unable to uncover any impacts to nearby home property values.

LBNL has conducted two other major studies on this topic (in 2009 and 2013), and in all cases, found no statistical evidence that operating wind turbines have had any measurable impact on home sales prices. As an author of the 2009 report stated “Neither the view of wind energy facilities nor the distance of the home to those facilities was found to have any consistent, measurable, and significant effect on the selling prices of nearby homes.”

“Wind is a lucrative, sustainable ‘crop’ for our farmers and entire community,” said Susan Munroe, president and CEO of Van Wert County’s Chamber of Commerce. “We hope to continue to harvest wind to not only build economic success for our county but provide sustainable, renewable energy for our state.”

About the Author: Greg Alvarez is the Deputy Director, External Communications, for the American Wind Energy Association.

 

raw land

How Raw Land Investments Can Equal Retirement Income

Raw land investments can serve many lucrative purposes, but have you considered retirement income among them? From rental properties to fix-and-flips, retirement investors have utilized their business expertise to build a comfortable future. Some investors may not realize that property is a permissible retirement asset, but tax-advantaged savings vehicles like IRAs and 401(k)s can own a house, commercial building, or vacant land the same way they can own stocks. These accounts feature tax benefits that can help offset any tax-related concerns that may otherwise deter a potential real estate investor. Pre-developed land has flown under the radar as a viable option for real estate IRAs, but that has changed rapidly over the last several years. 

The beauty of self-directed retirement lies in the hands-on nature of certain business activities. In the context of a vacant land deal, the roles of the broker and of the investor are virtually the same as a transaction with non-retirement funds. Investors must maintain a degree of distance from their IRA holdings, but they’re still able to establish terms and prepare documentation. IRA holders may even pursue non-recourse financing on behalf of their plans to broaden their purchasing options or compensate for a capital deficiency. 

 Although an IRA—as its own investment entity independent of the IRA holder—is able to invest in raw land, the plan holder must follow certain rules to avoid prohibited transactions and possible tax consequences. If your piece of IRA-owned property needs some measure of work before leasing or selling it, the use of personal funds, assets, or efforts would be limited or restricted. For instance, your IRA may own a plot that you’d like to lease as farmland, but there’s a dilapidated barn that has to be removed before you can proceed. Because your retirement plan owns the land, you may not pay for the barn’s demolition and removal with your own money, nor may you fire up a bulldozer to knock it down yourself. Any and all expenses inherent to the development, maintenance, or repair of the property must be covered with IRA funds.  

 In maintaining suitable distance from their retirement assets, investors must also be careful not to conduct IRA business with disqualified persons. Such individuals include anyone in the plan holder’s direct familial lineage or their spouses (daughter, father, son-in-law, etc.) and any individuals with fiduciary responsibilities to the IRA. Non-lineal family members like siblings, existing business partners, or trusted friends are non-disqualified persons and may therefore interact with the IRA more directly. They can provide repair services, serve as property managers, or even take up residence as your tenants. Concerns regarding disqualified persons revolve around the separation of one’s personal funds from his or her retirement dollars. IRAs and other such accounts provide significant benefits, so it’s important that tax-advantaged income never reaches the personal bank accounts of plan holders. 

 That being said, disqualified persons are not 100% prohibited from getting involved with IRA-owned assets. Keeping the money separate may prove especially challenging under these circumstances, but partnering with disqualified persons is certainly possible. Let’s review a few example scenarios that may arise when a self-directed retirement plan and a disqualified person work together on a vacant land investment: 

  • Your IRA and your father own a piece of raw land together, each with a 50% equity share. 
  • If you both decide to sell the property, you would each receive 50% of the sale proceeds in accordance with your ownership percentages. Any other income from the asset would be distributed evenly in the same fashion.   
  • Let’s say you elect to sell your IRA’s portion but your father wants to keep his. This is perfectly allowable as long as the IRA portion isn’t sold to a disqualified person (including you). 
  • If you decide to build a residential or commercial property, all expenses would have to be covered in equal amounts. Both parties could pay no more or less than 50% of any applicable costs. 
  • Just as you wouldn’t be able to retain your IRA’s money on a personal basis, your father could not accept income credited to your IRA.  

Whether you go in alone or pursue an investment with a series of partners, a raw land investment with a self-directed IRA is worth considering. The same approaches that you’ve already mastered—hold and flip, land leasing, construction, etc.—can be applied to assume genuine control over your retirement. Your IRA has the opportunity to yield the same profits that you’ve come to enjoy with your personal pursuits, all while garnering the tax-deferred or tax-free benefits that are only available through retirement investing. A growing marketplace of offerings, expanding technology, and a new breed of IRA providers that specialize in alternative assets like raw land are making it easier than ever for real estate investors to make a virtually seamless transition into this arena. 
About the Author: Bill Humphrey is co-founder and CEO of New Direction IRA, a provider of self-directed retirement plans. With over 20 years of experience as a certified public accountant, Mr. Humphrey has broadened his expertise to include real estate and other alternative retirement holdings. Since 2003, New Direction IRA has provided administrative services for thousands of alternative investments in IRAs, 401(k)s, and health savings accounts.

 

rural house

Five Essential Tips to Maintaining a Rural Home

Living out in the country certainly isn’t for everyone. Some people are too accustomed to the city life, have a need to be near other people or desire a home with no maintenance. However, for the right type of person, there’s nothing better than a rural home.

There are plenty of benefits to living in a rural area. The one you’ll likely notice first is how quiet and peaceful it is without the constant noise that becomes a part of life in the city.

Of course, when you live in a rural home, it presents its own unique set of challenges. You need to handle more tasks yourself, and nature can rise up quickly if you don’t stay on top of it. With the following tips, you’ll be able to better maintain your rural home.

Invest in the Tools for the Job

There’s just no sense in trying to extinguish a fire with a water gun. You don’t want maintaining your land to be any more difficult than it has to be, which is why you should invest in tools that make the job easier. The right tools will depend in part on your home and the amount of land you have. If you’ve acquired quite a bit of land, a push mower or even a small riding mower just isn’t going to do the trick.

A good riding mower is important to keep the grass in check because it can get out of control quickly, especially after some rain. Planning on planting anything? You’ll need a soil tiller. A compact tractor is a good choice for its versatility, as you can use it to mow, dig, move snow and much more.

barn house

Build a Barn

This can be expensive, but look at it like this – you’re already going to invest money in equipment for your home. If you then leave that equipment uncovered, weather will cause all kinds of wear and tear, reducing its lifespan. You may be able to get away with using your garage depending on what equipment you have, but you’re likely going to need a barn at some point.

Besides, barns are cool. They can be a source of pride and a relaxing retreat if you’re the sort who enjoys some manual labor – and if you’re looking into country living, you’d better be. If you plan to have any animals on your land that won’t be living in your home, then you’ll need a barn for them as well anyways.

Establish a Fence Line

Even though you want to stay close to nature, you also need to make sure the land that’s yours is clearly identified. Fence lines can help you to corral animals, section off portions of land for a specific use, or identify property lines. Disputes over where your property ends and a neighbor’s begins can be frustrating. Avoid that headache entirely by establishing a fence line.

After you’ve got your fence up, walk along it occasionally to check for any issues. If posts are rotting, replace them. If they’re loose, reset them so that they fit snugly. Make sure the fence is snug and if it’s an electric fence, test the voltage at different areas.

 

Keep the Area Near Your Home Especially Well Maintained

Some wild animals can be a treat to watch. There’s nothing like spotting a family of deer or a herd of elk while you’re sipping your morning coffee. Other animals – pests, essentially – will see your home as the perfect place for their own safety. Rats and snakes can be dangerous and you definitely don’t want them setting up shop in your home.

One personality trait that many of these animals have in common is an aversion to crossing open fields. That’s precisely why they like the look of your home and surrounding shrubs; they look for places where they can easily hide. If you’re mowing the grass and trimming bushes regularly, it’s far less likely that you’ll have any pest problems. And when in doubt, you can call in your very own enforcer, leading into the next tip.
farm dog
Get a Dog

They’re called man’s best friend for a reason and dogs are perfect company in a rural area. They’ll be thrilled to have so much open space to run around and play. Besides being nice to have around, dogs can also help in many ways around a rural home. Many dogs have herding instincts to keep livestock in the proper area. Breeds that are especially good at this include the Australian cattle dog, the Australian shepherd, the border collie, and the Rottweiler, although there are also many others.

Predators and pests will think twice about coming near your home or your livestock when they smell or hear your dog. And of course, your dog would love the opportunity to alert you whenever someone stops by your home.

Living in a rural area can be an extremely rewarding experience for the right type of person. Despite all the tips you could read, some of the learning simply comes from experience of rolling up your sleeves and getting out there. However, if you invest in the right tools, identify and organize your property, and consider getting a dog, you’ll be on the right track and avoid many potential issues.

About the author: Selene Strong is a contributing writer and media specialist for Bradley Mowers. She regularly produces content for a variety of landscaping and gardening blogs.

young professional

Young Professionals: Earning The Elite ALC Designation

Starting out as a young agent in the land real estate business is usually an intimidating challenge. When I obtained my real estate license five years ago, I started researching ways to gain knowledge and experience in land sales. I quickly found there are plenty of places to learn about the real estate business in general but very few opportunities to learn specifically about the land aspect of real estate. I found the REALTORS® Land Institute (RLI) and learned about their Accredited Land Consultant (ALC) Designation. I soon figured out this was an organization I needed to be a part of and the ALC was a designation I sought to obtain. Having the ALC Designation is an honor for anyone and it can really set you apart from your competition.

“Receiving my ALC Designation took my career as a land broker to another level.”

Here is why…

  • Education: The knowledge I gathered from taking LANDU courses offered through RLI helped me greatly. The course content is second to none and the instructors offer “real life” situations where you can put this knowledge to work in the field. The lessons you learn and the people you meet can help you many times over and many years down the road.
  • Networking: Networking with other RLI members and ALCs has led to several opportunities in my real estate career. I have had numerous referrals and joint listings that I can directly tie back to the connections I made at either State RLI Events or at the National Land Conference. I believe meeting another agent at one of these events and getting to know them better on a personal level makes it much easier to be able to put a deal together with them down the road.
  • Credibility: Being an ALC sets you apart from the rest of the “pack” of real estate agents. It gives you credibility when talking with clients and prospective clients. For instance, where I work in Alabama there are over 26,0000 real estate licensees and brokers and of those real estate licensees only 19 are ALCs. This gives a young agent who holds their ALC a real advantage over most of the real estate agents in our state. In 2015, I got the chance to interview with a prominent family for a listing on a ±380 acre timberland listing in Central Alabama. While in the interview, they asked what made me different from the rest of the agents that they had spoken with. I explained to them that I had recently received my ALC Designation and that the work and education that it took to get there gave me the specialized expertise needed to conduct their transaction. A few days went by and they called me and told me I had the listing. Since then, I sold that tract, along with several other properties for the family, and helped with a couple of consulting and appraisal jobs.

I honestly believe the ALC Designation helped me land what could very well be a “career long” client.”

I owe much of my success in my real estate career to the education, networking, and credibility I received through RLI while obtaining my ALC. I truly believe that ALCs are the “Best of the Best” in the land business and the ALC Designation is something that everyone in the business should work towards.

About the author: Calvin Perryman, ALC, is an Associate Broker and Appraiser with Great Southern Land. Calvin is an active member of RLI, serving on the 2017 Future Leaders Committee. He graduated from Auburn University with a Bachelors Degree in Agricultural Business and Economics in May of 2011. Shortly after graduating from Auburn he obtained his real estate license and has been in the real estate business since 2011.

land real estate

Uncovering Motivations to Buy or Sell Land Real Estate

“I want to sell, but I don’t need the money.” This is a common refrain uttered by people who are contemplating the sale of a piece of real estate. If they do not need the money, then why are they selling? Finding the “Why”, the “What”, the “When”, the “Who” is an essential part of making a real estate deal come together.

Several years ago I helped some seller clients sell about 800 acres of beautiful hardwood and pine timberland that had been in the same family for over 70 years. There were simultaneous offers to purchase the land, one came from a hardwood timber company and the other from a small group of land investors. My clients looked at both offers, and immediately rejected the one that had “timber” in the name of their organization. One of the family members told me, “These other people may cut the timber also, but at least it isn’t in my face.” I believe the timber company would have ultimately paid a higher price than the investors did, but the sellers preferred to deal with individuals instead of the timber company. Their motivation was not only money, but also seeing that the land ended up in good hands.

Here are a few considerations regarding motivation that I have seen influence the decision of buyers and sellers.

  1. Past Experiences- Past experiences, positive or negative, can play a significant role in the outcome of a real estate deal. I have seen sellers refuse to sell to an adjoining land owner because of some long-running family feud. I have seen buyers refuse to make an offer on a listed property because they had a bad experience with the listing agent in the past. Those little details can mean all the difference between getting your deal done or not. 
  1. Time is of the Essence- Timing can be the most crucial part of a real estate transaction. A buyer may need to identify and make an offer on a replacement property because they are doing a 1031 exchange. On day 45 of their identification period, a buyer may be extremely motivated to try to work something out to avoid paying 15% to 20% in capital gains tax. Sellers may be faced with an immediate expense for a home repair or the loss of a job. If you wait a month to make a decision, they may find alternate sources of funding, and no longer be highly motivated to sale. I learned a long time ago, “The time to business is when someone is ready to do business.” The whole world can change for someone in a day, so don’t miss out on an opportunity because you dragged your feet. 
  1. Fear of Missing Out (FOMO)- If you’ve ever seen the look in a buyer’s eye when they missed out on a property they really wanted, you know what I am talking about. They missed one, but By George, they will not let that happen again. In 2015, I watched a professional athlete miss out on buying a property that would have been an ideal tract for him. Instead of paying the asking price and buying a tract he would have enjoyed for decades, he tried to make a lower offer and he missed out on the deal. He was trying to save about $150/acre and did not offer full-price. Another buyer came in one hour after the ball player made his offer, he offered full price, and bought the property. Two years later, the athlete found another property, across the river from the tract I sold, for about $750/acre MORE than the one he had the opportunity to buy before. He overpaid for a property of lesser quality because he did not want to miss out again. 
  1. Feel Goods- Emotions play a big part in many real estate deals. About 2/3 of the properties I sell are related to estate transition, and these farms and land have often been owned by the same family for generations. When it comes time to sell a property, they want to know that it is going to be to someone who will be a good steward of the property that their family has enjoyed for so long. I saw this exact thing happen several years ago when a family hired me to help them sell a property to a board member of The Nature Conservancy. They were convinced that this beautiful hardwood property along a pristine river would be protected in perpetuity if they sold to this type of buyer. Often, older farmers will offer owner financing or will sell at a reduced rate to help a younger farmer get started on their land.

Finding the motivations to buy or sell land real estate from the individuals in your real estate transaction will go a long way to helping you get your deal closed. It is important to ask questions of your customers and clients that will give you the answers you need to find out what really matters to them. Money is not the only motivation for many buyers or sellers, and I have seen a seller be offended by a buyer “showing off” with how much money he has. Your odds of a successful real estate transaction increase when the parties are able to each get what they want, and sometimes it takes more than just money to make the deal come together.

Jonathan Goode, ALCAbout the Author: Jonathan Goode is an Accredited Land Consultant (ALC) with Southeastern Land Groupand is a licensed real estate broker in Alabama and Mississippi. Jonathan is also a co-host of the weekly radio program, The Land Showand loves to serve people buying and selling land.

Kudzu: Friend or Foe?

Kudzu.  The mere mention of the word often invokes a visceral combination of both annoyance and fear.  Personally, I think of the movie ‘The Blob’ which was first released in 1958 starring Steve McQueen and Aneta Corseaut battling a gelatinous, alien life form that slowly engulfed everything in its path.  Similarly, I view kudzu as a scary, green pest slowly creeping along, plaguing the land in which it captures, and becoming the perfect habitat for an evil creature to live patiently waiting for its next unsuspecting victim to wander too close!  Am I being a bit dramatic?  Possibly. However, I’ve yet to meet anything other than a rattlesnake that considers kudzu a friend.

I was recently showing a beautiful tract of land to a client.  Everything was going well until we rounded a corner and there it was – a gigantic kudzu patch that looked like it had been growing for decades.  Rightfully so, the client expressed concern with having this on the property.  He wondered if kudzu could be eradicated and if so, would it be in his best interest to do so from both a financial and land preservation perspective.  These great questions left me eager to learn more about this common yet mysterious annoyance that I had become somewhat complacent towards having grown up in the South. Where did it come from originally?  Did it have a purpose?  If destroyed, does it do more harm than good?  I’d always considered kudzu a foe…but could it be a friend?

Cultures in the Pacific Rim utilize the kudzu root in cooking, teas, and herbal remedies.  The history of kudzu in the United States began in 1876, where it was brought to the World’s Fair in Philadelphia from Japan with the purpose of controlling soil erosion.  Seven years later, the Deep South embraced it as a beautiful ornamental plant that provided excellent shade for porches during the sweltering summer months!  Mesmerized by the immediate benefits of this hearty plant many of our ancestors used it for livestock feed, fertilizer, honey, and even a potential source for bio-fuel.  The government embraced the kudzu “bandwagon” and paid folks to plant it.  By 1946, they estimated over 3 million acres had been planted throughout the country.  They soon realized that this “dream plant” was turning out to be a nightmare rapidly spreading up to a foot a day especially in the Southeastern states due to its drought- thriving indigenous nature.  It climbed up trees, shrubs, and anything in its path… like “The Blob” …blocking sun rays thus diminishing or eliminating all of the photosynthetic productivity of the plush greenery underneath. Any soil erosion it may have prevented was ultimately a moot point considering its path of natural plant destruction.

In 1953, the U.S. Department of Agriculture removed kudzu from their list of suggested cover plants.  It was not until 1997, however, that it made the Federal noxious weed list.  To date, it is believed that kudzu now covers close to 7.5 million acres in Alabama, Mississippi, Georgia, Tennessee, and Florida alone! In addition to being a nuisance, kudzu has a significantly negative economic impact throughout the United States.  It is estimated that power companies spend between $1,500,000 – $1,700,000 annually to repair power line damage caused by kudzu.  The U.S. Forest Service reports have a much more conservative estimate of approximately 227,000 acres of kudzu growing in our forests. Some estimates are that close to $300,000,000 of lost forest productivity occurs annually due to kudzu infestation.

So, what did I tell my client?  Not to automatically dismiss a property because of kudzu, however, be sure to estimate the cost and time involved with controlling it.  County extension offices are typically equipped to assist landowners in determining the best plan of action based on their specific needs and location. Here are some of the most commonly used techniques for controlling kudzu on private land:

  • Mechanically:  mowing or cutting the vine back to slightly above ground level.  Kudzu debris should be completely removed then burned to prevent regrowth.  Another mechanical method involves completely removing the root crown by using a shovel to expose the base and then an axe to sever the root just below the crown.
  • Chemically: applying herbicides once at the beginning of the growing season (May) and then again in late summer or early fall. To completely kill the plant, plan on spraying 40-80 gallons an acre bi annually for a few years.  Tordon and Triclopyr are common herbicides used to eradicate kudzu.
  • Naturally: enlisting the help of animals to graze the kudzu.  Many use a small herd of goats or sheep to help in the battle.

Kudzu. It just goes to show you that something that started way back in 1876 as a clever idea to control soil erosion turned out to be a foe at best, “The Blob” at worst, and most definitely not a friend.

About the Author: Eric Leisy, ALC, is an avid outdoors-man, freelance outdoor writer, REALTOR® & Land Specialist for Great Southern Land Co.

sage grouse

Sage Grouse Management in the News

I read the recent article noting that our new Secretary of the Interior was directing mangers of the public lands to include flexibility in their plans to improve on sage grouse habitats. This, and in other articles I have read, continue to reference “livestock grazing” as one of the reasons for the decline of the sage grouse. In one article, they cite the main reasons for the decline of the sage grouse: “In 2013, the FWS identified 14 threats to the greater sage grouse: nonnative invasive plants, energy development, sagebrush removal, improper grazing, range management structures, wild horses and burros, pinyon-juniper expansion, agricultural conversion, mining, recreation, urbanization, infrastructure and fences.”   Interestingly enough, they always leave out the one reason that probably has the most impact on sage grouse populations and that is “Predators.”

We have more predators of the sage grouse now than ever before and still most will not recognize them as a major factor. One predator in particular whose population has grown by a thousand percent is the raven. University studies since 1948 have shown ravens as major predators of ground nesting birds and a 2003-2005 study “The Effects of Raven Removal on Sage Grouse Nest Success” by Peter S. Coates and David J. Delehanty of Idaho State University confirms the benefits of taking Raven’s out of the picture for improved nest success.

sage grouseWhy not give credit where credit is due? Some believe it is because controlling predators won’t give the public lands managers the control on other resource users that using “critical habitat” does.  There are organizations in the West whose main goals are to interfere with livestock grazing on public lands. In Idaho, they are trying to have dirt tanks (ponds created to store water for livestock) filled in because they are used as breeding grounds by mosquitoes since they are carriers for the West Nile disease which is found to also kill sage grouse.  Any of us who spend a lot of time in the habitat will tell you that these same ponds are frequented by many species of wildlife that benefit from them, just a livestock do.

Many argue that there has been entirely too much time and money spent on improving “habitat” for sage grouse. Historical records indicate there were very few sage grouse in the Great Basin before man settled. The journals of early day settlers such as Peter Skeen Ogdon (1828-1829); Jedediah Smith (1827); John Charles Fremont (1843-45) pay a lot of attention to wildlife and the diets of the native American’s they encountered.  In all these journals, there was one record of sage grouse found as a diet item (RE: testimony of Nevada Assemblyman Ira Hansen 2011). In the meetings in 2012, when the U.S. Fish and Wildlife Service (USFWL) was conducting a hearing on the potential listing of the sage grouse, they noted that they were using as a starting point the mid 1800’s and the areas they identified as sage brush areas at that time.  They were also using a two-million bird prediction based off that number of acres of sage brush.  In other words, the number of Sage Grouse being managed for is based on poor data that is not substantiated by historical records.

Livestock grazing can actually be a benefit to sage grouse and, if you look at the records, you will see that at the same time we had the most livestock on public lands is when we had the largest sage grouse populations. I believe mainly for two reasons:  first, we had an active predator control program at that same time; and second, over grazing of grass species allows shrubs to encroach onto those areas being overgrazed.

Livestock grazing kept the excess fuels down and we had fewer range fires. Managing for grass required leaving excess grass to reseed and I can tell you we have a lot more grass now than when I was a kid in the 1950’s and 60’s. In those days, we didn’t have government fire centers that did the firefighting, we did it ourselves. All the ranchers and other county residents would drop what they were doing when a fire started to put it out. That meant bull dozers being loaded and put on fire lines, it meant filling barrels with water, grabbing soaked seed sacks to slap out flames, and not stopping even at dark.  In fact, we usually got the fire under control at night as the winds calmed down and the moisture content of the air went up. We don’t have forests to deal with so fighting fires at night isn’t much danger.  Unfortunately, even today, the agencies who now control firefighting shut it down at dark and wait until after their 7 am fire meeting is over the next morning to get back to it. Changing this one policy would keep the size of our fires down considerably. To their credit, however, this year they are getting on the fires much sooner that they have in the past.

In summary and in my opinion  a)the sage grouse are not at a low enough population level to justify being listed as threatened or endangered;  b) the Critical Habitat Provision of the Endangered Species Act is being abused to list species whose populations don’t warrant listing; c) Livestock grazing is not a negative to the sage grouse; d)Predators are not even sited as one of the main impacts on the population even though there are numerous studies that show they are a large factor; e)the agency’s policy of not fighting fires in the Great Basin at night has burned literally hundreds of thousands of acres unnecessarily. On the other hand, I just sold a 10,000 acre ranch I had listed for over eight years to be used for sage grouse meditation with federal agencies. Suave on the sore!

About the author: Paul Bottari, ALC, is Owner/Broker for Bottari & Associates Realty Inc. in Wells, NV. Paul serves on the REALTORS® Land Institute 2017 Government Affairs Committee.

residential land sales new home construction

The Evolution of Residential Land Sales in the Northeast

Northeast land values and trends in residential land sales: What has happened and can we see the future? I have been a practicing REALTOR® for thirty-eight years. I started selling real estate while in college and never looked back. My primary market is thirty-five miles west of Boston. The state of Massachusetts is really divided into these parts: Route 128 and inside, Route 495, both sides, to Route 128 and Worcester east to 495; and, then, Western Massachusetts. Massachusetts has a myriad of permits and land use regulations which are some of the most restrictive in the country, in my opinion.

As a young REALTOR® starting out, I did all types of land sales. My marketplace was dotted with family farms. Most of these, as a teenager, I would hunt, fish, and drink beer on (of course with land owner approval, or one of their sons / daughters in tow). When asked to write this, I thought of what story would be best to tell. The approach I’m taking will, hopefully, be applicable across into your marketplace.

In the late 1970s and the early 1980s, land could be bought for forty-five dollars per lot as an Approval Not Required Under Subdivision Control (ANR) lot. An “ANR lot” means that the lot complies with the dimensional requirements for public way frontage and the required minimum lot size. For backland, you could buy a forty-acre piece in the “raw” for ten thousand dollars per lot. Once under contract, you could begin the necessary permitting. The rule of thumb in practice at that time was that twenty percent of the land tract had to be given up to regulatory prescription; in this case, eliminating eight acres.

residential land real estateAt that time, my thoughts were that the entire regulatory morass was put on the landowner to the community’s benefit. Alas, to this day, I still feel the same. New homes were being built for fifty dollars per square foot, the lot included. A finished two-thousand square foot colonial was one hundred thousand dollars, or thereabouts. During the early 1980s, we had an escalating economy and prices on homes and land were rising dramatically. The state of Massachusetts started buying the developmental rights to family farms and paying them not to build, but to continue to farm. In Northborough, two of the biggest farms on the highest point in town, overlooking the new 1974 I-290 highway, were bought. Over five-hundred acres were kept from development and, until this day, serve as a reminder of why some regulations are necessary.

In addition, a certain amount of lots were allowed to be kept for family members in the future. Now, the third and fourth generations of farmers have their homes here and a vibrant farm business has grown, and keeps growing. In 1987, Massachusetts had a banner year selling farms at a price of forty-thousand dollars per lot in the raw while an ANR lot ran about seventy-five thousand dollars each. Then, we had a market adjustment and the local economy all across the Northeast was hit with a slowdown. It was during this time of slow, or no, growth that the regulations were revamped and revised to “protect” the environment and the school district. Zoning referendums were created and placed from community to community, as each town had different and more onerous restrictions in place. From aquifer laws, contiguous uplands, and open space as a minimum fifty percent, to revisions of soil standards, increasing sizes of subdivision roads, and increased setbacks. All of these regulations put a severe crimp on land values.

Despite tremendous efforts by landowners, builders, and REALTORS®, these regulations are now a way of life, to this day, in all our urban areas. When the “powers that be” implement new zoning, it has a tremendous effect on land values. In the mid-1990s, another piece was passed known as The Rivers Bill. This bill precluded development within two hundred feet of any listed stream and tributary in the Commonwealth of Massachusetts. Some of those listed were two feet wide at maximum and the only relief was if it dried up for three or more consecutive days so could you film it.

Now, we have arrived in the late 1990s. With ANR lots at $110 per lot and raw land at sixty thousand dollars per lot, finished two thousand square foot homes are sold from $350 to $375 thousand (or around $175 per square foot) all in, inclusive of land. The builders then decided that in order to make money and increase their corporate financing, they would build bigger homes. Starting in late 1999, prices rose and house sizes were 2,800 to 3,200 square feet. Around this time, I did a seventy-lot former gravel pit, where pricing ran from $399 thousand for a 2,700 square foot colonial to $475 thousand for a 3,400 square foot colonial.  Now, twenty years later, those resales sell for $680 to $800 thousand with no new lots in sight. In my primary area, we have reached build out. There are no longer any fifty to one hundred lot subdivisions, only five to ten lot ones are available from the I-495 area eastward to the sea line of Boston.

New home construction residential land salesIn addition, for the last ten years, builders have taken advantage of a law in Massachusetts called Chapter 40B. This law was created in 1969 to increase affordable housing throughout the Commonwealth. However, it did not get any traction until 2005 or so. This law allowed for an increased maximum density for apartments, as long as twenty-five percent of the units were for people who meet the affordable income limits as defined by the State of Massachusetts. Thousands and thousands of apartments have sprinkled the highways and byways, as this law allows you to bypass local planning boards and apply directly to the State.

While many benefits are apparent, the adverse impact comes on the older two to four family units as they have to compete with sleek new more modern apartments offering dry cleaning services, gyms, pools, and all the other upscale benefits. Demographics within these units are primarily young urban singles or couples, with older divorcees, and a transient population waiting for newer homes in the Central Massachusetts market. Many are buying duplex halves and, now, the communities are putting moratoriums in place as more and more of these units are built. These two thousand square foot duplex halves are selling in the mid to high four hundreds.

However, no one realizes, except the REALTORS®, how the marketplace has changed. The millennials prefer new construction. Most don’t want to have to change storm windows or paint their new homes. They just want to live in a new home with little or no exterior maintenance so they may enjoy their free time. Yet these communities who have implemented moratoriums are crimping their ability to buy new, and restricting the value of the land owners’ equity. You can still buy an ANR lot in western Massachusetts under one hundred thousand dollars, but the access to corporate headquarters and city services is a day trip away.

As for the rest of the Northeast, in every major urban area within thirty-five miles of an airport or big city, land prices and residential land sales tell the same story. Land prices are escalating higher and higher to the point of spiraling out of control. Installing new roads are costing a thousand dollars per linear foot. Remember the seventy lots in Northborough neighborhood? Well, I just sold the eighty-one year old owners last remaining four acres for one million dollars and the builder is getting five ANR lots. Homes of three thousand square feet will start at $750 thousand and we expect them to all sell upon release.

What a difference three decades make. When I attend the RLI meetings I hear similar stories from across the country and realize the truth in the phrase that “The Land Is Under All,” and it’s our duty to protect private property rights. By virtue of our profession, the duty falls on all REALTORS® to fight restrictive zoning and ensure that our elders can retire with the equity they expect and deserve. All of us in the business of buying and selling real estate have an obligation to participate in the public process for new zoning. We have an obligation to be cognizant of all underlying land use and we must defend and protect the ability to adapt our land use to meet the new requirements of the marketplace and the next generation.

For more information on land value trends and residential land sales, check out RLI’s annual Land Markets Survey. Read more on the demand for land and the increase in demand for residential land real estate.

This article originally appeared in the 2017 Summer Terra Firma Magazine, the official publication of the REALTORS® Land Institute.

About the author: Michael L Durkin, ALC, CBR, has been recognized as one of the Top REALTORS® in the country by many of the major companies: Top 300 Coldwell Banker; Top 10 GMAC Real Estate; and Top 80 RE/MAX.  He has twenty-five years’ experience in his office and is an author and former radio host for WTAG. He has served on the NAR Land Use and Property Rights Committee for a total of ten years.

Turning Your Land Into Multiple Sources of Cash Income

Hey Land Owners, What Have You Been Waiting For? Turning Your Land Into Multiple Sources of Cash Income is Easier Than you Think!

We live in the age of AirBnB and VRBO mania. Residential owners across the globe are taking advantage of the need for residential renting opportunities. They post their properties on listing websites like AirBnB or VRBO, and quickly turn their residential properties into piles of instant cash income. Guess what? Land owners can do this too! There is an enormous demand for private land use of various types, in which users are willing to pay. It’s time for landowners to get in on the money making action too.

The demand for private land use across our great nation is nearly immeasurable. Simply put, an exponentially enormous portion of the population has the desire or need to use private land for various purposes. As an example, in addition to being President and CEO of LandLeaseExchange.com, I am also Vice President of Maury L. Carter & Associates, Inc., a land investment and brokerage firm based in Orlando, FL. Our firm and our investors have owned hundreds of thousands of acres over a 50+/- year time frame. We currently have a portfolio of 12,000 acres.

Every year we get hundreds, if not thousands of unsolicited phone calls and email inquiries on the 12,000 acres in our portfolio. These inquiries are from individuals or companies searching for property to lease or rent. Again, it is important that landowners understand just how much demand there is for the leasing and use of land. We DO NOT market our properties for lease, yet we receive all of these unsolicited inquiries from users who are ready, willing, and able to lease a property.

Most of the land in our portfolio that we lease is conducive for production agricultural farming, cattle leases, citrus leases, timber leases, and hunting leases. These are fairly standard land leasing categories, yet they are just the “tip of the iceberg” when it comes to the possibilities available to landowners and how they can turn their land assets into cash revenue. The land leasing market has been identified as an extremely under-served marketplace. What am I saying? There are tens of millions of people in the U.S. that have a need for land, yet there isn’t even a small fraction of land available to them to do so. Enter the private landowner.

On the LandLeaseExchange.com side of things, I have many landowners say to me “John, all I have is (enter amount of land) acres, and there really isn’t much I can do with it to make money.” Really? I beg to differ. Each parcel of land is different and offers its own uses based upon its characteristics. Landowners don’t really need to get too creative, actually. They simply need to take advantage of the land they already own and provide leasing opportunities to users that are conducive to the characteristics of the land owned.

As land owners, we have to think outside of the box. We have opportunities that we take for granted, available to us RIGHT NOW on the land we own, that others are willing to pay to for to experience.

Here is a list of examples I have compiled. Remember, you can lease your entire property, or just a portion. For one use, or for many uses. No property is too big, or too small to turn into cash income.

Agricultural Opportunities

  • Do you have land that you aren’t currently using that could be leased for agricultural purposes? Whatever agricultural use your land is conducive for, the likelihood of someone wanting to use it for commercial agricultural purposes is high. Our website offers listing categories on anything from citrus to peaches to tomatoes to more traditional commodities like soy beans, corn and cotton.

Recreational Opportunities

  • Birdwatching, camping, equestrian, fishing, hiking, hunting, mountain bike trail riding, RV/Motor Home/Camper, Shooting, Off-Road Trail Riding/ATV/Motorcross, Waterfront properties, and more. Recreational use is one of the most desired uses for land right now.

Special Event/Corporate Retreats/Religious Retreats

  • Do you have an old barn you could clean up, hang some lights and rent for weddings or parties? Brides and grooms and party hosts want to create something different and unique while hosting their parties.
  • Corporate retreats – Does your land have activities available? Skeet shooting, hunting opportunities, adequate lodging amenities, meeting areas, etc.? Turn it into a corporate retreat and charge companies to use your property.
    Cabins, Rural Residences, Estates:
  • People want to have a getaway weekend or an experience on a farm, ranch or property outside of the city. Provide the opportunity to them by leasing out cabins, rural residences or estate properties.

Agri-Tourism Sites

  • Now, more than ever, people want the opportunity to get on land, see where their food is coming from, visit the farm and experience something outdoors and have a good time. What type of agritourism can you provide? U-Picks, corn mazes, pumpkin patches, vineyards, petting zoos, Christmas Tree U-Cut, etc.

Communications and Energy

  • Do you have a site that would be perfect for a cell phone tower?
  • Are you located near high tension power lines and you think your property would be good for a solar panel project?
  • What about a road, and your property would be good to lease to a billboard company?

All of the above are ideas on how to turn your land into cash revenue. As a landowner, what are you waiting for? Additional cash income is only a few clicks away!

 

About the Author: John Evans is a 2008 graduate of the University of Mississippi with a degree in real estate finance. A seventh-generation Floridian, he lives in Winter Park, FL, with wife Ann and son Jack, 1. He is Vice President of Maury L. Carter & Associates, Inc and founder, CEO and President of Land Lease Exchange, LLC. which is an online marketing tool that connects landowners to land users.

 

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Teaming Up To Transform Your Real Estate Business

“If you want to go fast, go alone. If you want to go far, go together.” – unkown

What is the best way to achieve the highest level of success in your land brokerage career? The answer to that question varies greatly depending on your definition of success. Many brokers would like to see an increase in income earned, number of transactions closed, quality agents hired or retained, or any combination of other metrics used to define success. There are many definitions of success that do not have their own column in your firm’s P&L sheet, such as: spending more time with family, creating a steady stream of income, or dominating your local market. Figuring out the best way to achieve those goals is a real challenge for real estate salespeople.

“If you want to succeed, buckle down and work harder. You need to make more calls, set more appointments, and spend more time in front of decision makers.” This is good advice, but at a certain point in your career it becomes unproductive to pour yourself into more of the same. You can reach a plateau where spending more hours at work does not yield the desired results. In economic terms, this concept is called “The Law of Diminishing Returns.”

In 2013, my co-worker, Robert King, ALC, and I candidly discussed our goals for the year and how our numbers were tracking to date. Robert shared how his goal for the coming year was to increase the size of his average transaction to raise his total commissions earned. At the time, Robert was closing forty land transactions per year and was one of the top producers for Southeastern Land Group. The next year, he and Randall Upchurch teamed up and formulated a plan to increase their business and target a market segment that was largely under-served in Alabama. They focused on marketing and selling poultry farms across the state.

Poultry is the leading agricultural product in our state, and both Robert and Randall had previous experience with poultry operations and real estate brokerage. In 2014, they formed PoultrySouth to focus on marketing poultry farms. It took only two years for Robert to not only increase his commissions, but he was also able to more than double them as a result of teaming up with Randall. This is a perfect example of how two REALTORS® Land Institute members can partner to totally transform their business.

Randall is grateful the partnership has worked so well and, as he recounts their success, he does not take it for granted. “By working together the past three years, Robert and I have helped our clients close twenty-five poultry farms for a total of about fifty-five million dollars in sales. We currently have six pending farm deals, and are working on others.” Robert explains the upside of their partnership this way, “The benefit of two minds working through the issues of real estate transactions is a multiplying effect, not merely additive.” King continues, “Having slightly different perspectives focused on the same goal is a win-win for agents and clients. Additionally, we have seen the unexpected benefit of being able to multiply our effective handling of listings. Randall and I could probably only manage twenty-five or thirty listings apiece. Together we are able to handle one-hundred or more listings, while providing good service to our clients.”

The financial success of the partnership at PoultrySouth has opened doors for Robert and Randall to add cattle to their personal herds and each have purchased additional acreage for their family farms. The benefits from their business have overflowed into achieving goals for their families and farms. They are the perfect example of how real estate teams are supposed to function.

How do we achieve the positive outcomes we desire in our careers? One way is to align yourself with like-minded people. The power that comes from working together to achieve a common goal cannot be overstated. Fletcher Majors, an ALC from Alabama, has done a great job fostering an atmosphere of cooperation at Great Southern Land, both internally and with outside agents. In early 2015, Fletcher and three of his agents worked tirelessly to help one of their clients sell 6,477 acres in forty-five different tracts to thirteen different buyers in a single bid sale. Calvin Perryman, an ALC who works with Fletcher, explains why they believe in the team approach, saying “We often use a teamwork approach on special projects as well as everyday listings and appraisals. We believe having multiple opinions and ideas along with additional boots on the ground helps us better serve our clients.”

Each winter, nature demonstrates the power of teamwork when we see the V-shaped formations of geese as they fly south from Canada to warmer climates. The flock is able to survive by travelling great distances with maximum efficiency because of the cooperation of all the individuals. Each member of the flock benefits from the cooperative efforts of the group. This collaborative effort only works because each individual is clear on the objective, their responsibility, and they expend the effort to achieve the desired result.

There are many ingredients to creating a great team, but there are three essential elements that this article seeks to address. In order to form a great partnership, you must ACT like a team.

Agreement- “Can two walk together unless they are in agreement?” This question was posed by Amos, a shepherd turned prophet, that lived about 750 B.C. This question is still relevant millennia later. For a partnership to be effective, the partners must hold a common vision and agree on implementation of their strategy. The objectives must be clear so that everyone knows what they are working toward and how they will achieve the desired result.

Communication- Operation without communication leads to frustration. Sharing frequent updates, addressing problems jointly, and asking accountability questions helps ensure that the partnership stays on track. No member of the team should blindly assume that everyone has the most recent information or is acting on it. There will be hiccups in every partnership, but as a mentor often told me, “Communication covers a multitude of sins.” Receiving information makes people feel important and in the loop, so, be sure to share all that is appropriate with your teammate to increase the chances of mutual success.

Trust- The single most important ingredient to a well-functioning team is trust. Working with people that you know unquestionably have your best interest at heart frees you to focus on the challenge before you, and not on defending yourself from the people around you. Trust is very difficult to manufacture or bestow, and is generally built gradually and methodically through shared experiences. Trust breeds loyalty. Loyalty begets a willingness to work hard and take risks together. Working hard and taking calculated risks together is the formula most successful entrepreneurs use to achieve their goals.

RLI’s 2016 ALC-to-ALC Networking Award was recently presented to three ALCs from Hertz Real Estate Services in Iowa. ALCs Kirk Weih, Troy Louwagle, and Kyle Hansen teamed up to close a $12,263,100 transaction on 998 acres. This size and type of transaction requires that teammates have a lot of trust. Kyle’s advice for creating this type of success is, “Remember why you are working with another broker. It isn’t because they provide the highest referral or pay the best commission; it is because they can provide the best service to you and your client. We are in business to provide the best product and experience possible. To do that, you need to work with the best brokers possible. That’s why I like to work with Accredited Land Consultants and agents that I trust. That is what our clients deserve.”

A quick search in the “Book” category on Amazon.com for “Team” returns about 310,000 entries. With that much written on the topic, the best this article can hope to do is highlight a few essentials to creating positive teamwork for land brokers. There are dozens of free resources on teamwork available at the National Association of REALTORS® website. We face a challenge when we take a competitive vocation and ask individual agents to work together; however, good brokers know this is the formula for long term success.

“Our industry is unique in that it helps to have salespeople that are fiercely competitive, and yet be able to work well as a team. In many land brokerage companies, the agents are independent contractors and not traditional employees. In that type of relationship, you mandate only what is necessary and encourage your group as much as you can,” says Dave Milton, ALC and President of Southeastern Land Group. Dave adds, “For agents to succeed in this business, brokers have to do all you can to create an atmosphere of trust that leads to a strong team. The best way to help new agents launch their career is for them to team up with someone more experienced. Hiring the right kind of people is the best way to ensure buy-in from existing employees and protect the continuity of your team.”

A wise writer of antiquity once observed, “Two are better than one for they get a good return for their labor.” My hope is that by hearing other brokers involved with RLI share stories about the success they have had by teaming up, that you will find new ways to foster teamwork in your land brokerage business. “If you want to go fast, go alone. If you want to go far, go together.” Here’s wishing you all the best as you “Go together!”

This article originally appeared in the 2017 Summer Terra Firma Magazine, the official publication of the REALTORS® Land Institute.

Jonathan Goode, ALCAbout the author: Jonathan Goode, ALC, is an active member of the REALTORS® Land Institute. He is a Co-owner of Southeastern Land Group, LLC (SELG) and is the Responsible Broker for the company in Mississippi. He is passionate about helping people buy and sell land.