Subdivision Development A Complete Guide
Renowned digital marketer and entrepreneur Neil Patel once said that one should never optimize for the sake of efficient conversion; optimize for the sake of revenue. While Patel was referencing internet marketing and SEO optimization with that quote, it can also just as easily apply to subdivision development.
If you are a land developer, residential developer, or construction company, there could be many benefits to building subdivision development projects in residential areas. Subdivision development can be financially beneficial and aesthetically pleasing to investors and potential homeowners.
However, subdivision development initiatives can also have their fair share of drawbacks. There is a lot of bureaucratic paperwork, unforeseen expenses, and development delays that could occur after investing in a subdivision development.
If you need guidance on subdivision development, here is an essential guide to getting you started. And contact My Site Plan today to help you get started.
What is a Subdivision?
A subdivision development project is a process of legally dividing or splitting up the land into multiple plots to develop, sell, or even transfer. For example, instead of buying one city block of land in the city or suburb, your development company can legally divide that block into five, ten, or twenty subdivision lots.
Subdivision is a piece of land that is divided, re-subdivided, and partitioned into smaller parts of land that could be called lots, units, sites, parcels, or blocks depending on local real estate and building laws.
The amount of land tracts that you can legally subdivide depends on how much land you are starting with and the dictates of the local building permit and zoning laws.
And now, here is an essential guide for starting a subdivision development project.
Who Legally Owns the Desired Land?
Never make assumptions when preparing for land transaction deals, and you will never be dramatically disappointed. You need to know who owns the land you want to develop subdivisions on before you can start.
Usually, local municipal, city, county, or state governments may own land that you may want to build residential subdivisions on, but don't count out federal entities either. Or the land in question may be owned by an individual, family, or company.
Never make assumptions. You should check local real estate, land, and property records to discern who legally owns the property you want to develop.
Understanding the topographical, geographical, legal, and jurisdictional boundaries of one piece of land is difficult enough when you are a land developer. Still, it can get a lot more complicated when developing subdivisions.
A subdivision could represent a couple of units of land or hundreds of individual units, depending on the scope of the development project. So, you should commission a land survey.
A land survey, also known as property survey, surveys and maps the boundaries of land, structures, and property located in the land you want to develop. A land survey can tell you if there are overlapping boundaries with other land properties, topographic details,
Land surveys can also help you learn the best areas to commence construction and the best resources to utilize. And most importantly, a land survey can help you understand the strict and legal boundaries of every subdivision unit you want to develop.
Get a land survey conducted as early in the development process as possible so you won't be dramatically surprised later on.
To turn land into a subdivision development project, you will have to secure a contract, permission, and local governing body approval.
Such authorities could include a local city council, municipal politician's office, or a land developer with connections to such.
Your subdivision development proposal will have to include site plans, layouts, schematics, and data about the purposes and goals of the project.
Remember the mantra to "never assume" when it comes to land development projects. You will need to be legally confident that local zoning ordinances will allow you to build a subdivision project in the desired area.
A zoning law is a local law that predetermines how specific geographical locations can be used for construction and development purposes.
For example, your city has local zoning laws that dictate which area of the city schools, hospitals, malls, museums, and residential structures can be erected.
And even if a residential structure can be legally erected on an area of land, you still have to learn if a subdivision development is allowed.
Even if a subdivision development project can be built on a unit of land, that does not mean you can automatically start building. Your subdivision development company will have to acquire building permits.
A building permit is an official permission to build structures on land as approved by a local governing authority, like a city council. And a building permit will allow your development company access to land, utilities, roads, and other benefits as per local regulations.
You should keep in mind that in the United States, there is no legal standard for defining a "subdivision" or how many units can consist of such. So, you may have to deal with more bureaucracy than usual when acquiring building permits for a subdivision development project.
Your development company may have to acquire a permit for every subdivision unit you develop, which could number a few or hundreds depending on the project's scope.
Getting a permit should be a relatively straightforward process. Over 90% of developers who get a building permit start construction within 60 days.
Subdivision Development Pros and Cons
There are numerous benefits to embarking on a subdivision development project.
For example, the potential for augmented profit margins is relatively good. You can build multiple kinds of properties and divide them amongst subdivision units to optimize profit potential.
The typical cost of a new home in the United States is about $350,000.
Subdivision development is a relatively more straightforward way to diversify a real estate portfolio for a company or investors. A well-managed and fully booked subdivision development can bring in more money than one plot of land, depending on circumstances.
However, committing to a subdivision development project can also bring about some headaches. There may be many unwelcome surprises, like unknown property owners revealing themselves, non-beneficial land survey results, or project delays that extend the cost and timeline for project finalization.
Unless you sell or rent a subdivision land unit with a strategic business plan, you may lose money in the long term.
Start Your Development With a Professional Site Plan
Need help with a subdivision development project? Contact My Site Plan today. The professionals at My Site Plan can design site plans, subdivision designs, and floor plans for your development project.
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- Ryan Crownholm