Getting started by developing my own land?

Question

Hello,

I am totally new to real estate investing as well as the bigger pockets community but I've found both to be very interesting. This seems to be an awesome resource.

Im looking to get started in flipping houses and the first step is finding the money.

My wife and I currently own a home here in Oregon City, OR. We have a giant back yard and Ive recently discovered that I have just enough square footage on my lot to subdivide and develop the new lot.

My questions:

If I subdivide and build a house on the new lot and then sell it, will I make enough profit for a catalyst to start my first flip?

Has anyone done this?

Would I just get some home builder to put a spec home on the lot or do something different?

Would it be more wise to just subdivide and sell the lot?

If anyone has any advice on this I'd greatly appreciate it. Its so cool to have a place to ask these questions. Thanks!!

James Phillips · Answer

Thanks for your responses!

Whoa! 3000 acres is a lot of land!

So I spoke with my city planning department and someone from zoning (might be the same dept.?) and they told me that in Oregon City, in the neighborhood I live in, lots need to be a minimum of 8000 Sqft. I have a total of 17,900 Sqft so after subdividing, 8950 per lot. I want to maximize whatever profit I make so that I can get into flipping.

Steve Haight · Answer

@James Phillips

Hello James and welcome to B/P This is a great place to be to network, ask questions or to get educated with all of B/P podcasts. I have been in real estate for over 30 years in a niche called vacant land investing. I started when I was 27 and broke into the land business with a mentor. I am here to pay it forward and would like to help you but you do not provide any numbers or data to give you intelligent answers. I can tell you I have been doing land splits for many years but have never built anything on the land myself, I made the money in the split and was happy with that. In the old days I took 3000 acres put it under contract for $200 an acre and split into 40s and 80s and sold it for $400 an acre and the spits where just paper splits. You will meet lots of experienced real estate investors here just have your questions more detail.

BTW Who told you you dad enough square footage?

Hope this helps,

Corey Westermann · Answer

Hi James,

We're in the middle of developing a couple lots in Oregon City. It's been a frustrating process, mostly due to the land use application, planning and permitting processes with the City.  It seems like the planning and engineering departments have a revolving door when it comes to employment there so there's been a major lack of continuity in the people we've been dealing with and the information we've received from them. They've recently adopted a new set of storm water requirements and between the "green streets" and mandatory frontage improvements they are requiring the design and construction costs have really spiraled.

I obviously don't know the ins and outs of your project but be prepared for the city to wring money out of you any way they can, with requirements that even they don't fully understand. My advice would be to go into the planning department and set up a meeting with them. Make sure you have a real good handle on what they are going to require before you sink too much energy into the process.

The good news is that build-able lots in the city are scarce so it should not be hard to sell the land at a premium.

I'd be happy to chat and share some good local contacts for survey, engineering, etc.  Shoot me a message if you want.

Jay Hinrichs · Answer

really depends on where your at in Oregon City.

go into public works and make sure your sewer is gravity and sized big enough.. and your water etc.

some lots IN OC are just not feasible to split.  if you have a nice level lot with gravity flow sewer enough room on the side of the lot to get ingress egress etc ... best of luck

Ross Leavitt · Answer

Hi James,

That sounds like an exciting project. We've done several projects in Corvallis where we buy old houses on lots large enough to split, tear down the original house, split the lot, and build two large houses on the lots, hold them and rent them out. It's worked great. Total cost for the replat has been 5-7k for us. Our builder and architect are out of Portland and it might be worth talking with him about your project. Message me if you want to talk more about it.

It's a great idea, and I love that you're starting out with creativity! That will serve you well as you keep at this game!

Randy Johnston · Answer

@James Phillips Partitioning a second lot on your property can be time consuming a will run around $20k, at least in Portland proper. I've look at property in Oregon City and if you lot is large enough to partition, then there's a possibility that it may be a double lot, which is a lot less expensive and less time consuming. If you have a problem with determining whether or not it's a double lot, contact me and I can find out for you.

That said, there are several options available to you. You can develop the lot and build a home, then sell the home yourself, this would bring a higher return than developing the lot and selling it to a builder, which would be a easier for you. You could also develop, build and then rent the new home, which you can then get reassessed and refi to take out some working capital, this is a wonderful buy and hold option.

Please feel free to give me a call if you'd like to get more info on these options.

Also, we are having a Portland based BP meet-and-greet on October 11, which can be found on this events page.

James Phillips · Answer

Corey,

Thanks for the post. Very interesting. I was wondering how much the city would want to get their nose into this project and from the sound of your project, its quite a lot. The road that I live on also has a sidewalk everywhere except for in front of my house and I don't want them to suddenly decide that it needs one as well as dealing with all the sewer stuff. I was hoping to do all this just to gain access to a little capital so that I could get into fix and flips but I'm not sure at this point that this is the place to start. Thanks for your input and good luck on your project.

James Mc Ree · Answer

You will very likely need to address your current house's septic flow to get a subdivision as your city is very unlikely to approve the subdivision with your septic emptying onto what will become somebody else's property.

Jim.

James Phillips · Answer

Well, I know that my house is on septic, and the drain field runs out right where the new house would sit. Would probably have to get both houses into city sewer. Is it even worth it after all that?

Getting started by developing my own land?

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