Jodie Heap, Business in Vancouver, April 23-29, 1996

If you rifle through as many prospective deals as Rudy Nielsen does in a given day, you've no doubt developed a pretty thorough selection system.

As owner and founder of Niho Land & Cattle Co. Ltd., Nielsen typically buys 140 rural and recreational properties in any given year. He admits that the system he uses isn't particularly sophisticated, but it's methodical and detailed to a fault, and us a good path to follow if you're new to investment in this area. Here's how it works.

The first step is finding the property. Nielsen uses a number of ways to research prospective investments. He tracks down realtors in BC who specialize in recreational and rural property and has them give him a list of what they've got available and also what might be coming up.

"I'm looking for their multiple and exclusive listings, but I'm especially looking for those listings that are in their hip pocket- ones they know about, but that are not on the market yet." Establishing good relationships with these realtors is crucial, he adds. " You need very good communication lines."

Nielsen subscribes to 36 newspapers around BC and routinely checks the listings in them. He also stops at "For Sale" signs when he's driving around the province. " I usually stop right there and use my cell phone to call the realtor or the owner."

The next stage is to spend hours sorting through the information he's gathered. "I look at my price range, and discard those that don't fall into it."

Once he's narrowed his selections to a handful of prospects, he does title searches "just to make sure the owners on paper are in fact the owners of the property," and then heads to his local map store. There he picks up a map showing the privately owned and government owned land in the province, as well as lakes, roads, and highways, to help him figure out exactly where the property is and what kind of water and road access is available. He also buys a contour map: "That shows me if the land is swampy, how high the hills are, and if the roads are steep."

The final map Nielsen consults is one which details forest inventory, so he can get a feel for potential timber value on his particular property. "This map shows me where the trails are and how big the trees are in the area."

Once he's gathered all of this information, he feels confident to formulate a price. "I get a gut feeling about it," he adds.

When instinct fails, he'll phone realtors or other people he knows in the area to get a feel for prices there. "At that point, I make an offer that is subject to viewing."

Then he climbs in his truck and heads off to the site. A longtime outdoorsman who's spent many evenings camped out, Nielsen will walk through the property, painstakingly noting the most minute details. One 160-acre parcel- the size of 121 football fields- usually takes him about three hours to cover.

"I look for hidden things," he says. "Most properties were deeded in the late 1800's and early 1900's as homesteads, so I look for an old cabin or field. I also look at the timber value for both hardwood and softwood and at the potential value in peat moss and gravel." To help him assess the value of these materials, Nielsen will often bring in local sawmill or gravel company representatives to give him their opinions.

He also looks for "liabilities". If somebody has logged the property in the past, he looks for evidence that they've dumped oil on the site. "As the new owner, I'd be responsible for cleaning that up," he explains. "I also look for old slash piles or sawmill sites which could be fire hazards."

As well, Nielsen visits the local assessment office and looks up the assessed value of the property. He'll also spend a few minutes with the assessor to find out what he can.

Another important feature Nielsen looks for is water. "Lakefront lots are going to go up dramatically in value, because there are going to be fewer of them built," he says.

When he's ready to buy, the final step is financing. While it's not likely a problem for Nielsen, he warns that prospective buyers of rural and recreational property may hit a stumbling block at this point.

"It's very difficult to get financing from banks for recreational property," he says. "If you can't use your own cash, you could try to get the vendor to carry the mortgage or form a syndication to bring in partners."

(Nielsen's company offers financing for the property it sells in 5 or 10-year terms. The interest rate is 12 percent providing that the investor makes a 25 percent down payment.)

He prefers to invest in the Vancouver-Williams Lake stretch as opposed to the Gulf Islands "[Property on these islands] has gotten so expensive in the past four or five years," he notes.