Buying A Cabin On National Forest Land
i am buying a cabin on a national forest land without a real state agent. the land itself is not part of the sale. it is only being used by permit from the national forest. what due diligence work should i do? what type of forms are to be filed for this type of sale?
thanks in adavance!
Curious about why you'd be doing this. What is the advantage in buying the cabin withou either buying or controlling the land it's on?
i want to buy the cabin for personal use. i figure it is cheaper that way. the annual permit is inexpensive and i only pay tax on the cabin. with that, i have the use of the national forest.
nice to meet you john!
i have already researched the national forest website and spoken with their representative. i understand the permit transfer procedure but i am unfamiliar with the process of buying the improvements on the lot. it's not considered real estate since the land is not included. will a bill of sale for suffice? how about a grant deed? what should i watch out for?
spikerz,
I would suggest having an attorney familiar with the type of transaction you are contemplating put it together for you.
Whenever you are dealing with National Forest Land transactions there are plenty of i's that need dotted and t's that need to be crossed.
John $Cash$ Locke
[addsig]
Hey congratulations, it is really not that difficult at all. I own one so I know.
Advantages: having your own slice of heaven away from it all. Need I say more?
A bill of sale will suffice. Even though you are buying by owner still enlist the help of your local escrow company to handle the fine points. Everything is the same as a normal RE transaction except some addition paperwork on behalf of the USFS. Basically, they are strict on what you can do on the property. No full-time living, painting it hot pink, messing with the land, or turning it into a shanty-town. (trailers, junk, etc...)
For tax purposed you will now own unsecured property. Very similar to a business that leases space in a mall or something. The lease on the land now goes in 20 yr increments. Find out where you are at and inquire about any rumblings about leases not getting renewed. It happens. In the past it happened more. The USFS would then use your cabin for a practice cabin fire and fire suppression training, after, of course, the higher-ups got to hand pick any valuable left behind antiques. This was in the 60's - 70's that kind of baloney doesn't happen anymore, well it better not.
Watch out for: butting heads with the USFS personel after the deal is closed. (follow the rules) Plan ahead for the future, if and when the time ever comes for the lease not to be renewed, pick your cabin up and take your business elsewhere.
BTW, which mountain range is the cabin in?
john-
the cabin is in the cleveland national forest. what about your cabin?
if it's a straight sale why do i need to go through an escrow? what type of things can an escrow do that i cannot do myself? so far, from what i understand the only paperwork involved are a Bill of Sale and a Grant Deed. is that correct?
Inyo National Forest, Sierra Nevada.
Well lets see, you can do everything yourself. My escrow company was familiar with the process and USFS so they knew how to get the lease paperwork from the government quickly. The USFS can be tough to deal with on matters like that, and sometimes it is hard to get a hold of someone who knows what they are doing. lol
Also there was the normal proration of taxes, lease fees for the year, holding my downpayment (seller financed), I don't remember much about the title insurance - you know proving that the selling indeed owned it and had no back liens on the place. For $450 (my share) it was definitely worth it - I was busy working at the time.
We used a bill of sale and trust deed. Yeah, this could be done in house - sometimes escrow is just the easy drive through method.
The lease is easily transferable. The USFS required a "interview" before the close of escrow. In that face to face interview the lady stated three rules: 1. You can't paint it hot pink 2. You can't live there full time (and then told me I had to live there 15 days out of the year) and, 3. I can't rent it out without permission.
I saw one of these on ebay, was it the Owl's Nest?
no, it wasn't listed on ebay.
i'm curious what the price range is on the cabins in your tract? how is the inventory? what is the market like?
i have a bit of reservation on this purchase because i'm not too sure if it's a sound investment. granted it is for personal use, i'm not sure how marketable the place is should i decide to sell it down the line. do you feel the same?
Our area up here in the Eastern Sierra it is very expensive. Recreation Residence cabins can list on an average of $300K-$500K, and yes that price is ridiculous. The inventory is very limited and only a couple go on the market every year. I think that there are about 15,000 cabins on the lease program throughout the US. They are very marketable depending on the area. Lots of them are on very scenic pieces of land, lakes, creeks, views, etc...
I had no reservations buying as the price was very cheap. ($32K) I still pay $303/mo (owner financing) but I'm almost through with it. The place needed tons of work and I spent a couple summers working with the whole family, my brother and dad included.
The thing is, these cabins are rare and a part of history. Even the wealthiest person around cannot build next to me, no new permits/leases are allowed.
A lot of people will say it's just a luxury or something you can't afford, and partly they are right - keeping up multiple homes is tricky, especially if no one is even renting it out. But on the flip side they can and do appreciate, you get a little piece of the forest, you can do a lot out there or just relax. And heck, getting out of Los Angeles is hard to put a value on.
If you can picture yourself in it, and you want to be there, then do it.
[addsig]
thanks for the input john! i really appreciate that. the Edison quote may apply in this case.
from your previous post, it sounds like you had to deal with the USFS on changes to your cabin. the cabin i am buying needs a lot of exterior work and changes are limited due to its historical value. did you come accross the same limitations? how did you get around that?
True, I did deal with them a lot - and you will too. In March of every year they like to send out a work plan questionaire which you need to fill out and return to them. Minor things don't need to be put down, but they are looking for big ticket items such as paint, or putting on a new roof. Some things you might like to do such as pave the driveway or build a new deck or even put up a satellite dish, they will tell you no.
Our cabin needed exterior work too. However, I liked the old wood and just stained and patched it with new pine of similar design, no one can tell. If you're thinking of putting up fake siding don't, try and keep things original. These things are old and survived, the workmanship tells a lot about the olden days. If you come across something major that needs fixing, fix it. You're on your own and don't need to write someone a letter for permission - if you catch my drift.
The winter of 1969 was huge. Snow drifts were over the top of the cabin (2.5 stories) and the massive weight of the snow pushed it off the foundation. So in the spring of 1970, the old owners came up with a crew of men and jacked it back up - they did what they had to. Had they asked, it might have been a candidate for fire training.
Lastly, a big consideration is insurance. It costs more than a normal home but good to have. In the past, if a forest fire or avalanche takes out your home (and yeah it happens), the USFS will deny you a rebuild.
You are fortunate, years ago I looked online and I could never find any "real" information on this subject. At least some is getting created now. But tell me about the place you're looking at: Lakes, rivers? Utilities? Snowsports?
[addsig]
it doesn't snow in that part of the national forest. there is a seasonal creek that runs in front of the cabin. from what i hear, fish can be caught but not plentiful. there are a couple of waterfalls a short hike away. the area is known to have good trails for mountain biking.
water is obtained from the fire dept. the cabin has a 3,000 gallon tank. electricity is by solar and there's a propane gas tank.
i'm definitely glad to have you as a resource. it is hard to find information on cabins in the national forest. even the NFH does not have a forum for cabin owners to share experiences.
Sounds like my set-up! Right on. We have a propane refrigerator (Servel) that keeps the food and beer ice cold and you can't even hear the thing running.
And don't get me started about the outhouse. It's probably the nicest out-door toilet facility west of the Mississippi.
i think i'm prepared to make an offer today. what type of form should i use? any suggestions on what type of contigencies i should include?
Good question. A simple one page "offer to purchase" would work. My cabin took 1.5 years of deal on - deal off - deal on again. When the deal finally came to fruition I still didn't believe it until I was finally inside and cleaning it out. No contingencies in that deal.
However, it should be contigent upon the USFS tranferring the lease. Which of course will happen, unless there is something the owners are hiding. If the cabin is in direct violation of any rules, the USFS won't transfer the lease until things are fixed. Also it should be contigent upon inspection. Do expect to have things wrong that no one has ever come across before. That is normal. Our cabin you could drop a bowling ball in the kitchen and it would roll all over the house - fixed now of course.
Other things to look for, when does the lease expire. Dec 2008?
I'm sure that you know that financing is almost non existant for these types of dwellings. Can the owner finance a term that takes you up to the end of this lease cycle?
I don't know your situation, I hope this helps a little. It's just for every situation there are many correct avenues to use to your advantage.
[addsig]
It is a long story, lets see if I can make this quick. Little old lady from Pasadena dies and wills cabin to a youth outreach/church group in Hollywood. This group uses the place for trips over 12 years and eventually realizes it doesn't work out for them so they decide to sell. It is right down the street from my house (15 mins) and I figure it would be a nice addition to my porfolio. Begin negotiations, they want all cash, but finally concede to a price of 24K with 12% financing. 12%! The thought of such high interest made me sick. I was unexperienced then and didn't realize that was the best deal. Flat out told them no. They found another buyer, fell through. So then they put this guy into it as a renter - not allowed. This guy trashed it good. Buckets of human crap (literally), a real horror show. The USFS evicted him. I didn't even know this was happening until a received a letter from the church stating it was for sale again. New price $35K 8% financing. I called them up and offered full price, provided we do the deal now. Still took another 4 months! Why, who knows. In the end I received a phone call and was told that "God has chosen me", well I was thankful for that - but enough talk lets get God's signature on the paperwork.
OK, even though it is unsecured property, there is a chain of ownership. And it does get recorded, how else do they know who and how much to send the bill to? And, truthfully I don't remember title ins., but that's why escrow handled it. So, for 1.5 years I wasn't practicing due diligence but patience.
You need to talk to someone in the county office, they will know more than the seller about records. The cabin does have an APN. Perhaps the previous seller is still holding title - you know, you can only trust people so far. Darn-it I am stumped on the title insurance question *making a call* Ok, got the answer - no title insurance. Do you need it? Doesn't matter, it's not available.
Bottom line, whoever holds the lease needs it to be transferred to you. A bill of sale will transfer the cabin and contents. The lease gives you the right to occupy the land, without the lease sanctioned by the USFS there isn't much there. whew - I need a break.
alright, so i made an offer and he accepted it on the condition that he is selling it "AS IS". we already agreed to do work on the cabin. it requires a lot of exterior work which we agree to do. should i worry that is "as is"?
Well... I don't know. I didn't worry about my "as is". But our situations are different. At the very least you or an inspector need to give it the fine tooth comb. These things were built a long time ago - not to complicated to work on over the weekend. You need to be handy with tools and home repair. Also, you need to give the various animals and rodents their eviction notice. :-o
[addsig]
thanks a lot for all the help!
Are there any tax benefits to owning these Forest Service cabins, as there is when buying a second home? Or, is it just like buying a car--money spent, nothing ever really returned financially?
No real tax benefits. If you carried a small loan on it you may be able to deduct the interest. Property taxes are also deductable.
I would like to clarify that it is not like buying a car. Has anyone ever bought a car to have it increase in value by 600% just through time? Of course, like anything else the appreciation will not be realized until a sale. Renting for short terms is also allowable, so that could be a source of income as well.
These leased cabins can be quite valuable, but most often it is the Holidays, time with the family, memories, vacations, relaxation, and time spent outdoors that richen the owner's lives.
[addsig]
well said john. i've only had the cabin for less than a month and good times are already starting to pile up. if these cabins are well taken care of, i'm sure it will only appreciate in value, but the goal here is to enrich my life with great times in the cabin.
i'm currently looking into replacing the exterior log siding since it has deteriorated. i plan to use pine log to maintain the aesthetic. i want to restore the cabin to it's original look. any tips? you can email me direct if you want. thanks.
I don't have your email - but I sent you a PM.
[addsig]
OK, I was thinking the same thing, but for the barebones membership at $25/year I went ahead. There is just not much good stuff out there -- and when I happen to luck upon something of this quality that needs financial support count me in. (Sorry for the shameless plug TCI )
[addsig]
Spikerz and John-
Not to change the topic but I was born and raised in So. Ca myself ( lived in Culver City and I now live in New Orleans) and I use to escape to Angeles National Forest and Big Bear every chance I got. It is just nice to read about people back home enjoying what the west coast has to offer. Just felt a little homesick I guess after reading your posts. Good luck in all you guys ( I still can't say y'all LOL) set out to do.
Christine