The Commonwealth Iconoclast

A site dedicated to covering issues relevant to the Commonwealth of Virginia, and nation at large, plus other interesting things too, as I see fit...

Wednesday, December 07, 2005

Real Estate 101: A simple guide to becoming (very) rich!

Here is an interesting little story that comes to me from my readers down in the Heart of Virginia: Prince Edward County, Virginia.

It seems that there are some fabulous opportunities to make a lot of money fast if you know your way round those dusty Courthouses in the Heart of Virginia. The story is about making money the old fashioned way and it goes something like this.

Once upon a time (actually a few years back), the Prince Edward County Board of Supervisors found itself in possession of some real estate that it had no immediate practical use for.

The piece of land in question was 74 acres in area and was covered with mature hardwood trees. The property was adjacent to the Town of Farmville and had access public water and sewer utilities subject to the normal hook-up fees. Town streets were immediately available and stubbed into the site. For those who may be unfamiliar with the area, Farmville is a vibrant and growing community in the Heart of Virginia and the home of Longwood University.

From local accounts, the 74 acre site was a pretty piece of land with a little stream and majestic hardwood trees over a hundred years old. Neighbors in the area reported seeing all sorts of wildlife on the land including deer, turkey, and everything in between. For years, children from the surrounding neighborhood played in the woods on the edge of town like children of yesteryear.

Apparently, sometime around early 2003, the Prince Edward County Board of Supervisors decided that there was no further use for the land and elected to unload it by public sale. The exact circumstances of why are not known and it is possible that this decision was made in a closed meeting for some good reason. We just don’t know what that reason was. It really doesn’t matter (unless someone wants to offer a reason).

In any event, the County published a public notice in The Farmville Herald, a local newspaper, on April 30, 2003 to announce the “Sale of Surplus County Property” and indicated that the Board of Supervisors “will consider offers” not later than 4:30 p.m. on May 12, 2003. A check of the calendar will reveal that the County provided a full twelve days from the first notice to the public to the deadline for bids on the land.

The public notice indicated that there was a timber appraisal available. That appraisal reported that the timber on the land had an estimated value of $166,000. There was no other appraisal for the land in general. Perhaps there was no need for a current land appraisal, but I will leave that for you to decide.

According to a report in The Farmville Herald on May 16, 2003, citizens appealed to the Board of Supervisors and asked many questions concerning the status of the land and its possible uses for the public interest. Citizens also asked for a public hearing on the sale of the land so that current citizen ideas and suggestions could be considered more carefully.

Citizen concerns were acknowledged by the Board of Supervisors Chairman William “Buckie” Fore. However, the request for a public hearing prior to the sale of the land was rejected when the County Attorney Jill Dickerson explained that the County already held the required public hearing to declare the land surplus back in August of 1996. The Board seemed satisfied that the seven year old public hearing was sufficient to fairly weigh citizen ideas and decided that no new public hearing to receive public input would be necessary.

To be fair, it should be noted that the same news report revealed that there was some doubt on the Board about the appropriateness of the hasty sale of the land. In that report, Chairman Fore asked one of his fellow Supervisors who had expressed qualms regarding the sale “…how much of the County’s money he would be willing to spend to answer the [citizen] enumerated issues?” While it appears from this report that there was some honest hesitancy on the part of some Board members, the overriding view of the Board, and Chairman Fore, was to accept the two bids and get on with business.

The low bid was in the amount of $150,000, an amount less than the appraised value of the timber ($166,000). This bidder apparently wanted the County to pay him or her to take the land. You can’t really blame someone for trying…especially under these circumstances.

The high and winning bid was $225,000. This bid was submitted by a well known local land speculator (name withheld). Subtracting out the appraised timber value of $166,000, this winning bidder walked away with the raw land for an estimated investment of $59,000 (remember this number).

A recent report in another local paper, The Crewe-Burkeville Journal, points out that this effective price for the raw land is equivalent to about $800 an acre. Considering that the site is located with immediate access to public water and sewer from the Town of Farmville, this is starting to sound like a pretty sweet deal.

Shortly after acquiring the land from the County, the land speculator harvested the timber. Presuming that the appraised value of the timber at $166,000 was approximately on target, what was left was the raw land that the land speculator obtained from the County for an effective price of $59,000. Consider…74 acres with public utilities available for $59,000 or $800 per acre…indeed, a pretty sweet deal.

Since then, the original land speculator was reported to have sold the land to another party. Most recently the second private owner was reported to have sold the land again. Courthouse records indicate that on May 25, 2005, only two years after the original land speculator acquired from the County the raw land for the effective price of $59,000, the same raw land sold to a new party for $725,000! This deal is getting sweeter by the minute.

Please let me repeat this for clarity: Effectively, the County sold the raw land in May of 2003 for $59,000 ($225,000 total sale price minus $166,000 timber value equals effective price for raw land of $59,000). Two years later the same raw land (with timber harvested) sells for $725,000!

Just looking at these basic numbers (all available in local news reports), this seems like the value of the raw land went from $59,000 to $725,000 in just two years. This seems to be over a 1200 percent increase in two years in basic value (correct me if my math is wrong).

Even allowing for incidental costs for attorneys, engineers, and various other middle men/women, et al, etc, whatever, it would appear that someone made a fairly good return on their initial investment.

I really do not want to speculate on exactly how much money specific individuals made on this deal. Probably there were a number of people in the chain of transactions who took a piece of the action on this little “economic development” venture. It is fair to say that significant money was made in a very short time.

Perhaps there were a number of players who did pretty well on this deal. But, as for the taxpayers who used to own this land, they may not have come out on this deal so well. The big profits by the private investors in such a short time suggest that the County may have given important County assets away way too cheap… way too cheap. (That's what some people might call an "orange jumpsuit" type of deal - you firgure it out!)

Interestingly, this same 74 acre site is now the subject of a highly controversial zoning application in Prince Edward County where the most recent owner is proposing 270 townhouses ( $40 to $50 million in potential value) If approved, the new zoning proposal would permit the largest residential development in the history of Prince Edward County (this matter probably has nothing to do with making a lot of money really fast). I am sure that the Board of Supervisors (the same people who sold the 74 acre site two years ago at a fairly modest price) will look out for the interests of the citizens and resolve this controversial zoning matter satisfactorily.

But back to the main story: I am probably making the idea of easy money too simple. The key to making a lot of money really fast is not as simple as the above basic facts may suggest. If you want to make similarly impressive returns on investments you have to know what to look for. Here are some basic tips.

Look for opportunities in counties where the Board of Supervisors does not bother to appraise surplus real estate before they sell it.

Look for opportunities in counties where the Board of Supervisors will accept seven year old public hearings a satisfactory way to evaluate current decisions.

Look for opportunities where the Board of Supervisors does not want to “waste” tax dollars answering silly questions from citizens.

Look for opportunities where the Board of Supervisors is willing to liquidate hundreds of thousands of dollars in County assets on the basis of a twelve day notice.

Look for opportunities where the Board of Supervisors really doesn’t care all that much about citizen concerns about management of valuable public resources.

One final tip: Where you find the above conditions, you might want to get to know your county officials… get to know them very well… and let them know that you too are interested in getting rich as quickly as possible.

Good luck.

PS: Many thanks go to those who contributed to this piece including The Farmville Herald, The Crewe-Burkeville Journal, my good friends the citizens of Prince Edward County, and those officials who have kindly provided the public documents cited in this article. As always, I want your feedback. If readers have further insight on this story, I welcome further comment and information. Keep those confidential comments coming. I appreciate the material.


  • At 12/07/2005 10:34 AM, Anonymous Anonymous said…

    What great research! It really appears that you have done your homework and connected the dots. Thanks for taking the time. This a good piece of journalism, impressive! As a resident of Prince Edward County I will indeed be forwarding this link to everyone I know!

  • At 12/07/2005 12:24 PM, Blogger Will Vaught said…

    Thank you for your kind words.

    Hell, who knows maybe my next stop will be the NYT? :)

  • At 12/07/2005 2:32 PM, Anonymous Anonymous said…

    I have never even been to Prince Edward or Farmville but it sounds to me that the County's Board must think the citizens fo the county are stupid?

    Are you the only person in the county that has scrutinized this sale?

    This unknown person purchased the land from the County for 59k (sales price - timber) and then turned around and sold it for 750K? that definately sounds like a "orange jumpsuit special" to me too!!!!!!!

    So who is this mystery person that paid 59k for the land? enquiring minds want to know. let me guess, he's probably the brother of one of the current board members? haha

    give up the name! what are you scared? this might even help to explain things more.

  • At 12/07/2005 5:57 PM, Blogger Will Vaught said…

    No as far as I know the individual who purchaed the 74 acres is not related to any former or current member of the BOS in Prince Edward. Yes, certain members of the County's staff and BOS might think that the general public are stupid, but not that stupid I guess.

    I choose to withold the name of the individual who purchaed the land because I do not want to even give the impression that this person has done anything wrong or illegal.

    As far as I can tell, this individual made one hell of a investment. It is my opinion that the onus is on the Couty's staff and ultimately the BOS. period.

    Otherwise, you can look through the County's real estate transactions records and find out for yourself.

  • At 12/08/2005 9:20 AM, Anonymous Anonymous said…

    This may be kind of interesting, but...and this is a big but... these kind of deals are the exception and not the rule. So if all your readers jump into their cars and run down to their local courthouses, most likely they will be disappointed.

    My question is did county officials get any professional guidance before the sale. Almost any reputable real estate professional would have told them that a 12 day bid period was totally inadequate and sure to generate poor results.

  • At 12/08/2005 10:48 AM, Blogger Will Vaught said…

    Since this has been posted (as of yesterday morning) I know some individuals have been aggressivley e-mailing the link to loads of people. which in my opinion is fine, if someone doesn't like it, then delete it, this is called e-mail people!

    But one individual (not part of county staff or the BOS) took exception to being forwarded the link, and went so far as to send me a blistering e-mail. Here it is:

    I find this another misleading and somewhat deceptive piece of communication. I try very hard not to conduct my professional and
    personal business in a deceptive or duplicitous manner and chose not to read documents that are constructed in that fashion.

    Please remove me from your e-mailing list and refrain from
    sending me any other un-solicited or un-requested communication.

    I promised this this individual that I wouldn't e-mail them a link again (which I didn't in the first place), but of course I had to respond to this individuals e-mail, so here it is my response:
    I will be happy to remove you from my list. But first, let me respond to your e-mail. You wrote:

    **I find this another misleading and somewhat deceptive piece of
    communication. I try very hard not to conduct my professional and
    personal business in a deceptive or duplicitous manner and chose not to read documents that are constructed in that fashion.**

    Please tell me what part of the article/blog entry that was incidentally forwarded to you that was "deceptive or dublicitous"? What portion of the blog entry was falsified or misleading? Were my sources ficticious? Were my sources wrong? Did I make anything up? Because I'll be happy to take the blog entry down immediatly if you can explain to what portion of the entry is "deceptive or dublicitous". I stand behind this piece 100%.

    This is why in the e-mail you sent to me you CAN NOT SITE ONE SINGLE PART OF MY COMMUNICATION/BLOG ENTRY THAT IS NOT BASED ON DOCUMENTED FACT! DID THE COUNTY NOT SELL THE LAND FOR 225K? DID SOMEONE TWO YEARS LATER NOT TURN AROUND AND SELL IT FOR 725K? Is the piece of property not the subject of a contorversial rezoning? Is that a lie? Is that misleading or duplicitious? Please I want to know, educate me. Because I have the records in front of me that prove that these statements are 100% gounded in reality.

    I have a feeling you're not going to respond. Because your e-mail is based on a false perception of reality,and outright denial of basic facts. Once again, I'm sorry that someone sent you a dose of reality, I hope they do not do that again! WV

    Needless to say, this individual never responded to me.

    Once again, my intent here is not to upset the current power structure in the County (ok that is a lie) but still, this individual went our of their way to look up my e-mail address (which is listed under my profile, so i do welcome them) and tell me that I'm misleading and dublicitous in my approach. If you want to be critical of the piece, then please tell me what portion of the entry is false, and document it, and I'll be more than happy to take it down.

    I'll be waiting...

  • At 12/08/2005 2:35 PM, Blogger zen said…

    This comment has been removed by a blog administrator.

  • At 12/08/2005 2:35 PM, Blogger zen said…

    Great post and impressive in-depth exposure of what many people are probably oblivious to. They don't care to know that the 'good ol boy' system of corruption is alive and well. Or incompetent, or both.
    I attended Longwood and had a few eye opening experiences when I lived there as a townie during the summers.

    I agree that it is not the fault of the investor. As a matter of fact that's the kind of sweet deal I will keep an eye out for from now on. However if something should come to light that there were special circumstances surronding this sale I hope you'll fill us in on those as well.

  • At 12/08/2005 2:44 PM, Anonymous Anonymous said…

    I think it would be interesting to hear from some of the county officials who have all the inside information on this deal. Come on folks! Stand up and defend yourselves!

  • At 12/08/2005 4:02 PM, Anonymous Anonymous said…

    as the the poster "zen" stated, you can't blame the investor for making a good investment. but still, this does not clear this mystery investor of any wrong doing either. i understand that will doesn't fault the ivestor for "flipping" the land because the deal should have never been allowed by the board in the first place. but this does not mean that this person wasn't somehow involved in some sort of shady deal. get my drift?

  • At 12/11/2005 8:25 AM, Blogger republitarian said…

    This entry could be about Rockingham. Just change the names....

  • At 12/11/2005 4:18 PM, Blogger Will Vaught said…

    Repbulitarian - I would have to 100 percent disagree with you on that one...

  • At 12/21/2005 2:53 PM, Blogger David Briggman said…

    I think Myron meant that it sounds like the City of Harrisonburg.


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