Beginning Developer

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Over the years, I have purchased SFR property on large lots. These deals have always cash flowed well, but these purchases were also made with the idea of further developing the properties.

One property can easily be short platted leaving the existing 3 bdrm home and allowing for a home in the 400 to 500 K range. The neighborhood has mostly homeowners and most of the existing homes are in this price range and many of them are newer homes.

Any suggestions or comments for someone starting in developing this way?

[Jennifer B.]

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.