Buying in Non Warzone Cheap properties

9 Replies

I am considering buying and investing in Northern Maine ,North of Bangor Howland , Milo , Brownville area . Some people do in fact commute 50 + miles to Bangor . Most of the towns areunder 25,000 in population with many houses listed at 40-60 K 2-3 BR. Definately NOT a warzone but the economy is quite Bad . Lots of seniors on fixed incomes . yet there it is also considered to be a big recreational area Hunting , Fishing , Snowmobiling etc; 

I will actually be buying some acreage and building a  house in a very rural setting . on average land is about 5K per acre if Power is available . About 1/2 if it has to be brought in . Close to water but NOT on it . Don't mind traveling to enjoy my outdoor activities .

Your thoughts please on Potential investment Please ?

Planning on Building 4 Br 3 bath 1800-20000 SQ Ft Ranch house for when family andfriends come to visit . Looking at total cost 185-200 K Prefer to pay cash !! I KNOW !! I KNOW !!! you can invest a lot with the 200K . Satisfied with my investments up to this point . Though it would be hard to turn down a great deal if one were to be found .  Net Net income would still be in the 100K before any properties are liquidated . As I said I started my investments a long time ago which the kids will end up with . At what point do you say Enough is Enough and pursue your retirement Dreams ?

Interesting idea. Your plan sounds more like a secondary residence than a money maker. I will concede that some people do commute into Bangor from those locations, but I think there is much bigger market for renters (if that will ever be your goal) or purchasers (if you aim to sell the property at some point, or your heirs will), if you stick within 20 miles or so of Bangor. 

The thing is, there are so many cheap places to live just a few miles outside of the city center (Brewer, Orono, Old Town), and a lot of those areas are very depressed right now, so prices aren't very stable. Old Town's mill is being shut down, so jobs are being lost, and East Millinocket (just north of where you are considering investing) is fighting a National Park creation and has no economy to speak of at the moment. You could literally buy a house in East Millinocket for under $10K right now. Might need to put some money in (likely has been stripped of copper piping...etc.), but if your goal is cheap, that might be better. Imho, if they ever do build the national park, values will rise substantially. However, the current political climate up there doesn't seem to leave much hope of the Park coming to fruition. 

Additionally, if your goal is to have a place with easy access to hunting/ fishing - you are in a pretty decent zone, but at that distance from Bangor, you may also consider something off the 'Airline Road' aka Rt. 9. Lots of opportunities up there and the Grand Lake Stream area is a real hotspot for outdoor adventures. Alternatively, the Greenville area by Moosehead has some really nice areas (more mountainous), a consistent, if modest, year-round tourism economy, and is not much further up the road. 

My final verdict - I think $200K is much more than you need to spend for a 4BR/ 3BA ranch in that area. I would encourage you to find an existing structure of that size (or close) with some acreage that needs some work for about $100K and put in $20K to make it yours. 

Half of my portfolio is in a rural little town.  Not much appreciation but the cash-flow has been good.  Mostly my vacancies are filled from tenants seeking value from the neighboring expensive town 30 miles away.  Without it being an overflow, I would be swimming in vacancy and regretting my investment decision most likely.  

Will you have seasonal demand or overflow from a neighboring, more expensive market @Bob Baldwin

Originally posted by @Steve Vaughan :

Half of my portfolio is in a rural little town.  Not much appreciation but the cash-flow has been good.  Mostly my vacancies are filled from tenants seeking value from the neighboring expensive town 30 miles away.  Without it being an overflow, I would be swimming in vacancy and regretting my investment decision most likely.  

Will you have seasonal demand or overflow from a neighboring, more expensive market @Bob Baldwin? 

Steve: Will there be seasonal Demand  YES I would say from Snowbirds . Some camps/ homes in the area are on Recreational Waters . Mostly owned by Southern Mainers plus a few M******** !!! LOL that is an inside joke from the year round residents 

          As far as Overflow from more expensive neighboring markets I would have to say NO . It really boils down to age group , single , family still of working age .retirees etc;

Sean : You are partially correct My intention is to make it my Primary Residence NOT seasonal residence . I will grant you that we all have our wants and desires to what we WANT out of life . Sure Some I suppose would go for a Tesla , Ferrari , Lambo etc; or retire to Florida Buy a condo and a Cabo fishing yacht and be happy I guess I have other desires . What is making me go in this direction is age , I will be 70 this year . My son is 10 years out from retirement and still continues to vacation with me up in Maine . Upon his retirement he plans on moving up to the same area Is there a market for such a property YES though typically the times listed on the MLS are usually 200-250 days on the market before sale is made

I have been playing the Real Estate GAME for 45 years Am I happy YES could I have done much better CERTAINLY !! Between my investments ,my kids investments and utilizing various LLC's and TRUSTS My mind is at peace .All the grand kids and even great grand kid colleges are paid for . Was it a Gift YES . Could the $$$'s have been used for other investments OF COURSE . Will the kids be better off facing life without student debt loans ? I think so actually quite sure .!! reguardless of their career paths

        Sean I do get your point about the Old Town Orono area  But that area is just not for me . I,m more comfortable in the Brownville , Sebec or the thriving metropolis of Seboeis total population about 25 !!! Absolutely NO desire to be near Millinocket . As far as the " National Park " aspect goes there does seem to be a mindset of the people living north of Bangor that it just is not going to happen for the Enviro Wacko"s People living there are just fine the way things are at present . State and Federal funding being the primary reason .Yes something needs to be done to try to give some economic infusion to the northern counties but no one seems to have any answers in the past 25 years .

     I have been to Grand Lake Stream area before . nice area but I still get drawn back to the Brownville area . My issue with the Moosehead lake area for the interest my son and I have is that area tends to be more Pricey . . Heck if we want to fish that lake no problem it is about 1 hour plus drive ,Same could be said for the Grand Lake Stream area though maybe a little longer drive .

  Presently negotiating for a 65 acre piece with a stream on it which on a paved road with power for 100K SUBJECT to LURC approval for a building lot  and a engineers rendering for a septic system .. Backside of property backs up to Paper company property. To keep the hard cost down somewhat I DO plan on doing some Serious negotiating as far as supplies and labor goes .Not that I am a cheapola but there are bargains around if you shop hard enough .

Back when the economy was crashing, I was thinking about what hard assets one could buy other than gold, which is easily stolen and the value fluctuates.  I considered wood lots.  People will always need wood!  Enjoy your peace and quiet and good luck with LURC.

@jay hinrichs  Yes, but it's getting harder.  Nothing can be cut within a shorland zone and nothing within a certain distance of vernal pools.  Paper used to be Maine's #1 product, but mills have been steadily closing down.  We still have strong demand for firewood and wood pellet fuel.

All fair points @Bob Baldwin , and it sounds like you have already thought through all of other options I proposed. It sounds like you deserve to spend what you want on what you want and it will serve you and your family well. I wish you best of luck with the purchase and build out! 

Jay: As relates to your question of Hard woods or Soft woods , MY opinion is it is a pretty good mix . In what I call the BIG NORTH WOODS  which is millions of acres and quite literally owned / controlled  by a consortium of paper companies . Old practices use to be that said companies use to go in and literally Clear Cut select areas both hard and soft woods . Today it appears that said companies are leaning more in the direction of SELECT cutting .  From a sportsman point of view their seems to be some restrictions about the soft woods  " FIR TREES " as traditional they had been used as wintering yards for deer and moose . With many of the northern mills closing down I am not sure IF that will change any of the regulations or not .

      Some of the paper companies are no longer in business . Thousands of acres have changed hands to Foreign investors and I am led to believe Hedge funds .? No one I have talked to has really got a grip on WHICH direction the lands are heading . I would NOT have a problem IF they turned it in to a National Forest but NOT a National Park as that incurs too many restrictions .

Amy : There are a few people that I am aware of that have done the woodlot deal from an investment stragedy Though I think that they may NOT be buying the property outright  but buying /leasing the timber rights on said property . I can put you in touch with a real estate broker in Lincoln whose son is doing that . Just another type of commodities to invest in . But admittedly I  do not know how that GAME  is played .

         On another note I made a few calls over to ajacent towns a saw mill that had been making dimensional lumber " 2x4's 2x6's still has not recovered from the real estate bust of 8-9 years ago still at only about 50% of production capacity . The best part of that deal is their willingness to sell on a "Cash Basis " Wholesale prices all the material wood wise I need to build my house 

       Yesterday I was re-affirmed the VALUE of references trying to move forward with this endeavor . I had called a few other RE Brokers , Banks and Trades people to get some leads on Builders , Lawyers , Civil engineers , Plumbers , electricians etc . While some would NOT give specific recomondations it did surprise me that each type service a few people were singled  out as the best of the best . The other point was most of the towns are somewhat run on a part time basis . But I am sure these will pan out for me .

     The biggest downfall my son mentioned to me was that " GEEZ DAD !! You do realize that YOU meaning HIM will NEED the Following : A new pick-up truck preferably a Ford F-250 4 door with 4 WD , , 2 snowmobiles , 2 ATV's , A Mule ATV , of course a new trailer to haul them around in , A couple of chain saws and don't forget a new BASS boat . Then of course you will need an over sized 4 car garage and workshop to keep all the toys in ."He is a good kid but I am wondering if he is thinking about HIS FUTURE or MINE !!! LOL I actually had him price these things out NEW of COURSE !! " YOU should be able to cover the toys cost for about 135 K plus Tax , Tags , and Registration . !!! Some Kid !!!  " OH I almost forgot a couple of Old Town canoes Just in case we decide to do a trip down the Allagash .!! My response back to him was Let me call Dave Ramsey and get his opinion on that LOL. 

   I love him to death and even after putting him through trade school and fronting him "GIFTING HIM" the down payment for his own house when he has tried to pay me back I have refused to take the money telling him take your cash pay down your mortgage , ad to your retirement and start funding the grandkids future . This I believe may be opposite to what many on BP would have done with available cash but that is the way I am .

  SO I guess the big question I have to ask is : IF life is good , Kids and Grandkids have a Good  start in life and you choose to live below your income level , Would you suggest putting more into their trust funds for Future generations to have a step ahead in life or is that each generations decision to make as far as passing down the liquidity .? I don't have to but am actually considering selling a tri-plex that I really just don't care for anymore to cover the cost of the toys . My biggest concern is I don't want any new mortgages , NOR incurring any new monthly payment oblibations .