Relocating a new group of bees after a swarm. Cool stuff shown by Rick Theriault- Your Maine Real Estate Guide
Maine Land For Sale
I am writing this post from the Realtors Land Institute National Land Conference in Albuquerque NM. This annual conference is attended by about 500 of the top land agents across America. During the three-day conference we network with other land professionals and attend lectures by national economists, political analysts, scientists and other experts speaking on a wide array of topics related to land use and sales.
Economist Dr. Mark Dotzour shared his opinion that the US economy will continue to do well in the coming year. His analysis of current trends and historical data do not point towards a looming recession, as some of the national media have been touting. His advice to shut off your CNN and Fox News feed, which he feels is pure propaganda, was well received by attendees. Indicators such as a consumer confidence index at an 18-year high, a 3.5% wage increase nationwide in 2018, over 7 million open jobs in the US, low oil prices and low interest rates should keep the national land market up for 2019. Expect interest rates to creep up a little bit this year. The fed will look to make some room to drop rates when the next recession comes. At the current rates there is not much room to drop
A land use gaining momentum in the western and southeastern US, which I believe will become a larger niche market in Maine, is “glamping”. Glamping is roughly defined as glamourous camping utilizing extravagant canvas tents, tree houses, and other unique structures. Cost per night stays range from $100 to more than $300. I spoke to several western ALC’s whose clients have purchased property to develop this niche business. Be careful investing in this in heavily regulated areas of the state, Colorado towns have started to zone the use out as undesirable.
By 2020 the millennials will become the nation’s largest demographic. Many in this group are saddled with a lot of debt and are still living at home, however, about 19% of them live in their own home. Millennials are beginning to consider land as an investment that doubles for recreation. I have personally sold land in the past year to this group. They do not have the knowledge about land investing that was more common in Gen Xers passed on by their baby boomer parents, but they are intelligent buyers eager to learn more about the investment side of land. Expect to see more Maine land purchased by this group in 2019.
The hot topic in land this year is industrial hemp because the new farm bill legalized the growing of cannabis plants containing less than .3% THC. This level is where the federal governments differentiates between marijuana and hemp. CBD oil derived from hemp is the most profitable product to date. CDB oil has not been approved by the FDA, however consumers believe it relieves a host of ailments, including insomnia, anxiety, chronic pain and post-traumatic stress disorder.
Agricultural economist Dr. Terry Barr, spoke about a wide variety of topics. Top of his list is China’s slowing growth to about 6%. Overall worldwide growth rates are also slowing, with most increases in growth now coming from unadvanced countries. A strengthening US dollar taking buying power away from other countries will mean that US commodities will not do as well. He expects that US economy to grow more moderately than it has historically. New housing is being built strictly on demand as most spec builders are gone after the last big recession. He expects that residential housing markets will remain steady as they go.
Despite predictions of slowing world growth, at our brokerage we have seen an increase in the number of requests for winter land showings and contracts written over the previous winter. Overall Maine land sales have slowed a little but most of that I believe is due to overall lower inventories of parcels. The hunting and recreational market is strong. We have many buyers looking for cabins and homes on 40+ acres. There has also been a high demand for agricultural properties. Timberland interest has also picked up. If you are considering a sale of your land give us a call to see what the current market values are in your area.
Death and taxes. Neither can be avoided. However, with some clean living, careful choices, and a little luck the former can be delayed. So can the capital gains tax on the sale of your real estate, which happily only requires some planning.
The tool to make this delay of tax is known as a Like-Kind Exchange, often referred to as a 1031 exchange, from the IRS code of that same number. As of January 2018, this only pertains to real property used productively in business or held for investment and not personal property such as equipment, vehicles, and other such things.
What is a like-kind exchange? Simply put, it is exchanging one property, held for productive use in a trade or business or held for investment, for another property for those same purposes. What it is not? It cannot be used for delaying taxes on real estate which is held primarily for sale, often referred to as dealer property, where it is your business to buy and sell real estate for profit. This will likely be taxed as ordinary income.
Pros and Cons – The benefits of using a like-kind exchange are pretty obvious if growing your real estate investment net worth is your primary goal. Reinvesting equity gain which would otherwise be paid to Uncle Sam in capital gains tax, may net a better return on investment. The downside to the exchange can be the lack of liquidity of real estate in general and less diversification of investments. As an example, if a great stock opportunity became available to you, the equity from the property sale could not be used tax deferred to purchase it.
Is it complicated you ask? We are talking about the IRS, so of course it is. Nothing worthwhile ever comes easy. There are several types of exchanges and rules such as time to complete the exchange, naming of properties to exchange into, and not directly receiving the proceeds from the sale of the relinquished property, plus many other potential concerns. The process involved in an exchange can take up many chapters in how-to books, so I will not cover all the details here. The good news is, if you are interested in an exchange, there are professionals out there, such as Qualified Intermediary (QI), CPAs, real estate brokers, and attorneys that can guide you through the process.
If you think that the like-kind exchange is a possible route that you may take, plan it from the day you put your property on the market. Engage the appropriate professionals that are required to help you. Be sure you inform the buyer of your property about your intentions to exchange in both the property disclosure and purchase and sale agreement. This is not necessarily required but certainly will make for a smoother closing.
If you need more information, here are some links to the IRS website and a QI and attorney we have used.
Before you purchase that lake, ocean or river front land, home or cabin in Maine, you should know a little about shoreland zoning rules. This includes all area within 250 feet of the normal high water mark of the water feature. Knowing the basic rules will help you better select a property that meets your expectations.
As Mainers, we often take good water quality for granted. It is well protected here, but that is not the case in every state. Recognizing the value of water quality to fish, wildlife and us humans, the state adopted shoreland rules with beginnings in the 1970’s that continue to be updated today. The reasons for mandatory shoreland zoning are many, including such goals as preventing water pollution, protecting wildlife habitat, and conserving the scenic beauty of our special places to name a few.
The rules do depend on where the property is located, either organized or unorganized township. Also, what property type you are going purchase, such as an unimproved waterfront parcel or an existing residential structure. Also, please note that every organized town can have slightly different rules depending on the ordinance they have adopted, but all will comply with the minimum requirements. Check in the code enforcement officer (CEO) of the town to get the local ordinance.
For unimproved lots, here are the basics.
- Minimum Lot Size – For tidal areas 30,000 square feet ( just less than 7/10 of an acre) For non-tidal areas 40,000 square feet (just over 9/10 of an acre)
- Minimum Water Frontage – For tidal areas 150 feet For non-tidal areas 200 feet
- Minimum Lot Width – within 100 feet of the high water mark shall be equal to or greater that the required water frontage.
- Minimum Set Back for buildings – For great ponds and rivers flowing to great ponds 100 feet from the high water mark. For other water bodies, 75 feet from the normal high water mark.
- Vegetative Clearings – This is a probably the most misunderstood of all shoreland rules. Review the ordinance for formulas to use prior to any harvesting of trees and/or other vegetation and do consult with the CEO prior to beginning to avoid possible fines and other penalties.
If you are purchasing a non-conforming ( AKA “grandfathered”) structure the rules for additions, expansions and other changes can vary a lot depending on the size, setback, height and other features of the structure. All of these changes will at a minimum require CEO approval, commonly planning board approval.
There are many exceptions to the above. This can be a complex topic, so I have provided a link to the Maine Department of Environmental guidelines here should you need additional information.
Maine Subdivision Rules - Should You Develop Your land?
In Maine, there is a difference between a division of land and a subdivision of land. In most municipalities dividing your property into two separate lots requires little or no permitting. However, dividing a property into 3 separate lots within a 5-year period does require approval in most cases, and is the definition of “subdivision” in our state.
Increased Property Value
Why would you want to do a subdivision? Most property investors look at the subdivision process as a way to increase the per acre value of their property. At first the thought of a smaller lot being worth more does not make sense, but consider that by reducing the size of the acreage you bring the gross selling price lower and within the purchasing power of more people. More people competing for a property usually translates to more demand and a higher price.
Higher prices may or may not translate into more profits. Before jumping headfirst into a subdivision some research and planning should be undertaken. Market conditions should be the first consideration. Data such as recent comparable lot sales, how many sales have occurred, lot sizes of successful sales, what is the current supply of lots, absorption rates, and financing availability to name a few. Next what will be the costs of surveying, wetland delineation, engineering, road construction, soil testing and other requirements of permitting? After thorough analysis and due diligence a property owner can decide if the risk is worth the reward to subdivide.
Every organized town in Maine may have a slightly different subdivision ordinance. The unorganized territories in Maine have a uniform ordinance with little variation in requirements. Typically, a local planning board will review a proposed subdivision to see if it conforms with the ordinance. The process will consist of several meetings starting with a presentation of a preliminary sketch of the proposal. This is followed up with notifications to the public and nearby property owners of the proposed subdivision and the date of the public meeting to review it.
This next hearing consists of a more formal presentation of a preliminary survey plan of the layout of the proposed lots, roads, easements, slopes, soils etc. Public comment is permitted and heard by the board. After this meeting any changes required by the board need to be addressed and another hearing with a final plan will be scheduled. Assuming no other issues are outstanding, the board will sign the final plan that will be recorded in the county registry of deeds.
There are a number of exceptions to the rule to sell property without the process of subdivision. Gifts to relatives (see definition in statute) may be exempt if the donor has owned the property for at least 5 years and the consideration is less than ½ the current assessed value. Sales to abutting property owners may be exempt from subdivision rules. In unorganized territories, 3 lots can be created in a 5-year period as long as the 3rd lot is retained for forest management purposes. This is often referred to as the ‘2 in 5 Rule.’ There are other exceptions listed in the statute linked above.
This post is intended to encourage a thoughtful process in land investing and should not be viewed as an endorsement to subdivide your property. In many cases I would advise clients not to. The above descriptions are a simplification of the process, not a complete outline of all potential requirements of every planning board. You are well advised to consult with experienced professionals like real estate attorneys, surveyors, soil scientist, and land brokers before undertaking the subdivision process.
Has your land in Maine been on the market for 6 months, 12 months, 2 years or more? Few showings, no offers and you think that something must be wrong. Well something probably is. Here are the Top 5 Reasons we have identified that get in the way of selling your property.
The number one reason property does not sell is typically a pricing problem. Before putting your land on the market a thorough analysis of the potential uses of the land, recent sale data, competing properties for sale, location issues, property improvements and other factors should be considered in order to price the property competitively for the market. If this is not done correctly from the start the end result is longer marketing time and a below market selling price.
Number two on our list is marketing. Determining who the most probable buyer is and then how you reach those prospects is paramount to any good marketing plan.
Selling raw land or properties with a large component of land is not the same as selling a single family home on 1/2 an acre in town. Putting and ad in a local paper, a sign on the property, placing the property in MLS, Realtor.com, Zillo and Trulia can be effective for selling homes but miss the mark for properties with acreage. Take a peek at any of these mediums and you quickly see that they are designed to focus 99% of attention on single family homes. Land is hard to find here and generally not presented in an attractive manner with a low quality tax map or Google Earth screen shot as the opening photo.
How you physically get onto a property has a real effect on buyer interest and general appeal of the land. If your land fronts a busy road or highway and there is no driveway or access road onto the property prospective buyers may have a difficult time seeing the utility of the parcel. Does the land have a clear right of way if it is not on a public road? If not, what can you do to better define the access or right of way? Is your property on a private road that is in bad condition? If any of these situations describe your property, this could be one of the reasons your land is not selling.
Boundaries are unclear
Imagine yourself as a prospective buyer and meeting the owner or real estate agent to see a 50 acre parcel of land. Now imagine you ask them where the property lines are and they tell you "we think they are somewhere around here". Does that statement give you and warm and fuzzy feeling that would inspire you to write a deposit check? I doubt it. Get your property surveyed to add value and shorten the marketing time.
No Owner Terms
If you have not considered offering owner financing terms for the sale of your land, you should give it more thought. Inquiries on our land listings triple when advertised with owner financing terms. It simply opens the property up to a much larger buyer audience. Owner terms often bring a higher price for the property and most owners get interest rates that are attractive as an investment.
If any of these conditions apply to you, this may be the reason why you have not been successful in selling your property. Need more help? Call us today for a professional opinion.
When you are in the market to purchase land one important consideration is soil quality. Your soil considerations should be based on the intended use for the land. Do you want to grow crops, graze animals, manage timber, provide recreation opportunities or conserve wildlife, wetlands and other sensitive features? The higher the soil quality the better crops and trees will grow. These will be better drained sites for constructing homes and cabins as well.
The U.S. Natural Resource Conservation Service (NRCS) has provided a plethora of information online at Web Soil Survey. The online data is complex. Some soil knowledge or basic mapping skills are necessary to navigate this site. We, at United Country Lifestyle Properties of Maine, have made this process easier for our customers and clients through the use of mapping software that simplifies the NRCS data into an easy to understand soil report.
NRCS has identified more than 70,000 soil types in the United States. Maine has soil types such as Monarda, Dixmont, Howland, Thorndike, Bangor and many others. The types or series of soils will be abbreviated on maps and reports such as Mo for Monarda or Ba for Bangor. Soils are given compound names such as Bangor silt loam. The first part of the name, Bangor, refers to the soil type. The second part, in this case silt loam, refers to the structural texture of the soil. You can find a soil triangle like the one below online to help determine the texture. I’m not going to discuss the various simple to complex testing methods that can be done for soil texture, you can Google search this topic and find a number of articles and videos showing these methods. Here is a link to a simple jar method. https://hgic.clemson.edu/factsheet/soil-texture-analysis-the-jar-test/
Soil types are assigned classes from I to VIII based on their suitability for agriculture. They are also assigned subclasses based on their limitations of e,w,s, and c which stand for erosion, water, shallow or droughty and cold climate.
Capability Classes I – VIII with I being most desirable. Classes I-IV will support most types of cultivation and V-VII do not support cultivation but can accommodate forestry and grazing. Class VIII land does not support cultivation, grazing or timber production and includes cliff faces and other rock outcrops, beaches, river and creek beds.
Understanding Soil Code
Looking at a soil type map for the first time is Greek to most people. But with use of the NRCS Websoil Survey or a mapping platform such as Mapright, these codes will become easy to use. So, the next time you see BaC 3e, you can refer to the capability view and know that this is Bangor Silt Loam with 8-15% slopes and the limiting factor to its agriculture productivity is its propensity for erosion. It can be used for growing crops as long as a lot of conservation measures are used. It probably is better suited to grazing and would certainly grow trees very well.
While doing due diligence in the review of a specific property, don’t eliminate it just because it has class IV – VIII soils, they have value, just not to a farmer. Most of Maine has some limitation to its soils from rocks to slopes to bedrock and so on. Class I and II soils with no limitations are rare and expensive.
Like most online data, the US NRCS soil mapping has limitations and localized exceptions will be found on most every site. These reports should not be replaced with an on-ground inspection of individual properties. If soil conditions are critical to your intended use of the property, a soil professional should be consulted.
Maine has a long tradition of landowners allowing reasonable public access to private lands. As a Mainer I want to thank all of those land owners who allow this. I do not post my land as we also enjoy using lands of other landowners who also allow access for recreation on their lands.
If you wish to keep your land for your own use, Maine does protect the landowners rights to privacy. Title 17A Section 402 explains how the landowner must post their land with signs or paint to legally restrict access over their property. Signs or paint must be within 100 feet apart and be visible so that a potential intruder can see the restricted access. Signs must be specific as to the restriction ie. no trespassing, access by permission only, no hunting etc.
Painting is the easiest way to post your land, a vertical purple painted stripe 1 plus inch wide on trees 3-5 feet above the ground means access by permission only. These stripes need to be no more than 100 feet apart and need to be maintained so that they are conspicuous to any person who may approach your boundary lines.
A verbal warning to a trespasser is also a legal means of enforcing your property rights. If you confront a hunter on your land you have the right to inspect their hunting license to determine who they are, if they refuse they have violated Maine law. If convicted they can loose their hunting rights for a year and possibly forfeit their firearms to public auction.
If a hunter wounds a game animal which then enters your property the hunter does not have the right to enter your property to retrieve the animal. If you are concerned about the access please contact the local game warden and allow the hunter to retrieve the animal to prevent the waste of the game.
We are often asked by landowners that if they post their property to restrict access if they can still legally hunt their property. The answer is yes. The landowner does still need to purchase a Maine hunting license and abide by all applicable hunting rules and regulations. We are also asked about landowner legal responsibility for keeping their property safe for recreational users. The answer is no as long as you do not willfully or maliciously fail to guard or warn against a dangerous condition, use, structure, or activity.
We hope this helps Maine land owners manage the land they way in which they want to. To understand that if they wish to keep it for just themselves that is a right that they are entitled and protected. For those who leave their land open for public use this Mainer and many others say thank you and respect your property rights.
More and more people are awakening to the realization that the current system of living and providing food for our population is a tenuous and fragile system. The demise of honey bee populations may be a visible sign of how our current monoculture mega farming techniques are not the best methods for a healthy eco system. They are inherently dependent on large applications of petro-chemicals to produce yields of crops that are shipped vast distances on trucks to consumers that are thousands of miles away from their food source. Bees are trucked thousands of miles and then placed in a virtual food desert where all they see for miles and miles is 1 type of plant on which to gather nectar and pollen. Imagine how healthy you would be eating only oatmeal 3 times a day, for a month or more. Regular yes, healthy no!
Permaculture is a growing trend not only herein the U.S., but worldwide. Pioneers in this field like Geoff Lawton of Australia have been instrumental in teaching and developing and applying the developing principles of Permaculture throughout the world. Through applications of reshaping and forming the land to enhance and utilize its contours, you can develop a method of conserving and utilizing water that eliminated the needs to use pumps for irrigation. Permaculture strives to mimic the diversity found in a forest, where man is not required to annually apply fertilizer and spray trees with pesticides in order for a forest to grow. Left to its own designs a forest will grow without man doing anything.
Permaculture farming strives to develop a sustainable and robust food forest system that once established will grow and improve without man continually applying petroleum based fertilizers or pesticides. The living food forest will, over time, improve the water table, improve the soil fertility and allow a diverse array of food crops to grow together better and healthier than they do individually. One of the tenants of Permaculture that really appeals to me is the fact that during feudal times, the only people that had lawns were the monarchs. Peasants farmed what land they had to feed themselves. Monarchs as an outward display of opulence could afford to use farmland for nothing more than growing grass. On a small scale worldwide people are turning back and front yards from barren lawns to nutrient rich food forests where they can pick fresh fruits, nuts, berries and more and eat it right off the vine in their own yards, and never have to cut the grass again.
There are many good books on the subject of Permaculture. I've read Practical Permaculture by Jessi Bloom & Dave Boehnlein as well as The Resilient Farm and Homestead by Ben Falk. Ben's book details his homestead from the land purchase to building the home on a plot of undesirable land in Vermont. He through the application of Permaculture techniques is even able to grow rice on his property in Vermont for his families use. There are numerous websites and YouTube videos on the topic; in short Permaculture creates a more sustainable food source and lifestyle on our planet. What's not to like about that?
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