Jurock Real Estate Investor, August / September 1993

To some people, "recreation" is a $400,000 home or a "basic" $230,000 condo in Whistler. To others, it's a vacant piece of wilderness land near Alaska. One man's nightingale is another's owl.

Whatever the vision, many people have given up looking for their own escape places. Properties seem too expensive or they don't want to buy into a co-op purchase of a large acreage where they may never see a return on (or even use of) the land.

In the following, and courtesy of the hard working hard drives of the very active but low-keyed family owned NIHO Land & Cattle Company, we'll try to make the point that with research, patience, and analysis, there are hundreds of affordable properties located throughout BC. And while we focus this month on vacant, unimproved rural land, in a future issue we'll examine improved recreational properties.

Based in exciting Burnaby, NIHO Land has its eye on the title, topographic break-out, price history and whatever of every property title in British Columbia. (It's also one of the largest recreational property owners in BC. NIHO's portfolio includes more than 280 titles, 65,000 plus feet of ocean frontage, 96,000 feet of lake frontage, 60,000 feet of river and a slew of islands, parklands, ocean-front peninsulas and whatever.) NIHO's nine gigabytes (and growing) computer system can access 64 basic layers of information (and another 16 optional layers), cross-match, compare, analyze and essential give you a god's eye view of every square inch of ground in this province. Large or small, urban or deep in the boonies, all of British Columbia's 234,198,167 acres and 1.3 million properties (of which 350,000 are classified as recreational) are in the bank.

(Want to know how many Alberta-registered people own waterfront on Bowen Island? Or how many of Kitsilano's 10,800 property titles are registered to Hong Kong addresses? Answers: 11 and 32 respectively)

But while few are keyed, many are calling. Under the seeming calm surface, there's a boil of sales activity out there as the need to get away becomes mentally de rigueur for baby boomers. NIHO president Rudy Nielsen also believes, heck he knows the action is far bigger than most people (and the media) believe. He also believes that most realtors ( hey, they're people too) are equally unaware of what's going on; many of the deals and wheels are done directly between buyers and sellers without bothering with a middleman…sorry, middleperson…they never make the MLS sheets. Or as Nielsen puts is: "The average realtor guy is out of the picture." But the silicon knows.

The chip has flagged everything from a 158 acre riverfront plot on the trout heavy Barrier River 40 miles south of Kamloops (price $75,000) to cheap ($1,500 and up) homesite lots scattered throughout the province. For $118,000 you can board Battleship Island, a 33.5 acre retreat in Stuart Lake, eight miles northwest of Fort St. James. Put our finger down 60 miles east of Terrace and you're on a 60 acre riverfront piece set amid the snowcapped Hazelton Mountain Range and rumored to have a hand-hewn log cabin hidden among the aspen and birch. But before we get into trends and figures, first of all a backgrounder (pun intended).

SO YOU THINK THERE'S LOTS OF LAND? HA!

British Columbia is darn big. Total area: 234,198,167 acres. But what God created, man categorizes. But for all the space, there's surprisingly little available for private purchase. Of these 234 million acres, the federal government controls 2,276,743 acres or about one percent of the total area. Victoria oversees another 231,406,475 acres or about 91.1 percent of the province. Lake and water area covers 4,465,036 acres or 1.9 percent. A mere six percent or 14,049,913 acres is held under private title.

Area	Acres	%
Forest	106,905,366	45.6
Uncatagorized	79,617,406	34.0
Grazing	20,979,990	9.0
Recreation	14,451,761	6.2
Agriculture	5,854,276	2.5
Water	4,465,036	1.9
Settlement	1.356,560	0.6
Other	567,768	0.2
Total	234,298,167

To the carbon-monoxide choked boomers and the grey brigade, this six per cent is the solution. Finding it ahead of everyone else, however, is the problem.

Huge, seemingly vacant are surprisingly unavailable. For instance, the vast north and mid coast area (from the north tip of Vancouver Island to the Alaska border, including all islands and the Queen Charlottes) has a gross area of approximately 26.1 million acres held under more than 3,000 titles. Factor out the Crown-granted-land, residential titles of less than 10 acres, titles held by non-market owners (federal/provincial/regional governments, MacMillan Blodel, Crown Forest Industries and their ilk), the small properties (less than 40 acres) and you have 54,233 acres held under 355 titles.

Of these 355 large acreage private lands, 58 titles of 20,830 acres total ( 38 percent of the above 54,233 acres) are held by six owners: Alcan Co. of Canada; BC Packers; Jim Patterson Industries (& Canadian Fishing Co); Moss Management Inc.; NIHO Land & Cattle Co. Ltd. (natch); property mogul Peter Eisenmann. Most, if not all, are long term holders and (sorry) are not about to unload their land for cheap.

Which leaves 297 titles covering 33,403 acres. Many of these are non-waterfront. This includes all interior properties of the Queen Charlotte Islands and the Hagensborg Valley. Lovely in their own right, but still landlocked.

Final initial estimate of large potentially available oceanfront acreage on the entire mid and north coast…fewer than 200 properties. The obvious point: appearances are deceptive. Once run through the silicon, those huge, seemingly open, willing and waiting tracts aren't as available as you may think.

LAND RUSH, 1990s STYLE

Nielsen feels the rush to become rustic started in the mid-1960s, resurged in the 1970s under the influence of the 'go back to the land' movement. It's now roaring again. Says Nielsen: "1993 is the hottest year I've ever seen"

Over the last five years there have been more than 128,000 single-transaction sales of unadorned, unimproved single-transaction rural land. According to the cold computer readout (see charts), the volume is increasing mightily. Since 1988 the investment level has riser 144 per cent with annual dollar values growing from $171 million (1988) to $418 million (1992).

It's also being done quietly. Much of the activity is sparked by "tiny ads" garnering large responses. According to Nielsen, most of it is seemingly being done for locals by locals.

According to NIHO's data, it appears foreign investors make up only a small percentage of the actual transactions, although they have been involved in some very large deals. American and Europeans (Swiss and Germans, mostly) are the principal foreign players.

Of course, there is a caveat; if a property is purchased or sold through a BC law agent, the address is seemingly that of a BC owner. Unless one does a deeper search into the individual or corporate entity behind the lawyer's filing cabinet, it's hard to say who really owns what.

For example, under the aegis of Coquihalla Development Corp., Nielsen says a "Taiwan guy and his two sons" is busily buying up the Merritt area ranches. Nielsen says Coquihalla Development (listed president/chairman: Liou Jieh-Jow) and its sister companies have 1,121 properties (and counting) and has just picked up the 1,004 acre Nicola Ranch. (Nielsen also believes that the whole area is becoming "too popular" as rural prices is rising fast.)

Closer to home, literally, Nielsen says areas within a day's drive of Vancouver and Victoria are understandably heating up fast. Because properties on the southern Gulf Islands are becoming rare (even as the ferry waits grow longer), most rural seekers are looking inwards. Aside from the Coquihalla Highway's gift to Merritt, areas such as the Tulameen area north-west of Princeton attract lots of attention. Perhaps too much attention. For instance, in winter the "old-fashioned friendly" town of Tulameen and its Otter Lake environs has perhaps 500 residents. As the Okanagan fills up with fleeing Lower Mainlanders, the original inhabitants are packing up and ripple out farther east into the "real nice areas" around the Kootenays. Little towns such as Grand Forks and Salmon Arm are already beginning to feel it. Three years ago, $8,000 got you a good lot in Grand Forks. Today you need three or four times a month.

Near or far, dear or cheap, unimproved land is the draw. Perhaps because it naturally commands a premium, most people aren't seeking (or don't expect to find) waterfront or river-front land. The dream of a 160 acre lakefront parcel complete with cabins and pines (and within a commuting distance) is the ideal. The impossible ideal. While a creek or pond is nice, Nielsen says many will settle for "something with trees on it" and unadorned solitude. "Everybody is looking for raw land. They don't want a cabin. They want to build their own." Factor out the big investors and Nielsen categorizes the rest as:

Near and Actual Retirees: Fifty years old and over, these middle middle-class types are "looking for something cheap." Their major assets are their urban or suburban homes and a pension. Their retirement plan: sell the expensive Lower Mainland or Victoria home, take part of the proceeds and buy or build a more affordable place in among the trees and then invest the rest to augment their pension income. If they're not planning on retiring immediately, they often settle for a weekend cabin with the plan to upgrade it into a proper home when the time comes.

Rat Race Escapees: City living has soured, the suburbs are crowded and soulless for these youngish and usually double-income professionals. The plan: find the money to buy a small resort, bed and breakfast or other manageable rural business and head for the hills. Sure, one partner may keep his or her regular job to keep the new venture afloat, but that's what dreams are made of. Nielsen knows of one Toronto executive who now lives and works beside Kootenay Lake. From Monday to Thursday he stays linked to Hogtown via the fax, phone and modem. Thursday night (if necessary) he takes the red-eye to Toronto for all previously scheduled face-to-face meetings. And then it's back to the hearth and lake trout.

"Kookheads": Although he's a born outdoorsman and able to wield a creel and a keyboard with equal aplomb, Nielsen says some people feverishly believe the whole system is going to go to hell, and soon. A few years ago, it was The Bomb that kept them awake. Now, it's the impending economic/social/whatever collapse. They want a remote, secure place where they can grow spuds and smugly watch the flames. Still, their money is as good as anyone's

Natural Types: These benign folks buy rural land for the satisfaction of knowing that somewhere, someplace, there will always be a patch of ground where trees and wee beasties are safe.

Of course, it works both ways. Even if you can't escape too often, just knowing that you own a leafy refuge is balm for stress-racked souls. As Nielsen puts it: "When in trouble, you go off, sit by the fire, you plant potatoes and shoot a moose."

Before you begin searching, define yourself. If skiing is your icon. And Whistler is it, you'll fork over the bucks (a single-family lot in Whistler commands between $160,000 to $300,000). Why not consider - in the words of NRS Vice President Art Meyers- "God's Little Big Mountain" on Vancouver Island at Mount Washington? A single family lot sells for $65,000 and new condos sell for $110,000 and up. And yes, there is a new quad chair and the road is paved to the foot of the mountain.

If nature isn't complete without several French and Italian restaurants nearby, you're not into "recreation" but "recreating" Vancouver. Or as Royal LePage Vice President (Marketing) Gary Morris puts it: "I can't understand these people wanting to be within half an hour of Vancouver and spending an arm and a leg [for it]. My family, my dad and several others have had lakefront property at Canim Lake near 100 Mile House for several years now. We get a true sense of getting away from it all, without going broke."

According to Morris, a 110 by 300 recreational building lot on this lake goes for as low as $25,000.

Despite NIHO's computer system and contacts, Nielsen looks inside while checking out new investment prospects. "It's a 'gut and heat' feeling when I'm looking at a piece of property. I look at it and know what the price should be." He also looks for ghosts.

A "rustic old homestead setting" (i.e. collapsed cabin, defunct barn, fence post) means that the property has been been settled before. If the remnants are there, so are all the original reasons for the pioneer choice are still there too: water, location, whatever. The site is likely a good one.

Next, check out the surroundings. Visual beauty: snow-capped mountains, forests, views and wildlife. Things that appeal to the heart. If you feel good being in a place, someone else will feel the same way later on. And they'll pay for it.

The right setting is often more important than the per-acre price. A small parcel on, say a knoll with a view and next to a creek (with fish) will be worth more than a big chunk of dull.

(Then again, Nielsen believes every piece of recreational land has a use and potential buyer, even the swampiest mudhole could appeal to perhaps an ardent moose hunter or duck watcher. But as an investor, always think of the widest appeal.)

By nature, recreational land isn't neat and tidy. Unless you physically walk it out, quite often you don't know what you're getting into, or even getting.

It's crucial to make sure you know exactly where the boundaries and corner posts are placed. Smiles Nielsen: "A lot of people have gone out and though they looked at the property and didn't find the right one. They bought the piece next door and didn't buy the one they should have bought."

To put your foot on the right ground, first get a map of the area and the legal description. Phone Victoria and ask for the Survey General Branch of the Ministry of Crown Lands. Ask for a copy of the original survey notes and, says Nielsen, "you're home free." Taken by the original oldtime surveyor (all Crown grants were marked out between 1896 and 1930), they tell you exactly what you're looking at. It's also rather "romantic and neat" to literally follow in the footsteps of history.

If the vendor doesn't have an aerial photo of the parcel, again, contact the Ministry. When used with a contour map, an air photo can tell you a lot about the lay of the land, logged areas, road access, topography and vegetation.

Further to vegetation, get to know your trees and shrubs; they can tell you a lot about what's below. For instance, cottonwood trees thrive in wet, porous or gravelly soil. Willows and devil's club also like it soggy. Jack pine and fir prefer sandy, dry soil. Says Nielsen: "When settlers first came up, the tree was basically the enemy; today the tree is a friend."

Check to make sure that wonderful riverside plot isn't part of a floodplain and therefore unsuitable (or illegal) to build upon.

LAND HO! TRENDS AND TOTALS

The following information is unique. It also comes courtesy of NIHO Land and Dean Nielsen who spent many hours coaxing the computer into releasing the trends. At our request, he distilled literally tens of thousands of regional titles and dollar figures to provide, for the first time ever, an accurate snapshot of just where the boom in rural land is heading.

Bear in mind the 1993 sales figures are still coming in and haven't been included in the following. The computer was also told to focus in single-transaction, unimproved rural land. If the plot has a sellable building or was part of a multiple sale, it was eliminated from the run.

North and Mid coast: Queen Charlottes, Bella Coola, Prince Rupert,  Alice Arm

The farther you go, the cheaper it gets. Up here in God's backdoor, the number of sales is about a twentieth of the comparative super unnatural southwestern BC and the dollar volume a mere fiftieth. The growth has bee steady, but slow. Blame it on perceived distance from the main urban areas. But perceptions can be deceptive. Speaking from decades of experience, Nielsen says this, " the most gorgeous area in BC.", is imminently accessible by, say, an inexpensive floatplane from Port Hardy on Vancouver Island. Assuming you can find an available chunk, there are some unique buys. For instance: Five years ago the owner of a waterfront chunk on the west coast of Calvert Island (just off the mainland directly north of Port Hardy) wanted about $200,000 for the 211 acres. The site had no road access and no hope of ever getting one. He was finally offered around $100,000 but spurned it. The deal died.

That same piece has now been sold to Columbia Fishing Resort Ltd. Price: around $850,000. Two years ago NIHO finally removed its 200-acre waterfront parcel on Desolation Sound from the market. Priced at $195,000 no one wanted it. And then along came a forestry company wishing to heli-log a 15-acre piece of it "right at the top, you'll never notice it."
NIHO said okay and netted more than $200,000 for the timber. Meanwhile, the land itself is now "unofficially" back on the market. Asking price: around $500,000.

Other possibilities include 120 acres of oceanfront for $79,000, a 109-acre private island for $295,000 right down to a 2.4-acre parcel (with 274 feet of oceanfront) right to the mouth of the Skeena River for $19,000.

Northern BC: Prince George, Omineca, Peace River

In 1992 the area activity has almost doubled with dollar and sales volume just about triple of five years ago.
Central BC: Caribou, Chilcotin, Kamloops,Merritt

The rural boom began in earnest about three years ago. For that, credit the relatively easy access created by the acceptance of the Coquihalla Connector and the hordes of urban types escaping for weekend holidays. Volumes have quadrupled over the last five years.

Southeastern BC: Okanagan, West & East Kootenays

Even more telling: the median prices have come close to doubling over the last five years. A definite sign of solid appreciation across the board.

Southwestern BC: Fraser Valley, Lower Coast, Vancouver Island, Gulf Islands

Again, the median prices have almost doubles since 1998, the biggest upward dollar bounce being in the last two years. Proximity to the saturated and stressed out Lower Mainland and Victoria areas will only keep the heat on. Later or sooner. However, the market will crystallize well beyond the affordable.

PUTTING DOWN $TAKES: WHERE TO INVEST

In terms of five-year annual growth and pure sales volume, southeastern and central BC are the top performers. Southwestern BC is posting the highest dollar values, but the volume increase on a percentage basis is well behind the other regions. Where NIHO buys in bulk, smallest investors can pick up small lots for cheap. For instance, BC is riddled with old ghost towns and vanished towns that still have active, registered lots. For between $1,500 and $4,000 you get a personal camping area(average size: about 25 by 120 feet) in some very scenic and historic areas. For instance, the old gold mining townsite of Sheep Creek 24 miles south Nelson or at Boundary Creek south of Greenwood in south central BC.

As the regular camping grounds and parks become seasonally crowded, Nielsen thinks the Gulf Islands "up north" around Campbell River are good buys, although prices are becoming a titch steep. In the Interior, he likes the Kootenays and areas around little towns such as Kaslo and New Denver.

Assuming it has the visual appeal and reasonable access, anything beyond an easy drive of Vancouver or Victoria are good long term bets for affordable with good profit potential. This is especially true for those people able to get away for a week or so at a time.

If it's for a weekend getaway, expect to pay more for something smaller closer in. If you've got the time and want the space, land north of 70-Mile House and Green Lake are worth looking at. Says Nielsen: "There are lots of deals up there."

FINAL WORD

It's hard to say how long the window of investment will stay open (Nielsen expects it to stay heated for another two years) AS with anything, the early arrivals will get the deals. (The slow and/or greedy can risk getting done.) If you buy in the expectation of making a quick killing, you could be buying into a myth…and a lot of future woe.

By nature (pun intended), recreational land should be a thing of beauty. Like a piece of art, it should be bought to be enjoyed. If it appreciates, well, that's okay, that's very okay. First and foremost however, buy something that you can both afford and enjoy for itself. Overextend yourself or coldly buy a "good buy" and then hang on expecting an unrealistically high return, well, you're asking for problems. After all, reality and real estate should have something more in common than simple phonetics.

Be it recreational, residential, commercial or whatever, the landscape is littered with the bodies of those who put greed ahead of common sense, Nielsen himself knows a couple of people who overextended themselves on recreational land and then finally bit the dirt when the market dipped. They have and they held, until debt did them part.

Jurock's Publishing has no present or future financial and/or personal interest in any of the properties mentioned above. As well, we thoroughly recommend that, should you think to buy, research comparable prices and personally visit the property in question. Just because something is cheap, it may not represent value.

Land values must be independently verified and researched. Check access, water availability and so forth. "Waterfront" on the edge of a 300-foot cliff overlooking a swamp, inaccessible beaches and 1,000 acre parcels buried under a glacier aren't anyone's idea of sound buys.