When Louis Herron spent $2,333 on an acre of land in 2013, he knew he was getting a bargain.
But he never predicted that the property in Flagstaff, Ariz., a 30-minute drive from the Grand Canyon, would become more than six times more valuable in less than a decade. Now the acre, which currently houses two tiny homes, is worth up to $15,000, according to an appraiser estimate reviewed by CNBC Make It.
“I was 21 or 22 at the time and didn’t even know I could even buy property,” Herron, 31, told CNBC Make It. “I set foot on the property and knew I had to take the opportunity, even though I didn’t.”
He adds: “I have spent all my savings on this earth.”
Despite its spike in value, Herron says he’s unlikely to sell it anytime soon: the two tiny houses combine to create his bedroom and living spaces, and it’s only 30 minutes from his full-time desert hiking business, which he started three years ago. Here’s how he acquired the land and why its value has increased so much.
Real estate luck
In 2011, Herron dropped out of Ball State University to follow a wanderlust, he says. He washed dishes at a restaurant near Yosemite National Park in California before becoming a tour guide for park employees. In June 2012, he took a similar position at Glacier National Park in Montana before moving to Flagstaff, just outside the Grand Canyon, in 2013.
A friend of his found the real estate deal, Herron says: $7,000 for three acres of land. Along with another friend, the trio bought the package and split it, giving everyone an equal share for an equal price.
Herron says he bought his first tiny manufactured home in 2015, but didn’t move into the land until May 2017, following an increase in rent prices. The house was too small to fit most standard household amenities. So he bought a second small prefab house from a neighbor and divided his accommodation between the two structures.
A house has the bathroom, the laundry room and the master bedroom, Herron says. The other has the kitchen, living space and storage.
“The cost of living has skyrocketed due to the ongoing gentrification in the city, so I figured that instead of paying ridiculous rent, I could just live on the land,” Herron says.
Average foot traffic, higher expenses
The dramatic increase in land value is “based on location, vegetation on the land…nearby electricity, [and] neighboring properties,” according to the appraiser’s emails to Herron, which were reviewed by CNBC Make It.
Gentrification is probably also a factor. Last year, the median price for a one-bedroom rental in Flagstaff was $1,300 per month, according to Apartments.com. Data from Rentdata.org shows that the median rent for a bedroom in the same area in 2013, when Herron bought the land, was just $852 per month.
This represents a 65.5% increase in median rent over those eight years. By comparison, the median price for one-bedroom rentals nationwide rose 54.5% between 2011 and last May, according to US Census data. and a Redfin report.
The Grand Canyon is also increasing in value. In 2011, 4.3 million tourists spent $467.26 million in and around the national park, according to the National Park Service. Just 4.5 million people visited in 2021, but those visitors spend a lot more money: The park’s entrance regions took in $710 million from tourism last year.
In August 2020, Herron and his then-partner spent $15,000 to build a 16-foot yurt on the property. He brought in $27,600 between August 2021 and August 2022 as an Airbnb rental, according to documents reviewed by CNBC Make It. When they broke up, Herron’s ex took possession of the yurt. Herron says he wants to build a replacement – or more replacements – soon.
It will have stiff competition: There are at least 2,000 vacation rentals in Flagstaff, according to rental analytics firm AirDNA. Herron says some adjoining slices of land host up to six Airbnb listings each.
Financially speaking, Herron is betting that the value of his land will continue to rise. But he says that’s not the point: He staged his off-grid experience as a testament to his appreciation of living off the land.
“The Grand Canyon is arguably the most incredible backdrop in the country,” Herron says. “I love living on her doorstep and taking trips on the spur of the moment and sleeping under the stars in the canyon.”
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