Buying Raw Undeveloped Land (How I did it)
In 2020 I set out to finally realize my dream of purchasing some land in northern Minnesota. I have been wanting to do this since my early 20’s.
I am primarily interested in the boreal forest ecosystem (White Pine, Red Pine, and Birch trees) and Canadian shield rock landscape. For the longest time I was interested in the area surrounding Ely, Minnesota and up the Echo trail. Unfortunately, when I started looking most of the land surrounding Ely was pretty expensive or was near a proposed mining operation.
The area near where my Superior Hiking Trail hiking trip occurred with two friends in 2017 was one of the areas that I was really interested in (Eastern Cook County, Minnesota), in addition to the area around Ely Minnesota.
Define Goals
My primary desire\goal was finding an acreage that was over 40acres and under $50,000
My ranked order list was as follows:
- Away from development, ideally near state and federal land
- Mature trees
- Within Minnesota, ideally near the Boundary Waters Canoe Area Wilderness (BWCAW)
- Minimum of 40acres
- Under $50k
- Minimal wetland, ideally streams\springs\ponds would be present
- Away from major ATV and Snowmobile trails
- Surveyed or evidence of survey
- Access via maintained road is preferred, but access via fatbike or hike\snowshoe is okay
- Near a lake but, lakeshore was not desired or preferred
- Existing structures \ driveway \ improvements not required
How to Find Land
Zillow is an okay resource for starting to research, I have found that Zillow is not the most accurate tool for raw undeveloped land as it is dependent on how the data is entered and ingested from the MLS. The location on Zillow’s map may not be the most accurate, the number of acres may not be accurate (sometimes square feet are entered instead of acres). With Zillow you can setup eMail notifications for certain areas that are in a given price range that meet certain criteria.
LandWatch is also a pretty okay resource that allows for searching with natural language and allows filtering and slicing and dicing as much as possible.
eBay & Craigslist there are often “for sale by owner” deals listed, personally I wanted to work with a real estate agent rather than having to trust or hire an attorney and title company by myself to facilitate the deal. I felt like there was more risk of getting scammed through these listings. Going with the MLS and a Real Estate agent offered some protection in facilitating the process and
Once the initial research has been completed, I believe that researching on the website of the Reality company that has the property listed is essential. Once I felt like I understood the property and any comparable listings I reached out to the listing agent and asked questions about how to access the property, if it was alright if I walked it, and if they recommended I look for any comparable properties while I am out looking at my target property.
How to Research The Land and Your Target Area
I wanted to avoid talking to a relator as much as possible as I didn’t want to be pressured into buying and wanted to explore by myself and ask questions. Fortunately, in late 2019 early 2020 the Raw Land market was not as hot as it was in the Summer of 2020 continuing to today.
Online Research
Using Google & Google News searches for news stories regarding the road names near the property, the township name, adjacent landmarks\lakes, and businesses in the area will allow you to understand the area more. Using this method I was able to find news stories about how the roads are plowed in the winter and local buzz around tax levies.
CalTopo this mapping website was introduced to me at a presentation at the Winter Camping Symposium by Brian from Sagewood Gear. For free this website allows you to layer multiple maps and areal images allowing you to get a feel for the vegetation, trails, and historic uses of the area you are interested in.
Google MyMaps allows you to upload your pictures to a map and then allows you to reference
OnX Hunt is a Website and App that is available on Android and iPhone that allows you to research roads and tax payer names for a subscription fee you can download their maps offline. Knowing the taxpayer names allows you to then reach out via social media, snail mail, whatever and ask the locals questions about the area.
Boots on the Ground Research
It is important to actually see and walk the property you are purchasing, ideally you would have the opportunity to walk it in all seasons, but being able to walk it during the peak wet season and the peak dry season will allow you to get a feel for what it is like and what opportunities there are for camping, hiking, hunting, building a cabin, or whatever you are purchasing land for.
When I initially scouted my land at the tail end of the 2019-2020 winter season the most logical (as suggested by Google) routes to access were impossible to access.
- From the first approach, I found that the roads were in good condition for accessing with my fatbike until I got to a portion where melt and flooding prevented me from safely approaching by myself. I later found that this is a consistently flooded road where you have to “ford” the crossing on the logging road.
- I think drove and tried to approach from another direction, I parked at helipad found that the roads were not maintained or plowed and the snow was much deeper. The snow didn’t have structure and was concealing quite a bit of chunky rocks. I later found that this road is only maintained when logging was occurring.
…I didn’t actually make it to the land this first time, but found that I really liked the general area and if I could find consistent access to the property I would make an offer on it.
My wife and I then came back up a few weeks later and started approaching from the second logging parking area area where I attempted to approach the first time and found that the road from that direction was terrible (those boulders that were concealed were present now). We eventually ended up ditching our bikes in the forest and walked further as it was so bouldery (it was beyond my wife’s skill on a hybrid\gravel bike). We were thinking that we were going to have to abandon this one as having multiple miles of fatbiking to get to the property was not an okay situation and we really didn’t want to invest in a off-road vehicle right away to access the land. Ironically, about 10minutes of walking after we ditched our bikes and we found that the road was graded and maintained super smooth. It turns out that the switch from Federal forest roads to state maintained forest roads meant more maintenance for the road. This just meant that we had to find an approach to the land that was consistently maintained. After walking some of the property lines and walking into some interesting areas we returned to our car and decided that we had to find a route on the logging roads that would allow for us to at least park closer, if not drive all the way to the property.
Once we got there we took quite a few photos of things on the way to the property and along the edge of the property. We uploaded those to google MyMaps allowing us to reference where we saw things when scouting out the land.
We then approached via 2 different roads which were a further drive on the highway and county roads but, we found that there were 3 different approaches within the logging road system that were all better maintained than our initial approaches were. We came back and made an offer on the after confirming access.
The Offer Process
I found my land deal to be a bit different than buying a house.
Rather than working with a buyer’s agent as I did when buying my house (which probably isn’t an option with deals that are under $100k).
I didn’t want to pay 7% in commissions to a real estate agent, and the seller had already negotiated with the real estate agent that if the agent was representing both sides of the deal that the seller would pay the 3.5% Realtor fee. I paid all fees from the title company for facilitating, recording, and title insurance.
My offer was a cash offer (there was some nuance to this discussed below).
I made my deal contingent on no easements, encumbrances, or other defects being found with the title.
In my case there was some delay in each interaction from the Seller’s side and there was some offer\counter offer back and forth. We ended up settling on a price that I believed fair based on the comparable properties.
I made my offer in late May of 2020 and it was accepted by mid-June.
Once the offer was accepted my earnest money (1% of the purchase price) was sent in and held by the title company in escrow.
How to Finance
Buying a land for cash is the easiest and best way. Banks see raw\undeveloped land as a speculative investment that is hard to value. There are options to get “story” loans or loans for recreational property, all of these carry a high interest rate and will negatively affect your personal cashflow.
The offer\closing for my land was a “cash” deal, I did not have $50k in the bank ready to spend, but once I made an offer (there was no contingency on obtaining financing).
I am a bit of a nerd when optimizing my finances; I try to save as much as I can in a tax efficient manner as possible. That meant that I was contributing to my traditional 401k at a pretty aggressive rate, knowing that I could loan myself up to $50k over 5 years paying the interest to myself and paying a nominal service fee ($2.50) each quarter. That meant that I had the tax efficiency of lowering my taxable income by saving in my 401k, getting the outstanding growth of the market over the past 10+yrs and when I had the cashflow to be able to purchase land I could then take out a 401k loan to finance the purchase and make the transaction a cash transaction.
It was also nice that the payments for the 401k loan were deducted from each of my paychecks.
The risk of the 401k loan is if my employment ended I would either have to pay a tax penalty on the outstanding balance of the loan or pay off the balance of the loan in one lump sum.
The Path To Closing
Not due to any issue on my side there were delays with recording certain items on the Seller’s side, the accepted offer occurred in early June 2020 and closing did not occur until the days prior to Christmas in December of 2020.
As a part of the path to closing, the Title Company had to research the title for the property and any encumbrances against the title. Title Insurance they found that the land was enrolled in the Sustainable Forest Incentive Act (SFIA) program. This program prevents development of structures (outside of a small toolshed) on land to promote healthy forests. While I agree with the goals of the SFIA, I wanted the future option to build on the land and withdrawing land from the SFIA takes years. Fortunately, the seller was able to work with the MN DNR to remove this covenant and have it’s removal recorded with the county.
Given the extended time between accepted offer and closing, I spent quite a bit of time up in the area exploring the roads and points of interest within the logging road system. I got to know when the roads are maintained and had the opportunity to chat with various folks that were out driving.
Once you receive your title commitment for Title Insurance from the policy will list exclusions and\or exceptions, those will be the easements, covenants, and encumbrances on the title.
Questions to the Relator \ Seller \ Title Company
This is not a a complete list but, these are some of the questions I found myself asking:
- Seller’s Agent: Is there a standard disclosure about the property that I can review?
- Relator \ Seller’s Agent: Are there any easements?
- Road, Cartway, Trail, Conservation, and et al. easements?
- Utility easements?
- Relator \ Seller’s Agent: Have any surveys been completed recently? If so, please provide the evidence.
- Relator \ Seller’s Agent: Are there any continuing fees beyond
- Seller: Are there any wells on the property? (In Minnesota, MDH requires that this be disclosed)
- Title Company: Are there any existing covenants?
- What are the requirements of the covenant?
- Title Company: Who owns the mineral rights?
- Title Company: Please provide the supporting documents \ evidence of any easements.
- This was really interesting for me, this gave me access to public documents that
Other Considerations
Property Insurance, depending on your homeowners policy your liability for things that occur on your land may or may not be covered. If there is a structure on the property you will almost certainly need an additional policy to cover liability and losses on your property.
The tools needed to maintain the land and get to the land. In my case I ended up purchasing a Stihl Brushsaw to cut trails on the property; and while I could access the land via fatbike and probably with my Van or Honda Civic, I ended up swapping out my Honda Civic for a Subaru Outback which had the appropriate ground clearance to get to the property and explore many of the roads in the area.
