How to Enjoy Vacation When You Know It Costs Money
When you hear the phrase "subdivide country," you likely think of suburban-style subdivisions.
In these scenarios, country developers took 1 big tract of land and divided it into many to build numerous homes.
These large-calibration subdivision projects can be an effective way to add value to the land; although, they are expensive, especially if non done correctly.
However, not all subdivisions need to be so extensive.
If yous're a landowner looking for a artistic way to add value, subdividing a smaller parcel of state may be the next best step.
At that place are just a few things you should know well-nigh the process before you brainstorm.
Here'south how to subdivide land that you can sell, build on, or rent.
one. Subdivision is the process of dividing a tract of state into two or more pieces of land
You may be asking, "Why subdivide state at all?"
The reason that nearly people move frontward with a subdivision is because information technology'due south assisting for the landowner and allows them to have greater flexibility with their investment.
If you've purchased a large packet of land, you may consider this choice to maximize your existent estate resources.
Ultimately, more lots hateful more money.
By dividing a bundle of land into smaller pieces, yous can sell land to multiple buyers.
Yous'll liquidate portions of your land while likewise retaining the ability to keep some for yourself.
Whether y'all choose to build and live on this country, or you just hang onto it and lookout man the value increase, you're increasing your flexibility and marketability.
In many cases, information technology's much easier to find buyers for smaller subdivided parcels.
Smaller parcels are more affordable for buyers and relieve the purchaser time, endeavour, and risk.
It's everything they need in a smaller package.
And then here's the general process for subdividing land…
Check for restrictions
Information technology is all-time to consult with a title company before starting the subdivision process.
They can verify that yous own the lot costless and clear, but as well that there are no act restrictions or covenants in place that would forestall subdivision.
Evaluate the market
Before putting any money into the subdivision, you first want to make certain there is a market for the lots you are creating.
After all, if you lot can't sell the lots you lot'll simply be throwing money away.
Call your local planning, zoning, and/or evolution office.
They tin tell you the subdivision process for your area and give you information on any existing zoning restrictions.
You lot can also check online to run across what data exists.
This volition assistance yous understand whether or not your holding qualifies.
Do not skip this step.
If your property does not qualify, you do not want to waste matter your time or coin.
Talk to a town planner, holding lawyer, or subdivision specialist.
In general, cities and towns have increased their restrictions and fees in the past few years.
A professional in the field can help y'all decide whether it'southward worth committing to subdividing your land.
Understand whether new infrastructure will be needed
Depending on the size of your subdivision and the local regulations, you may need to install utilities or even a new road.
You volition desire to keep this in mind when evaluating whether the subdivision makes sense.
Hire a surveying and/or technology firm.
They'll assist you lot survey the property and draw upwardly a plat.
A plat is a map of the surveyed land that identifies property boundaries, access right-of-ways, flood zones, easements, etc.
They will besides provide feedback on whether your property is eligible for subdivision.
If in that location are issues, y'all tin notwithstanding consult an chaser and evaluate whether it's smart to movement forward.
However, having this information is useful.
Even if your property doesn't qualify for subdivision, you may be able to go approving past filing a planning or zoning variance/waiver.
Sometimes planning and/or development offices make exceptions where reasonable.
Reach out to local officials or your surveyor to hash out the process for exceptions.
Design the subdivision
Yous volition likely need to complete a plat map or ready of drawings that bear witness the exact boundaries of each of the new lots.
Typically, these drawings are washed by an engineer.
Simply make sure the drawings bear witness all the elements that the county planning officials will want to see.
Submit your application and expect a response.
In nigh cases, the application must exist submitted with a plat map, certificate of title, and an awarding fee.
Yous'll want to double-bank check this with local officials first.
Receive your response.
The procedure volition differ slightly depending on your location.
In some places, a planning lath or council volition make up one's mind to corroborate the subdivision during a routine meeting.
Other areas will have subdivision bug get to a public hearing.
Brand improvements to your land.
If you have any improvements that need to be made before your subdivision tin be approved, you lot'll make them at this point.
This may include building a road or installation of new utilities.
Your surveying company will also identify the new purlieus pegs.
Request certification afterwards approving from the planning board.
Once all the necessary changes and improvements accept been made, you tin can asking approval from the planning board, which certifies that all atmospheric condition take been met.
Congratulations!
Your belongings has officially been subdivided.
Yous should obtain new titles.
two. There are a number of reasons why you may desire to subdivide your lot
People subdivide land for a number of different reasons.
They may want to create housing for loved ones, or they want to desire to brand a turn a profit from the land that they purchased.
Hither are a few of the reasons yous may choose to subdivide land.
Increase your property's marketability
In some areas, smaller lots are easier to sell than larger lots.
Then, if you have a larger lot of land that you are looking to sell, you may detect it easier to sell your real estate after it is subdivided.
Make money
If you lot're a state developer, chances are you're looking to make some money off of your investment.
Dividing upwards your parcel of land and selling each piece to a different buyer is one way to brand a profit!
Downsize your land while remaining flexible
Mayhap you find that you no longer desire to maintain a large bundle of land.
Past subdividing information technology, y'all can even so retain function of your state while selling the rest to another buyer.
In general, this allows you to make some money while downsizing or increasing your flexibility.
Build an extra home for family
In many areas, you lot are but allowed to build one dwelling house on a lot.
By subdividing a larger lot, you tin can create several building lots that volition allow you to build a few homes most yours for your children or parents.
3. You lot must comply with zoning (make sure you cheque!)
Local zoning and subdivision ordinances can often inhibit the subdivision of land, which ways you demand to check your local regulations before you motion forward with your plans.
Here's what the procedure looks similar.
Contact the municipal planning and building township of the township or municipality to learn the holding's zoning category.
Decide how your belongings's zoning category volition bear on your planned subdivision.
Many counties and towns have regulations around minimum lots sizes, setbacks and open space requirements, which may make your projection infeasible.
They may as well have regulations dictating that you lot provide certain services to the new lots that could become very expensive.
So this is not a step you can skip!
Illegal subdivisions do sometimes happen and when they practice, they can terminate up destroying your property'southward value.
4. A subdivision may or may non be the right call for you
Deciding whether or not to subdivide land can be a difficult step.
While a subdivision typically increases the value of the land, there are fiscal risks and hardships involved.
You lot'll desire to practise due diligence on the process before taking action.
Every bit mentioned in a higher place, many counties and towns take zoning or subdivision ordinances that may crave you to install services to each of the new properties.
If you need to put in new roads, utilities, or other infrastructure, and then your subdivision project can easily become a full-fledged community evolution project.
Even a unproblematic subdivision projection will crave you to spend upfront money on a couple of different professionals (more on that below).
Depending on your financial state of affairs, you may find that it doesn't make sense to spend your limited resources in this way.
At the end of the mean solar day, you lot need to evaluate the costs of the subdivision and compare them to the potential benefits to run into if the projection makes sense for you.
Too keep in mind that yous will exist taking on some financial adventure since sure restrictions, such as old act restrictions, may non be easy to observe.
Sometimes, landowners simply find out about deed restrictions or neighborhood covenants subsequently spending a lot of money on a subdivision project.
Then do a title search to ensure that yous don't have any outstanding liens, issues, regulations or other claims on the state that may complicate or impede your project.
5. A subdivision should be done where there is a market for land
Speaking of risks, one of the biggest risks associated with a subdivision project is market place risk.
Then you will want to be adequately confident that there is a stable market for the new lots you are creating (recall y'all volition likely be selling your lots a few months or years out from now).
Research the market and other properties in your area to determine the appropriate lot size, layout, and price that is marketable in your area.
Doing this can help you determine whether your project makes sense.
If yous're unsure throughout this process, consult a local professional who tin provide their expertise on the land value and how it may appreciate.
Local information tin assistance decide many of your adjacent steps.
For example, if many of the local homes in your area are large and expensive homes on big lots, then you lot shouldn't look to create smaller homes on smaller lots.
They simply won't do besides because they won't be appealing to the market that you're in.
This is why it'south wise to enquiry your area and brainstorm but if yous tin can provide a product that the market is interested in.
half-dozen. Y'all volition demand to hire professionals
Y'all will ever need a survey in order to subdivide land.
If your country, urban center, or town offers surveying services, wait into those before turning to a private business firm.
In well-nigh cases, state or municipal surveying services are less expensive than a individual service.
However, yous won't simply cease with a survey.
As mentioned above, yous volition likely want to rent a title visitor to check for old deed restrictions and other potential issues that may complicate your project.
On top of this, if your local planning office, title company or surveyor says your property is ineligible for subdivision, y'all will want to consider consulting an chaser who specializes in zoning laws.
You may be a skillful candidate for a variance or entreatment.
An attorney can aid guide you lot through the procedure and allow yous know all of your options.
Finally, you lot may need to hire an engineer since….
vii. Subdivisions crave a plat
A plat is a map fatigued by a land surveyor or engineer.
It depicts the subdivision (or lots) that you want to create.
Each jurisdiction volition mandate what a plat needs to show, so you'll demand to know your local rules for what it must include.
This will likely exist fixtures like streets, utilities, etc.
Also, go along in mind that you will likely demand to pay for several iterations of the plat when you subdivide land, including:
a preliminary plat that you volition initially file with the local governing quango or body.
intermediary plats if the local planning office requests changes later their engineering review
a final plat that shows whatsoever required piece of work completed (such as new roads or utilities)
8. A subdivision has no standard cost
Unfortunately, because at that place's no standard process when you subdivide land, there'due south no standard toll.
The price will depend on surveying and platting costs too as the local awarding and fees.
You may as well have to make improvements to the property to boost its marketability.
Overall, you should plan to spend between $2,000 and $10,000 to divide your property into more than two lots.
Have a picayune bit of sticker daze?
You're not the simply one.
This tin can catch people by surprise.
The toll will depend on your location and the number of lots you lot're creating.
In that location'southward almost always an application fee regardless of where you are, and then yous'll also exist responsible for dozens of other fees.
For example, you'll accept hearing fees, recording fees, review fees, tax map updating fees.
Surveyors typically charge by the hour, so when getting your property surveyed and platted, you'll often spend virtually $500 to $ii,500.
However, don't underestimate this toll.
The price could reach tens of thousands if you have a large property.
As a general rule of thumb, you should accept roughly $500 to $1,500 to subdivide ane mid-sized property into 2 and more to divide ane belongings into more than than two lots.
Note that any required improvements to the property can speedily run up your bill as well ($ten,000 to $30,000).
These improvements would exist roads, sewers, or utilities (required for a subdivision approval).
So, long story short, make sure you lot've checked (and double-checked) that you meet all the requirements (zoning and otherwise) earlier yous begin to make this investment.
It tin quickly add upwardly financially, and you don't want to spend coin on a subdivision projection that won't get approved.
nine. A subdivision generally takes 9 months to ane year
But similar the cost, the fourth dimension that information technology takes to subdivide land ultimately depends on a variety of factors like the size of the lot, the improvements needed, and the location.
However, generally speaking, information technology takes ix months to 1 year for a two-lot subdivision from the fourth dimension you start to the signal when you obtain a championship.
10. Larger subdivision projects are likely to increment the value of your lot more than than smaller ones
In full general, larger subdivision projects create more than value than smaller projects.
And so, a three-lot subdivision is more than valuable than a ii-lot subdivision.
This is because you'll have an additional buyer coming in and paying you lot for a piece of the pie.
Each person will run across the value of the land that they're getting and exist willing to pay you something for it.
The further y'all divide up your land, the more than y'all'll profit from it.
That said, you should be conscientious non to make the lots besides small-scale.
You want to notice the optimal size when you subdivide land that makes your lots bonny to buyers.
One-half-acre and quarter-acre lots are often too small to be desirable for buyers.
Y'all need to find a happy medium for your area to ensure that everyone gets what they want.
You maximize the number of buyers while also getting the maximum profit possible from the country you lot own.
Also, keep in mind that as you increase the size of your project, you may besides increase the cost and complexity.
Final thoughts
Thinking about subdividing your state?
The procedure of subdividing country tin be long and expensive, but you'll ultimately profit off of information technology if y'all practice it correctly.
Our advice?
Do your research and don't skimp on professional help.
They can assistance orchestrate the process smoothly and ensure your property is eligible for subdivision.
Additional Resources
If you are looking to purchase affordable state, you can cheque out our Listings page. 
And earlier y'all purchase land, make sure you lot check out Gokce Land Due Diligence Program. 
If you are looking to sell land, visit our folio on how to Sell Your Country.
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Disclaimer: nosotros are not lawyers, accountants or fiscal advisors and the information in this article is for advisory purposes merely. This article is based on our own research and experience and we do our all-time to keep it accurate and upward-to-date, just information technology may contain errors. Please be sure to consult a legal or financial professional before making whatever investment decisions.
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Erika is a former Affordable Housing Director for the Urban center of New York turned full-fourth dimension Land Investor. She used to aid New Yorkers find affordable housing, now she helps people find affordable state effectually the United states of america.
Prior to starting Gokce Capital, Erika received a Bachelor of Architecture from the University of Southern California and a graduate caste in Urban Policy from Columbia University. She worked every bit both an architectural designer and engineer in New York before joining the New York City Department of Housing Preservation and Development.
Erika currently lives in the New York Metropolitan expanse with her spouse, girl and true cat. She is originally from Chicago and notwithstanding considers herself a midwesterner at heart.
Erika as well loves to read, write and travel (fun fact, she has visited all 50 states and more than 30 countries!). Her new book, Land Investing Mistakes: 11 True Stories You lot Need To Know Earlier Buying Land, is now available on Amazon.
Source: https://gokcecapital.com/subdivide-land/
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