Blown Away by the Cost to Subdivide $$$$$

Blown Away by the Cost to Subdivide $$$$$

Investor · Wilmington, DE · Member since 2014 · 48 posts · 33 votes

I recently put a property under contract that was on a 1+ acre lot. I had a meeting with the country and they said that it appears that I am able to subdivide the lot into 3 lots - keep the existing house on one and create 2 additional. First, I would need to submit a minor subdivision plan to them for review. I had two firms come out to view the property and put together a proposal. Never having pursued a subdivision before, I had no reference for what the cost would be. Here was my thought process - get a survey, draw some extra lines on the plot plan, submit to the county and pay their fees to review and record = $3,000 tops. 

I am not sure I have ever been more wrong about anything in my real estate investing career. Both proposals were a few bucks apart and right around $40,000.  That's forty-thousand. My heart only just started beating again after reading through the proposal. Is this not insane? There is a price breakdown showing the various environmental studies that would be done, but am I crazy to be shocked by that number? Others that have never investigated a subdivision before, would you have guessed that amount?  Is this a comparable price to what others are seeing in other parts of the country?

Please let me know your thoughts and help bring some clarity to a situation that my brain just isn't able to understand. 

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Karen MargraveBusiness Member
Moderator
Realtor, General Contractor, and Developer · Redding, CA · Member since 2009 · 7k+ posts · 4k+ votes
11y

@Joel Owens is correct, the larger the project, the more lots you have to spread the costs out over, for both development and construction. 

One of the biggest problems for developing land is real estate agents taking listings and not understanding what goes into development and all the costs involved. Too often they, and sellers, look at the end price of a developed lot, and have no clue as to what it took to get it there, and all the costs involved. Not understanding those costs, they mistakenly underestimate them, and give far more value to the raw land than is reasonable for a developer to pay and still make a profit. 

What they need to do is have required education, etc. for agents wanting to list land that covers costs, zoning, etc.

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  • Civil Engineer · Orange County, CA · Member since 2012 · 189 posts · 45 votes
    10y

    @Chris Field, wetlands are a hot topic now nationwide. This past May there was an new federal rule of what the EPA and USACE regulate under the Clean Water Act. The goal was to reduce the confusion on who regulates what but it really didn't solve that problem and just expanded what they can regulate, go figure. Be interesting how this plays out.

    California specifically you will probably need permits from the USACE, Water Quality Board, Fish and Wildlife and CEQA approval (California Environmental Quality Act) if you have wetlands. A lot of permitting work if you want to get your project off the ground.

  • Investor and Architect · Ramsey, NJ · Member since 2010 · 305 posts · 84 votes
    10y

    was this more of a commercial deal with an LOI? if so thenjoy that is why you have the due diligence period. either way unless your money has gone hard you can adjust your offer downward or back out of the deal. what you are dealing with runs with the property and any other buyer would encounter the same.

  • Investor · Gaithersburg, MD · Member since 2016 · 4 posts · 0 votes
    9y

    @Matt Fish, I'm very much in the same situation as yours. I have a hard time to find a company to do the work in PG county MD. After 20+ calls, I finally found one that quotes me below. I don't have another quote to compare with so still sitting on it. Another reason I have not made the decision is it takes 10-20 months to complete. I plan to sell the house with 1/2 of the land within a year. I have a difficult to find out how I can sell the house while the subdivision is pending. I talked to many real estate agents (I understand not all of them are create equal), several reals estate attorneys (they're either not familiar or don't want to do), but still, don't know if this is possible and how.

    Here is the breakdown of the works:

    1) Boundary Survey of 1.1 Acres per Deed Price: $1050.00 
    (Boundary Drawing is included)
    (Title Report is required to be supplied at Client’s cost – approximately $150 - $200 by others).

    2) Stakeout Property corners..
    Add: $525

    3) Topo for subdivision

    Add:$700.00

    4) Feasibility study and preliminary plat for subdivision:

    Add:$800.00

    5) [Optional only after 4 above] - Subdivision plat with all county requirements addressed:

    (PERCOLATION TEST or PUBLIC SEWER will need to be addressed after Feasibility study has been made)

    Add: $7500.00

    6) Add: drawing of existing improvements (House etc)
    Add $175

    7) Paper Copies
    Add: $35.00
    Autocad drawing
    Add: $35.00

  • Investor · Durham, NC · Member since 2016 · 10 posts · 0 votes
    8y
    Hi Giak,

    I'm in a similar situation you were in when you posted this.  How did this end up working out for you?

    Originally posted by @Giak Tran:

    @Matt Fish, I'm very much in the same situation as yours. I have a hard time to find a company to do the work in PG county MD. After 20+ calls, I finally found one that quotes me below. I don't have another quote to compare with so still sitting on it. Another reason I have not made the decision is it takes 10-20 months to complete. I plan to sell the house with 1/2 of the land within a year. I have a difficult to find out how I can sell the house while the subdivision is pending. I talked to many real estate agents (I understand not all of them are create equal), several reals estate attorneys (they're either not familiar or don't want to do), but still, don't know if this is possible and how.

    Here is the breakdown of the works:

    1) Boundary Survey of 1.1 Acres per Deed Price: $1050.00 
    (Boundary Drawing is included)
    (Title Report is required to be supplied at Client’s cost – approximately $150 - $200 by others).

    2) Stakeout Property corners..
    Add: $525

    3) Topo for subdivision

    Add:$700.00

    4) Feasibility study and preliminary plat for subdivision:

    Add:$800.00

    5) [Optional only after 4 above] - Subdivision plat with all county requirements addressed:

    (PERCOLATION TEST or PUBLIC SEWER will need to be addressed after Feasibility study has been made)

    Add: $7500.00

    6) Add: drawing of existing improvements (House etc)
    Add $175

    7) Paper Copies
    Add: $35.00
    Autocad drawing
    Add: $35.00

  • Investor · Atlanta, GA · Member since 2013 · 3k+ posts · 3k+ votes
    8y

    Wow! I had no idea about the cost of just splitting up 1 or 2 lots. Naively, I thought it was just as easy as having a surveyor create a new plat map and submitting it to the city - providing all of their requirements for road frontage etc are met. 

  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    8y
    Originally posted by @Michaela G.:

    Wow! I had no idea about the cost of just splitting up 1 or 2 lots. Naively, I thought it was just as easy as having a surveyor create a new plat map and submitting it to the city - providing all of their requirements for road frontage etc are met. 

    every jurisdiction is different..  some are that easy.. some are really tough I am doing one in lake Oswego Oregon and it will cost at least 50k to divide one lot into two. 

  • Rental Property Investor · Friendswood, TX · Member since 2010 · 663 posts · 508 votes
    8y

    Im doing this right now splitting off some homes from a mobile home park.  3 houses need to be subdivided from park.  4 or less seems to be something that can be handled in just the office from what i have gathered.  With the surveyor, i think we will be in it for about 3k.  City fees probably 1-2k. Then we have to put the SFHs on their own water ( each tap fee of 1k for 3 houses).  Would be 900 for sewer on each but think we can use the way it is.  Then will have to add driveways for separate access but thats kind of different the straight subdivide costs i guess and getting estimates now. Probably have our attorney review all this as well .  So we might be in it for 10k ish ( plus drives) for 3 parcels if it turns out as I'm hoping .  Doesn't seem bad. If i was in California probably have to donate a lot of blood.  This is in the Houston metro. 

  • Portland, OR · Member since 2015 · 8 posts · 1 vote
    7y

    Jay Hinrichs,

    I am attempting to split one into two in Tigard and YES, it is going to cost me about $50k when all is said and done.  I first have to acquire another 1000sqft to meet a minimum 14k lot size requirement at $8500 to move the lot line not counting what the neighbor is going to charge me for the 1000sqft we need.

  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    7y
    Originally posted by @Kirk Hart:

    Jay Hinrichs,

    I am attempting to split one into two in Tigard and YES, it is going to cost me about $50k when all is said and done.  I first have to acquire another 1000sqft to meet a minimum 14k lot size requirement at $8500 to move the lot line not counting what the neighbor is going to charge me for the 1000sqft we need.

     on the one in Lake Oswego I had to abandon the lot split.. by the time the city was done conditioning us would have been close to 200k to split one lot that is only worth 250 to 300k. and now that we are slowed a little higher end lots are not moving as well or for premium pricing.. so I am going to build one house.. but put the house on the lot such as if someone wants to split the lot down the road the existing house is in the set backs.. 

  • Investor · Baltimore, MD · Member since 2019 · 163 posts · 46 votes
    6y

    This is an an old thread but the reason why the cost is so high is the environmental issues , especially if there are wetlands or species of plants, reptiles, birds, or animals, which are considered endangered

  • Rental Property Investor · Member since 2019 · 66 posts · 24 votes
    2y
    Quote from @Barbara G.:

    We subdivided  property a long time ago and I thought it was expensive at the time but can not remember much other then paying a survay company  and I am not sure whether we had to have an enviormental study.

    Everything must be negotiable why don't you just call up another survey company or two and get another price or two.  Why don't you research it on the internet? and find out just how reasonable or unreasonable the price is??  I assume you have called the county and asked them for some advise or names of companies.  I think we used the original survey company on our original house plans.

    This is the most useless answer ive ever seen on biggerpockets
  • Chris SeveneyBusiness Member
    Moderator
    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    2y

    @Matt Fish

    What’s a lot in the area cost?

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