What Are the Benefits of Subdividing Land?

Subdividing land can be a controversial thing. Oftentimes, people don’t like the idea of splitting up a longstanding farm into smaller housing lots. It goes against the traditions built around property legacies, which commonly span generations. This translates to decades or even centuries of heritage.

“I don't want to have to subdivide a big farm out, but if we know that's going to achieve the seller’s goals, then that's what we’ll do,” said Tre Kerns, a Whitetail Properties Land Specialist in West Virginia. “Still, we have to make sure that it fits each parcel. One can’t limit the next.”

For those who choose to subdivide, it comes with attractive benefits. If it’s the right property (good location, adequate layout, proper access, etc.), turning a larger property into smaller tracts can generate considerable profits.

Take a desirable 20-acre tract that’s compatible with subdividing, for example. Generally, it will sell for far more as 20 1-acre tracts than one 20-acre tract. Because residential building lots are highly competitive, smaller parcels tend to bring higher premiums. The downside? It usually takes longer to sell 20 tracts than just one.

Determining if Land Division Works for the Property in Question

When it comes to subdividing land, there are important steps a seller should take when subdividing the farm. The first is assessing whether or not subdividing is the right thing for each property in question.

“We've done it several times here in West Virginia,” Kerns said. “First and foremost, you must see if that property fits the need.”

Many properties Kerns sees aren’t ideal for subdividing. Even when sellers want to divide it, and maximize value, it doesn’t always make sense to do so. Sometimes, he has to tell them it won’t work.

Flat, easy-to-navigate terrain tends to do best as subdivisions. It also tends to be cheaper to set up on the front end and get to market. In contrast, more challenging landscapes, such as flood zones and steep topography, are more challenging and expensive (for the seller) to subdivide.

The best properties to subdivide tend to be just outside city limits in areas far enough from the busyness of metros to offer some peace yet close enough to offer convenience. Parcels that aren’t completely flat and open, but that offer gently rolling terrain and some trees and other plant life, commonly have great appeal, too.

Checking for Potential Zoning Issues Before Subdividing Land

Zoning is a significant factor for real estate of all types. It quite literally controls how land can be used at the county and city levels. How an area is zoned influences whether a property can be used for agriculture, commercial, residential, all-purpose, etc. Oftentimes, it even regulates whether or not land can be subdivided into smaller pieces.

It’s common to see regulations that mandate minimum lot sizes. That number might be ½-, 1-, 2-, or 5-acre minimum parcel acreage. Like all zoning mandates, these rules must be strictly followed.

Studying Available and Potential Road Frontage for Proposed Subdivision Layouts

Quality subdivisions are more attractive to buyers, sell quicker, and go for higher prices. Part of this attraction is curb appeal and ease of access. Because of that, road access and quality matters greatly.

Situation depending, creating a subdivision might also require paving new roads. If not building additional road systems, each lot must have direct access to existing road frontage. The design should be convenient, look appealing, and maximize each individual parcel of land.

More times than not, there are minimum road frontage measurements for each lot in the subdivision. It might range from 60 to 300 feet, sometimes more.

Ensuring Proper Access for Utilities

A proposed subdivision must have satisfactory access for utilities. Key things to assess include electric, sewer, and water hookups. Conduct necessary checks, such as perc tests. If utilities are unavailable, it won’t work. If utilities cost too much to install, it might diminish profitability. Consult with professionals in each field to ensure all relevant utilities accesses are viable.

Optimizing Subdivision Layout and Ensuring the Subdivision Doesn’t Limit or Isolate Any Parcels

Those considering subdividing their real estate should optimize the layout. Furthermore, ensure each tract within the subdivision doesn’t limit, isolate, or otherwise inconvenience any parcels.

“You have to make sure one parcel isn't going to limit the other parcel,” Kerns said. “What I mean by that is, if you have four tracts, and the first three sell really quickly, you don't want something that will be a detriment to that last tract. That doesn't help your seller if he has to sit on a tract.

“Be able to look at the contour, determine the topography, and have a feel for that property,” Kerns continued. “See if it works for what you're wanting to do.”

Maximizing the Profitability of Subdividing Your Property

Profitability varies greatly from one piece of land to the next. Subdivision A might sell 1-acre lots for $100,000 while subdivision B can’t sell 5-acre pieces for $10,000. It’s all about desirable locations, proximity to attractions, and quality of tract layout.

Another element of profit maximization is minimizing up-front costs to prep a subdivision. For example, if proposed subdivision layouts call for paving roads, that gets expensive and can greatly reduce profit margins. When possible, avoid road construction, as it requires a lot of time and money. While adding strategic infrastructure can benefit properties, it must be with purpose and a high likelihood of return on investment.

Considering Subdividing Land But Not All of the Farm

Some landowners who have larger properties might not sell the entire farm. Instead, they might retain the interiors, and a small amount of road frontage, but sell certain sections, or even the majority, of road frontage.

This can be especially lucrative for more desirable building lots with great views. Sometimes, it’s possible to subdivide and sell off that portion of the property and keep the bulk of the land.

“I've seen individuals keep a portion of the property,” Kerns said. “We just had a piece of property here in West Virginia. It was several hundred acres. He kept his house and about 20 acres. He wasn't at the point in his life where he wanted to move, but the rest of the property was getting to a point where it was a lot for him to keep up. So, we subdivided that out and sold it.

“It all depends on the seller and where they're at in their current state,” Kerns continued. “Most of the time, here in West Virginia, they're selling as whole tracts. Otherwise, your goal is to parcel it out and make sure that each part of the resale process fits. Make sure each parcel is marketable and not just a hillside. So, if it’s steeper topography, we try to include that with an area that's more suitable for a building site. Include these with a good parcel so that it sells.”

Surveying for Dividing Large Acreages

Surveying subdivided property is significantly more involved than larger, standalone farms. It’s a more complicated, time-consuming, and even regulated process. It might even cost more.

“I'll use Land ID or Acres to reference my road systems and proposed parcels,” Kerns said. “With that, I can get a really close indication of tract locations and sizes. I'll send that file to the surveyor, explain the proposal, and then we can do that survey. Depending on the timeframe, we can typically pay for that survey on the front end or on the backend. We’ll address the price, and as long as the surveyor is OK with it, pay out of the closing proceeds so the seller doesn't have to fork over several thousand dollars on the front end.”

Working With the Right Professionals, and a Whitetail Properties Land Specialist, on How to Subdivide Land

Landowners aspiring to subdivide their land should work with the right experts. Consult licensed professionals who are skilled and qualified for each step of the process. Individuals to consider working with include trusted civil engineers, land surveyors, real estate lawyers, and Land Specialists. In tougher markets and economic downturns, it can prove beneficial to enact a strategic marketing plan, which Whitetail Properties offers included with its services.

Once again, study deed restrictions, zoning laws, and other relevant regulations. Start the process of involving a homeowners association. Expect fees for applications, assessments (environmental, impact, etc.), legal, surveying, utilities, and more. Local approvals for subdivision applications typically take one to two months, sometimes longer.

“The biggest thing is being able to see the land and the visuals for what it could be,” Kerns said. “A lot of people just parcel out stuff, and honestly, screw themselves on the piece they part out because they don't look at the bigger picture of what they're trying to sell.”

Want more info? Contact a Whitetail Properties Land Specialists near you. They can assist with your land subdividing questions, concerns, and needs.