Quick Profits in Real Estate through Lot Subdivision

Key Points

• Fastest way to generate profits in real estate:
  • Not through fix-and-flip or wholesaling.
  • Comes from subdividing lots.

Simple Subdivision Process

• Focus on low-level, quick subdivides.
• Example: Subdivide a one-acre lot into two half-acre lots.
• Potential profit: $10,000 to $50,000 in 30 to 60 days.

Subdivision Steps

1. Meeting with the City

   • Understand local codes for single-family residential lots.
   • Inquire about setback requirements, house sizes, and utility options (septic, well).
   • Codes usually available online; generally, only a few pages long.

2. Utility Considerations

   • Assess utility access (water, sewer, electric, gas).
   • In areas lacking municipal services, consider well for water and septic for waste.
   • Solar options are viable where gas service is unavailable.

3. Replicating the Process

   • Once familiar with a municipality's rules, apply the same process for subsequent lots.

Finding Profitable Lots

• Look for lots suitable for custom home builders.
• Target price range: Homes selling between $500,000 and $800,000.
• Example: Purchase a one-acre lot for about $100,000, subdivide into two half-acre lots.

Financial Analysis

• Builder's perspective:
  • Build a $700,000 home on the lot yields about $130,000 profit.
  • Instead of one home, build two on divided lots for similar profit.
  • Sale Process:
    • Sell each half-acre lot for $100,000.
    • Total potential profit from two lots can reach approximately $99,000 after expenses.

Conclusion

• Subdividing lots is a low-risk, high-reward strategy compared to other real estate methods.
• This method helps generate capital quickly and build a real estate portfolio.

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