Buying a cheap rural lot in Northern Michigan, worth it?

Question

I stumbled across several lots in rural Michigan (near Alpena) across the street from Lake Huron and down the road from another large sports lake, that are priced around $1,500. For that price I wouldn't be opposed to buying it to take a chance at the appreciation play or possibly developing it down the line (possibly even keeping for myself as a getaway). Taxes are $30/yr and there's an HOA fee of $242/yr (includes use of an indoor pool, private launches and a clubhouse). Association rules don't require me to build on the lot. What's the catch? Any red flags here?

http://www.realtor.com/realestateandhomes-detail/E...

Lot size example: 155x165x191x133

http://www.realtor.com/realestateandhomes-detail/E...

Lot size example: 155x165x191x133

Andrew Johnson · Answer

@Billy Holt I'm not in any way saying this is the case (based on the listing, it's not) but you should look NRPI and Erik Estrada.  It was maybe 15 years ago but there were late night infomercials selling land in Hawaii and all sorts of places.  It was "really cheap" and the play was that in __ year when you had retired then you'd have a home site to build on.  The reality was they were in swampy areas, unbuildable lots, etc.  I just like to point that fun out whenever someone says "hey! there's cheap vacant land, what's the catch!"

For this specific listing I'd be looking at drainage, make sure it won't flood, etc.  Just looking at the screenshot they have, some homes and been built but a lot of lots seem to be vacant.  I'd drive around the area and see the condition of those homes.  Look on Zillow at see what the homes have sold for in the area.  As you rightly pointed out, $1,500 is pocket change.  If it's even a decent piece of land, why not $5,000?  Someone on Craiglist would probably pony up $1,000 and try to "owner finance" the other $4,000 for their lake dream home of the future.

The other reason to drive is it that helps to look at the grading of a property.  I looked at a lot once that looked perfect on Google Maps, was looking out over a river, was $70K for an acre, in a good area with other homes being developed.  In short, it looked great until I got there.  There was a huge slope and most of the other lots didn't have it.  The one that did had to build a huge retaining wall.  When I asked the realtor about it, she said "you're probably looking at $200K for the wall and to level it out".  So all of a sudden my $80K lot was a $280K lot and it became crystal clear why the current owners hadn't built on it and why it was on the market for 9 months.

Hope that helps...maybe...a little...if not you...maybe someone who is reading this...

Kurt Hines · Answer

@Billy Holt

I live a few minutes from here (and know the owner of the  Realty office selling the lot (though not the listed agent).)  There are a lot of these lots, most haven't been built on as far as I know. But I don't think most people buy them to build on them.  Buying a lot gets you access to the association, which gets you access to the clubhouse (which I remember as rather nice, but I haven't been since I was a kid 20 years ago or so) the launch, some other private facilities I believe. It also gives you access to a private RV park, which is what many of the owners use. Basically, it is a way to buy access to Presque Isle, and Grand Lake (the large lake you mentioned. I live on it). People come up and spend the summer, or just summer weekends here.

The area is gorgeous in the summer, and has a decent level of summer tourism. There is also winter tourism for Ice fishing and whatnot. There are a lot of weekly rentals, but the core season is only about 10 weeks long.

I wouldn't consider it something to buy for an appreciation or development play. I can't imagine it making any money for you. But, if you want a summer getaway, it is absolutely an amazing place. I've been coming up here since I was a kid, and bought a lakehouse a couple years ago. With the RV lot, if you have an RV, you don't have to build to visit in the summer. (As I said, there are also many places to rent, including cabins, houses, and a resort. I'n happy to refer you if you are interested in a visit.)

Feel free to ask my any questions.  I would also be happy to go take some pictures and check out the lot for you, if you want.

Dylan Vargas · Answer

@Billy Holt @Kurt Hines Billy, small world. I spent almost 3 years recently in Alpena and have family in Lake Orion. At any rate Kurt is right that most people want access to the Presque Isle Estates. This is worth the price alone if you vacation or camp "Up North". There are a million lots for sale for $500 if that lets you know about appreciation. Not going to happen. Still a great place to buy and build if you can do it at a good price then put in a rental program but the "Sunrise Side" is wwaaayyyyyyyyy behind West and Northern Michigan. This is NOT Petoskey/Charlevoix. Traverse or the like. Beyond beautiful area and the best water you will see in North America in my opinion. Drove by Grand Lake every Monday for 3 Summers.

Billy Holt · Answer

@Andrew Johnson,

That's infinitely helpful, thanks for the response. I'll plan on checking out the lots this weekend. The pictures of the lots seem build-able (wooded but flat) but pictures can certainly be deceptive. Was a little worried about the HOA but the rules seem standard. Again, much appreciated!

Buying a cheap rural lot in Northern Michigan, worth it?

Most Popular Reply