Non Conventional BRRRR with Subdividing Potential

[Anthony Simboli]

Hey BP - looking for anyone to share personal experiences about purchasing a BRRRR property with 20+ (or many) acres of land. I have no experience subdividing land so that's mainly what I'm trying to learn here. A brief description of the opportunity is below. Feel free to ask further questions if needed.

Large single family home with 2nd approved structure that is currently rented (essentially 2 family). Needs renovations but livable (I will be owner occupying and renovating myself as I also need a place to live right now). Rent numbers would certainly not make any of the 1% type rules work, HOWEVER!, there is 22 acres of land that can be subdivided. How would one factor in the potential benefits of that land offsetting the high purchase price? I'm pretty confident in traditional BRRRR calculations but this opportunity could be very unique if I can understand the subdividing potential.

Thanks all!

[Lamont Chen]

@Anthony Simboli

Is the way you are intended to subdivide the land allowed per the zoning for the area? Else you would require a variance which could be a toss up on whether or not it gets approved. If it is allowed you can try to connect with an architect and builder to see what can be built to maximize value and cost to see what type of revenue/profit you could expect.

You could buy the lot, subdivide, and sell at a premium with preapproved build plans.

Good luck!

[Anthony Simboli]

@Lamont Chen Thanks for the response! I need to double check with my agent in regards to the town allowing this. He did not mention needing a variance but I assume this is something I can get in writing from the town or the seller prior to an offer? 

I like what you mentioned about potentially subdividing and getting pre approved build plans. That's what my agent said too when he brought me the opportunity. It sounds great, but like anything I always want to try and do as much homework as possible to make the best decision. Appreciate you help!

[Lamont Chen]

@Anthony Simboli

You may be able to check with your realtor and attorney for verbiage but you can potentially add a contingency in there to make sure it can be zoned for what you want to do without spilling all the details.

Good luck!

[Anthony Simboli]

@Lamont Chen makes sense. Appreciate your help!

[Whitney Hutten]

Sounds like you have a potential winner!  I've see easements, utility improvements and property access hang up this type of transactions. Make sure you have the full answer from the city prior to purchase.