Investors bet busted projects in Searchlight have a chance
Cottonwood Lake Homes, a suburban-style subdivision in Searchlight, has street names like Aqua View and Shady Cove, and even some palm trees. But the failed project, a relic of the housing bubble, has far more empty land than developed.
September 9, 2016 - 5:48 pm
Cottonwood Lake Homes, a suburban-style subdivision in this rural town, has street names like Aqua View and Shady Cove, and even some palm trees. But the failed project, a relic of the housing bubble, has far more empty land than developed – and at the main entrance, one of the palm trees is headless.
A few miles away, next to the airport at the south edge of town, investors started building a residential project aimed at aviation buffs. But their plans fizzled, leaving an abandoned subdivision with roads, street signs and fire hydrants but not a single house.
Searchlight, an unincorporated town 60 miles south of Las Vegas off U.S. 95, bears almost no resemblance to its famous neighbor — no hospitals or shopping centers here, and only about 500 residents. The two bubble-era subdivisions were marred by bankruptcies, foreclosures and lawsuits, mirroring the collapse an hour up the highway.
Now, some investors are wagering that these busted projects still have some life in them.
Gary Costello, of the Bakersfield area in California, bought the remaining 52 unfinished lots in Cottonwood Lake Homes in early August for $190,000. And last year, Bill and Joan Turnbull, of Seattle, bought the Searchlight Airpark property for $400,000, county records show.
The investors are unlikely to transform the sites anytime soon, but at the very least, they got swaths of real estate on the cheap – deals they couldn’t pass up, they say.
‘FLIP IT AND MAKE A DOLLAR’
Costello, who owns rental properties in California, said he isn’t looking to develop the land, but instead sell it piece-by-piece or in bulk. “I’m looking just to flip it and make a dollar on it,” he said.
He noted that people view Searchlight as being in the middle of nowhere. But, he said, “It’s the middle of everywhere,” situated between Henderson and Laughlin and west of Lake Mohave.
Many people in Las Vegas probably wouldn’t think of moving to a town like Searchlight, but Costello said potential buyers include people who want a second home near the water. And he’s already looking to unload the land.
“Why don’t you buy it from me?” he asked this reporter, offering to “carry the paper,” or finance the purchase.
Bill Turnbull, whose company RC Aerodyne sells remote-controlled helicopters and airplanes, had been looking for an airstrip to fly such aircraft and hold events for RC enthusiasts and vendors.
The Searchlight Airpark initially was designed to have dozens of houses and aircraft hangars, a community where people could fly in and out as they pleased, similar to the tiny town of Cal-Nev-Ari, about 10 miles south of here.
Turnbull said the airpark was a “great deal” – a roughly 40-acre property with paved streets and utilities – and he made an offer the day he saw it.
“My wife just said, ‘Buy it.’”
SUNK BY HOUSING CRISIS
Searchlight is a remote outpost with mobile homes and abandoned mines. And when Southern Nevada was awash in easy money during the real estate bubble last decade, investors came here with plans to sell dozens of houses.
Chris Harrison and Gary Wells teamed up to develop Cottonwood Lake Homes, just east of Searchlight’s main cluster of homes. They bought the site in 2004 and drew up plans for 65 homes on 16 acres, Clark County records show.
They closed four sales, including one for $511,000 and one for $499,000. But the project flopped with the economy.
Wells filed for bankruptcy in 2008, Harrison in 2009, and they lost the subdivision’s remaining land to foreclosure by 2011.
Wells said in a recent interview that buyers’ response to the project was “phenomenal” – he obtained deposits for every lot within a month of installing a sign to advertise the project. But he said there were extensive delays with the county to get plans approved, and when project lender Silver State Bank collapsed in September 2008, the housing bubble had already burst, and he and Harrison couldn’t get financing anywhere else, they were forced into bankruptcy.
“There was nowhere to go,” Wells said.
Harrison said he spent his life savings trying to keep the project alive and, at one point, had just $20 in his pocket.
“I ended up losing everything,” Harrison said.
‘STILL A BIG POTENTIAL’
Meanwhile, Taylor Emanuel and Richard Jones teamed up in 2004 to develop the Searchlight Airpark, court records show. They laid out plans for 32 homes and 24 aircraft hangars.
But by 2010, Emanuel had sued Jones, and by 2011, the adjacent airstrip was “in disrepair and deteriorating” because the developers had defaulted on their loan, county documents say.
They lost the project site to foreclosure in 2011, and Emanuel filed for bankruptcy in 2013.
Efforts to reach Emanuel and Jones for comment were unsuccessful.
Searchlight resident Diane Kendall, an agent with Global Realty and Management, said it was “very sad” the airpark didn’t materialize.
“There’s still a big potential for that to succeed,” she said. “I hope the new owner does it justice.”
At Cottonwood Lake, at least one resident doesn’t mind living in a failed subdivision.
He said it’s a “peaceful getaway,” and Cottonwood Lake residents are friendly and can go boating, mountain biking, camping or exploring.
“We think of it as a hidden little gem,” he said.
Contact Review-Journal writer Eli Segall at 702-383-0342. On Twitter at @eli_segall