Split Land to Make Money


There is a certain simplicity when you buy and split land as a way to make money. Of course, nothing is as simple as it seems with real estate. You have to learn the local laws regarding how small a property can be split, how to get a survey for the splits, and so on. You also typically get no income from land you plan to split, but you are still paying property taxes until it sells.

But at least you don't have tenants to worry about, or heating systems that can suddenly fail, or roofs to repair. You also don't have to gamble on an increase in value and wait for it, since you are creating the value by making the land into more accessible lots for buyers. So perhaps splitting land is a simpler kind of real estate investing than buying rental houses or speculating on commercial land.

Many years ago a friend of mine bought a home on 65 acres as an investment. He had the land surveyed, split off the house and one acre, which he sold for close to what the whole property cost him. The rest of the property he split into lots of an acre or two. It took a couple years to sell them all, but the profit was certainly worth the effort.

To buy and split land is a relatively safe process if you do your research. Some of the costs you might have include surveys, "perk tests" if there will be septic systems, and property taxes. There can be other minor costs too, like governmental fees to get new tax identification numbers for the new parcels you create. Buy land that already has road frontage on more than one side and you can often avoid the cost of building a road to interior lots. There will be some legal costs if you want conditions and covenants or other agreements and subdivision plats drawn up for you.

Each property can have its own issues and costs, but fortunately it is possible to estimate these expenses before you make the offer on a piece of land. Of course, what is sometimes unpredictable is the amount of time it will take you to sell the lots you create. During this time you will have the relatively minimal cost of property taxes, and - if you borrowed for the deal - the much bigger expense of interest on the loan.

You may have higher property taxes in total from that point on, because the sum of the value of all your lots will be more than what the property was worth whole (at least you hope so).

Most of these costs can be estimated with some certainty before you begin. Then, once the land is split, your primary expense will be property taxes, at least if you are doing this whole deal with cash. Otherwise you will have interest charges as well (unless you financed the deal).

How Much Can You Make?

Every deal will be different, of course, but you should determine what the resulting lots will sell for, what your costs will be, and - in my opinion - only go ahead if you'll be making at least $100 per hour for your time.

Ways to Make More | Related Opportunities | Tips

There are a couple ways to make more money. One is to use cash rather than financing the purchases. This also lowers the risk of having profits eaten up if sales are slow. If you have a little cash, start small. If you can find an investor who will split the profits for putting up the cash while you do the work, that is another way to avoid borrowing.

Another way to boost your bottom line is to offer financing for the resulting lots, in order to sell them for a higher price and generate interest income. If you have lots that normally should sell for $15,000 cash, you might get as much as $20,000 each if you offer them to buyers with $1,000 down and easy monthly payments. This can tie up your capital for a long time, but the increase in sales price and the interest you charge might make up for that. You also could have a balloon payment due in three years to limit the amount of time your cash is invested.

Qualifications / Requirements

If you have the will and the ability to raise the money, there are typically no legal requirements to becoming a land developer.

First Steps

Learn a bit about real estate, research your local regulations to learn what you need to know to buy and split land, and find the funding. Then start looking for land that can be profitably split.


National Association of Home Builders - Land Development - There is some good information here about the challenges you'll face if you decide to split land or otherwise develop real estate.

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Flipping Land: A Strategy

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Every Way to Make Money | Split Land to Make Money