BiggerPockets

Hi Charles,

I think that's a smart investment most of the time. If you buy a home with an oversized lot that is able to be subdivided into two or more lots, you typically get your additional land priced below value if it were separated. Now you will probably have to spend money on a survey and apply to planning and zoning for approval, but normally the cost is worth it. Just make sure you don't violate any deed restrictions. Although this may not be the best time to try and sell a lot, it may be a good time to get it subdivided. Surveyors probably not very busy, and city could use the fees.

I have done several projects this way, however I changed to building duplexes (cheap to build, higher rents than one SFR). I always do my feasibility before hand to make sure I can short plat and submit for the duplex permit right away. Then, I go in and install all of the utilities and road while I am building the duplex. Once the duplex is finished, all of my utilities are in and when I apply for the short plat the local jurisdiction has to qualify the utilities as pre-existing and it gets me through much quicker!

Also, I have found that if you replace a new structure (SFR or duplex) with the old one, you get credit for mitigation fees and it expedites the process.

You can still buy a house on a larger lot like you mentioned, but there is much more cash involved when I buy the ugliest, tear down house on a large subdividable lot and do my duplex strategy.

Sometimes I keep the duplex as a long term rental, and other times I condo them and sell them off individually with the new houses that I build after the short plat.

15 to 20k seems extremely high for survey and civil drawings. Just like contractors, make sure you get at least 3 quotes from the design team. They are very hungry in this market. I have a duplex that I am planning to split into condos and the survey is $850.The county fee is $550 and of course the condo docs will be the most expensive at $3000. Granted this is Milwaukee and not Seattle. I also have the opportunity to split the lot. There was a deed restriction on it, but all I had to do was contact the city real estate office and they took care of lifting the deed restriction with the common council. Took three months, and they did all the work. Not sure if I'm going to divide the lot cause the city will charge me an additional $5k to do so.

Replatting costs around here are pretting expensive as well. I have a 5 acre tract of land that I am considering either splitting into smaller lots, build a new home, or just sell the tract as is. I'm a little concerned about building a new home right now. I think a buyer could get a better deal on an existing home.

Charles, how's the new home sales in this area?

Hi Charles, sounds great, but Emilio and I are thinking the same thing, that's really high. I did 6 plats and 5 houses and the whole zonning and permit side wes less than a grand!

Maybe you can do some of that yourself. I re-plated the existing simply by writing new legal descriptions and the drawing had to have the measurements (to the legal) and is not to scale. A hearing and an excuse to do it was all that was required. Since it's an existing lot, seems a minor subdivision would fix it for you.

You have a good plan working. As mentioned above, oversized lots with existing homes appraise at ther lot value for the lot required, the excess is usually a third of the value per sq ft since excess or additional land is a small bonus, but when there is enough to subdivide another legal lot, you can get a steal of a deal!

Jennifer has it down! But I don't see how a couple of duplexes can pay for streets, curbs and gutters, here that runs about 100 bucks a foot and a cul-de-sac a little more. FInding existing properties with excess land along the street is worth looking for. Good luck, Bill

Jennifer, that sounds like the old days when banks would speculate. Where are you? That's a great win win!

PS. never mind, I see you are in WA. Are you close to Charles? He's a great CPA, I've been chewing accounting fat with him for some time now. Good Luck, Bill