Subdivisions are one of my favorite subjects.
Every state and local jurisdiction is different.
Here are some general facts. There are two types of subs.
1) Most counties have some type of program that addresses a farmer’s or ranchers need subdivide a large acreage property to 5 or so smaller ones by re-writing the legal description. 640 acres = a mile = a “section”, the S2 or south half of Section 6 is s2 sec 6. That is a subdivision. Most places are pretty cool about taking property down to 40 acre parcels. Some require roads to be bladed in and some require more. Some let you go down further in acreage if you only subdivide 5 properties.
2) The kind of subs that we all live in. Where a developer files a plan for entitlements and takes a larger parcel and makes it into a master planed community. This is how office and industrial parks are made as well as rural and urban residential subdivisions.
We care about #1.
Rewriting legal descriptions and turning one large APN into five smaller APNs is like printing money.
Buy a 40 for $4K and make it into 3-10s and 2-5s which should sell for about $16K or so cash. Do that 10x and you generate $120K in margin pretty fast and without any work except drawing squares on a piece of paper and asking the county for permission.
So what’s the catch? Why doesn’t everyone do this all the time?
Here is the reality, most counties and states require a TON of reporting to do this these days. There are still places that accept this practice.
It can easily be a specialization within our specialization. See ARIZONALAND.COM We have done many deals with them. They buy huge properties and cut them up into 40 acre parcels to sell on terms.
Stephen Seal of landcentral.com and I are talking about doing this right now with investor money because it requires a lot of it with slow but great returns.
I can talk in detail about this on the next call if you guys want me to. I love doing this and have done it many times.
You can retire a 5 good deals like these.