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Property Parcels:  Splitting Your Lot

How do you split up a lot or parcel of land? For large lots of land, see if there’s potential to split up the property and sell a portion of the lot or build an additional property next to an existing property. There might be a way to build a rental unit or income generating property on the same lot.

If you’re buying land, since you believe it will appreciate in the coming years as the city grows or you know a certain development is on its way, in the time being you might use the land as storage facility or another alternative business.

In other words, as an investor there could be stages of development for your asset—from storage, to parking, to apartments, to condos, to condos and commercial uses (mixed use).  You're looking at the land or property with a long term plan.

Furthermore, if you’re buying land, make sure the area is setup so you can access water, the sewer system, power, natural gas, and Internet and cable—now more than ever a high speed Internet connection is a great selling point.

But if the land you own is off the beaten track, seemingly a good buy since it’s cheap, make sure it will catch up with all of the pipes and wiring—water, sewer, and power, or you’ll be stuck with a piece of land that will always stay cheap.

Attract More Potential Buyers

When you split up land you can raise the price since more people will potentially be able to buy those smaller parcels of land. That’s often why a stock will split on the stock market, so more people can buy the stock at the lower price, same idea in the parceling of land, demand is increased when the price is more viable for a bigger group of people.

In order to split up land or sale parcels you’ll need to have separate release clauses for each parcel. Otherwise, depending upon your loan, if you sell one parcel you may have to pay off the entire loan and or you won’t be able to give clear title to each parcel. Check into the stipulations of your loan before you decide to buy a large piece of land. Plan ahead and know what you’d like to do with the land.

Other Factors to Consider

How do you price each lot so that all lots are sold in the end? You also have to keep in mind who you're selling each parcel of land or lot to. Think about selling a lot to investors that will induce others to buy (a well know construction company for instance or investors with a large network of buyers), and or selling to investors or builders who are compatible with one and other.  A certain type of builder or lot owner could sway others to buy a lot or want to buy into the local area.

Perhaps you can get more money if you don't split up the lot? Along with splitting up parcels of land a large piece of land can also be attractive to a certain type of real estate investor. Before you split up the lot check to see if there's another use for the land and the entire property can be sold. Maybe a factory or a large store would like to own the land - then again, the land must be zoned for commercial use.

Location also is key. A piece of land downtown is worth a lot more than land outside the city, obviously.

KEY:  An engineer must check parcels of land to ensure that the land can properly support the intended construction. Compaction is when land can’t support structures due to previous flooding or the area was once a land fill and won't support the construction of homes or condos.

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