Wellson Group, Inc. receives questions everyday regarding what factors influence the market values of recreational properties. Two properties may appear to be very similar and comparable but after further investigation it often becomes apparent they are unlike and therefore carry different market values.
Factors That Influence Recreational Property
Market Values
Location:
Recreational properties located near metropolitan and popular recreational areas are highly sought after and therefore carry higher market values than properties located in remote areas. However, as the demand for recreational properties increases, and the supply near metropolitan and popular recreational areas diminishes, remote recreational property market values will appreciate.
Access:
Recreational property accessibility is extremely important when determining the market value of a property. Recreational properties are accessed in the following ways:
By Public Road:
This is the best form of access. The property is accessed directly from a maintained road.
Through Public Land:
The property is accessed via logging road, ATV trail or walking trail. Vehicle’s may or may not be
able to access the property depending on road conditions and legal issues. An easement or
license would have to be granted by the proper governing authority to gain the legal right to
access the property. Lenders often require a property buyer to obtain legal access in order to
secure a loan.
Through Private Land:
An easement or permit is needed to cross private land. If an easement or permit will not be granted
by a private party, a cartway permit can be filed with the proper governing authority. A cartway is
an administrative process by which the governing bodies of a township determine how a property
shall be accessed. There are time and legal issues associated with this process and we
recommend you consult a lawyer prior to purchasing property that is only accessible through
private land.
Waterfront:
There is a huge demand for property that contains lakeshore, river frontage or lake access. Waterfront property is very expensive relative to property that does not contain lakeshore, lake access or river frontage. Waterfront market values are further influenced by factors such as lake zoning class, lakeshore and lot size requirements to build, water clarity, species of fish available and exclusivity of the property. Click here to access information from the DNR’s Lake Finder page.
Land Composition:
The land composition of property is very important in determining market value. Properties with an abundance of high ground provide good building sites, while properties that are composed of low ground and/or swamp may provide no building sites but can provide exceptional recreational opportunities.
Timber:
Timber carries both scenic and commercial value. Timber has become a valuable investment in recent years due to increased demand for paper, lumber and firewood. Properties that contain marketable timber are much more valuable than properties that have been recently logged or contain no marketable timber. Timber management, through selective harvesting, also enhances property value by creating timber diversity; which is important for wildlife habitat development. Click here for more information on our Timber Consulting Services.
Building Potential:
Building is possible on most recreational properties. However, it may not be possible to build on some properties due to access issues, land composition, and/or land use restrictions.
Property Boundaries:
Due to their relatively remote locations, most recreational properties do not have marked or surveyed property boundaries. A survey is needed to determine the exact property boundaries. Wellson Group uses state of the art GIS mapping and GPS systems to locate general property boundaries for our clients.
Utilities:
The availability of utilities such as water, electricity and gas are important factors in determining property value. Utility availability is usually associated with the location of the property relative to public roads.
Taxes:
The county assessor’s office determines taxes based on multiple factors that include: recent comparable sales, appraised value, and the property’s tax use classification. Specific tax information regarding a property can be obtained by contacting Wellson Group or by visiting the proper county website.
Sustainable Forest Initiative Act (SFIA):
This is a tax incentive program run by the Minnesota Department of Revenue. It pays land owners a yearly tax rebate per acre to practice sustainable forestry. These properties are limited to timber and/or recreational activities. Property development and/or building is prohibited while enrolled in this program. For more information regarding the SFIA please click here.
Things to Consider
When Purchasing Recreational Property
Well informed buyers make better decisions.
Purchasing recreational property can be very complicated; make sure you get ALL of the facts regarding a property prior to signing a purchase agreement.
Purchase property that fits your needs.
People purchase recreational properties for different reasons. Define your intended property use and needs prior to beginning your search.
We hope you found this Land Buyers’ Guide useful and educational. Please contact Wellson Group, Inc. if you have any questions regarding these issues or intend to purchase or sell recreational property in the future. We will do everything necessary to ensure your needs are met.
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