In this episode of The Land Academy Show, Steven Jack Butala and Jill K DeWit discuss the topic of adding value to a land deal by minor splitting or subdividing land. They define minor splitting and subdivision, and explain the processes involved in each. Steven and Jill also share their personal experiences with minor splitting, and offer advice to listeners who are considering this strategy. They emphasize that minor splitting can be a profitable way to add value to land, but it is important to do your research and understand the risks involved before getting started.

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Land Subdivision: Adding Value Through Minor Splitting

I’m Steven Jack Butala.

I’m Jill DeWitt.

This is episode number 2034 and we’re talking about adding value to a land deal by minor splitting or subdividing land. There’s all kinds of misinformation out there. Jill and I will tell you exactly what’s possible and likely and how we do it and make it work for us.

Also, when you should do it. What the biggest thing I hear people doing and when you’re new to land especially. You think you have to do something to it to make it more valuable. That’s not what we’re saying. I don’t want you to go out and overspend for something because you know you’re going to split it. I know we’re going to talk that about, too. It’s going to pay off in the end. I still want you to buy it. This is just an option.

Minor splitting requires careful planning and research. Don't overspend on a property based on the potential for subdivision. Share on X

We want you to make money and do it realistically. Go into it with your eyes open and what to expect and all that. In fact, all week I’m calling it the theme of adding value to your land deals. One way you can add value is, as I said to minor split the property but depending on where you are in the country, it’s tricky. It can be glorious and profitable, but it’s time consuming and we’ll talk all about it.

Hoops to jump through.

Question From A Land Academy Member

Each day on the show, we answer a question from our Land Academy member Discord forum and we take a deep dive into one land related topic by your request. Let’s take a question, Jill.

James wrote, “Does anyone recommend a text message service that doesn’t give warnings for stop responses or shut the service off after no reply messages AKA Google Voice?” What funny about this is that for my work phone, we have a phone system because we have numerous employees. We need to transfer calls and different phone numbers feed in. It’s not just my little land business. It’s more like Land Academy.

I use my work phone all the time and I forget that that’s on there. Sometimes text messages go out and it might be, let’s just say I’m out of town. I’m even booking a hair appointment. It’ll have on there. They told me later, “Please reply stop to this topic.” They’re like, “Huh?” You’re like, “You’re booking a hair appointment. I’m very confused here.” It’s funny.

There are some services that you can get. First of all, you could go get a whole separate phone number and that’ll solve that. It’s getting more and more advanced and easy, depending what you’re doing. I know there’s probably a trailing response in Discord on this probably. Ten people said, “Use this phone. This doesn’t do it. Here’s how,” and all I could stuff.

Every marketing idea that’s very effective, eventually gets regulated because it gets misused and abused. Texting and spam falls under the spam laws. It’s no exception. Let’s start with the actual rule. The actual rule is some version of this, you can’t solicit or reach out to anybody. Solicit means reach out to somebody or attempt to contact. It doesn’t mean try to sell them something. You can’t reach out to somebody according to the law if you don’t have a pre-existing relationship.

Think about that. How do I have a relationship? Do I have to meet them in person in a bar? I don’t know. I’ve always been wondered about that, but that’s the rule. If you have a pre-existing business relationship with somebody, it’s perfectly legal and ethical to contact them via text. That doesn’t help us. We have thousands of people we want to send letters to every month and contact them. Here’s what we do.

On one side of it, you can look at a map. You have a target property and you want to sell it. This is how we use it. We effectively text people on a personal level one by one and down that block to say, “Hey, John Smith.” Not, “Hey, you or hey, landowner or any of that stuff.” “Hey, John Smith. We purchased the property down the street from you. We were going to resell it. We would like to offer it to you if you’re interested in buying it for this price before we list it for sale.”

That seems to evoke very positive responses, “No, thank you.” “All the thanks for letting me know.” “We’re not interested, or we are interested.” That’s a real healthy in my opinion use of texting. The way that you don’t want to do it is robot texting where you have a list of 1,000 numbers from a database and you buy into a service or send out thousands of notes saying, “Do you want to sell your land?” If you start to look around the internet, there’s class action suits that revolve around that all over the place and they’re very expensive. It’s all complained driven.

When you think about it. I have this started. I started my career with faxing. Not literally sending mail merged faxes all over the country to see if people wanted to sell their nursing homes. There was no regulation based on that and it was very successful. One day, we I woke up and that was no longer possible. The regulations kicked in. It’s just any solicitation. For some reason, if you talk to anybody who doesn’t live in this country who’s buying and selling land here. They’re shocked and amazed that we have access through a database. First of all, a database of who owns everything. Second of all, you can send them a letter. It’s legal and ethical. The tread very lightly about texting. I understand the sentiment. As an entrepreneur, you’re like, “What?

Back to the topic, though. I’m sure there’s a lot of discussion on here. We have used Vumber. There’s open phone. I can’t remember what the latest and greatest best one is but I’m sure they’re all respond. Sorry I didn’t see this in Discord or I would be sharing their response directly from Discord. I know people have waited in there on that, but I’m never been a fan of Google Voice no matter at the very end of the day. I don’t know why. It didn’t work for me.

I agree with you, Jill. I haven’t used it but it used to be clunky and clicky. There would be delays and then it would get rerouted somewhere. It’s obvious.

It was obvious what it was.

I don’t know if they change it.

They tried to make it last obviously. In Google Voice, I don’t think you own the phone number. It’s very different when you get a Vumber number or open phone or other things. You own that number and you pour them around. I think Google Voice might even change. You got to be careful of that. You want a number you’re going to Keep.

My final point on this topic is we’re entrepreneurs. When you take a step back and say, “I could do this, this, and this. That’s going to make some money and maybe do some good on the planet.” You get into it and find out you can’t do it because the regulations have stopped you. This has been happening my entire entrepreneurial career for decades about land.

It’s not land specific, but anybody who’s an entrepreneur who’s trying to do something to make some dough. It’s very regulated. Please keep this in mind. James, I chose your question out of a lot of questions on Discord because I wanted to make this point. When something seems amazing in the entrepreneurial board, “All going to do is get a list of everybody’s phone number and all these people that own land and sent him a text message to see which ones want to buy it.” It’s probably been so abused by the time you got to it that you’re going to have to be careful.

Adding Value To Land Deals

You have to have some knowledge of the whole thing and use it with within your risk level. Our topic is adding value to land you buy minor splitting or subdividing the land. Let’s take a look at some definitions very quickly and I’ll start with the story. A very long time ago, I purchased a 48 acre property in Arizona. it was very obvious to me that somebody went and subdivided the 4 acre property into 1 acre properties to squares. There were 41 acre properties and they subdivided it. They were done and they got 48 APNs out of it.

The person that I bought it from undid that. The subdivider did what they did. Somebody bought all these properties and then went to the county and said, “I don’t want all these properties and these APNs. I don’t want to pay all the taxes on 40 properties. I want to do it on one.” They put it all back together and then they got my letter. This is a million years ago and I bought the property from them and undid it. I undid this is back when you could do all the stuff. This is back when you could send a text message without fear of regulation.

The Financial Benefits Of Subdividing Land

This is how and why financially as an entrepreneur, subdividing or splitting lang. Minor splitting land is so attractive. You buy 40 acre property and in my case, I bought it for $4,000 and you get 40 acres. If you can just go rewrite the descriptions and send it into the county and sprinkle some magic dust on it. You get 40 APNs back to resell. Can you imagine? The math on that staggering. Let’s say, I buy the property for $4,000. I’ve got 41 acre properties and I sell them each for a $1,000 dollars.

I’ve invested $4,000 and gotten $40,000 back. This is a tiny little example. If you’re tall brother’s or shade brothers or if you’re massive home builder, this is a reality. This is what subdividing is. You take a big piece of farmland usually in on the outskirts of an urban area. You make it tiny little lots and resell lots through whoever’s going to go vertical or build houses on it and resell it. It’s crazy profitable. In that case, that’s a real subdivision.

There’s a 1 to 2-year process with a team of lawyers and stuff. You have to have a lot of mental brainpower to get a subdivision done in a place like Phoenix, let’s say. Phoenix happens to be a place in the country that encourages us. It all starts with the spreadsheet. I can buy for $4,000 and sell for $40,000. Sign me up. Where do I start? That’s the message people on the internet are delivering to new people in this business. You can print money splitting land. That’s just not the case. Mathematically, it works. Are you going to jump in here?

Understanding The Risks And Regulations

Why would I interrupt your story?

Anyway, I bought the property and I did do that. I undid it because it was already done. It was pretty easy back in the day when you could do that and was very profitable. I had a bunch of deals like that. You start with the mathematical concept. You should get tears in your eyes. It’s so beautiful. You can start doing the math. I only need to do ten of these deals and then I’m done forever, especially in an urban area. That’s not the case.

However, minor splitting land. The route of minoring land which is she take one APN that same 40 acre property and create let’s say 4 or 5 parcels. For math’s sake, let’s just say four and we create four 10 acres properties. You will make a profit generally because small property is on a price per acre basis. It’s more valuable the smaller it gets. I hope that makes sense. In economics, they call it the bottle case theory. You buy a case of beer but each bottle you can sell individually for more than the sum of the price of the case.

That’s the economic theory behind this. What’s very realistic in certain areas, Arizona and Texas, or Texas specifically as very open to this to minor splitting land. The root of it happens with farmers. You would take a large property farm that they had and their daughter or son get married. They would take the back for you and subdivide it off. Get its own APN and give it to their child and their child’s spouse. They would have a happy life back there and working on the farm.

That’s the root of this and you still can do it. It’s very possible in many areas. The further West you go, the more likely it’s possible to do minor splits once you get a survey. The real way to do it is you find out first if it’s possible in the county are in. I have yet to see an incorporated municipality meaning a city that’s not just County land that allows this. It’s only County land. Have you ever seen a city?

The further west you go the more likely it's possible to do minor splits. Share on X

I’m trying to think. I’m sure it’s possible, but it’s probably more hoops and more regulations and all that too because people do it.

You want to find a place that’s not going to fight you throughout this process. You want to get on the phone with the planting, zoning, and accounting. My first step is to look around on the internet for what’s for sale. You look at and find something, it’s obvious somebody did that. There’s 4 or 5 lots right next to each other. They’re all in acre or an acre and a quarter. It’s obvious that they went through the process of a minor split. That tells me that it’s possible and likely that if you find that property that fits their criteria, meaning the county and zoning that you can do it.

It gets confusing for people when they go down this path. They’re like, “Jack, are you talking about now I got to put in roads. They told me I have to put in two fire hydrants over here and then I got to make sure we have this. I got to do this. Are you talking that?” Would you please clarify?

You want to find a place that's not gonna fight you throughout this process. Share on X

It depends on a municipality. Some municipalities allow you to split it and Texas is one of them.

Without doing infrastructure.

Rural areas in Texas allow you to divide the land. They issued new APN. What you’re doing is taking one APN and making 4 or 5.

You want to be smart about it, too. Make sure like if you have four and there’s a mile on the road. Divide them up so they all have access. Some people don’t think about that and I’m sure you’ve looked on maps and said, “Who’s nutty idea was this?” Where they have done. Theoretically, there are no legal and physical access and it was just allowed back then.

The point is that it’s possible. That minor splitting property is very possible and certain areas if the lot and the actual piece of land fits the criteria for the municipality. They’re going to accept it. They will accept it at the end. It’s very likely that they will without asking you to put infrastructure in. This is something that eventually will go away.

Minor splitting property is very possible and certain areas if the lot and the actual piece of land fits the criteria for the municipality, they're going to accept it. Share on X

Don’t Count On Minor Splitting

That’s true. My point at the beginning was, I want you to buy it right. You’re buy for $4,000, split it all up, and sell out for 40 story is great. The nice thing is, when he bought it for $4,000, he knew he could sell it for $10,000 in its current conditions. You just have options. Do I want to cash out and make $6,000 on this or do I want to put the time in it, wait several months, work with the county on this and then sell all these off?

Jill, the likelihood of you ever doing this in your career is very small. Jill and I have done 16,000 deals since early ‘90s. I think I have minor split property twice with Jill and maybe 4 to 5 or maybe 8 times back in a different era I’ve done it so. It takes 1 to 2 years to complete this. The property that you’re purchasing has to be conducive to what the county wants for them to allow it. You need a professional surveyor who knows the people at the county on a first name basis, a local person and who can do the survey divide it and run the paperwork through the county because they know everybody.

You that server because the county likes them. The county believes that the work that they’re doing is better for the county and not worse. There’s a lot of things you got to line up for this to work. What Jill’s alluding to is, don’t count on this. If you’re going to buy a piece of property for $4,000 and you can sell it for $10,000 in an as is condition or $40,000 to $100,000, fantastic. If you’re out looking for property because you can minor split it like the math I did, buy for $4,000 and sell for $40,000. You’re going to be disappointed.

Maybe you’re buying it for $20,000 to sell it for $40,000. That’s my thing. I don’t want you to overspend because you’re banking on this. Why do we not do that much? I’ll tell you why, because this exact reason. We buy it going, “Look what’s possible. We can do this. We can do that. We’ll make all this money,” then we stare at each other going, “Sell it.”

Make the 40% or 80% markup instead of waiting two years.

So what? Sell it for $10,000. I don’t want to wait that long. I want to use it on this other thing, too.

If you’re serious about this, we have people in our group that this is all they do. Sometimes, they put mobile homes on them and all kinds of stuff. It’s very profitable. What I would recommend is that you find a business partner that does this and bring them a deal and say, “I did all the research. In this county, this is what they want. They want the sacred size, this, this, and this. This access all of it. Here’s a deal. What do you say you and I put it together?”

Partnering For Success In Minor Splitting

If somebody does this for a living and they’re a little bit older and have a lot of experience under their belt like us. They’re going to say, “Heck, yes. Let’s do this together.” That’s the best way to break into the minor splitting business. Join us next time where we discuss flipping mobile homes to add value to your land business. You are not alone in your real estate ambition. We are Jack and Jill. Information.

Inspiration.

To buy undervalued property.

Important Link

• Vumber