How I made 1k-5k a month dividing land.

[Adrian G.]

Ok first off I would like to say that I am not a land dividing professional nor do I claim to be, I am simply posting what I have learned on my own and done myself. For all of you who try this please make sure to due your due diligence before purchasing land and BEFORE you try to divide it. Certain cities do not like this but it’s your obligation to research this….again. (Common sense here). This is only a brief overview and I will not be going over every detail in depth so please keep everything positive or at least constructive. Some of you might have even seen me asking questions recently in regards to the subject but its only for my researching to see what other creative investors thought and to see how NEGATIVE comments could affect your thinking.
After years of rehabbing properties and becoming incredibly lazy, I find myself wanting to start investing in land but I figured that I never had enough cash or credit to be investing in huge deals in major cities where I would be happy with the kills (its not always about money). So I came up with another plan that has worked for me…….Purchasing land with the plan to divide them in to smaller sizes.

How I started:
RESEARCH RESEARCH RESEARCH

Apparently, when you own a property you can sign it over to anyone, this even works in percentages of ownership …..3%.....5%.....25%...85%.....etc etc. I used this to my benefit by doing the following (for example) I purchased a 5 acre parcel that was only used for hunting and camping for $4,000k. I took my 5 acre property and turned them into lots sizes of .10. Now 5 acres divided by .10 leaves me with 50 lots. Now Im sure your asking how I turned them into .10 which is how WE MAKE MONEY, I sell them as undivided interest.

What is undivided interest?
Selling land as “Undivided Interest†is when you sell or trade or issue a lot that is not a parcel on its own, it has been issued from the owner who purchased it as a hole. You can also look at it as someone who DID NOT go through the city, zoning, surveyor, etc to actually subdivide your large parcel, acres, land/lots. You DO NOT GET YOUR OWN PARCEL NUMBER OR TAX ID. What you do get is your very own DEED stating you are the owner and the approx size of your lot…..WHICH HAS NO SPECIFIC DEFINITE LOCATION.

Back to the 5 acres example: So I am turning my 5acres into 50 lots sized .10 each undivided interest..
Which means who ever purchases a .10 lot becomes an owner of a .10 lot but has no specific location so they have access to ALL 5 ACRES.

I had a lawyer write up a deed which I copied 50 times haha and pretty much filled them in one by one (again, I am skipping a lot of technical details so don’t take me words for being easy). Anyways, Im in the hole $4k right now and with 50 lots that are being sold “undivided interestâ€. We are not done…lets talk about how I sell these.

How I use ebay to make MONEY MONEY MONEY.
For some reasons there are a lot of guru’s out there that make money on ebay because they say EVERYBODY will buy ANYTHING on ebay, so I put this to the test on a larger scale.
There is an UNWRITTEN rule for selling (land) on ebay, its that the average closing costs are about $195-$300. This is where you have the potential to make money on top of your auction, The fees that certain states/counties charge are minimal (at least the ones I prefer to do business with). 90% of the time I charge 300.00 for closings costs minus ebay fees for selling is 70 bucks, This leaves me with approx 230 dollars for me.

Ok now Im still in the out the $4k and have 50 lots BUT the potential to make $11,500 in profit from CLOSING COSTS ALONE. (230 X 50=$11,500). I have had some auctions sell for 5 dollars and some sell for 250 but over all your still seeing a higher profit then the original $11k that your expecting. (auction winning bid +closing costs difference=YOUR PROFIT)

Questions about buying before or after the sale….
Well this is the most difficult part that people don’t seem to understand, they become your co-owner or tenants in common. The easiest way I find to sell these lots undivided interest is to be COMPLETELY HONEST AND UPFRONT ABOUT EVERYTHING. I tell them that sometimes I make the lots so small that its no longer buildable, or that they are not the only owner, etc. Most of them just buy the lot to keep in there portfolio or to resell at a later date or to just have something they can go camping on or hunting etc.

Now you want to know how much much I have actually made doing this...??
Well my first month actually putting this plan into action (I own other lots that I have done this with some making more money and some making less) But Already Im seeing a massive profit.

Actual deal:
-Feb: 5acre parcel for 4k……50 lots at .10
-As of 06/08 I have sold 26 lots
-26 lots x $230= $5,980
-26 lot auction prices ranged from $3 to $260= $2,900

$5,980 + $2900 = 8,880 (approx)
$8,880-$4,000= $4,880 (PROFIT)

This one deal brought me in $4,880 in profit (approx) and I have about 8-9 deals going on right now, This just goes to show you with enough researching and motivation that anything is possible.

[Bill Gulley]

Hi, Y think I brought this up to sell and undivided interest, however, I never said to divided the area up into lots. You stated that you mad the lots so small that they are unbuildable/ OK,

Did you check with an RE attorney before you did that? In many states, to provide a legal description (dividing property by setting property aside with a newly created legal description) may only be accomplished by a licensed survey engineer or an attorney. If you broke up the whole and conveyed title, you're likely in violation of the law.
Also, there may well be limitations set by presidence. Deeding an undivided interest to 3, 5 or maybe 8 people is ohne thing, 50 or 100 seems to be another. Effectively, while you don't care because you got the money from the transfers as if you sold the property, you have destroyed the property as to having good title in the future, with title being insurable. When on of your buyers dies and the interest goes to their estate, it may be settled amoung two or twenty people and if one is not found in that estate there may be a problem, now multiply this times 50. Years down the road the property may not be insurable without perhaps 300 people signing off on it, that just won't happen. Wrecking title may have other consequences. Now, had you held the property in a corporate name and admitted memebrs to the entity, title never would have been put in that state.

There are proceedures for dividing property and selling off partnership interests, several means as a matter of fact. Using e-bay may have other consequences as well, as to charges that might be applicable from buyers.

I'm not saying that laws were broken, I'm saying there may have been and I rea;lly doubt it if your would be aware of it, in fact, I would not be surprised if you talked to an attroney and that attorney did not recognize these tranasctions as wreckless to title. Think of it this way, someone can own property and sell it and pass it on. It is an asset, not only to mthe person in titlre, but also to the state. Placing title in a situation where it can never again be passed in it's legal described manner as a whole, simply makes the property useless, to it's current owners, future owners and the state. There are illegal subdivisions, to cure these problems someone may go to court to have it correccted, like a title company, and when that happens, the party that was responsible, years ago, have been held liable for costs and damages. Say the government needs the property for a highway, sewer line or whatever. In the event of eminate domain, the property is appraised. My opinion would be that the property would be almost worthless, perhaps a liability. Where would comparable sale be to judge value? There aren't any, and no, you can't use the subject property sales.

It's interesting to see what will happen in the future, and depends on how you went about breaking up the title to sell the interests off. It may even come under SEC regs as well. Depends on the state, but before anyone tris to do this I wouold suggest that they get with a good attroney and be advised all the way through the transactions.

Congrats on the creative thought process.

Creative thought is good, but it doesn't mean you can do anything your imagination can dream up, just because you can put it in a contract. Good luck, Bill