Subdividing Property Owned with a Traditional Mortgage

[Lucas J Reynolds]

Hi! I'm looking for help from someone with experience subdividing investment properties.

A partner and I are looking at acquiring a piece of property we can subdivide and turn into multiple short- and mid-term rentals. We have several investors willing to invest with us, but we need to figure out the sub-dividing step. Based on my research I see two main options. I'd love it if someone can guide me as to which option would be best or if there is a third option I'm not thinking of:

1. FIND A VERY CREATIVE BANK. Purchase the property with a traditional loan but through a bank who realizes the property will be subdivided and is willing to provide written approval for the subdivision when needed. It sounds like this kind of arrangement is very rare for a bank. 

2. RAISE THE CASH. The other option I'm seeing would be to raise enough money to purchase the property with cash (probably about $1.2M). Then subdivide and refinance each lot and once that is done paying back the original investors with the proceeds of the subdivision. 

I've included slides that give an overview of the project: https://docs.google.com/presentation/d/1Z4xYNVegr77GYDaz-i3w...

Questions: 

1) Am I missing a third-alternative? 

2) Any missing details I should keep in mind as I explore both these options? 

Thank you! 

Lucas