How do I get around subdividing restrictions for selling land?

3 Replies

I have a 16 acre vacant land lot that is undeveloped. The county prevents me from subdividing into anything less than 5 parcels unless I develop it. I have already sold 4 acres which leaves me with 12 acres and I am able to only split it up 4 more times. This would be 4 lot sizes of 3 acres. The land has some homes being developed around it and the minimum requirement for home lot sizes in the area is 1 acre lots. The land is located in a stagnant market with very little growth and or appreciation. I would like to sell the entire piece of land to reinvest in multifamily properties. Theres very little interest in the parcels since they are larger than what people need or are willing to pay for. Im looking for a creative way to either get around the subdevelopment restrictions or how I can use this property to fund other RE investments.

Arizona has very strict land subdivision laws resulting from rampant land fraud in the 1960's. The only way to divide land in the county six or more times is to get approval for a subdivision and file a public report. Many investors have tried transferring the land to partners, friends or family to sell but "acting in concert" is also illegal and selling an illegal subdivision is a felony. 

So your only practical option is to sell 3-acre parcels. Do the property's have water? Utilities? A good way to sell retail is to put in a shared well and road with operating agreements for both. Have power to the lots. Then market them (build ready) to people wanting to build a home/place a mobile and homebuilders/mobile dealers. Horse people also want larger lots. Is it zoned/deed restricted against horses?

If the property is in the middle of nowhere with no water/utilities you can still market it to preppers and hunters. 

To maximize profit and saleability offer a seller carry with interest. Whatever you decide I would find an agent and/or attorney experienced with land. Good luck!

@Matt Shields thanks for the great info. The property does not have water or utilities but they are accessible from neighboring properties. Ive done some financial anaylysis and the ROI to develop any further is not worth it. We currently have it listed with seller financing as an option. Do you know if lenders will allow you to leverage the equity in vacant land? I own it free and clear. Thanks again for the response.
Originally posted by @Armando DeGuzman :
@Matt Shields thanks for the great info. The property does not have water or utilities but they are accessible from neighboring properties. Ive done some financial anaylysis and the ROI to develop any further is not worth it. We currently have it listed with seller financing as an option. Do you know if lenders will allow you to leverage the equity in vacant land? I own it free and clear. Thanks again for the response.

 Probably not. Lenders usually won't lend on a property without electric or water.