advertisement
Article Tools
Find a new home or apartment
Four-year-old Jonathan Killmer dips his toes into a creek and watches, enthralled, while his dad unloads sacks of deer feed from a pickup. As he works, Bill Killmer explains to a visitor why he bought hundreds of acres of rolling pine and hardwood forest in northeastern Georgia.
Killmer, 50, grew up in Ohio, the descendant of farmers. He says he's "sort of retired" after selling a travel business and a building-maintenance company in Atlanta. He doesn't intend to plant corn or soybeans on his spread, which he calls Rosser Creek Farm -- the upcountry red clay wouldn't be suitable.
His agenda: hold the land as an investment for at least five years and "have a lot of fun while we own it." Then he may sell the farm in pieces, subdivide some land at the edges for estate-home sites -- or perhaps do nothing at all.
Killmer has counterparts all across the country, mostly in Texas, the South and the western mountain states. Investors are paying anywhere from $1,000 to $20,000 an acre for land that doubles as a private recreational escape and a diversifier for a long-term portfolio. Killmer hunts some, but as the parent of Jonathan and three teenagers, he sees the farm as a family retreat -- a place to spend lazy days angling for bass, catfish and bream in the property's ponds, as well as camping, hiking, swimming, spotting turkeys and other wildlife, and just hanging out.
About 75 miles east of Atlanta's Perimeter freeway (Interstate 285), Killmer's acreage isn't exactly in the wilderness. But it wasn't easy to acquire because it wasn't on any multiple-listing service. Kevin Teston, a land broker in Augusta, Ga., worked with Killmer for a year to find the tract.
More from MSN Money and Kiplinger
Teston believes that the land, formerly owned by a big timber company, has doubled in value since Killmer bought it two and a half years ago. Some of that appreciation is a result of its location. Atlanta is close enough that nearby crossroads towns, such as Madison and Greensboro, are sprouting coffee shops and nice restaurants. But similar vacant land twice as far from Atlanta is also heating up.
Just as other real-estate investments have started losing their appeal, a growing inventory of recreational land is attracting more buyers. Major landowners, such as International Paper, MeadWestvaco and Weyerhaeuser, are divesting their forest holdings, usually to banks and insurance companies. Hardscrabble farming no longer provides a living, so kids raised on former cropland have long since marched off to Atlanta or Nashville or New York City. Old home places end up in the hands of banks and other groups of investors, who carve the property into tracts of 200 to 1,500 acres and sell it to small developers and hunting clubs -- and people like Bill Killmer.
Is this a backwoods version of the investor-owned real-estate glut that sank the condominium markets in Florida and Las Vegas? Possibly.
Chris Hawley, the chief executive officer of Mossy Oak Properties, a network of recreational-land brokers in nine states, says a recreational expanse "is just a different kind of condominium. It's just not at the beach, and there are trees growing on it."
But for now, Hawley, who lives and works in rural Livingston, Ala., is a very busy man.
What's it worth?
Unlike the values for homes and crop farms, prices for recreational property -- land that's not being actively farmed -- don't appear in familiar real-estate indexes. The Federal Reserve Bank of Kansas City studied wildlife-related recreational land use -- hunting, fishing, camping -- and concluded that recreational appeal adds to land values, but it couldn't pinpoint precisely how much.Besides, many land investors will tell you they have no idea what their return actually is. They just know they are ahead.
Drew Kyle is one of them. Kyle, 47, owns an office-supply business in Tuscaloosa, Ala., and is an avid investor in stocks and mutual funds. But he's also accumulating Alabama forest property 50 miles west of Tuscaloosa. Kyle added 585 acres in 2006, bringing the total owned by himself and his family to 2,300 acres.
Kyle earns a little income by harvesting timber, but his priorities are peace and isolation, family time at the weekend house he built on his property and a plan to restore an old, wooden tenant farmer's house. "I can't tell you the rate of return on any of this," says Kyle.
He could probably make an educated guess. It's likely that timber revenue offsets taxes and the cost of maintenance, such as clearing kudzu and other invasive plants. Kyle paid $360 an acre 15 years ago and $1,820 an acre in 2006 for similar land in adjacent counties. That's a compound annual growth rate of 11% -- less than the 14% annualized total return for the average real-estate investment trust that owns domestic property.
Continued: Market may be growing
Rate this Article
High
