Splitting up

The summer season is just about in full swing but sales are still down significantly. When compared to pre-pandemic times, it was common to have about 4x the number of homes on the market this time of the year. The year-over-year median purchase prices have increased by 17% but sales would certainly be higher if our market had more inventory.

This month's article might interest you if you're considering subdividing your current property, evaluating lots to subdivide, or just curious about how developers in our market subdivide land for new developments.

Since there's a lot of new construction in our market, buyers often ask how the subdivision process works. Why would someone want to subdivide land?

Breaking up a parcel is a practical way to create value. Provided there's a market, you can make a worthwhile return. You also may want to develop the land, e.g., build homes or commercial space, to generate a short-term return or passive cashflow.

Here's a quick overview of the flow of events and things to watch for:

• Outline your objective and plan — get started early and plan accordingly, as the process can take as much as a year.

• Conduct a feasibility study:

- Ensure there is a market or demand for the location and type of lot you're offering.
- Determine how much the lots will sell for, likely time on the market, and approximate costs of subdividing in your town.
- Evaluate development costs and timeline.
- Check the availability of utilities — present, planned, proposed, and possible.
- See what improvements will be required by planning authorities.
- Consult an attorney to discuss any legal implications.
- Work with a title company to research the deed and tax records; ensure there are no easements or encumbrances that could adversely affect the marketability of the title.

• Hire a surveyor to mark the property's boundaries and prepare a plat map.

• Submit application and plan, attend the open or closed hearing, and get approval or denial.

• If denied, determine the cause and then reapply. Most issues are simple to resolve when you conduct due diligence in advance.

That's the high-level view. If you have land or are considering purchasing land as an investment, connect with me to learn more about the process. -Henry