By Kyle Rearden
Today’s article is a chapter within Brian Kelling’s 1999, “Travel-Trailer Homesteading Under $5,000.” I figured that as part of an eventual article I’d like to write about strategic relocation, this background material would be useful from a historical perspective, if for no other practical reason. This republication of Kelling’s chapter is hereby done under the intention of Fair Use; no copyright infringement intended.
Choosing your land is probably your most important consideration, and there are many things to take into account.
For starters, where would you like to live? To me, this is the most important question.
Then, where can you afford to live? Where can you find a piece of suitable land for $2,500? You’ll need to be realistic about this.
Is the county unzoned? I highly recommend a county with no zoning, because then you can pretty much do what you want, and erect what you want. Taxes are usually cheaper, and there’s generally no one to enforce county regulations. So while you’re at it, check into whether or not there are any county regulations that would affect you (such as having a well or cistern, and a septic system in before you could occupy the land).
If the county is zone, how strict are they? Do they have a building inspector? Are mobile homes allowed?
Are there any covenants on the property? Covenants to me are completely undesirable, although it is possible to live with some if they’re not too restrictive.
How far is it to town? With today’s gasoline prices, this can be a real factor in the total equation. However, part of that depends on how often you’ll be going to town.
Does the county maintain the road? (Assuming there is a road, that is.)
Can you get into that property in the winter? Do you have a four-wheel-drive? (And this is strongly recommended.)
What’s the climate like? Is there a lot of sun?
How far is it to water? How far to firewood?
Is the ground suitable for a septic system?
And here’s a big one: what will you do to support yourself after the homestead is in? Will you work? If so, where? Is the reception any good for cell phones? (If you’re planning on having a phone, that is).
Myself, I would start with the question of where you want to live. I’m talking about what region you’d like to live in. Say, the West, or the South, for instance. From there, narrow it down to a particular state. Then check around in the different areas of that state.
In my case, I knew exactly where I wanted to live. It was in the San Luis Valley of southern Colorado. I had already purchased a 5-acre tract in Alamosa County a few years back for a total of $2195. I paid $295 down and made monthly payments of $50 until it was paid off. I preferred to have the land – and everything else, for that matter – paid for, but you can sure make payments if you want to. It would substantially drop the initial amount you would need to get started from the $5,000 we are talking about in this book. But you have to be able to make the payments, and money is hard to make in small towns.
My taxes are $52 a year, and there is a building inspector to deal with, but I found him most reasonable.
For instance, mobile homes are allowed in Alamosa County, but travel trailers are not. However, my trailer is one of many. There are even a few buses. One guy I know built his entire house – complete with artesian well – without getting a single official permit. There’s even a straw bale house down the road a few miles.
Remember that building inspectors are powerful people in big cities, but that’s not usually the case in small towns (there are exceptions, however). I did eventually buy a building permit, to build a rock house, and this got him off my back. Also, by that time, I had my septic system installed, and that pacified him further.
Anyhow, I love the West, and particularly this part of Colorado. It’s sunny almost every day, the views are fantastic, the people are friendly, and land is pretty darned cheap.
Here’s a little bit about the place:
They say the San Luis Valley is the largest mountain valley in the whole world, roughly the size of Massachusetts. The Rocky Mountains run all the way around this valley, and the elevation here at the floor is quite high, 7,550′.
There are still some places available for $2,500, especially in Costilla County, where land is cheaper. It’s a favorite for homesteading, as are most of the farther-out places. Several years ago, I bought a 5 acre lot in Costilla County for $1,200, then turned around and sold it for $1,500. Recently, a realtor I met in town sold a 5 acre lot in Alamosa County for $500, and it’s in the artesian zone. Some area realtors, like at Fort Garland, for instance, deal in property that has piñon trees on it for somewhere around $35 down and $35 a month, but it’s real tough getting to it in the winter on rocky roads.
Kenneth Casey (he’s listed in the Albuquerque phone book) deals in Costilla County land. He sells it for $45 down and $45 a month. My brother bought one of his lots, and set up an $800 mobile home on it.
But wherever you but, check with the county it’s located in to make sure the land taxes are paid. Don’t take it for granted that the last owner paid them. It is possible for people to obtain land for back taxes, and you could be out of your money and a place to live (See section on tax lien properties later in this chapter.)
Naturally, with growth and the passage of time, some things have changed in the San Luis Valley. Costilla County – take note – is now recently zoned, as are most of the surrounding counties. Costilla County is in the process of trying to hire an enforcement officer – for at least permits, anyhow – but will never be able to enforce it everywhere. There are way too many homesteaders over there, in too large an area, for enforcement to be one hundred percent effective. Mainly, it depends on how visible your place is. But existing places were grandfathered in, anyhow.
Taxes in Costilla County are around $30 a year on a 5 acre tracts. Many people live in trailers, shacks, or buses, and even have outhouses (why, I can’t understand, when for the same cost of materials you can have a fully functional septic system – covered later in this book.)
There are several artesian wells in this area that are accessible to the public. One is on Highway 160, halfway to Alamosa, and other in Blanca, in Costilla County (it used to be the town well.) In addition, there are various others scattered here and there throughout the valley. These flow year-round, with good clean water, due to the large aquifer under a layer of clay beneath the valley floor. Actually, there are two aquifers – one under the clay, and one overtop of it. And the clay can be shallow or deep, from 10 feet to over 400 feet deep, depending on the location.
Under the pressure from water flowing underground from the mountains, a puncture of the clay (by a well) relieves pressure and yields a constant flow of water to the surface. It’s sort of like pricking a giant water balloon with a pin, only the stuff doesn’t squirt out.
But remember that you can’t get artesian water everywhere in the valley. For instance, at my place I can’t because the clay later is absent this close to the mountains, but I simply wanted to explain how the water flows constantly.
And you need a constant availability of water. The San Luis Valley only gets just over 7” of precipitation a year, so water collection is not really feasible as a main supply. Trying to drain a roof or other area for an exclusive water supply might be fine in places that get a lot of rain, but where, that would bring thirst in a hurry. If you employ gutters for water collection in a place like this, it will only be an augmentation at best – and with few exceptions, not much of an augmentation at that.
As far as heating, it is quite cold here in the winter, so everybody heats with wood. Me? I just stoke the wood stove and forget the temperature outside.
Her is the climatic data, courtesy of the National Weather Service:
The San Luis Valley is called the Land of Cool Sunshine, with the sun shining on average for over 320 days a year. So besides being excellent for solar power, I love it for the fact that to me sunshine contributes to a spirit of optimism.
The temperature rarely gets into the 90s, with 96 being the highest temperature ever recorded in the valley. If it gets to 90, you should hear the people complain. (I have fun telling them they don’t know what hot really is.)
We average 50 nights a year where the temperature gets below zero. Minus 10 is nothing. In the last four winters, I have seen it get to -30, once. The coldest temperature ever recorded was an even -50, but that in the 1940s. However, don’t let the cold scare you. When the sun comes up in the morning, it quickly warms things. That doesn’t necessarily mean it will be 60 outside, but it warms up and is quite tolerable.
With the dry climate we have here – and the abundant sunshine – it also seems to be substantially warmer than it is. There’s none of that mushy wet cold like they have in Buffalo, N.Y.
Now remember, there are always two prices for land out West, and in many other areas, too. One is the tourist price, which is high. The other is the local price, which is lower, and the one you want.
There is also a similar situation with realtors. Most of them sell the high-dollar stuff, and won’t even mess with lower priced properties. But in nearly every area, there is always one realtor who more or less specializes in cheaper land, or at least sells it, and that’s the person you want to talk to.
In all land dealings, remember that money talks. I mean cash money. Many times, you can get land substantially cheaper if you’ve got cash to put on the barrelhead. I once bought a 5 acre piece in Costilla County for $1,200 cash, which at that time was about half of the going rate.
At any rate, no matter where you locate, choose your land with care. You’ll spend half your money on this purchase, and it can affect your happiness and economic situation for the future. Don’t rush into anything, because there really is plenty of land out there to choose from. Take your time. Look around. On the other hand, don’t pass up a perfect deal, either. Trust yourself; you’ll know it when you see it.
Notes on tax lien properties
Before you get excited about trying to get tax lien properties dirt cheap – and for the most part, they are – keep in mind that you usually don’t get the property. In most cases, the people eventually pay up, so usually all you get is your money back with interest.
Notice that I said “usually” in both of those sentences. There are some instances where you might actually get the property, and indeed, I myself have obtained a few lots this way. One of those lots adjoined my land and expanded my contiguous holdings by one-third, which was really nice. But getting that particular piece was really just a stroke of luck, and in my experience such things are the exception, not the rule.
In my view, a tax lien property is generally not desirable for homesteading. There are too many variables, and too many chances for it not to work out. It also takes too long to actually get title to the land. However, a tax lien property could be an alternative if you know that you won’t be homesteading for several years yet, and have the time to wait until you actually own it.
Each state has its own rules or laws about tax lien properties, and if you’re determine to pick up a piece of land this way, you’ll have to investigate them. It’s pretty easy to do this. If you have access to the Internet, look it up. Search under “tax liens, _____ county, _____ (state)”. Then, call the county clerk or county treasurer to confirm that the information you have is correct. If you can visit them in person, even better. This follow-up contact is important, because rules and laws do change. New Mexico, for instance, changed the way they conduct tax sales, and you’ll find both versions on the Internet. One way to correct and current; the other is outdated. What’s the difference? A couple of years on getting title (it’s actually much quicker now). So call them.
Note that some of your Internet search results will be non-government sites where, for a fee, they can “show you how” or “provide current tax lien listings.” Ignore these. They’re just trying to make money from something you can do yourself with a little investment of time.
Incidentally, I wouldn’t bother with an initial written inquiry about tax liens, because like everyone else these days, those county people are busy and may not get around to writing back. (I say this from personal experience.) It’s also possible that they know or are related to some of those people whose land is up for liens, and might not be overly happy about helping them to lose it.
Here’s how the tax lien process works in Colorado: At a set time of year, counties annual publish a lit of properties in the local newspaper that back-taxes are owed on. The size of the parcel, location, owner’s name and address, and amount owed are all shown. Notice is given that if the taxes aren’t paid by a certain date, the county will hold a tax lien sale.
At that sale, people show up to “buy” tax liens. Basically, if you purchase a lien, and then pay the next two or three years of back taxes as they come due (there’s a mysterious way they come up with that figure, too), you can then apply for title to the property. Then, you pay some more, wait some more, and eventually, there’s a small chance that you just might get lucky.
But normally, you don’t get lucky. Most people redeem their property by paying the taxes plus certain fees. When that happens, the county sends you written notification canceling your lien, and also your money back, with interest. (The interest, by the way, is pretty decent. It’s something like 9 percent above the prime rate, or thereabouts.)
If you do get lucky, here’s how it goes. It takes at least three years of paying the back taxes before you can apply for title. At that time, you have to cough up an additional $400 to $800 or more to get the process moving (this is for the county’s attempts at owner notification, advertising in the paper, etc.). During this time, the person can redeem at any opportunity, right up until the very day before the county issues you a deed.
If you get the land, the deed the county issues will be a Treasurer’s Deed, not the more common Warranty Deed. This means, of course, that the county will not warrant the property to be free of all liens or “encumbrances.” No realtor would buy the land from you, if you ever wanted to sell (except maybe for pennies on the dollar), unless you had first done a Quiet Title Action in court. Cost: $2,000 or more.
Even if you are successful, you still won’t have completely clear title for 9 years, because of the antiquated Sailors and Miners Act. The reasoning goes that a person might have been away at sea or working in the mines for a number of years – they picked the number 9, for some reason – and not been notified that they were losing their property. This Act outdated, of course – just like the open range law in Colorado where you have to fence your property if you want to keep somebody else’s cows out – but that’s the way it is.
Assuming that you get title but don’t do a Quiet Title Action, know that at any time during the 9 year period, the person the land was taken from could come back to you and take you to court if they have some kind of valid claim. They probably won’t, but they could. Likely, this would depend on having a substantial claim, and also how much the land is worth. Once in court, the burden is on you to prove that the county did everything right, legally, in taking away that person’s property (let’s hope that they did.)
Should you get a parcel this way, and you sell it to somebody before 9 years has passed, and if the original owner comes back on you with a legitimate claim, you can then expect to be sued by the person you sold it to.
Some fun, huh? I recommend staying away from tax lien properties as a place to live. I think it’s actually easier to buy land the regular way. Then it’s yours, free and clear, with no worries.
Now, back to those tax lien sales. If you do go to a tax lien sale, there will be several kinds of people there. Some will be just like you, others are doing it on a lark, and then there will be those who fancy themselves as investors.
The investor types typically choose city properties with houses, because they know that sooner or later, somebody is going to pay those taxes rather than lose their home. Investor types figure that’s where the money is, so that’s what they buy. It’s sort of funny to watch these people, because they actually bid against each other for those particular liens. And any bid above the amount of taxes due is money that does not come back to you if the owner redeems. It’s simply gone.
Don’t bid, because bidding, at least in Colorado, is not necessary at all. Neither is waiting for a tax sale. In casual conversation with the county treasurer one day, I found out that you don’t have to wait for the tax lien sale to purchase a lien on any outstanding tax-due property. She said that all I had to do was come down during any normal working hours and go through the book of tax-due properties, pick one or more that I liked, and pay the money. So from then on, that’s exactly what I did, and never attended any more sales.
My aim was not to invest, anyway. It was to pick the outlying pieces, and cheap ones at that, that I was most likely to get because it wasn’t worth much to begin with and the owner lived out of state. I really believe it increased my chances.
Now, having tried to discourage you from getting a tax lien property, I would say that there may be instances where you could use a piece for homesteading that you obtained this way. Note that simply holding a tax lien does not mean it’s your property. Nor dies it give you any property rights whatsoever. Until you have a Treasurer’s Deed in hand, all you have is a lien, and that property still belongs to someone else. If you set foot onto it, you’re actually trespassing.
As for me, there is only one instance in which I would ever live on a tax lien property. That would be if I had a Treasurer’s Deed in hand and nowhere else to go. In other words, if I had title, and had to live on it. But that’s something you would have to decide for yourself.
Another note: By now, you have all seen some supposedly rich person on a television infomercial explaining how you, too, can become rich by buying tax lien properties and reselling them. This process is portrayed as being quick and easy – almost nothing to it, or so it would seem – and very little money is needed to get started. So if you’ll just send them $250 or so, they’ll be happy to let you in on the Big Secret and mail you the coveted information that can transform your life.
Now I’m not saying it can’t be done. But ask yourself why a millionaire would need $250 from you. Then ask yourself why a millionaire would want to let in on his secret to wealth. However, having said that, I think it might be possible to supplement your income by investing in tax lien certificates. Of course, this is assuming you have some extra money you can part with, which most homesteaders don’t. But I did it myself for a few years, and it brought in a few bucks here and there. Surprisingly, I actually ended up with some of the property. But it almost broke me, because I didn’t expect to get the property – only my money back with interest. When the people didn’t pay up to redeem it, I was stuck with having to pay for title to those pieces. I got it done, but it was sure hard on my budget at that time.
Remember, there is no guarantee when you’ll get your money back from tax liens. It could come at any time, from a matter of two weeks to three years or more. I say more because you might end up getting the property, in which case your money will come back to you years later when you sell it.
So here again, I would urge you to buy a piece of property the regular way. That way it’s yours, and no worries.