The advantage a real estate investor has owning larger lots is the options the larger lot provides. The investor could decide to build a larger home with extensive landscaping and outdoor amenities such as a swimming pool, kitchen and entertainment facilities. Or, the investor could choose to build a guestlarger lots provide options house on the lot.

Other options can also include dividing up the lot into a smaller one and build not just one new investment property but two. If you have a large lot in your investment portfolio or are expecting to buy one, how can you determine what to build? One, two or even three homes?

An investor who buys several acres of land has the option of dividing up the property in any way the investor sees fit, according to local zoning of course. A 10 acre lot can be made to two five acre lots or 10 one acre partitions and so on. On the other hand, an investor who owns several lots can legally join them together and have one legal property instead of two.

The first consideration on what to build should be a reflection of the surrounding market. What are the surrounding properties like? Are they all on large lots as well? This should be your first clue as what to build. If there’s already a market for homes on large lots then cater to that market. However, if yours is the last lot in the area you might also run the numbers to see how dividing the large lot into two and building two new properties compared to just one. You can divide a lot once in this scenario and still build a home that’s marketable if you have two five acre lots instead of one 10 acre. However, if you divide 10 acres into 10 lots, your real estate will be wildly out of proportion with the surrounding homes.

When lenders financing newly constructed homes, they look to see if there are similar properties that have sold in the area. A large home on five acres is much closer in property type with a home on a single 10 acre compared to one home on a much smaller lot. Cater to what surrounds you. Don’t try and start a new trend all on your own.