A Wannabe Vacant Lot

By
Real Estate Agent with The Realty Matrix

map of a house and its landMost of us have seen a plat drawing like the one on the left.  It is not a survey map, but usually a copy of what the county has on file in their offices.  This particular map is my son's property.  He owns all of lot 6, lot 5 and the south half of lot 4.  In our area, that's quite a bit of land.  Additionally the home is a legal duplex in a single family zoned neighborhood.  This parcel is in one of St. Paul's higher demand neighborhoods just a few blocks (walking distance even for me) from the famous Como Lake and Park.

We knew from the beginning (I was his agent and did the research) that there was potential for splitting the property and having a buildable lot.  During his ownership he has played in the big yard and enjoyed all the amenities it provided.  Now the time has come to possibly move on.  His agent (that's me) has counseled him to keep the duplex.  He can rent it for far more than his current 15 year mortgage payments.  He already has the "landlord" experience so keeping the duplex as non-owner occupied would be an easy transition.  Sale of Lot 6 would produce sufficient funds for a downpayment on the next property. 

The city planning department says the property meets the guidelines for a split.  A buildable lot must have 6000 square feet and existing structures meet the set back requirements with the exception of the shed which can easily be moved.  My son's agent keeps harping on building wealth.  He's young.  In 11 years he will have a minimum of $1200 net from the duplex.  His goal is to retire in his 40's.  Keeping the duplex will provide income toward that goal. 

It's taken quite a bit of harping to convince him to keep the house.  Once he got it, though, he thought he might be able to do something with Lot 4.  What if the neighbor would sell the north half?  Could we combine the two halves and have another buildable lot?  Nope, it's not going to happen.  The duplex is too close to the lot line.  Moving the duplex would require too much financial outlay to make Lot 4 a profitable venture.

The next step?  Applying for the split requires forms and a fee.  Research has to be done regarding the tax values for the two separated parcels.  The mortgage company has to be willing to release the land (his loan is only about 30% of the property value) from the mortgage.  Then the lot will need to be priced and listed.  The final and easy step will be finding a buyer to build on this new parcel.

Who ever said real estate is easy and anybody can do it?  Not me!

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Rainer
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Carole Cohen
Howard Hanna Cleveland City Office - Cleveland, OH
Realtor, ePRO

Bonnie you know way more about vacant property than I do and you explain what has to be done well enough that even I can understand it! Yes, real estate is not just a piece of cake lol.

I have one question; if the property line would be too close to the duplex then doesn't that take away the worry that the new owners of the rest of the property will be able to divide and build again?  (Just curious)

 

Dec 05, 2006 02:32 PM #1
Rainer
274,477
Bonnie Erickson
The Realty Matrix - Saint Paul, MN
The only portion that will be sold is Lot 6.  The duplex is on Lot 5 and is set back far enough to allow the new owners of Lot 6 to build within Lot 6.  My client/son does not intend at this moment to sell Lot 5 and the south half of Lot 4.  They are currently all three in one parcel from which he will subdivide Lot 6.  The other 1.5 lots will remain with the duplex.  A future owner will not be able to subdivide lot 5 from the south half of lot 4 without tearing down the existing duplex or moving it.  Each buildable piece must have 6000 square feet.  Lot 6 is 6500 as is Lot 5.  If the duplex on Lot 5 were moved 9 feet south the two halves of lot 4 could be combined and then would  be considered buildable.  The cost of moving the duplex would probably exceed what the value of lot 4 would be.
Dec 05, 2006 02:45 PM #2
Rainmaker
858,695
David Spencer
Keller Williams Team Realty - Bloomingdale, IL
Chicago Area Commercial-Residential R.E.
I think I know the outcome. The mortgage company will agree as long as the mortgage is paid off at the time of the subdivision.
Dec 05, 2006 04:18 PM #3
Rainer
274,477
Bonnie Erickson
The Realty Matrix - Saint Paul, MN
Actually David, I think the mortgage company will agree anyway.  Two reasons for my opinion:  first the outstanding loan is about one third of the property value without the lot.  Second, the loan is through his company credit union and they are very good to their employees
!
Dec 05, 2006 08:24 PM #4
Rainer
292,336
Leanne Paynter • Greater Fort Lauderdale • Plantation, Davie, Cooper City
United Realty Group, Inc. - Davie, FL

Your son has a very smart agent.  :-)

He certainly has a lofty goal... retire in his 40's.  Then again, with you and your sweetie's experience regarding real estate, landlording, etc. - it should be much easier for him to reach that goal... so long as he listens to his agent.

Dec 11, 2006 01:55 AM #5
Rainer
274,477
Bonnie Erickson
The Realty Matrix - Saint Paul, MN
Leanne, Maybe my sweetie and I will die and leave him with the unfinished Victorian to rehab!  My son-in-law lives in dire fear of that very scenario because he knows his wife (our daughter) wants our house!
Dec 11, 2006 02:20 AM #6
Rainer
292,336
Leanne Paynter • Greater Fort Lauderdale • Plantation, Davie, Cooper City
United Realty Group, Inc. - Davie, FL
How on Earth do you find the time to rehab your own house on top of writing regularly on two blogs, listing/selling property, property management and any number of other things?  Please share your secret with us.
Dec 11, 2006 02:31 AM #7
Rainer
274,477
Bonnie Erickson
The Realty Matrix - Saint Paul, MN
If you'll note, I've been absent from AR lately.  I've been busy trying to wrestle a too big tree into a too small bay window (the saving feature is when the tree topples it can't fall, it can only lean), prepare for the Yankee Blog Swap, decorate and clean the house for the neighborhood block club Christmas party on Thursday, rescue a slow to decide client who walked into a new construction open house (anyone hear of losing commission due to procuring cause), get ready for the semi-annual national guard visit of our former owner who stays with us during his duty, watch the grandbabies, go to the annual "Gospel According to Scrooge" play, see the Hollydazzle parade, visit Macy's 8th floor Christmas exhibit, etc.  Sleep is an elusive commodity!  Oh, and I forgot the Christmas cards for both clients and family/friends and the quilt retreat!  Hmmm.  Time, if I could only bottle it!
Dec 11, 2006 02:42 AM #8
Rainer
292,336
Leanne Paynter • Greater Fort Lauderdale • Plantation, Davie, Cooper City
United Realty Group, Inc. - Davie, FL
Yeah, I did notice a bit of a slow-down for you on AR.  I doubt Teresa minds... she's probably happiest when you don't blog (on AR) since she's always saying "just don't make me write".  She got quite a bit ahead of you during your hiatus... almost 1,000 points separate you two, though I suspect that won't be for long with your friendly competition.
Dec 11, 2006 03:05 AM #9
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