Converting Raw Land into Residential Lots

One of the fastest ways to make a huge profit in the real estate market is by purchasing large tracts of raw land and then subdividing them into smaller residential lots and reselling the lots for profit. Most people that start off new in the real estate flipping game usually start off with this process. The reason for this is because prices for large tracts of land is often cheaper than going out and purchasing a home that needs to be fixed up before it can be resold. More often than not, large tracts of property that are available to be subdivided into smaller residential lots are usually found in communities that have not yet been overly developed. In most cases, if you live in or around larger cities or areas that have larger populations and larger commercial developments chances are that most of the land has already been purchased for this purpose.

When you do find a community that has several large tracts of land available for sale, you need to be cautious and selective about what properties you're going to buy before you sign a contract to purchase. You should always take caution and try and find out why it is that such a large tract of property is available for sale and the price appears to be too good to be true. One should typically think that the owner of a parcel of land has already considered or should have already considered the possibility of subdividing the land themselves and sell in the smaller pieces for a higher profit. That is not to say however that all properties that are left in large tracts available for sale are not capable of being sold subdivided for higher profit. There are many cases in which the owners of a land either simply do not know how or do not want to bother with the process of subdividing the land and selling off smaller pieces, where they would often rather settle for a one lump sum to sell the whole parcel.

Take for example the area that I live in now. I live on the mountainside community that has not yet seen the initial stages of real commercial development population in the area I live is only about 200 people within a square mile of the main shopping plaza. This leaves a lot of untouched land that has a huge of ability of being purchased for low prices and being subdivided into smaller residential lots in order to be sold for a profit. One piece of land in particular that I have been looking at is a 48 acre tract on an access road about a mile and a half from the new Wal-Mart shopping plaza that just opened a few months ago. This property has been on the market for about two years and to this point nobody has made an offer to buy it. The parcel is currently listed at $89,900.00 the realtor in charge of the listing has told me that the owners are desperate to sell and are waiting for somebody to make an offer on the property. Based on the original listing price the per acre cost of this land is just about $2,000.00 per acre. This leaves a huge potential for markup for subdivided as property to residential lots. The most common size parcel typically available for this area right now is anywhere from one to three acres in size. It is also a typical that the retail for property in this area runs anywhere from $25,000.00 to $42,000.00. Can anybody else see the huge potential here?

If I buy this tract of property I will probably make an offer of a less than the asking price because I know that the owner of the property is desperate to sell. I am thinking that I will offer to purchase the land for a thousand dollars per acre bringing the toll purchase price to $48,000.00. If the seller is willing to sell the land for this price, I will go to work in trying out the map subdividing the lots into approximately one acre tracts including room for streets and right of way is so people can get in and out of their properties. I will then have to take the map to the city boards so that you can be entered into the amount system for the county and also be given proper addresses for emergencies systems, tax purposes, and whatever other city and federal needs for the properties would be.

My estimate in the sale price for these properties due to my desire to sell quickly for a profit as opposed to holding onto them for a long time to get top dollar would range from $5,000.00 to $9,000.00 per acre. If I sold all 48 acre tracks at $5,000.00 a piece with the original cost of $1,000.00 per acre my total profit for this project could be as much as $192,000.00.

This is just the basic example of what you can do with turning runway and into residential lots and parcels good luck and happy investing!