Today’s REI Classroom Lesson

As an expert in land, Leo Clark teaches us in the classroom today about sub-dividing land.

REI Classroom Summary

By dividing out a large parcel of land, you’re able to build multiple homes and receive multiple sales from a single, large purchase of land.

Listen to this REI Classroom Lesson

Real Estate Investing Classroom Show Transcripts:

Mike: Welcome back to the FlipNerd.com REI Classroom where experts from across the real estate investing industry teach you quick lessons to take your business to the next level. And now, let’s meet today’s expert host.

Leo: Hey everyone, Leo Clark here with Crest Investment Group. I am your host for the REI Classroom today, and we are going to talk a little bit about subdividing land. That is my bread and butter, what I do. I go out. I buy the land, or buy the property. I build on it, or I subdivide to build on it, and then I go and I build, and then I sell the properties.
Right now, we’ve got about 13 homes being built, or somewhere in my funnel of coming out of the ground, or being approved to come out of the ground. So in my funnel, there is 13 homes this year that will be built.

Mike: This REI Classroom real estate lesson is sponsored by UglyOpportunities.com.

Leo: One of the things I want to talk to you about is, because I see this happening a lot. People get a property send to them, and it’s a deal as they say. And the property sits on a parcel that’s kind of large like this recent one. It sits on an almost two-acre parcel, and the zoning is for seven units. Seven per acre. So that’s almost 14 units I could go forward building if I wanted to, because it’s zoned for it.
So we say the money is in the zoning. So if something comes to you, and you see it’s sitting on a large parcel, you want to find out what the zoning is. If the zoning is, let’s just say for round figures, R1 at 10,000. That’s one house per every 10,000 square feet. That means in a one-acre parcel, you could build four homes.
So what I want to show you is how to look at that so that you are not missing out on deals, because most of the time, the asking price is a little higher on the house and the property because they know the future value of the parcel. And what I did recently was buy a house that had already been fully remodeled sitting almost on two acres, and we are going to go forward subdividing it and building four more. So this year, there would be five sales because we’ll have five EPMs, the house is existing. It’s been remodeled. There’s a renter in it, and that renter is the buyer.
So when we subdivide it out, that house goes away, it’s sold, and then we’re building four and we’ll sell those four. So this is what it looks like. Now as you can see, this is the existing home right here. And then as we go forward, we will subdivide all this out, and these four homes will get built.
Now, the big reason why I went after this one, the reason why I like this one so much is because this is the street that the existing property sits on right here. But it’s also double-fronted, meaning this street right here dead ends into the property, the property line. So it’s double-fronted, meaning I can get to the parcel from this side, or I can get to the parcel from this side. So with the existing house already there and a street that is ending into the property, I’ve got a lot of opportunities here. So as you can see, these four homes along with the little cul de sac will be developed this year, and the four homes will be built. Then we’ll go forward selling the four.
So I wanted to show this to you because there is a lot of opportunities out there within the zoning of the parcel. You don’t need to go find more inventory. Everybody is talking about lack of inventory, I’m creating inventory. So aside from this house right here, four more homes I am creating.
So from a standpoint of looking at a parcel or a deal as they say, find out what it’s zoned for. Find out if you’re maximizing the density, maximizing the opportunity for that parcel. So that’s stuff that I wanted to show you today. Subdividing is my bread and butter or my business. I do it every day. Again, thanks for watching. And if you need any help, send me a message and I’ll help you through the process of knowing how to subdivide. Thanks again. See you.

Mike: HomeVestors, the We Buy Ugly Houses folks, is a franchise system of hundreds of real estate investors that has purchased over 65,000 houses. If you’d like to learn more about the most powerful real estate investing in existence, whether you’re a pro or looking to take your business to the next level, or whether you have no experience at all, but a burning passion to be successful in real estate investing, please visit FlipNerd.com/ugly to learn more.
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Leo Clark
I am Leo Clark & I am the CEO of 2 Real Estate Investing Companies in San Diego. CREST Investment Group Inc. & Infill Enterprises. Both are Real Estate Development Companies.
Leo Clark

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