Rentals to Building a Subdivision

[Gennaro Coscia]

Has anyone here gone from owning rentals to buying land and building a subdivision? I know I hear about people leveling up to multifamily, but I'm way more interested in land and land development. I was just looking to see if any others have done that and how has that journey been? Thanks in advance for your answers. 

[Doniel Winter]

HI Gennaro - the journey is long, capital intensive, and not for amateurs. The process and requirements vary by region, state, county, city - and neighborhood within a city. If you search land development on BP there are hundreds of posts on the subject. Jay Hinrichs is also a good resource, he posts and has podcasted on the subject many times.

I am in year 5 and counting on the first phase of a 13 lot subdivision in Asheville NC, my first, and I would never undertake a project of this scale again. There are easier ways to make money, IMO.

That being said, the easiest way to dip your feet into development is to start with a single lot and a single house. That will give you a very good idea of what's involved on the construction end. Even better would be finding a house to rehab or flip that has enough land to do a parcel split and create a new lot - maybe even two. That would give you a taste of what's entailed in entitling land for development in your city. In my experience, there is plenty of hidden value in existing properties on larger parcels.

When it comes to development there are two common refrains that I heard from others in the beginning of my project and have found to be true: you don't know what you don't know, and you will be paying for your own education in development.

So, a great place to start are the development ordinances of the city you want to build in. It's dense and not always easy to interpret but it's all there. Also, if you see a development project in your neighborhood that interests you, find the job box on site and look at the plans, get the number of the engineer or the developer and make a call. People like to talk about their projects, you might get lucky. Last, look for a realtor that's listing land for development - it's possible they have enough experience/knowledge in the process to steer you in the right direction.

Good luck.