Last week, there were three tracts of land for sale in Linn, County, Oregon for under $200, and I would have purchased one, except that I realized at the last minute that I had to be at the Linn County Courthouse in person at 9am, and there was no proxy bidding. I’m also considering a $1,000 tract of land that’s for sale in Alturas, California that’s almost an entire acre. Of course, if you bid on properties like this, I make no guarantees about this land, and buying land at a county auction comes with a lot of risk.
The reason I’m writing about this is because I’m sort of fascinated with the idea of owning a third of an acre of wilderness for the price of renting a camping spot for a few weeks. There may be significant building restrictions on it, but since it’s in a remote area, it’s possible that you could put a $2,000 shed on it, and then have a rustic vacation property, or at least put up a really nice tent for a week or two. You could even drop into conversations that you own a second home and people will think you’ve made it in life… as long as they never see it.
Land sales like this happen much more often than you’d think. The $200 tracts are tax foreclosures, which is wild because the annual taxes for it are literally $22. There are a lot of situations where an owner forgets or doesn’t realize they own land, or doesn’t want to pay taxes on it, and the county seizes it after a few years of delinquent taxes. In these cases, the county may be statutorily required to list the property at around two thirds of its fair market value, depending on the specific county laws. It’s common for these random tracts of land to have no other bidders, so the sale price might not be much higher than this. If the land was purchased for future development but has not been developed at all, its real market value might be extremely low, and therefore the taxes on it may be low as well.
Of course, it’s also possible that this land was abandoned because it’s so polluted that it falls under CERCLA, which is the Comprehensive Environmental Response, Compensation, and Recovery Act, meaning that any owner of it could be financially responsible for environmental cleanup. This particular land in Oregon, however, looks like it is in a large area that has never been developed, so I see this as unlikely, though of course I make zero guarantees.
I bet at this point you’re wondering if this article is entirely sarcastic, since I’ve basically said, “this land is beautiful, but it might be an environmental waste dump, you might never be able to sell it or drive to it on a road, and you might not be allowed to build anything on it.” Perhaps I’m a terrible salesman, but I do think that as long as you’re aware of these issues, owning a $200 piece of land might not be the worst idea.
Since this land is so cheap, it’s unlikely to matter if it decreases in value. Of course, cheap land can be expensive if it’s an environmental cleanup issue, or if the taxes on it increase significantly. However, purely from a market value perspective, you can’t lose more than $200 on it.
As a real estate licensee, it’s sort of shocking that land can be so cheap. However, the economics of tax foreclosure operate very differently from those of conventional real estate sales. When a county ends up holding the bag for a bunch of land through foreclosure, it becomes responsible for administrative expenses, maintenance, and, most importantly, liability exposure. It’s expensive to even determine what disturbing liability secrets a parcel of land can hold if you’re a government that manages thousands of acres of land, which is why selling a parcel for a nominal amount can be the cheapest option.
If a bunch of land that you might not be able to do anything with except sit on sounds appealing, then join me at the next Oregon tax foreclosure sale!
