This episode breaks down the specific documentation and analysis funders need to approve subdivide deals quickly, from signed contracts and realtor site visits to survey quotes and utility capacity assessments. The more comprehensive the package sent to funders, the faster the funding decision and the higher an operator ranks on preferred lists.
Key Takeaways:
- Prioritize signed contracts but don’t gatekeep early discussions. Funders typically prioritize deals under contract, but checking pricing viability before locking in terms prevents renegotiation damage with sellers.
- Realtor site visits are non-negotiable for high-value properties. Boots-on-ground assessments from local experts provide essential context that aerials can’t capture, especially for properties requiring structural improvements or complex terrain analysis.
- Comprehensive subdivide documentation accelerates decisions. Survey quotes with timelines, county regulation analysis, utility capacity checks, and PERC test pricing demonstrate serious operator status and streamline funder review processes.
Listen to the full episode for the complete due diligence checklist that separates top-tier operators from the pack.
(Podcast transcript below)
Hi, Chris Duff over at Serious Land Capital, vacant land funding partner, continuing with our subdivide series here and probably something we’ll return to in various form or fashion, even outside of this smaller series. Again, this was spurred by a comment from Jeff Perkins, other land investor a couple of weeks ago, just asking more about our full process regarding subdivides we’ve already discussed.
some of the base requirements that we’ll look for in subdivide deals, primarily from a pricing perspective, our preferred diligence periods. So now the next bullet point was, he was asking, okay, just things that we would like to see when presented with a deal. So a lot of these will be carried over regardless of whether we’re looking at.
just a single flip type deal or a subdivide. But there are a few unique aspects regarding possible subdivides here. So I know in the previous podcast remarking on our diligence periods that the more info that is sent over to us, the better. It’s going to allow us to make a more informed and faster decision on whether we are going to be able to fund
property or not. So in terms of what we would like to see, I’ll actually get to, you know, requirements in a separate video. But you know, baseline, we’re always just going to need, know, the APN, county, state that we’re operating in. And ideally a signed contract. I know some
Funders are very strict like they won’t consider any deals that don’t have a signed PA I’m a little less stringent on that because you know, I know that Oftentimes we might not necessarily agree on the pricing for the property. So If you think that there’s a decent chance the seller is going to cooperate here
It’s not the worst thing in the world. can you check in with a trusted funder, see what their proposed price is, so then you can go direct to the seller, figure out whether that price is going to work with them versus potentially, and oftentimes giving a higher price than a funder is willing to accept, then have to renegotiate it. And it’s kind of that dopamine hit from the seller perspective.
potentially can damage that relationship a bit more there. So we’re not totally opposed to that. Obviously, if you do have something under contract, we’re going to prioritize those first.
just in accordance with likelihood of the deal actually completing here, because anybody who’s been in this industry long enough knows that even if you have verbals from sellers and everything, or strong kind of rapport built on until a pen goes to paper or cursor goes to e-sign, as it were.
you know, the chance for the seller to bail on a deal still remains relatively high. or even when the signed PA comes in, you never know for certain until closing docs are actually signed. We’ve had people walk at the closing table before, never feels good, but ultimately you can never get too excited until that property is fully purchased and title is in your entity’s name.
Just as an aside there, have a story I share about that one later on. But yeah, in terms of things that we would like to see besides that, I know I had mentioned, you know, we’re gonna be working with realtors in almost every case. know, there are some operators within the land space who run a very sophisticated DISPO program.
You know, we might consider, okay, we don’t necessarily need to list with a realtor if you have a strong track record of moving properties, but that’s very rare. I mean, we’re talking less than 1 % on average of investors who bring us a deal. So generally we’re going to default to using a realtor. Even if we try to dispo in-house, it might be combined with utilizing a realtor because either way,
we’re never going to buy as a property site unseen. So, you know, if one is like simple enough where you could find a drone pilot, take some photos, provide some brief overview of the terrain and so forth, possibly. But especially for some of these higher priced properties that we prefer, or if there’s any complexity associated with the deal, like I want a true real estate expert to, especially a local expert, to have boots on the ground viewing of that property.
no matter what it might look like on the aerial. That’s just going to be a requirement of ours. So generally, if we’re going to have a realtor serve as that expert to go out there, I don’t like to kind of pull the rug out from individuals who might be looking to have some type of monetary reward with the deal. We try to be as upfront as possible.
Hey, you put some of this work in, we know you’re active in the area, we’re happy to give you this listing. Again, it’s another way on how to strategize finding realtors there, but suffice to say, if you’ve already found a relator associated with this particular property and they’ve conducted a site visit, potentially they already have photos for it.
They’ve provided either a longer phone conversation or whatever length, but just a lot of detailed questions were asked and you noted all those down. Or they provided a longer written response really incorporating the unique characteristics of the subject property in relation to the underlying market, plus understanding our strategy of trying to move properties as quickly as possible.
in almost every case, that is going to be a big help there. CMAs, I’ve remarked on that before, you can take them or leave them, oftentimes leave them for the most part, except for non-disclosure states, they can be more handy for sold comps, but otherwise they’re not that informative in most cases. But that’s still another avenue that you can explore, it’s an extra data point to
What else might be required for this property? If it’s a possible subdivide, then okay, what is the survey gonna look like? Do we have a hard quote? Do we have an expected timeline to work with a surveyor? Do you have multiple quotes? can we potentially trade? Trading time for money is generally a…
a poor trade. So, can we pay extra to get a survey done faster? Or if another surveyor might be able to get a survey done a few weeks earlier, they cost a little bit more. Is it worth it to go with them? So, do we have that sorted out? And then what is the specific process? Are we working in a state that has certain exception criteria, like Texas being famous in that regard, 10 acre plus?
Usually there’s not going to be an issue carving up as many child parcels as you want. But that’s not always the case, as we found out in our experience too. Sometimes county level regulations are also in place. And though they can’t legally supersede state law, you also don’t necessarily want to get on the bad side of the county and potentially risk getting into a legal snarl even if
you’re fairly certain the law is on your side. So understanding what the county level regulations might be in relation to subdivides and in cases where exception criteria can’t be met just from handling a subdivide. Okay, who are the decision makers and departments involved with submitting a subdivide? What’s the cost involved with that timeline?
you know, expected requirements. Have you reviewed the ordinances, understanding, okay, that this plan is likely to pass based on this and this reason. Does it require a public hearing? Having all of that info upfront is obviously going to make the decision a lot easier. If there are kind of utility constraints, if you’re expecting the subdivide, which in most cases, it’s going to be intended for
residential structural improvements for end buyers, are there any constraints on utility access? Usually power is not going to be much of concern, but water oftentimes is. Especially if there’s public water available, does the county or city have the capacity to add enough water meters for whatever your anticipated subdivide is going to be?
Same with sewer, if that is actually available in the area for minor subdivides, more often than not, it’s probably gonna be a septic situation. If it is a septic situation, do you need to get PERC tests based on that locality? Do you need to get PERC tests across each anticipated child parcel? That’s something else that we would want priced out too. So those are kind of the initial…
requests that we would generally look for when being presented with a property. as you can see, it’s a fair amount that could go into one possible property. and comps, of course. We’re used to doing comps in-house, but whether the realtor had provided some, you had already lined some up. Ideally,
Sold comps will be within the last six months, usually no more than 12 months. There’s a whole bunch of people that’ll send us comps that might’ve happened two, three years ago. That’s just too risky for us. know some folks will utilize older comps like that. I don’t think that’s realistic. The market has changed so often in seller’s market, buyer’s market, and there and back again, especially over the last five years. You can really get turned.
turned upside down quickly by trusting those old comps. The more recent, the better. Do we have any pending under contract comps? What does the active market look like? Can we undercut the price per acre that’s on the active market more routinely? Do we have a breakdown of the various characteristics of the comps versus the subject property?
And we distribute our institutional grade due diligence questionnaire for anybody who joins our land daily diligence Facebook group. So I know some folks will use that or use your own system, but if you want to use our tool, that obviously helps a lot more with figuring things out from a comping and just overall characteristics perspective. Are there any owed taxes, mortgage on the property?
Was there a recent sale that happened with the property? Did the sellers just acquire it? If so, for how much? I can’t tell you how many times we get possible mortgage attached with the property. Are there any owed HOA fees? Maybe zoning requirements. There’s a whole list here where I’m probably even forgetting some.
at the moment, any title issues, how many sellers are involved with this property, do we expect it to be a little bit messier versus not, do we need an affidavit of airship and all that type of stuff. If you already have a title commitment, great, makes it even easier. A title company picked out.
that’s fairly comprehensive in terms of what folks could send us. It’s pretty rare that we get a full package like that, but if you do send a package that’s really well thought out, you’re gonna be quickly ranked higher within funders’ preferred lists, because it shows that you’re a serious person, serious operator, it makes our jobs easier.
to answer yes or no on properties for possible funding. hopefully that helps a bit. Basically the more the better. But you can always provide things that are superfluous or are just not the best data points. Again, so you have to have kind of bounded timelines on your comps and so forth. So hopefully this one is helpful. And our land price are…
Tool should help a lot with this as well because it will spit out various diligence checkpoints Besides just coming up with a price. So you if you send those over to us as well Or you know you’ve already checked in on them prior to sending it over. That’s only going to help Us assess the property as well, so that’s was the whole intention why we added that feature to the software
Otherwise, serious land dot capital for any of your funding needs and land daily diligence, as I mentioned, for zero cost review of your land deals. Obviously, just mention land price here. With that, take care. See you next time.
