How to buy a town: Have plenty of cash – and patience
Owning your own ZIP code can be a dream or a nightmare. One thing it will never be is easy.
Krishnan Suthanthiran's town is stunning. Not the town where he grew up, or where he lives now, but the town he owns: a 322–acre beauty nestled deep in a steep river valley in British Columbia, Canada.
"My goal, ultimately, is the eradication of contagious disease, malnutrition and poverty," says Suthanthiran, an Indian-born engineer who made his fortune selling medical devices and real estate in the United States and, at age 60, is increasingly turning his energy to philanthropy.
The two might seem incongruous – a remote town and such a bold vision. But faraway places have always been the stuff of dreams, not to mention the engine of American drive.
In today's crowded suburban landscape, empty or forlorn townships hold a rare appeal, a chance for those with means to re-create a place of note. It seems to matter little to Suthanthiran and other town 'owners' that as a government body, towns can't truly be bought and sold like any old commodity. A town that's for sale is legally either an abandoned town or an unincorporated rural community, meaning it might receive some county services. An individual merely happens to have acquired much of the platted town site.
Still, it remains the ultimate land grab (Not to mention the ultimate business-card inscription, the ultimate T-shirt and the ultimate introduction: "Hi, I own a town.").
It is also the ultimate project, as some have found — namely, those now posting the ads to which they once themselves enthusiastically responded: "Town for sale."
'Own your own town!'
"Imagine owning your own town and ZIP code!" shouted one such ad in 2006.
The town in question was Bridgeville, a former wagon-trail stop and timber town 25 miles off the Pacific Coast Highway in Northern California.
Its owner at the time, Bruce Krall, told a reporter that buyers from as far away as Germany and China had expressed interest. "The world has a fascination with being able to buy a town," he said in a story by The Associated Press, picked up across the country. "You can come in and name it after yourself if you want and be the mayor, chief of police and secretary of interior all at the same time."
Krall purchased Bridgeville in 2004 after it had made history two years before as the first town ever to be auctioned whole on eBay. The winning bidder bought it — sight unseen — for $1.77 million. (Hey, it was 82 acres of California real estate, after all.)
The unnamed Western developer drove north, took one look at his catch — remote, lacking in infrastructure and marred by garbage and dilapidated buildings — and immediately tossed it back, reneging on the online deal.
That's when Krall, a commercial mortgage banker, got it for $700,000. He invested several hundred thousand dollars in repairs, but, according to locals, couldn't persuade his family to move so far from possibility. Thus the new ad went up.
This time, Daniel La Paille, a 25-year-old Los Angeles entertainment manager, bought into the dream for $1.25 million, envisioning an environmentally green community and a retirement spot for relatives. He ingratiated himself to the 30 or so residents, enthusiastically dived into repairs and espoused the value of community.
Three months later, he committed suicide. His heirs, overwhelmed by the project and pained by its memories, have put the town on the market again, where it's sat for more than a year.
The ultimate responsibility
While Bridgeville's recent story is probably more tragic, it is not unlike that of other for-sale towns, in that distant allure outshines on-the-ground feasibility. Some town owners shy away from publicly discussing their investments; some have given up advertising but will consider offers to buy.
"Everyone thinks it'seasier than it is," says Skyler Blue, a Bridgeville local. "You have to be a person who doesn't mind that you might not have water for a couple days while it's getting pumped up, or that the electricity might blow up."
In real terms, 40 minutes from civilization means $195 for an appliance service call, barely a job in sight, no water if the state forbids pumping from the river, and neighbors who arrived with, or because of, emotional wounds, Blue says.
Furthermore, the town owners – the landlords – must maintain their renters' water and sewage systems.
Prospective owners quickly realize, "Whoa! This is a way bigger job than I thought," Blue says. "It's like fixing your own refrigerator. Sure you can take it apart, but can you get it back together?"
A place on the map
Bridgeville is now listed for $1.35 million and comes with 64 acres, riverfront lots, 10 rental houses and a building leased by the post office. (If interested, contact Bruce McNaughton at Realty World Main Street, in Norco, Calif.)
In 18 months, McNaughton has taken 40 to 50 calls from interested buyers, nearly 20 of whom made repeated call-backs. With one exception, the latter fell into three categories, he says:
- "The guy who's got a lot of money and, for lack of better word, wants to have it as a hobby. For ego … to put up a ranch or resort. … He wants to have his own deal, say he owns his own town."
- "The green community. They want to have their own little town and, for lack of a better word, have a commune. Which was sort of Dan's (La Paille's) idea; he wanted to get everybody involved, have a garden and stuff."
- "The family that wants to do, like, a ranch: a place to live that has some kind of business going there, the rentals. But they'd be able to have their cattle at the same time."
All hit the same obstacle: funding. Banks don't view run-down outposts as good collateral.
The one who likely had buying power, a business developer, figured he could make a better return on his investment elsewhere, McNaughton says. "If you just want 64 acres, you can probably get a better deal," he says.
So what exactly do you get when you buy Bridgeville? "Sixty-four acres that's been called Bridgeville for some time, that's what you get," McNaughton says. "It's a town on all the maps … whatever that's worth to somebody.
"Some people want to own their own ZIP code."
'I want to be mayor'
Two states north, real-estate broker Juli Doty experienced the same tough sales prospects for Monse, Wash., a former farming community in a lonely stretch of Eastern Washington. It took her five years to sell the 60 acres, six houses, a worn store and schoolhouse, a public fishing hole, an intersection and two street signs for $575,000. And that was after she sold a couple of small parcels first.
"I cannot tell you how many families I've shown it to, how many church groups I've shown it to," Doty says. "Families would want mom and dad and the adult children to move there and all have their own houses, and have a private safe place to raise their children.
"They were almost always people wanting desperately to get out of the city."
The problem: funding. (Not to mention a lack of locally available paid work once they got there.)
"Lenders are horribly hesitant," Doty says. "How do you appraise a town that may or may not be a town? That has termite-infested houses? Who has the $575,000 for the town plus the $3 million for the infrastructure, plus the strong-enough credit to have the lender work with them? They'd have to desperately want it and have the financial resources."
There were other ideas for Monse, too, including:
- Strip clubs: "There are no neighbors that can complain, no churches out there," Doty says. She got two separate inquiries for this.
- An RV park: "It's something they really looked at, but they couldn't afford the development to make it work," she says of the prospective buyers.
- A prison: "That was the state," Doty says. But the county's density was too low to comply with state regulations for prison sites.
- Make-a-sheriff: "The sale attracted some strange people," Doty says. The strangest? A Brooklyn man who said if he owned a town he could appoint himself sheriff for a day and have the legal right to carry a gun anywhere in the country.
"I never researched the idea to see whether it was legal or not because I thought it wasn't a good idea to get involved," says Doty, who, after three conversations, issued the New Yorker a firm "No."
- A church retreat: Many church groups had noble goals, such as to run a facility for abused women. Others wanted a "safe, quiet place to attend to their religion," Doty says. "But they were entirely without financial basis." Some even requested it be donated for religious reasons.
- A questionable outpost: A group in Idaho expressed interest and sought donations on its Web site, until, Doty says, someone told her they were Aryan Nation and she turned them away.
Throughout, Doty heard the same question: "Can I be mayor? Can I own a real town?"
"I was asked this very seriously," she says. "Everybody wanted to be mayor of their very own town. They wanted to make their own rules. I think people want some control over their own lives."
Doty finally closed in June on the sale of Monse to East Coast developers who called after seeing a story on Fox News. They haven't publicly disclosed their plans.
3 more 'bought' towns (one of which is for sale again)
For some buyers, there's no surpassing the cachet title of "town" might bring to a development. Here's a quick look at three towns and their owners.
Bobby Cave, a self-proclaimed restless overachiever, says he just about stole Albert, Texas, a small, abandoned town site an hour outside Austin, at $216,000 five years ago. He had inquired about a house, but much of the town came with it.
The former insurance broker and singer-songwriter cleaned up debris, rebuilt the ice house (Texas talk for gathering spot), "built a beautiful fence," engineered a first-class bathroom (to attract the ladies) and started holding music festivals.
"I built exactly what I wanted and exactly what I know and enjoy: a place where people can come enjoy a beer and listen to a guy play the guitar," he says. "Beyond that, I think the place could make a fortune."
Cave plans to keep adding — RV spots, lodging, a Texaco station, a drive-in theater, a dance hall — until he gets a buyer. It's listed now for $2.5 million, "but that price is highly negotiable," he says. Cave has returned to Austin for another business opportunity (and the singles scene).
Missoula, Mont., developer Scott Cooney bought all 42 homes in nearby Bonner for an undisclosed sum last fall from the Stimson Lumber Co., which is ceasing operations in the mill town.
Cooney has said he plans to create green manufacturing operations along the Blackfoot River, such as wind and solar power generation, renovate the houses and create a National Historic District.
Suthanthiran has a name for people like Cooney, Cave and himself: entrepreneurs.
Suthanthiran, who lives in Virginia, was eating breakfast in Halifax, Nova Scotia, in 2004 when he read a newspaper article about Kitsault, an abandoned Canadian mining town on the market for $5.7 million U.S. He called from the hotel.
Within four months, he'd sent staff for a look (he was busy buying a medical company in France) and paid cash for the lot: 322 acres and enough homes, apartments and community buildings for a town of 1,000 people.
"Definitely the property's worth a hell of a lot more than what it was selling for. And I'm a long-term investor," he says.
Other buyers were interested, but couldn't convince investors on the terms: no contingency, no feasibility study and a 10% nonrefundable deposit.
"I didn't have any idea what I was going to do with it, but I figured I’d make some use of it," Suthanthiran says. "That’s what entrepreneurs do; you make something out of nothing."
He renamed the town using his late parents' first names, Chandra Krishnan, and to date has invested $10 million on repairs to homes, water tanks, roads and plumbing and electrical equipment. It should cost an additional $4 million to prepare for a 2010 slow start as a resort and will cost more than $5 million annually to maintain, he says. He's responsible for infrastructure.
His goal is to capitalize on the town's isolation and beauty to attract celebrities and corporations for remote retreats. Kitsault is a three-hour drive from the nearest airport and a 3.5 hour floatplane trip from Vancouver, B.C.
Suthanthiran hopes their payments will help fund a rotating colony of 300 to 400 artists and scientists, who will be asked to spend up to a year there with free room and board. Bounded by beauty and isolation, perhaps they can help solve some of the world’s problems.
"You want to create an ideal world; it's something that doesn't exist," he says. "It may take 10 years for me to break even, but that's OK."
It's really the ultimate do-it-yourself fixer-upper. “If somebody wanted to build a town today, it would cost them $100 million," Suthanthiran says. "If I found another one like this, I probably would not be able to afford it."