When you say the word subdivision to most people, it will most-likely conjure up images of large tracts of suburban style housing. And while huge housing developments are one type of subdivision, there are also much simpler forms that even the novice real estate investor could contemplate doing. Knowing what a subdivision is and how to potentially go about doing one could be a profitable tool for any real estate investor.

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What is a Subdivision?

Subdivisions are rather simple when you get right down to it. A subdivision is taking of one tract or piece of land and dividing it into two or more tracts of land. A subdivision could involve tracts of land that range in size from hundreds of square feet to hundreds of acres. A subdivision can also only involve only one or hundreds of new tracts.

Legally, however, the definition of a subdivision is going to vary from state to state and from location to location. These legal definitions are important, because they will also define the rules that one must follow to legally complete a subdivision. There is no standard legal subdivision across the United States. If you are thinking of subdividing land, you are going to have to look into your local rules to find out what that definition entails.

For example, here in Tennessee, any division of land over five acres is not considered a subdivision — unless you are in Shelby County where the standard drops to four acres — or if you are installing roads or utilities then size will not matter.

As you can see, it can get complicated quick, so it is best to ask what your local rules are. In general, if you are creating small lots and building a road or installing utilities, you will fall under the legal definition of a subdivision.

Why Subdivide?

The main reason people subdivide their land is to sell off a portion of it. You may, for example, want…