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Strong Basics for Subdivisions Investors

What is subdivision? How does it differ from rezoning?

If you’ve taken a drive outside the major city limits throughout Canada – or through some neighborhoods undergoing modernization —  you’ve likely seen advertising signs offering large pieces of land for sale.  Some sellers have taken the time to subdivide sections off into sections that sellers have an easier time finding buyers to purchase, or that developers have an easier time turning into valuable property. Subdivisions can involve just a single seller and buyer, or it can involve a process of dividing large parcels of land into multiple smaller pieces. Subdivisions can spring up for housing, as well as for industrial or commercial properties, depending on the zoning.

If a property owner wants to subdivide property, there are regulation and zoning requirements that vary by  municipality, province, and territory. There are generally lot size requirements in zoning bylaws that ensure that subdivision does not result in pieces of land that are too small. A subdivision is the creation of new lots. It’s considered by the subdivision Approving Officer, who is appointed and governed by the Land Title Act. A subdivision is the creation of new lots.

Another possible change that a property owner can request is rezoning. This involves changing the designated use of a property. For example, a  property owner may request for a change from residential to commercial, or vice versa. The different types of zoning available will vary by location. Specifically, a rezoning application is a request to change the zoning classification of a property and must be submitted to Council for approval. 

Why do property owners subdivide their land?

The top reason that many property owners subdivide their land is the large profit upon completion and sale. The primary obstacle that many property owners face is access to financing. Traditional Banks and Credit Unions tend to shy away from these type projects. Banks generally like to lend on land where there are plans to immediately begin construction or development; also referred to as “shovel ready”. Even if an individuals with impeccable credit and a solid net worth have submitted an application to their bank with 40% down payment h

This means that investors face a difficult choice.  They can pay cash by from investments, leveraging existing real estate or taking out a private mortgage for the land. Private mortgages often charge a minimum of 8-9 percent plus fees; depending on the location. When done right, the return for an investor still makes a lot of sense for an investor. It is common for an investor to keep one lot for future occupancy while selling off the newly subdivided lots.

One example of an Amansad client that went through this process was a borrower who wanted to subdivide his lot into thirds, while keeping 1 lot. The projected profit on the sale of the 2 lot was just shy of $1 million. This property was in lower mainland BC – a hot area in terms of property values. However, profits like this are accessible close to urban centers across Canada.

What is the subdivision process?

The exact steps vary by province. Let’s go through some of the different provisions.

In Alberta, if you want to subdivide, you must make the application with your local authority. Visiting the website for your city is the best place to start. If your project is sufficiently complex, reach out to a city planner before submitting your online application. You are likely to have to submit the following documents:

  • Digital copy of the Certificate of Title
  • Digital copies of your tentative subdivision plans
  • Information showing the location

You may need to hire a surveying company to develop the required outline of the plan with the new parcel boundaries. Details such as the boundaries of the property to be subdivided, along with existing rights-of-way for each public utility, should be included.

In BC, an initial meeting with the local planning office is a required first step. Depending on the size of the subdivision, a public information meeting may be necessary. The requirements for the proposal are like those in Alberta, with these additions:

  • Provisions to protect the natural environment
  • Dedication of parkland or cash-in-lieu
  • Engineering servicing needs
  • External agency needs

Hiring a professional engineer to design your works and services for final approval is also required.

In Ontario, the process also requires an initial meeting with the local planning office, as in BC. The specific requirements are not as overtly detailed in government documentation, but that also allows the governmental authorities to add requirements as part of the drafting process.

Saskatchewan does not require an initial meeting with the local planning office, and the application process does not require the use of AutoCAD to draft the proposed outline of the subdivision.

Subdivision short-term loans come with a great deal of flexibility, allowing for the first six or even 12 months to go by without payments. Reach out to see if we can provide funding for your subdivision finance.

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  • Submit Online OR Call
  • Conditional Approvals with No Credit Checks
  • Very Bad Credit - No Problem
  • In Consumer Proposal - No Problem
  • Past Bankruptcy - No Problem
  • Get Out of Foreclosure
  • Can Pay Out Tax Arrears, Debt Consolidation
  • Fast, Efficient, & Friendly Service
  • Submit Online OR Call

(Very Good Equity or Very Good Down Payment Required)

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Amansad Financial Services | 2nd Floor, 5303 91st, Edmonton, AB T6E 6E2

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Daniel K. Akowuah | Mortgage Professional / DLG Underwriter
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