Brian's House Building Blog

Three Central Tips for Avoiding Losses During Land Subdivision

by Peyton Sanders

The process of land subdivision is intended to increase the value of a property and make the resulting lots more marketable to customers. However, if you are interested in this form of development, you must understand that not all divisions are profitable. Poor planning and decision-making can lead to unsuitable lots which might contribute to financial losses. Therefore, it is important to address all issues which could compromise your earnings. Here are some critical guidelines for avoiding losses during your land subdivision.

Choose Profitable Land

The choice of land will determine the feasibility of your subdivision work. In simple terms, you cannot section any piece of land and expect to earn money after the development. When planning for this type of project, you must acquire the right tract. Ideally, the land should be large enough to divide into useable lots. These lots should meet the minimum size requirements for the pertinent zone. Moreover, you must think about the market demand for smaller lots in the area. If people are not interested in reduced lot sizes, you will not have buyers.

Follow Legal Process

Financial losses can occur due to legal oversights. It is essential to remember that property division is a major form of land development. Therefore, there is a legal process for conducting the work correctly. If you do not comply with the law, you will be penalised for the violations. This could cause a significant loss and even compromise your profits. You can avoid these problems by following the established legal process for division. The most critical issue to keep in mind is obtaining relevant permits. Do not begin any developmental work before gaining approval from the local council.

Calculate the Costs

The cost of developing land through divisions can be high. If you do not conduct your due diligence, you will accrue significant losses. Simply speaking, if the amount of money required to divide the tracts to small lots is high, the profits from the sales will still not be ideal. Therefore, you should conduct research on the cost of the development. Keep in mind that you will be responsible for the infrastructure, which will make the lots useable. For instance, you will need to connect utilities like water supply and sewer systems to each section, and you must ensure that there is electrical supply.

Finally, you should note that some properties have deed restrictions and covenants that can limit land subdivision work. Therefore, consult a surveyor or other qualified contractor before making any major decision.