How to Subdivide Land: An In-depth Guide

Real estate investing is more than collecting rental income. With increased diversity in the industry, real estate investors are employing a wide range of approaches to boost their property’s profitability. Land subdivision is one such strategy.

A subdivision done creatively has proven to be one of the best ways to take advantage of every part of your land with the potential to increase your return on investment tremendously.

While profitable, subdividing land is not always as simple as it sounds. In addition to the long process, it can also be expensive, with a lot of upfront costs.

There is no standard procedure for land division. Rules and regulations vary from state to state.

For a successful land subdivision, an investor should consider factors such as; property location, zoning laws, the size and shape of the property, and access to services such as water and sewer. This is to ensure the subdivided land still holds value.

Are you interested to find out more about land subdivision? Here is a guide on how to go about subdividing land legally and successfully.

Resources:

What is a land subdivision?

This is the process of taking one piece of land and splitting it into two or more parcels.

Reasons for land subdivision

Being a flexible venture with a wide range of options to fit any investor’s preference, one can subdivide land for any of the following reasons:

#1. Selling the land per piece

Favorable market conditions such as increased demand for land in a given area can motivate an investor to subdivide one piece of land into two or more portions. These portions are then sold separately to interested buyers.

Once subdivided, the parts have proved to be more valuable than the whole piece of land.

Learn –> How to Invest in Real Estate, Make More Money and Retire Early

#2. Property improvement to rent or sell

When you want to develop your land, it is advisable to sub-divide it to the desired sizes depending on what you want to build. You can construct stand-alone houses or apartments in each portion.

If you want to immediately increase your returns you can sell them off at a profit. Alternatively, you can retain them and rent them out to gain regular income.

#3. Dividing up your assets to dependents

Land inheritance is an ancient practice. Children receive equally divided portions to develop themselves.

#4. Increase marketability

Selling a large piece of land leaves out other potential buyers. There are buyers who are interested in smaller sizes of land because they are affordable.

When you subdivide your land you not only increase its demand but also increase your chances of getting quality buyers.

#5. Downsizing your home

Owning a home is every investor’s achievement. There are cases where this home becomes expensive to maintain. You have an option to subdivide it in order to simplify the level of maintenance.

Learn –> How to Invest in Real Estate, Make More Money and Retire Early

Essential steps to follow in land subdivision

Step #1: Check for restrictions

Local planning and development offices have outlined procedures, regulations, and restrictions that an investor should look out for before beginning the process of land subdivision.

Its recommended you familiarize yourself with this crucial information to avoid hiccups during the subdivision journey. One such procedure is conducting a title search to be sure that there are no outstanding claims on your property.

In some places, you have to visit or call their offices. For others, the information is readily available on their websites.

Step #2: Understand zoning and other requirements

Every municipality and county has its laid down regulations, restrictions, and requirements for land use and the type of structures that can be built on it.

Because they change over time it’s important to thoroughly research your options. It’s good to talk to a property lawyer or land planner to shade more light before committing to a subdivision.

Step #3: Design the subdivision

As the property owner before any subdivision, you have an idea of how your property should look like after the subdivision. A civil engineer will help you layout this plan on paper.

The outcome of the design entirely depends on the terrain of your land. The plan will specify how the land will be divided in terms of the number and size of the pieces.

Learn –> How to Invest in Real Estate, Make More Money and Retire Early

Step #4: Survey the property.

Next, you will need a legal description of the land. This can only be done by a surveyor. It’s the responsibility of a surveyor to aid you in coming up with a plan.

A plat is a map drawn to scale that shows the subdivisions on a plot of land. It points out the property boundaries, access rights-of-way, flood zones, and easements.

The surveyor will also provide guidance on whether your property is eligible for subdivision, and if not, give you the options that can work with your piece of land.

Step #5: Submit your application to the land planning authority.

Thereafter, apply to the local planning authority to give you the approval to go on with the subdivision upon satisfying their requirements.

The application should be accompanied by a plat map, title certificate, application fees, and any other requirement depending on your local planning offices.

Upon scrutinizing your application, if satisfied they will give you approval, if not they will contact you and suggest a few modifications for the approval to go through.

Learn –> How to Invest in Real Estate, Make More Money and Retire Early

Step #6: Prepare an engineering plan.

After approval of your preliminary plan2, you can engage your engineer to place the new boundary markers on the new plots.

If you want to develop the pieces he can also draw plans for any construction work that you intend to do on the pieces of land.

Step #7: Prepare and record the new deeds

The new parcels of land are required to have their own titles. Therefore, you should avail all the plans for the proposed subdivision to a real estate attorney to help you through the process of dividing up the title for the new portions of land.

Finally, submit a final plat to your local land authority to record the new deeds for the new pieces of land.

Bottom line

Land subdivision is a profitable investment when done right. If you are undertaking a subdivision you need to make sure you have a wise plan on how you intend to use the subdivided land to increase your returns.

Familiarize yourself with all the requirements and have a budget in place.

However, despite the time and costs involved subdivision is a worthy cause.

Take a Course On Money & Investing

Or sign up for my weekly email newsletter to get tips and lessons sent to your inbox.