Housing is one of the areas of the economy that never seems to slow down or stagnate. After all, no matter what else happens with the economy, people will always need a place to live. Older homes, as well as new construction, will typically have people interested in purchasing them, particularly if they have upscale amenities or a great location.
When there isn’t enough existing real estate on the market to meet demand, new development and building can increase housing supply. Areas that have become dilapidated or that have previously never seen improvement or investment could soon become popular residential areas. Real estate developers and architects may see large areas of vacant land as a potential opportunity.
You could purchase acreage and create a subdivision with potentially dozens of homes on what was once a single property. That means turning a single purchase into a major stream of income. In order to do that, you will need to subdivide the property, which is a process that can be both expensive and time-consuming. The more you understand about how to separate one property into multiple parcels, the sooner you can move forward with your planned subdivision.
Make sure the property is appropriate for residential building before you buy
Some developers or architects make the mistake of purchasing a property out of excitement and enthusiasm before they verify that they can actually make their dream a reality on that particular parcel of land.
While real estate is often a good investment, you will likely pay a premium for any acreage that you intend to subdivide. If you cannot convert it into multiple parcels with individual dwelling units, you may not be able to recoup your purchase costs. Ensuring that the land is zoned properly and that you can complete the subdivision process before you purchase a property is of the utmost importance.
Have a plan for how you intend to split up the parcels
To subdivide a property, you will need to work with the local government to separate each future parcel from the original, larger parcel of land. You may have to pay to have the area professionally surveyed with the boundaries for each parcel carefully marked and recorded with the county.
You will need to consider the market that you want to sell to, as well as local rules about new developments when determining the size of the parcels and how many units you intend to put on a piece of land.
While the ideal is obviously to maximize the number of units that you build for the highest potential return on your initial investment, if you make the lots too small or the houses too close together, you may have trouble attracting buyers willing to pay a premium price for the properties.
