Improving Vacant Land Market in the Upper Peninsula

It's been a little while since our last post. We have been extremely busy, as is normal for this time of year. What is certainly different from the past few years is the increase in buyer interest. The Real Estate market in the Upper Peninsula seems to be improving. Prices have leveled off in many areas and we are seeing some vacant land sales of property types that have not had much activity until just recently.

Many of properties we have sold this year and currently have under contract are being purchased by "locals". While economic conditions continue to be slow to recover, their are some signs that the worst is behind us. It seems that there is a general feeling of more comfort when it comes to buying Real Estate. Much of the poor market condition were due to the lack of confidence as much as the lack of desire or funding. It feels like some of that confidence is returning.

The photo above is of a beautiful parcel that we listed in Marquette County and had an accepted offer within 2 weeks. It has been a few years since we've seen buyers acting this fast on vacant land. Every situation and every property is unique, so this may not be a significant sign of a better market, but we do think it is an indication that the market is improving.

We proceed with cautious optimism as national economic issues still remain, but the local economy in the Upper Peninsula has remained comparatively steady and we think that our market is seeing signs of improving in the near future.

New Houghton Office

Northern Michigan Land Brokers is pleased to announce that we are opening an office in Houghton, MI. We would also like to welcome our new Associate Broker, Josh Stein, who will be running the Houghton office. Josh is a young, but experienced Broker with a great sales history in the Houghton area. He is a Forester as well as a Real Estate Broker, which fits well with his area of expertise in vacant land.

We are excited to be working with Josh and feel that he is a great fit for Northern Michigan Land Brokers. Josh will be working on recruiting additional agents to work with him in the Houghton office, so hopefully we will have more new agents coming on with us shortly. You can get to know Josh by visiting him at www.joshsteinland.com. Also stay tuned to www.NorthernMichiganLandBrokers.com for our latest listings including the new inventory from our new Houghton office.

Get Out There

It has been a while since our last post, and we apologize for the delay. Business has been good and things have been very busy. The early departure of our snow pack has started our busy season early this year. The past month we have been hitting the woods looking at new properties, and checking on current listings. Last week I put on over 900 miles in the Upper Peninsula alone.

As I dove all over this wonderful region, I couldn't help but wish I everyone realized that this is when they should be out in the woods. The weather has been good for the most part. The leaves aren't out yet, which makes it easier to view properties. The roads systems have settled and most are in good shape now. The bugs are not out yet, although I did run into some ticks already. Basically, the conditions to look at property couldn't be better.

I urge everyone interested in looking for property to get out there and enjoy these conditions. It seems to me that in the past few years the Real Estate industry has been flooded with information. More people are looking online and less are getting out in field. While it's nice to have information at your finger tips, no website can replace looking in person. Sometimes you just need to go for a drive and see what you can find. Go it on your own, or give us a call for help. Either way, we encourage everyone to get outside and enjoy the wilderness that the U.P. has to offer. You never know what you might find.

Unusually Mild U.P. Winter

I keep waiting for it to happen... Winter that is. Not only have we avoided heavy snow fall to this point, but the temperatures have been amazingly warm. Throughout the Upper Peninsula the snow depth is shockingly low. I have been in the woods in several places of Marquette and Alger County in the past two weeks. Everywhere I go the snow depth is way below normal. There are many places where deer are digging at bare ground. Most of the deer haven't even migrated into their normal yards.

While this places a strain on some winter tourism locations, I can't help but love the mild winter. I like to snowmobile, but I'll give it up if I don't have to plow my driveway everyday. In fact, I haven't plowed in almost a month. I can't remember such a winter. It sure makes looking at properties easier. Usually during the winter months, we put off certain projects or we struggle to view properties. This year has been like no other in that I have been out almost every week looking at land. I don't mind toughing it out through feet of snow, but with less than a foot on the ground in many places, my job has been much easier this winter.

The Southern U.P. hasn't even had snow on the ground for much of this winter. Looking at property and showing buyers into parcels has been a real bonus to these mild conditions. The Real Estate market is typically slow during the winter months. Most buyers do not want to look at land with snow on the ground, or they lack the ability to get to most properties. Many sellers do not bother to list new properties because of the lack of buyer interest.

This winter we have seen increased activity by both buyers and sellers. The mild conditions are just what was needed to get a jump start to the 2012 Real Estate season. Hopefully this early start will lead to a better market this year. It sure is off to a good start. If you've been thinking about looking for a piece of land or putting a property on the market, don't wait until Spring. Right now is a great time get into the market. It is easy to access most areas around the U.P. with less snow depths and the mild temperatures make for some really great conditions to get out and enjoy the outdoors.

If you would like to take advantage of the mild weather by looking at land this winter, give us a call. We'd love to get out of the office and help you find a good buy while many are waiting for Spring.
Contact Northern Michigan Land Brokers    

The State of Michigan's Commercial Forest Program

Maybe this should have been posted prior to our previous article about the Qualified Forest Program, but better late than never. From the seat at my desk, it seems to me that more people are familiar with the Commercial Forest Program, or Commercial Forest Act (CFA), than any other type of State property tax legislation. There are many reasons for this, but it is undeniable that most owners, buyers, and seller of land in Northern Michigan's Upper Peninsula have heard of Michigan's CFA program. Hundreds of thousands of acres enrolled in the Upper Peninsula alone. Property ownership under this act is widespread and more of the corporate owned parcel are being sold to private entities every day bringing a greater variety of the participants in the program. So what does this mean? 

We consistently receive questions about this act and properties that are registered in the program. The most common entities that hold property in Commercial Forest are timber companies. The CFA program was started as a tax savings for large corporate land owners that also provides the public with use of those lands. It is seen as a win/win for both the land owners and the public. From the State of Michigan's point of view, providing an incentive for additional lands to be open to public access helps the recreational tourism business that drives the State's, and more specifically, the Upper Peninsula's economies. 

In short, a property in CFA is open to non-motorized public access for recreation purposes. This includes hunting and fishing. There are details for restriction on use, but they are very similar to the guidelines of the use of State lands. The benefit to the landowner for providing this public access is a huge tax savings. The amounts vary greatly, but as an example; a 40 acre parcel may have an annual tax of $800. This same property in CFA would have an annual tax of about $50. Private property is taxed based on the taxable value  of the property multiplied by the millage. CFA tax is a $1.20 per acre annually. What does this mean for owners, buyers, and sellers of Real Estate?

If you are an owner of a large acreage property with no dwellings or improvements, the CFA program can be a huge tax savings. If you plan to buy and hold a property for a long-term investment this can be of great value. The downside is that a property in CFA carries a lower market value because of the penalties involved if an owner withdraws. For a seller, it can be harder to market a property because buyers may not want the property to be open to public access. The penalty for withdrawing a property is complicated, but it boils down to about $100 per acre. If two properties are equal in value, one is in CFA and the other is private, the private parcel would be worth $100/acre more. 

What I have seen as a recent problem with the Commercial Forest Act is that a buyer of a parcel that is in the act may not fully understand their obligations. If they wish to keep the parcel in the CFA program, they need to file the correct forms along with a management plan for the property. They also need to be aware of the limitation that this places on their use of the property as well as the obligation to provide public access. If a buyer wishes to remove the parcel from CFA, they will pay the penalty of $100 per acre. Non-compliance with the required forms and or payments can result in tax liens being placed on the property.

The Commercial Forest Act was crafted with the large corporate land owner in mind. Smaller owners of properties of 40 contiguous acres may list their lands under the act, but they need to be aware of the pros and cons prior to making that decision. When utilized correctly, the CFA program can be a great aid to landowners in Michigan. The important thing is to do your research prior to putting lands in the CFA program or purchasing property listed under the act. For more information visit the State of Michigan's website or see the link below for some details on the Commercial Forest Act. To view properties currently available in Commercial Forest visit Northern Michigan Land Brokers website or call 1-866-231-5263.

http://www.michigan.gov/documents/dnr/IC4171_CommercialForestSummary_185969_7.pdf

http://www.michigan.gov/

Michigan Qualified Forest Program

For an owner or buyer of land in Michigan there is a relatively new program called the Qualified Forest Program to provide owners of forest lands with a tax break. This program has some similarities to the Commercial Forest Act program that much of the land in the Upper Peninsula is enrolled in. The CFA program provides a more aggressive tax incentive, but among other drawbacks, allows for public access. 

The Commercial Forest Act was designed for large owners of timber land, primarily paper and timber companies. The language and detail of the CFA program are intended to easy the tax burden on large acreage corporate properties, while providing lands that are open to public access for hunting and recreation. Recently , there has been a growing trend of these properties marketed for sale in smaller parcels to the general public. The CFA program was not intended for the private owner and this is causing some issues with both buyers of new properties and the State. While it may work for some, the CFA program usually is a problem for a buyer. In short, most buyers purchase a property for the purpose of having their own private parcel and this is in conflict with the Commercial Forest Act. 

In 2006, new legislation brought another option to the table. The Qualified Forest Program was designed with the smaller, private owner in mind. A 20 acre minimum enrollment was a decrease of 1/2 the size the CFA program requires. The other main difference is that lands in the Qualified Forest Program remain private and can be posted as "No Trespassing". The tax break is not as significant, but it does relieve some burden. There are additional stipulations and requirements which may not be for everyone or every property, but this does provide an excellent option. 

I have yet to work on a property in Qualified Forest, but I think it will start to catch on in the near future. Most of the requirements are things that a good land manager should do anyway. It is not a good option for those who plan to sell in the near future, but a great way to save on tax dollars for long term property owners of private timber lands. 

The link below is an overview of the program. For more information look up "Qualified Forest" on the Michigan DNR website.

http://www.michigan.gov/documents/dnr/FactSheetQFPKPW_205774_7.pdf