December 25, 2005. The real estate boom is in full swing. I am taking a class at the Arizona School of Real Estate and Business – Land as an Investment. I learn the concept of the five-split – buy a big piece of land and break it into five smaller pieces and sell them for double the purchase price of the larger piece. Sold on that concept, I drive down to Benson, Arizona, a small town just east of Tucson where property values are rising in anticipation of a major housing development – Anthem by Del Webb.
Once I arrive in Benson, it appears I was the last one to hear about the Anthem project and the prices have already skyrocketed. A little dejected, I decide to drive further east on I-10 to see if I can find some land that I can afford. The next town is Willcox, AZ. I find a broker and tell him I am interested in buying some land. He chuckles and says “you and everybody else.” After reviewing his listings, a 120-acre parcel with power and an irrigation well looks promising at $2500 per acre. As we pull up to the property, I see what looks like a bunch of dead sticks across the street. I ask “What is that?” He says “Them’s grapes”… “You mean like a vineyard?”… “Yep”… “Are they dead?”… “Nope, they’re dormant for the winter.”
Right then, I envision the headline in my newspaper ad, “Across from a Vineyard.” I figure that’s more marketable than, “Across from some cows.” And so begins my story. I bought the 120-acre piece and split it into five parcels, four 20-acres and one 40-acre. I installed a water company with a half mile of pipeline to provide water to each parcel and brought in roads and power to each. I sold the four 20s for $5000 per acre within four months and kept the 40 acres for longer term. Had I sold the 40 at that time, I would have netted $250,000 profit after development expenses.
For the next year or so, there are plenty of investors eager to pick up large parcels of acreage for so little. “$5000 per acre with water and power – is that a typo?” We even started bringing investors down on a 50-passenger luxury coach to buy land in “wine country.” We’d end the day at Coronado Vineyards for wine and appetizers before the drive back to Phoenix. We’d sell two or three parcels on each tour.
October 3, 2008. Bush comes on TV to announce that we need 700 billion dollars to save the world’s financial system from collapse. They officially take the punch bowl away – Boom turns to Bust. Suddenly, there are no investors and I own more than a thousand acres of land – with payments.
Now I need to find end users – someone who wants to buy my land to actually use it. How about someone who wants to plant a vineyard? How do I find those people? Well, if someone wanted to start a vineyard and winery, they would probably visit the other wineries in the state to learn where to plant their vineyard. So, we set out to get a list of Arizona wineries. What we found were very out-of-date and inaccurate lists online. We decided to do the research to put together an accurate and up-to-date list for consumers. We’d give them out at each of the wineries so they could cross-promote each other. And we’d make sure there was plenty of information about my vineyard land for sale. We decided to include some articles about the Arizona wine industry and call it a “magazine.” Okay, an eight-page “magazine.” We printed 10,000 copies and went about delivering them to the wineries. We were met with a healthy (and understandable) dose of skepticism from the wineries, but most of them let us put it out.
As it turns out, it was a hit and within three months wineries were calling asking for more copies. We thought the 10,000 copies would last all year – and it was expensive to print. We decided that the only way to keep up with the demand and afford to print it was to make it a real magazine and sell advertising. The first real issue was 32 pages. This time we got a great deal of support from the wineries who realized it was bringing them new business.
Skip forward to today, we currently print 20,000 copies per quarter, we’re up to 84 pages with distribution at not only the wineries, but also all the major resort concierges and B&B’s in the state and newsstands at Barnes & Noble, Bashas’, AJ’s, Fry’s and Albertsons grocery stores. We are at most tourism locations and wine bars, wine stores and restaurants throughout the state.
I’ve been able to stay in the real estate business by focusing on my niche as the Arizona Vineyard Broker. I’ve sold Charron Vineyards, Sweet Sunrise Vineyards (now Sand-Reckoner), Bonita Springs Vineyard (now owned by Arizona Stronghold) and most recently Crop Circle Vineyard (now Rolling View Vineyards). I’ve also sold vineyard land to up-and-coming wineries like Zarpara Vineyards, Asmundson Family Vineyards, Aridus Vineyards, Saguaro Canyon Vineyards and many more still in development.
Finally, after the long winter of recession, like the dormant vines pushing buds in the spring, I am excited to say that investors are coming back. Now let me tell you why – my little niche of vineyard land. As the industry has grown by leaps and bounds over the last few years, there is a great demand for Arizona wine grapes and not a whole lot of supply. Just over one square mile in the whole state actually. There is a short supply of land with all of the ideal conditions to give it premium vineyard land potential and there is a steady and growing demand. And it is still well below $10,000 per acre. I see potential there.
Now, you remember that 120 acres? I sold four 20-acre parcels for $5000 per acre each in early 2006. Two of those parcels sold in late 2010 for $7500 and $7200 per acre. That is a 150% gain from 2006 to 2010. If you had purchased a house in Phoenix in 2006 for $100,000, it would be worth about $40,000 today. They didn’t over-build vineyard land.
Recently, a group of investors in California found an article I wrote in the Arizona Real Estate Investors Association newsletter three years ago and invited me to come speak to their investment group. I’ve been to California to speak several times and they’ve been over here several times viewing and buying land for investment and even building homes.
The last three years have been extremely challenging, yet extremely rewarding. My wife Rhonni has been with me through the tough times and has been a tremendous and invaluable support to me. The magazine would be nothing more than a brochure without her talent and hard work. Rhonni also took on the role of Executive Director for the AWGA for two long years in addition to producing the magazine. Publishing this magazine and volunteering at all of the AWGA wine events for the last four years, we have had the opportunity to make friends with just about everyone in the industry and we are proud to have been involved in promoting and helping to grow this wonderful Arizona Wine Industry.
I look forward to continuing to help people realize their dream of growing grapes and making wine. It’s exciting to be part of an industry that has continued to flourish and grow into something so special. I can’t wait to see what the future has to hold for the Arizona wine industry…
Living Amongst the Vines…
So, you’ve always wanted to have a vineyard . . . live in the quiet and serenity of the vines . . . watch the cycle from vine to wine every year . . . BUT, you don’t want the responsibility of owning a business you’re not familiar with . . . you realize that you’re not a farmer, maybe you even have a black thumb or maybe you just don’t have the funds to start your own vineyard at this time. Well, there’s a new trend that’s the answer to your prayers – The Vineyard Estate.
Although it’s not a new concept, it’s been steadily picking up steam and they’re sprouting up all over the nation. The premise is based on a similar concept as a golf course subdivision but instead of golf balls being constantly “shanked” into your backyard, your home is situated in a vineyard. With some vineyard estate projects you may own a stake in the vineyard that surrounds your home or you may just own the land your home sits upon. Most of these communities offer incentives such as receiving cases of wine produced from these grapes and you may even be able to participate in harvesting or crushing the grapes or bottling the wine. The biggest benefit is agreed upon – looking out your window and enjoying the peace of vineyard life.
There are a few existing vineyards in the state that have plans to capitalize on this concept, creating some kind of community on or near their vineyards. It’s a premise that’s certain to gather momentum as people learn more about Arizona wines and as people decide it’s time to leave the rat race.
So if you dream of the day where you can sit on your patio, drink a glass of wine and watch the sun set over the vines . . . know that your dream can become a reality, without having to leave Arizona!
Article by Josh Moffitt
Originally Published in Arizona Vines and Wines Fall 2011 Issue