Just as other real estate investments have started losing their appeal, a growing inventory of recreational land — land that's not being actively farmed — is attracting buyers.
Plum Creek Timber, an investment company that's the nation's largest private owner of timberland, says land it has sold for recreational development has gone from $2,300 an acre in 2004 to more than $4,000 now. There are regional variations, but Plum Creek's chief executive, Rick Holley, thinks more and more of his company's timber holdings across the country will go from wood production to residential or recreational use, especially with wood prices falling.
If owning a piece of raw land appeals, your first step is to know what you want to do with the property. If you're into hunting, you'll need a minimum of 300 to 500 acres for a varied terrain and patches of cleared pasture to plant food crops for deer and other wildlife. If you just want a secluded house with a pond and enough forest to hear the wind and the birds, 25 acres is enough. (But you'll pay more per acre for a smaller piece.)
Water is a big deal. If you get permission to dig a lake, which opens up opportunities for private boating, fishing and swimming, prepare to spend tens of thousands of dollars to complete the work. A tract that already has a pond or riverfront land will cost more at the outset. But in the end, water is worth the price. -->
Unlike rental property, land won't provide you with a regular rent check or a tax break for depreciation. But you may be able to eke out enough cash to pay your property taxes and set up a reserve fund for maintenance and small projects.
Timber. Hardwoods, such as ash, hickory, maple, oak and poplar, take as many as 50 years to mature. They're more valuable than the ubiquitous pine, which can be cut for pulp after 15 years. You'll need advice from a forester, and you'll probably sell to local sawmills.
Hunting rights. You can rent your land for anywhere from $5 an acre per year to several times that, depending on its location, the lay of the land, the length of the hunting season and the variety of wildlife. Deer and turkey are common; quail hunters pay top dollar.
Energy. Most recreational land isn't in oil-and-gas country, but you might be on the periphery of, say, a known Appalachian gas field. You could find a taker for drilling rights in exchange for a royalty of one-eighth to three-sixteenths of production plus an annual per-acre retainer.