"Our small, early-stage company recently signed up for your service. We got numerous inquiries, several of which we are pursuing, and hopefully will find an investor partner as a result. It is almost impossible for young companies to attract investment capital in the current financial climate, but you managed to bring a number of qualified and interested parties to the table. I would recommend your service to any early-stage company seeking capital.
Bruce Jones, CFO
Posted on March 27, 2019 @ 12:45:00 PM by Paul Meagher
One question left unanswered in part 1 and part 2 of this series, was what exactly does "remote" mean? One interpretation would be "far away from other people"? Which leads to the question of how far away does land have to be from other people to be considered "remote"?
What I consider to be remote is likely nowhere close to what someone living in high northern areas of the US and Canada would consider remote. The distance from my remote property to the nearest full time resident (2 km) would be considered a short hop for people living in sparsely populated areas of the high north. Lola Sheppard and Mason White have compiled alot of useful and beautifully illustrated information about remote northern living in
Many Norths: Spatial Practice in a Polar Territory (2017). There are many cutoff lines that can be used to define where the north begins depending on what criterion or indicator is used to define north. You can use physical indicators such as the tree line, the permafrost line, the line where ice stays year round, or the line where the ice roads end. You can also use economic, military, political and architectural criteria to define different lines that define where the north begins. Lola and Shepard identify at least 10 ways of indexing north.
The lines corresponding to these different ways of indexing north can be found on this map.
It would be interesting to study the price of remote land at these various cutoff lines to see if these boundaries also have an effect on the price of land. As these northern areas begin to heat up due to global warning perhaps they will be viewed as more attractive places to live, while land in southern areas will become correspondingly less attractive? How quickly, if ever, might that happen?
The type of remote land I am principally interested in, however, is land that was formerly inhabited but which people left because they could not make money to support modern needs, they were too far from markets to buy and sell goods, their access to the world was too difficult (up and down long steep hills) relative to people in other areas (traveling over relatively flat terrain), and where young people left and never returned. There was a time when people lived there and perhaps there will be a time again when people will want to live there to grow their own food, cut wood for heat, put up solar collectors and wind turbines for hot water and electricity, and be as self-sufficient as they can be like they were 100+ years ago.
I do think we need to realistically prep for a future that could be very different than the one we experience today because of climate change, peaking supplies of energy/materials, and growing populations. How can we do that? One way might be by investing in remote land not simply because it may be a good financial investment, but to have a place where you might grow food, collect wood, and survive if things get worse in the next ten years. Getting back to previously inhabited lands may be one strategy that will be important in adapting to the future as outlined in The Future is Rural: Food System Adaptations to the Great Simplification by Jason Bradford (Feb 19, 2019).
Permaculture co-founder David Holmgren has done some important future scenarios work that those of us thinking about a New Green Deal should keep in mind. Most versions of the New Green Deal envision a future where we will scale up our renewable energy economy, make our buildings more efficient, invest in public transit and many other measures to mitigate the effects of climate change - a "Green tech" future. There are other scenarios, however, that we need to consider, such as the "lifeboats" scenario where we are too late and need to start getting ready for what is to come. If you believe in this more pessimistic scenario, then some of the New Green Deal actions we should be doing today to prepare for the future are quite different than if you think there is time to turn this ship around. David provides a nice overview of his future scenarios work in this video:
It is important to note that David believes there is alot that can be done to Retrofit Suburbia in order to adapt to future scenarios and he may not agree with my assessment that we may have to move further afield to adapt. David's free Feeding Retrosuburia Ebook offers some more recent discussion of his future scenarios work.
In this blog on remote land investing I have stepped back to consider what "remote" really means and some of the macro forces at play in the world and how remote land investing might fit in. In a rosy "green tech saves the day" scenario remote land investing may not be a particularly good investment or that important to consider. In a less rosy "lifeboats" scenario, we might want to reflect whether we will need to start moving back to rural areas, areas we may have abandoned, and way up north.
Posted on March 13, 2019 @ 08:02:00 PM by Paul Meagher
In my last blog on remote land investing I discussed some of the factors that drove me and my wife to purchase a remote 9 acre lot. That investment, however, is only a small part of the remote land investing me and my wife did within the last 8 months. We also purchased some nearby lowbush blueberry fields, forested land, and wetlands on the other side of the road from the recently purchased 9 acre parcel.
The decision to purchase the first wild blueberry field was driven by different factors than the 9 acre parcel:
My main farming enterprise was focused on making grape-based wine but it was proving to be a long hard slog to get the 2 acres of production required to apply for a mini-winery license. The prospects for selling grape wine from the farm were too far into the future with alot of unpaid work in between. I'm not getting any younger and can't afford to keep doing farming for exercise. What to do? It is hard to fully pivot from 1.70 acres of planted grapes vines even if you are making unsaleable wine from them every year.
Where the wild blueberry fields are located is near a place where a good buddy of mine has a cabin. I grew up in a nearby village so I've been traveling these remote back roads since my childhood. My buddy took me up to the upper blueberry field where he likes to watch the sunset. Wow!
Local wild blueberry prices have been in the toilet for the last few years. Many blueberry growers are not harvesting/maintaining their fields and are selling unique agricultural land cheaper that it might otherwise sell for. I was offered a deal I couldn't refuse to acquire the largest parcel.
Before we started acquiring more land last year our farm was 61 acres in size. It is now around 190 acres in size. A 3x scaling. What growing the acreage of the farm does for me is give me hope that the farm has a plausible chance of breaking even in the near future. The 14 acres of wild blueberries on it gives me that hope. This allows me to apply for a non-grape winery license because I have more than 2 acres of non-grape crop in production. I intend to make the argument that my grape berries are for blending and can also be used to make my wine. I have 30 carboys of wine brewing from last year's harvest. I am trying to determine which blueberry/grape blends might be the ones to scale up in next year's wine making.
The point of telling my personal investment story is to make the idea of remote land investing more complex and textured. It is not just about dollars and cents. In my case it resolved the issue of making a necessary pivot away from grape-based winemaking while not totally walking away from a sunk investment. The peace of mind that resolution gave me was priceless. I don't have to declare the farm startup a failure just yet. The sales taxes we spent to acquire the land will be coming back to the farm because it is "losing money" so that will help when tax season comes this year. Finally, I do think the price of lowbush blueberries will go up again and people will begin paying more for land with this incredible agricultural resource on it. Real estate prices in the nearby rural villages and towns are going up and could spread into the more remote areas we now own. My strategy for most of the acreage is to hold and improve and see what happens. I do want to dabble in developing some permaculture inspired vacant lots for sale.
Here is a video of the blueberries used to make my 2018 vintage blueberry wines. A light phenomenon known as golden hour appears to kick in at the end of this video.
Black bears (Ursus americanus) also like wild lowbush blueberries (Vaccinium angustifolium) and may be a significant source of manure in the fields. I was in my truck when I encountered this black bear. This photo was from 2013 and was the last time I saw a black bear. I do see fresh scat in the blueberry fields so they are around. I intend to continue sharing the blueberry bounty with my wildlife neighbors.
Below are a couple of videos by the Pretty Archie band that I've been keeping my eye on. I had a chance to see them performing recently. Great show. I'm listening to alot of their music lately. Poor Boy is a bluegrassy song about having no money and the joy of drinking homemade wine with your girl. Also the pain of losing your girl because of the homemade wine.
Hardwood Floors is another song from the same recording session that is also worth a listen.
This was the book that made me a fan of Joel Salatin. The book is an agricultural classic and often recommended to farmers, but I would recommend it to any entrepreneur.
A few years ago I read a library copy of this book and was inspired to write a blog called Dealing with Gate Keepers. The book discussses the creative ideas, arguments and maneuvers that Joel used to navigate around some of the costly demands of different gate keepers. Joel's farm, Polyface Farm, is a very successful and innovative enterprise so he had more victories than defeats in his dealings with gate keepers. His hard won battles offer lessons that might be useful to entrepreneurs getting bogged down in costly regulations.
This is a great passage from the book that I recalled from my first reading of it:
Some might ask, "Why don't you just put in the infrastructure and comply with the requirements?"...
Here's the answer, and it deals with the whole issue of innovation. All new things start small. Mighty oak trees begin from a tiny acorn, not 20-foot baby trees. Humans are born as babies, not teenagers. Innovation demands a prototype first, and a prototype must be as small as
How do I know if I have a cheese that people will want unless I can experiment with a few pounds and try to sell some to folks? How do I know I have a decent ice cream until I make some and sell it to taste testers? Innovation demands embryonic births. The problem is that complying with all these codes requires that even the prototype must be too big to be birthed. In reality, then, what we have are still-birth dreams because the mandated accoutrements are too big. p. 18
For those who would like to listen to the author discuss the book, this interview is the only extended discussion that I can find.
Posted on March 1, 2019 @ 07:50:00 PM by Paul Meagher
This week me and my wife finalized the purchase of 9 acres of remote vacant land. Here is an aerial photo of the parcel we purchased.
You can generally purchase remote vacant land much more cheaply than land in suburban areas, unless the land has valuable agricultural/forestry resources on it, has particularly nice views or is improved in significant ways.
One question you might ask about vacant land is how much it might appreciate without doing anything to improve it. We purchased the land for $9,000 but it came to $11,390 after sales taxes and lawyers fees. I will be able to claim the sales tax back ($1,350) as part of our registered farm partnership so an accurate final acquisition cost is $11,390 - $1350 = $10,040.
Let us assume that 5 years later I was able to sell the land for $15,000. The sales taxes I collect on that amount are irrelevant to calculating my rate of return as I have to return the collected taxes to the government. I would, however, have to deduct my lawyers fees from $15,000 to calculate my rate of return. Over a 5 year period I assume the lawyers fees would rise from $1,040 to $1,400 so the final amount I might make from this transaction is $15,000 - $1,400 = $13,600. Obviously, lawyers fees can play an important role in determining the amount of profit you make on a transaction this small.
Finally, let us assume that land taxes are $100 a year so over 5 years that amounts to $500 to hold onto the property. To compute my rate of return I need to subtract the land taxes as well: $13,600 - $500 = $13,100. An important thing to note is that as soon as you start improving your land your land taxes may go up, especially if you add a building to it. This is why some remote land investors specifically look for vacant land to invest in.
So $13,100 - $10,040 = $3,060 is the overall profit in a passive investment scenario (ignoring sales broker costs if you can do a private sale like I did to purchase this property). If we divide $3,060 by the 5 years we held the land that amounts to $612 per year in profit. If we divide $612 by the original investment of $10,040 that amounts to a 6 percent annual return on our original investment amount. Not great perhaps, but better than putting it in a savings account earning very little interest. If you don't get the profit you are looking for, maybe you will have to hold it a bit longer in the hopes that you will get the return you want.
If you leave vacant land alone it may appreciate or depreciate in value. If it was an open field, and it grows up in alders and low value wood, perhaps the land value will depreciate. If the land was a growing forest, then after 5 years of holding it may have marketable wood that can be used or sold by the new land owner. Maybe that takes 8 years to happen. Often it will be real estate values in nearby areas that are more populated, and the scarcity of available land to meed demand, that will have the most impact on the price you can ask.
My intention is not to hold this particular piece of property as a passive investment but before spending money to improve the land it might be worth trying to estimate its value as a passive investment so you can decide if your improvements are going to generate a significantly higher return or whether you are just spending alot of time and money for very little gain. There is risk in developing vacant land because there may be a good reason why it is vacant. In this case, road access in the winter is very challenging as snow plows don't service this road in winter unless the only person who lives on this road is staying in his cabin. He takes off after xmas. There used to be many more people living in this area 100 years ago but it was too remote for them so they gradually moved away.
On the other hand, we aren't making any more land, there are some spectacular views around here (i.e., view of lake on one side, ocean on the other), real estate values are increasing substantially in nearby rural towns, and people may want to get back to the land and enjoy greater privacy and freedom during warmer parts of the year. Maybe 3 acre lots could each be sold for $15,000+ a piece if they were surveyed, deeded and moderately improved?
The key to this particular land investment for me was that the path of the power line runs through the length of the property next to the road. Delivery of electricity to potential lots could be provided relatively cheaply. Access to electric power in remote vacant land can be expensive to get and you might need to explore some off-grid option to provide power. Here the power lines run along the road and are physically on the property. Another consideration is that we have already invested in farm equipment that can be deployed to help improve the land (e.g., tractor, bush hog, plow, rototiller, chain saw, brush cutter saw, wagon, etc..). Frankly the farming hasn't been much of a revenue generator for us so far which is ok because losses from the farm enterprise can be used to offset income in other areas to reduce income taxes. It is my hope that one way to get the farm to be financially sustainable will be to make improvements on this vacant land so people can live there. Last year we purchased the wild blueberry fields on the other side of the road. I hope to be able to spend time on this remote site managing wild lowbush blueberries and improving this 9 acre lot. That is my definition of a vacation.
One approach to land development on remote vacant land is to use Permaculture ideas and techniques. For example, sector mapping
involves figuring out how various energies move through your landscape: the path of the sun in summer and winter, the prevailing wind
directions in summer and winter, how water flows, how wildlife enters and leaves, where the fire danger is highest, where your vistas are located, etc. The idea is that mapping these flows so you understand them better will help you to optimize any design you eventually impose upon the landscape.
On Youtube, Oregon State University ECampus regularly publishes Permaculture videos as part of their online and offline Permaculture Design curriculum. In this video, Andrew Millison offers a great instructional video on how understanding the slope of your landscape can be used in the design of energy efficient and agriculturally productive settlements.
Hope this blog provides some insight into some of the challenges of remote vacant land investing. This type of real estate investing is not talked about as much as other types but it could be a good way to get people back on the land again. It can be a good investment under the right circumstances. Spending time in remote landscapes also helps to improve physical and mental health and gives you a sense of privacy and freedom that is hard to put a price tag on.
Notice: The Illinois Investment Network is owned by
Dealfow Solutions Ltd. The Illinois Investment Network is part
of a network of sites, the Dealflow Investment Network, that provides a platform
for startups and existing businesses to connect with a combined pool of potential
funders. Dealflow Solutions Ltd. is not a registered broker or dealer and
does not offer investment advice or advice on the raising of capital. The
Illinois Investment Network does not provide direct funding or make any
recommendations or suggestions to an investor to invest in a particular company.
Nothing on this website should be construed as an offer to sell, a solicitation of an
offer to buy, or a recommendation for any security by Dealflow Solutons Ltd.
or any third party. Dealflow Solutions Ltd. does not take part in the negotiations
or execution of any transaction or deal.
The Illinois Investment Network does not purchase, sell, negotiate,
execute, take possession or is compensated by securities in any way, or at any time,
nor is it permitted through our platform. We are not an equity crowdfunding platform
or portal. Entrepreneurs and Accredited Investors who wish to use the Illinois Investment Network
are hereby warned that engaging in private fundraising and funding activities can expose you to
a high risk of fraud, monetary loss, and regulatory scrutiny and to proceed with caution
and professional guidance at all times.