Hi:
can the following be done? If yes, what challenges to you forsee?
Put an option on a 5 acre parcel of land then subdivide and sell off the individual acres.
How do would I go about getting comps on land?
Thanks!
No can do. You can’t subdivide the property unless you are the owner of the property. Having an option on it only means you have the option to purchase it for the agreed to price within the agreed to time frame.
AJ is right.
I like you’re thinking, but you can’t to that with an option.
You need to own it to go in and subdivide, replat etc.
lease the land then sell to a developer have developer sell back to you and make monthly payments for the next 50 years.
Thanks AJ290, pilot76180, and john1234 for your reply!
John1234, just so I understand you clearly. I would LO the land. Then sell my option to a developer, who would then subdivide, build the houses then sell one of the houses to me? sorry if I got it all wrong
Are you insane?
No, just very, very confused…if I leased someone land and they headed off and tried to sell it, I’d have to believe the title company might just catch that.
Keith
You can option the five acres, with the option consideration consisting of doing all the grunt work of the subdividing (and paying for the costs of doing such), and the Optionor cooperates by signing the paperwork as each parcel is officially divided and subsequently sold off.
This way the seller/Optionor gets his property sold for what he wanted, the Optionee gets his profit spread upon the sale of each parcel, and everyone gets what they want.
It doesn’t have to be all or nothing with an option. Just arrange to have the Optionor cooperate with you as you move along. You would operate much like a general contractor of sorts.
It’s sophisticated, but doable.
:beer
This would be called a “rolling option” to split and sell parcels.
javipa is correct on the rolling option, but if I can add my 2 cents, that is really dancing with the devil. The devil being the Optionor…the person on title.
Lease the property if it’s zoned for AG, put goats on it, let them tear it up, then offer the seller a low ball to buy his ripped up land, sell the goats milk, sell the goats to a cabrito factory, get the land at a steal and subdivide…
Holy crap…I am a GENIUS!!!
Thanks JAVIPA! I always enjoy reading your posts. Thanks for sharing your knowledge so generously!
To pick your brains further, If the land (undeveloped) is in a residential area, high in demand for nature lovers (hikers, mountain climbers, naturalists). What would you do with the land during the lease term to raise money to buy the land, subdivide and either sell or build houses?
One crazy thought I had would to lease (2years ) with an option and put pre-built cabins for vacation rentals? can you rent pre-built cabins? Again, I have not really thought this thru, just playing around with ideas
Thank you for the compliment…
Sounds like you want your cake and eat it, too! 
If there are natural resources you can harvest and sell (trees, minerals, etc.) it might pay for development somehow… I wouldn’t really have an idea to raise money to buy the land without knowing what’s there, if anything.
Maybe you could turn it into a campground, but you’d need utilities and septic. I’m doubtful you could recoup that initial development cost in 2 years. Except that if the property were now worth more, because of the development and operation you initiated, maybe you could borrow enough to pay off the seller for the land?
It would be really important to settle on an option price in advance not after the real estate is pushing off cash. I would NOT suggest to the seller that you’re creating a cash cow with this scheme. Your position is that his property is barely worth a bear squat, and you have to “settle” for creating a campground to squeeze enough money to pay him off. Then, if things go great, you’ve locked in your price.
BETTER: Get the seller to deed you the property. Give him your option money as a down payment. This way, he’s no longer responsible for the taxes, insurance, etc. and you’re free to do what you need to do. Of course your payments are zero interest, zero payment for two years, just like the option would have been structured in the first place.
That’s all I’ve got for now.
:biggrin :biggrin :biggrin
Great ideas JAVIPA and pilot76180! Thanks!
Forgive me if I don't undestand. If I wanted to do a similar deal. My idea would be to do an owner held mortgage, with my terms, no down, no pay (x) months, include in the paperwork the right to subdivide off the property and pay a portion of mortgage equal to the % of property sold. Am I on target here or is there a flaw in my thinking?
Yes, that would be the principal way to do that.
I would try to work this out…
Assuming that 10 lots could be parceled out of the five acres…
i would pencil out the 10 lots in the acreage, and effectively carve out one lot for myself. Divide and sell the remaining lots, and keep the last one free and clear.