What Investors Should Know About Sub-Dividing Land

The land is a limited resource; let’s face it, they just are not making any more. With a constant demand for land, historically, the value increases steadily over time, making land a wise investment. Like a house flipper improves a property for a quick profit, land can be sub-divided or divided into two or more pieces of land to increase profitability. By sub-dividing, buyers can purchase a portion of the land at a more affordable price; thereby, the size of your potential buyer pool rises, increasing competition. If located where land is scarce, such as near more developed areas such as downtown, the location of your property can further add sudden jumps in the profit when bidding wars occur.

Another benefit of subdividing land is retaining a portion for your use and selling the rest for a profit. Read on to discover what investors should know about sub-dividing land.

Sub-Dividing Process

Sub-dividing land is a process investors should understand well. The first step is to ensure there are no restrictions on your plans for the property by working with a reliable title company. They will alert you to any covenants or deed restrictions on the land. Secondly, evaluate the location and existing demand for the sub-divided land, so your marketing efforts aren’t in vain. You should also investigate the utility services for the subdivided land. Finally, you can search online for information and contact the city planning department; they will explain sub-dividing your property and bring any zoning restrictions to your attention. Developing the raw land that you sub-divide will dramatically escalate the value of your property. However, unless you have extensive experience, it is beneficial to work with experienced land pros like professional investors to help you avoid costly mistakes.

Expenses

Costs depend on many factors in Sub-dividing land. The size and shape of the land you’re sub-dividing, the location, and the planned land use. For example, adding utility access increases costs and does access to infrastructure. In addition, there will be legal fees and county fees for inspections and permits. If the property lines are unknown, these too must be surveyed. There are also expenses associated with the survey, and you must use a certified surveyor. A perc test will check the soil layers, permeability, and water table to determine if the land is suitable for building and where the best location for the building is as well as engineering for any drain fields. For a reliable estimate, contact a land-developing firm in your area to help you anticipate the costs you are likely to face with your project. And you’ll need to pay fees and apply for approval of your plans to sub-divide the land. You may also be responsible for other costs to the county, such as hearing and recording, review, and tax-map-update fees. There are also costs associated with clearing the land. When developing more extensive tracts, buyers must consider additional expenses for an environmental impact assessment, possible wetlands delineation, and rezoning. If you intend to build on the sub-divided land and create a sub-division, the costs are higher, but the profits you can realize by building are also greater.