Lot purchase to subdivide and build new houses.

Asked by Luis Gomez, Atlanta, GA Sat Feb 9, 2013

Hi. I am thinking on buying a lot in Atlanta and then divide it to build two houses. The price of the empty lot is 100k. What is the price of each lot after the division? How can I get financing to do this? How much down payment do I need?

Thank you.

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Bruce Ailion’s answer
Bruce Ailion, Agent, Marietta, GA
Sun Feb 10, 2013

This is a fairly complex question and you should have several professional advisors.

First is the value of a single lot worth $100K, it would have to be in a highly desirable neighborhood to bring that value today.

Then would zoning permit a division. Most often the former owner, developer maximizes the density when the lot is first developed. It is likely you will need to get a zoning change, this can be time consuming, costly, and far from certain. I acquired a 19000 sq. ft. lot in a 30000 sq. ft. lot zoning district and sought rezoning 3 times to build a home and was opposed by the community and lost. I eventually sold the property for a buffer at a profit.

So far you need an appraiser, a zoning attorney, a title attorney, you will need to present a plan to the zoning commission and you will need an engineer or surveyor to draw a plat and determine the setback and build ability of the two subdivided lots. This professional can also determine if utilities are available to the two lots and costs to deliver utilities.

Assuming it is possible to divide the lot, an assessment of is it advisable. Will the smaller lots be marketable. Just because you can divide the lots does not mean it is a smart thing to do. The divided lots may be less valuable than the hole lot. Often I've seen someone divide a lot and put the new home in the back yard of the old home. Not a smart move. Folding a $100 bill in two does not give you $200 dollars.

You need professional help and advice. Depending on the size, location, market dividing a lot can yield a profit. It is not simple, it is not easy and forget about financing. You need a minimum of $120K cash to think about this. It is a risk, be prepared to lose all your professional fees and sell at a considerable loss if there is a shock to the economy.

Bruce Ailion,
RE/MAX Greater Atlanta
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1 vote
Chris Irvin, , Atlanta, GA
Wed Feb 13, 2013

My company does provide financing for this type of transaction. I can assit you with loan for the lot itself as you work to re-zone the property and then construction/perm financing once this is completed for a "Primary Residence or Second Home ONLY, with as little as 10% down" we don't allow for Investment properties. I do have outlets for investment property lending but it would require 40% equity position in the property? What is your intent with the properties once completed?


Chris Irvin
Mortgage Consultant
Brand Mortgage
NMLS#75615 - 465546
0 votes
Thank you Chris.
No, my intention is to tear down that old house and keep the lot empty, just grass. No new contruction, no new house.
Flag Tue Feb 19, 2013
Luis Gomez, , Atlanta, GA
Mon Feb 11, 2013
Good morning.

I want to thank all of you for taking the time and answer my question. I will start an investigation process to see how viable this idea of mine is.

Thank you.

0 votes
, ,
Mon Feb 11, 2013
Bruce has a very detailed answer for you. There are no simple answers to your questions. Finding out if it is even possible to divide teh lots and rezone would be the first step. Financing is going to be a challenge as well.

Rodney Mason, NMLS #151088
Sr Loan Officer
Prospect Mortgage
825 Juniper St NE, Atlanta, GA 30308
Office: (404) 591-2453
Apply Online at http://www.rodneymason.com
Licensed in Alabama & Georgia with over a decade of lending experience.

Prospect Mortgage offers a full selection of mortgage programs including:
Conventional | FHA | FHA 580-639 FICO | FHA 203K Renovation (Streamline & Consultant) | HomePath® | HomePath® Renovation | HomeStyle® Renovation | VA | USDA | GA Dream | Jumbo Financing.
0 votes
David Herren, Agent, Atlanta, GA
Sun Feb 10, 2013
Thumbs up to Bruce. I could not have said it better. Subdividing a lot is not rocket science, but you do need a team of professionals to help you through the process successfully.


Dave Herren
Best Atlanta Properties
0 votes
laurie cass, Agent, Atlanta, GA
Sun Feb 10, 2013
First of all, do you know if the lot can be subdivided? Have you checked on the zoning ? You will need to speak with a lender to determine financing and down payment options. Pricing will also be determined by the location of the property.
0 votes
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