When you subdivide a piece of land, you are essentially dividing a larger parcel into two or more smaller parts, each of which will have its own land title. Whether you own a sizable parcel of land for sale or even a house with “excess” land space, subdividing a property successfully offers plenty of opportunities and, therefore, numerous benefits, including increased profits and flexibility.
Here are the top seven reasons why you may want to put in the effort and subdivide your land.
You Want to Achieve Higher Profits
You have more assets to sell when a property is divided into two or more separate lots. This might be a very profitable move on a big enough property in a high-demand area. Alternatively, you may divide the land, build a house for yourself in one half, and sell the other for a quick profit.
However, when tackled incorrectly, the subdivision process can be incredibly long, complicated, and expensive. And since basic subdivision laws, as well as lot and building-size restrictions, vary depending on the state, city, town, or district, it’s crucial to learn how to subdivide land the right way and maximize the outcome.
You’re Looking For an Easy Way to Expand Your Portfolio
When you purchase a larger plot of land, you’ll likely focus on developing a single property. While there’s nothing wrong with this, it can reduce the potential of your real estate portfolio. However, when subdividing the parcel, you can create new properties and diversify your portfolio.
You Want to Boost Your Land’s Value
Property subdivision is excellent if you’re looking to liquidate some of your real estate possessions. It allows you to cash in on a portion of vacant land and hold onto the rest. When holding onto some of their tracts of land, you’re giving it time to increase in value as the surrounding subdivided land parcels develop.
You Want to Improve the Land’s Marketability and Sell It Faster
Smaller lots are typically more marketable than big ones. This is because they are more likely to appeal to the general public due to the lower price. This means you can easily expand your pool of potential purchasers and ultimately improve your chances of receiving an offer.
In addition, by completing the property subdivision project up front, you could increase the entire property’s marketability—and frequently the value—as you’d be sparing the buyer the time, hassle, and risk of doing it themselves. That being said, before taking actual steps toward subdividing your land, make sure to understand the needs of the market.
Your Goals Is to Downsize While Remaining Flexible
Perhaps you don’t want to keep investing the time, effort, and finances into maintaining your huge piece of land. Instead, you can subdivide the property so you can focus on creating better livable space, cut expenses, and stop worrying about underutilized or wasted raw land, all while earning money.
You Plan to Build an Additional Home for Your Family
In many places, zoning regulations outline that you’re allowed to build only one house on one plot of land. However, if your family is growing and you want to keep everyone close, you may want to build several houses for your children or parents. This is possible when subdividing your land into multiple legal building lots.
You Want to Boost Cash Flow for Property Development
Success in real estate development depends on having enough cash on hand. You never know when you’ll have to respond quickly. In addition, the goal of investing is to establish reliable income sources. Any real estate investor can greatly increase cash flow by performing a simple subdivision. For instance, you might sell off subdivided land portions to pay off the debt that might be having an effect on your financial performance.
Final Thoughts
Subdivisions, especially larger projects, can be complex. However, when done right, they could boost your land’s value and lead to increased earnings and flexibility. As long as the property complies with all law requirements, including subdivision regulations, zoning rules, and development laws, this can also be an excellent way to generate significant amounts of equity. At the same time, with the ever-increasing demand for land in desirable locations, subdividing a property can improve land marketability and bring about a smoother sale.
