Property Values

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Property Values

Post by Developer »

I was just telling someone about a conversation I had awhile back with a RLF property owner. He was explaining to me his opinion that people can't be trusted to keep their property in nice condition, and that's why we need to have a strong association that can fine people for breaking the rules. Of course he also had ideas for plenty of rules that would keep those property owners in line.

What was his reasoning for all this? Property values. He says he's got to make everyone in the Forest conform to his standards, because otherwise his property values might go down.

Do you agree with him?

About thirty years ago I rode down to Canadian Lakes, in Mecosta County, with my business partner. We met with the developer there, who said he had about thirty lots he was willing to wholesale to a single buyer, at a discount; said he was just tired of doing it, and wanted someone to buy him out. We were interested, so we drove around with him and looked at the place. It was very pretty. The development was large, and most of the lots had already been sold. There were some very expensive homes built already. The price the developer was asking was very attractive.

I asked him for a copy of the restrictive covenants, and he handed me a brick; there were lots of rules. I told him we'd have to look it over, and we'd get back to him. It's been a long time, but I remember some of the rules-- buildings all had to be painted a certain color, no propane tanks visible from the road, campers not allowed to be parked on the property for more than thirty days in any given year, and a whole list of violations which for which property owners could be fined.

I called my partner and told him the deal was off. I didn't want to be associated with a place with that many rules, and in which the association had so much power.

Fast forward to about three years ago. I attended the yearly State of Michigan property tax sale, where properties can be purchased at auction which have gone back on delinquent taxes. I was there because three lots in RLF were being sold, and I hoped to buy something.

They were also auctioning properties in Clare and Mecosta Counties. There were a couple hundred people there at the auction, and I found out there were also a great many people participating online. Everyone was given a list of properties and, looking through mine I noticed there were more than two dozen lots on the list from Canadian Lakes.

When it came time to sell the Canadian Lakes lots, the auctioneer disclosed there was an association; dues were... I think $400 per year, and he gave a link where everyone could read the list of restrictions. The bidding opened with each lot starting at about $600.

Can you guess what happened?

Not a single bid was placed for any one of those lots. None of them sold! By law the auctioneer couldn't go less than the $600, because that amount represented the taxes owed on the lots. Since they didn't sell, the auctioneer explained there would be another auction held later in the year where they would have the authority to begin at one-cent. But not that day.

I came away vindicated for my decision of thirty years ago. I didn't follow up with the later auction. I assume the lots sold to someone, at some price less than $600 apiece.

By the way, all three lots at RLF sold, and for much higher than the taxes owed. I was lucky to get one; the others went higher than I was willing to bid.

Looking online just now, I see there are numerous vacant lots for sale in Canadian Lakes. The price? Between $1,200 and $2,000. Twelve hundred bucks for a lot in Canadian Lakes-- what a deal!!! Similar lots in Rose Lake Forest are listed for between five to seven thousand.

Can you see what a strong association and lots of rules really does to property values?

I'm not interested in living under Nazi occupation in Canadian Lakes, but I know who should buy property there-- the jackass I mentioned at the beginning of this story. He likes rules, lots of them, so he should go to a place where other people believe the same way, and for God's sake, leave the rest of us in RLF in peace.
Gregory Wood
Trustee for PRTC Trust, Developer
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