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Land Investing Online

In the realm of real estate investing, opportunities abound for those willing to think outside the box. One such avenue, often overlooked, is land subdivision.

While the concept may seem straightforward, the nuances can make all the difference between a profitable venture and a financial flop.

In this episode of The Real Estate Investing Podcast, Ron Apke discusses how he and his brother and business partner Daniel Apke netted $200,000 off a vacant land flipping deal with $0 out of pocket on a subdivide deal, and how you can take this knowledge and apply it to your own land business. 

Minor vs Major Subdividing

Firstly, let’s distinguish between major and minor subdivisions.

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Major subdivisions involve breaking land into smaller lots, often requiring extensive development such as roads and utilities. These projects are costly, time-consuming, and laden with bureaucratic hurdles.

On the other hand, minor subdivisions involve splitting larger parcels into fewer, more sizable plots. This approach offers a quicker turnaround, reduced risk, and potentially higher returns.

More Knowledge = More Money

Another key to subdivision success lies in identifying jurisdictions where minor subdivisions are the most straightforward & profitable.

This strategy requires diligent research and communication with local authorities to understand the permitting process and requirements.
In some areas, a simple plat and survey may suffice, while others may demand additional approvals.

Take, for instance, a recent endeavor where Daniel & Ron Apke acquired a 70-acre parcel with minimal upfront investment. Initially the land was valued at $180,000, Dan & Ron recognized its subdivision potential and negotiated a purchase price of $136,000.

Armed with the knowledge that the county permitted minor subdivisions with just a plat and survey, they proceeded with confidence.

Minimize Expenses, Maximizing Returns

Partnering with investors is one of the most important pieces of the subdividing puzzle, along with breaking down the property correctly.

Dan & Ron Apke typically finance the entire acquisition and subdivision process, minimizing their own financial exposure.

Then, by strategically listing parcels individually rather than flooding the market, they maximized buyer interest and negotiated stronger deals. Within months, the majority of the parcels were sold, recouping their initial investment and then some.

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Listen or watch the full episode below ⬇️ to learn what strategies to use when going after subdivide deals, and how they can massively scale your business if done correctly!

Listen to the Podcast Here

View Transcript here

Ron: There are so many different types of subdivisions. Sometimes minor subdivisions, they’re still going to have you talk in front of the city board or the county board. The ones you want to do are the ones where they say, all you need is a plat. All you need is a survey. I think to this County, we sent 2, 500 mailers.

I think we offered them 136, 000. We overpriced this, but when we saw it, we knew immediately like this is an amazing subdivision. Again, we were out of our pockets, 0. We sold the first three or four within about 60 days. We had our funder already paid. So we had three parcels left. Hey everybody. Welcome back to the real estate investing podcast.

I’m your host Ron Apke. And today we are talking about making 200, 000 on a land subdivision with 0 out of our pocket. And this is from our experience. This is a deal that we are literally closing up right now. That we purchased about a year ago, I think, and we split it up and we’re going to talk all about that.

How we did it. And again, we had 0 out of our pocket. We used investors and we’re going to get all into that. But first, I just want to talk about what is a subdivision. So There are so many different types of subdivisions. Some people look at a subdivision and it’s what’s in your backyard where there’s a hundred lots and they’re all a quarter acre.

That’s not really what we’re talking about and what we specialize in in terms of land subdivisions. Can you make a ton of money subdividing into real subdivisions? Absolutely. But it also is extremely time consuming and it can take years because you got to deal with government permitting. You need to deal with cities.

You need to deal with the county, whatever it is. When you’re cutting up into quarter acre lots, third acre lots, anything like that, it is going to be a lot more costly. There’s a lot more risk involved with it. And it’s a lot more timely. You often need to put in roads for that. You need to put in utilities for that.

And it can be a very time, uh, time consuming thing for sure. But what I like to do, what we like to do is what are called minor subdivisions. And this is cutting up typically into bigger parcels. So you have 20 acres and you cut it up into five, four acre parcels. You have a hundred acres, you break it up into 10, 10 acre parcels.

A lot of times minor minor subdivisions are defined differently everywhere in the country. So, in X county, they might say nothing over 10 acres, you need any permitting or anything like that. And it’s a minor subdivision. So, anything over 10 acres is a minor subdivision if you don’t split under 10 acres.

And anything under 10 acres is called a major subdivision. That’s some counties. Other counties might be, as long as you keep your splits over 2 acres, it’s a minor subdivision. All you need is a plat, a survey. So each county, as you are targeting counties for subdivisions, you a hundred percent want to figure out, you want to talk to them and find out what, what qualifies as a minor subdivision, what qualifies as a major subdivision.

And you typically want to stay in that minor subdivision path. Then even with that, if it’s a minor subdivision, what do I need to do for that? Sometimes minor subdivisions, they’re still going to have you talk in front of the city board or the county board, something like that, which you really don’t want to do.

Okay. The ones you want to do are the ones where they say all you need is a plat. All you need is a survey and then we’ll take care of the rest for you. So you have that hundred acre parcel. You want 25 acre parcels. All you need to do is get a surveyor out there and they take care of the rest. So talking about our deal that we’re going to, we made 200, 000 on give or take a couple thousand dollars.

With 0 out of our pocket, what we did, this was not a targeted subdivision play. We were not looking for parcels in this area that were going to be used for a subdivision or were going to be used for a subdivide. It just came about. So we sent, I think to this County, we sent 2, 500 mailers or something, and we were targeting, I think two to 200 acres.

I could be wrong on the top number, but around two to 200 acres, and we were trying to buy properties at 40, 45 percent of market value. Um, so naturally you get a lot of responses. We get other parcels and we had this parcel. We had this seller call us back who had this 70 acre parcel and I think we offered them 136, 000 and based on offering 40 to 50 percent of market value, we overpriced this.

We reviewed it and we’re like this, there’s no way this is worth much more than 180, 000. But when we saw it, we knew immediately like this is an amazing subdivision off opportunity for us. It had I think three or 4, 000 feet of road frontage. It was a thin parcel with not that much depth and it just ran all the way down the road.

So immediately we wanted to start evaluating like, okay, we can buy this for 135, 000, sell it for 180, 000. That is tight. This is 70 acres. If we split this up into five acre lots or 10 acre lots, how much money are we going to be able to get out of this? So we first called the County. So I called the County and I asked them like, what can I do with this 70 acre parcel to subdividing it?

Why is like, what are the restrictions? And they said, all you need is a platter survey. But they said, the one thing that you do need to know is if you are over under Sorry, if you’re under 10 acres, you cannot put mobile homes. The end buyer cannot put mobile homes and with where we roar in the country, it was extremely rural.

Wasn’t a huge building area. I did not want to mess with having to sell these lots to people who were going to be building or something like that. Cause I don’t think, I think it would take forever to sell in this area. So I wanted to keep it over 10 acres or at least 10 acres. So that’s what we did. We called up the surveyor and we talked to him and he was three, four, five weeks booked out, whatever it was.

And he went out there and he’s, he cut it up. He literally, like we told him we want 10, I’m sorry, seven, 10 acre parcels. And that’s what he cut it up to be. And we actually found some more land within there. He came back to us. He’s like, this isn’t actually 70 acres. It’s about 73. 5 acres. So we got some additional land out of there, but going back to reviewing the numbers, we were buying for 135.

And at this point we still haven’t bought the property. We talked to the surveyor. We haven’t paid her anything. We haven’t a hundred percent confirmed it. So we’re still reviewing the numbers. Like what is 10 acres going to go for? We actually had a realtor in this area that we’ve used before. So we called them up and he said anywhere between 40 per parcel, which at 50, 000, you just put it in the middle that puts us at 350, 000 sale price, which obviously sounds a lot better than the market value of the 70 acres, which was 180, 000.

So we went through. And we didn’t necessarily want to, we were going to go through with the deal either way, but we have funding partners for these. And we had a partnership with someone who he would give us money and he would give us a 15 percent return on it. We’d give him a 15 percent return of it on his investment when the property sells.

Uh, so that’s what we use for funding. He, he paid for a hundred percent of the purchase price, 135, 000. Uh, he paid for the survey, which added whatever. So we are all in 140, 000. Again, we were out of our pocket, 0. We knew we had a, an asset after a subdivided that was worth 300 to 400, 000 depending on how it sold.

So we felt really good about this deal. We had no money about out of our pocket. So when you are subdividing and you’re splitting up these properties, the key on the backend. Is when you are going to sell. So we bought the property. We’re all in for 140, 000, none of out of our pocket. And we just wanted to list one 10 acre parcel.

We didn’t want to list them all at once because they’re all the same size. The thing a lot of people make mistakes on is when they’re subdividing, they post all of all seven of the 10 acre parcels at the same time. What this does is it dilutes the market like crazy. If you put 10, seven, 10 acre parcels, All on the MLS at the same time.

It’s going to be overwhelming for buyers. They’re going to also have negotiation because they know you got to sell these other six also, not just this one, where if I just post up one, I can tell this, uh, buyers when they call me, like I have other available if you are interested. So that’s what we did. We sold the first three or four within about 60 days.

And we had our money back. We had our We had our funder already paid out completely. So we had three parcels left that were a hundred percent profit for us. We had zero dollars out of our pocket and these were just going to be a hundred percent profit essentially once we sold them. So it took us about six more months or something.

I think all in, it took us maybe 10 or 11 months with everything, but we ended up netting out of this deal about 352, 000. Um, Whatever they did, after we paid our funder back, I think we had to pay him 150, 155, 160 maybe. So, after everything said and done, we made 190, 195, 000. With 0 out of our pocket. And really the purpose of this episode guys is one.

It’s like you can, you can buy properties when you’re subdividing for such a high percentage of market value. Like I said, we bought this for one 35. It was maybe worth one 30, one 60 to one 80 as is. And we ended up selling for three 50 because we put 5, 000 in the subdivide in land where this is not a deal.

We don’t subdivide like we would not do a buy for 140 sell for 180. It doesn’t make sense to our business, but absolutely buy 140 and sell for 350, a hundred percent. So when you are evaluating deals and maybe the numbers don’t initially make sense, try to be creative, like try to be creative. What can you do to make the deal work?

Dude, I’m not saying force deals by any means, but being creative with deals, figuring out a way to make deals happen. is extremely valuable in this business and is going to three, four X your income. So if you can do that regularly, it is going to really, really help your business. But other than that, guys, if you have not already, if you’re watching on YouTube, hit the subscribe button below.

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Watch the Full Episode Here