Subdividing is a profitable way to sell off unused land, and there are many ways to go about splitting up the property.
You can subdivide your own land by obtaining permission from local planning and zoning offices, conducting surveys, applying to subdivide, and acquiring titles for the new plots of land.
In this article, we’ll go over the benefits of subdividing along with a step-by-step guide to splitting up your land. Additionally, we’ll cover the intricacies of subdividing large plots, along with who to contact to make the process legal and straightforward.
We sourced the information used in this article from trusted subdividing guides, along with sources familiar with the basic process of splitting up land for sale and development. Local and state regulations vary, so be sure to contact an attorney before subdividing.
What is Subdividing Land?
Subdividing land is when a large plot of land, usually under a single deed or title, is portioned off and sold as separate, individually titled pieces. These smaller plots are then sold to developers or individuals for building houses, shops, industrial facilities, and farms.
Benefits of Subdividing Land
Subdividing land can be extremely profitable. Picture it like selling a car for parts. You can either sell the whole car for $500 to $1,000, or you could sell individual parts for $20 to $1,000 each. This can easily double or triple the amount of profit from the vehicle.
The motor for $500, the differential for $150, the steering wheel for $30—it’s much more profitable to sell smaller pieces than the whole lot. And though this is a generalization, the same usually holds true for land.
Subdividing also makes land available for individuals and small development companies that otherwise couldn’t afford the entire plot.
A 10,000 square-foot plot sold for $50,000 is affordable, whereas a 150-acre plot sold for 6.5 million dollars is not. But when subdivided, the margins are great for the seller and accessible for the small-scale buyer.
Where does Subdividing Happen?
Subdividing is particularly common in cities that are surrounded by farmland or otherwise vacant private property. Cities like Fort Worth, Texas, and Denver, Colorado, are home to some of the most easily recognizable subdivided lands.
These areas are expanding rapidly into open country, and there’s a desperate need for housing. Local farmers are offered hefty sums of money for their entire plots, but they can also subdivide their land themselves and make a much bigger profit from real estate developers.
Subdividing is why we see neighborhoods pop up out of nowhere. Developers purchase 50 or 60 small plots from a farmer (or a single large plot for dividing) and build an entire neighborhood on the plots complete with streets, lighting, utilities, and houses of various types.
And while not all of these neighborhoods are attractive or well-organized, they do serve a purpose and present landowners with an opportunity to make significant sums of money on their properties.
How to Subdivide Your Land
If you own a piece of property, it can be more profitable to subdivide and sell it in pieces. Specific subdividing protocols vary by state and locality, but the general steps remain the same in most parts of the United States. Here are the basic steps to subdividing land and how to do it yourself.
1. Check Local Zoning Laws
Localities have planning and zoning regulations that dictate how (and if) land can be subdivided and developed. These laws vary based on localities, states, and the type of land being subdivided. Additional restrictions may be involved, or your property may lie outside of the authority of the local planning and zoning office.
In some cases, you may need the locality to change the way your property is zoned if you want to subdivide it for residential or industrial development. In other cases, you can subdivide it and sell it to developers who will deal with zoning later.
It all depends on factors that vary from location to location—which is why you need to contact your local planning and zoning office. Be sure to prepare details on the size of your property and its precise location, as the office will need this information to give you an accurate assessment.
2. Contact a Subdividing Specialist
Contacting a local expert is key to a successful subdivision. These individuals can help expedite the planning and permit process and keep you heading in the right direction. It’s a lot more difficult to subdivide than it used to be, especially in areas where there have been local objections or court battles.
There’s a lot of time and money involved in land subdivision, so it’s always worth the comparatively minor expense of hiring an expert to dot all the I’s and cross all the T’s. Examples of subdivision experts include real estate lawyers and town planners.
3. Conduct a Survey
Surveys are the key to accurate and legal land subdivision, especially if the property has been owned for a long time. Many subdivided properties haven’t been surveyed in decades, and some have gone 100 years or more without a professional survey.
A survey must be completed to determine the size of the land, its boundaries, and how much of it can be subdivided. Surveys also determine hazard areas, buildable plots, and how much of the land is useful for construction.
Other issues, such as road access, environmental restrictions, and flood zones are also taken into account during a survey. You may not have legal access to certain parts of your land (such as waterways and roads), so it’s essential to work around them and not to sell them off without understanding the implications.
4. Apply to Subdivide Your Land
In many cases, you’ll need to submit an application to the local county land office or planning department. This is essentially a government permission slip to cut up and sell off pieces of your land.
You’ll need to provide documentation of various types, including the survey and a succinct subdividing plan. Your lawyer can help prepare the necessary paperwork, which will increase your chances of getting approved the first time around.
Once the local government grants approval, you’ll need to contact your surveyor to mark the new property boundaries. You’ll essentially have to re-survey numerous smaller parts of the land, and they each need to be marked and recorded before they can be titled and sold.
5. Get Your New Land Titles
Once all of the required steps are complete, the county or local government will grant titles to the new subdivided plots of land. These titles, along with survey information and documentation, can now be sold to developers or developed and sold by you.
You can partner with a developer to build houses on the land (or whatever else you want) as long as the new use of the land conforms with local zoning and planning laws.
For example, subdivided land zoned as residential can only be used for residential development, whereas mixed-use residential/industrial or residential/agricultural can go either way, with some restrictions in place depending on the locality.
What to Do if Your Subdivision Application gets Denied
If your subdivision application gets denied, talk to your property lawyer and find out why. In most cases, applications are denied due to zoning rules or environmental issues. Land-use regulation is a common reason for denial, and there are a few things you can do.
First, apply for an exemption. In many cases, an application will be denied but later approved once zoning rules are adjusted. Most counties and localities will work with you on this, and you can eventually get approved for some sort of subdividing.
You can also change your plans if the locality doesn’t initially approve. For example, if numbers are an issue, simply increase the size of the subdivided plots and apply again.
It’s important to stress that only a lawyer can give you sound subdividing advice, so these are just some options to consider when you’re contemplating subdividing.
Selling to Individuals vs. Selling to Developers
There are a few different things to consider before making the decision to sell or self-develop your new subdivided properties. Selling them individually to home buyers is a popular option, and it’s often quite profitable.
Selling the plots individually allows prospective homeowners to hire a builder of their choice and construct whatever they please. These arrangements usually work well in mixed-use areas, where individuals can buy up adjacent plots for home and agricultural work.
A faster and easier option is to sell all of the subdivided plots (or most of them) to a large developer or home builder. They’ll buy the plots, pave all the roads, install the utilities, and resell them either as completed homes in a new neighborhood or as unbuilt plots.
A developer is essentially a middleman between you and the final occupant. This frees you from the hassle of dealing with banks and individual buyers, though it also cuts into the profit of subdividing and selling your land.
Are you looking to buy or sell land? We can help—check out our listings or contact us today for more information.
About THE AUTHOR
We loved family’s outdoor adventures so much we started a land business just to help others buy their own land. We’ve sold to dozens of people from ATV weekend warriors to camping enthusiasts to retired truck drivers. Our inventory spans five western states. We’ve been trained by experience, land acquisition courses, and hundreds of hours meeting with county assessors and clerks, zoning officials, realtors, and land investors. We’ve answered hundreds of questions from people regarding the buying and use of land.Read More About Brittany Melling