Fast & Cheap Subdivisions Can Generate 50%+ Annual Returns

There are two basic types of subdivisions. The Rural Acreage kind or “let’s cut off the back 40 and deed it to uncle Earl” and what I call entitlement subs like the ones most of us live in with water and sewer systems and houses and apartment buildings.

This is a short article about the first one. Let’s leave uncle Earl out of it and talk about financial gain.

For all you pros out there, this is a short summary of what is possible, it not to be used as a blueprint or meant for detail in any way.

Here's the basic steps:

1) Research the counties that welcome large acreage subdividing and help the process. I've seen every set of rules from "rewrite the description and submit the new APNs on this form" to "you need to file for entitlements and install water/sewer/electric and paved roads" to complete this transaction.
2) Put a budget together with hard and soft costs (price of the property / engineering and application fees)
3) Hire a local surveyor/engineer who has been through this task with the county more than a few times if possible. This is super important. You really want a local on your side. Plus he is the guy (or someone he knows) who will show buyers the land locally after the deal is done and for sale.
4) Once as many details are put together, especially the budget and the local relationship, use the report to shop for money. These deals usually sell themselves.

Notes: - Finding cheap land is the easiest part of all of this. It's usually what new investors do first and incorrectly.
- Instead, find a compliant county first, then the land.
- It takes good chunk of cash and a lot of time to break a large property down into 40 or so acres which is the ideal size for sales and usually for subdivision rules.
- Make sure the money partner is a real estate investor and not a private equity or Silicon Valley partner. My experience is that they expect much different outcomes.
- Try not to put your own money in deals like this (I know that is not what I usually say). These deals pay great returns really slowly. Your membership group is more set up for "double your money fast" land transactions.
-Try to keep as much around as possible. Beautiful acquisitions happen when you have a ton of offers out there.

- I have an ROI analysis on one of our sites in the signature block that show how profitable they can be when done well.