Maximizing Profit Through Land Division & Splitting Land In Traverse City Mi - A Success Story

This will take you back to your movie star days. Having the light on you. Spotlight.

When they got the silver umbrellas over your stuff? Yeah. That's funny.

You know, they cut that part out of the ADTV interview.

Oh, did they?

Yeah, we're on. I've never, uh, I never knew that until, until that ADT interview there at the house that you did some stuff, basically Hollywood, right?

It was, it was Hollywood productions. It was television, the movies, and just kind of something just to make a little extra money. And the thing is, Texas was a nonunion state. And so anytime they could do location shots and, and things like that, they could get crews and get people much less expensive than it would be in California, which is the truth, more so than ever now. But some TV shows—

you had a spot on Dallas.

I was, I was J.R.'s secretary's boyfriend. That was actually the reoccurring role, but not a whole lot of action.

No, no, no, no.

But wedding scenes, I'm there, you know, a lot of the—

did you have many lines?

Cool scenes. Yeah, I had some lines. Yeah. Okay.

Not a great many, but it was mostly just a good reason to go back and watch Dallas. Yeah, exactly.

If you can find those archives somewhere, it was good fun.

Yeah, cool, cool. Well, here we are at the closing of 7697 Benzie Highway in Benzonia. And gosh, you've— you owned it for about, what, 4 months?

4 months, I think.

4 months. And this was really your plan all along?

Sure.

Or you— I guess you were— you were thinking about keeping it maybe as a rental property, as a rental property, but you always had the idea of dividing it from the beginning, right? Then it was a question of, do I sell off the house and a few acres, or do I keep that?

Sure.

And use it as an investment. And ultimately you chose to put that on the market and sell it. And here we are, successfully having just closed on it. Yeah, exactly. So let's just talk about that process.

Sure. Uh, well, we had found the property, and I think I was interested in finding some acreage. And we know that Leonall County and Grand Traverse Counties are very pricey now. Benson seems to be— even though it's a very small county, it seems to have a real opportunity for appreciation. Has essentially the same attributes as Leonall Leonard County. You're 7 minutes from Lake Michigan. You've got nice little towns around it. I think the number one public golf course is a stone's throw from the barn on the property. So Crystal Mountain Ski Resort. So a lot of good attributes were right there, and that attracted me to the area. But the acreage and the barn too— I, I have a history of being around barns and just like the structure of barns, so that appealed to me. And the rental— and we actually approached it, Sanders, as you may recall, made an offer toward the, to the sellers just to purchase, you know, acreage and the barn. And they didn't want to mess with the land division component. I thought, well, that's a big deal. You can do well with that and then sell the house separately and probably actually come out further ahead.

Ultimately, you bought a home with a, an historic barn on 10 acres. It was listed for $295,000. And we got it under contract, I think, for $289,000.

Correct.

And then we had inspections done and we found the items that we came back to them as justification for reopening negotiations, which that's always a thing I'm guiding buyers through. Then you get another bite at the apple depending on what you find. And then if they're willing to negotiate, if they're willing to negotiate, yeah, they might just tell you to go pound sand, which initially that was the reaction I got from these sellers. From that seller's agent.

Yep.

But it was insulation, lack of insulation, which can be a lot more expensive than you think.

Right. Some structural issues in the roof rafters.

Okay.

There was some issue with the siding, which was really not siding, on the garage itself.

Okay. I remember communicating with you and you were just like, you know, $280,000.

Let's let it ride.

Let's let it ride. And Initial reaction I got was no, we're not budging. And then I think we let it go for a day or so, and then I just reconnected with you because one of the strategies I always want to use is I want to make sure I'm negotiating within the parameters that are set for me by my client. And you were really clear in your communication that $280,000 is my, my number. And so then I just went back to that seller's agent. I just said, hey, you know, you're We're in an uncertain market. There's a lot— at that time, there just was a little bit more uncertainty in international and national affairs. Interest rates since that time have come down a little bit, but at that time they were trending upwards.

Very much so, yeah.

And those are the things I articulated to that seller. I said, you know, you're— and you're heading into the off-season. I said, this is an attractive property for people that wanted to use it as a short-term rental. However, now is the worst time for— exactly— for an investor to buy it because you're heading into the off-season. So now they're going to purchase it, they've got all these carrying costs. I said, you've got a bird in the hand here at $280,000. Um, if it doesn't sell until the spring, they're going to spend the difference, $9,000 in mortgage interest payments. You've got a ready, willing, and able buyer at $280,000. Let's let's just get this done. I have to be careful that I'm not offending the ego of the other agent, but giving them the words that they need sometimes to use with their clients. So, so anyway, we were successful. We got you the deal at $280,000, and then the land division process started that you, you didn't— then ultimately decided, nope, I do want to sell off the property.

So yeah, well, just determining what, what land division entailed.

Yeah.

And the person who represented the Joyfield Township. So all of these things can, can change or be different based on exactly where the property is that you're choosing to do.

So yeah, who the point person governmental official is, because in some townships I found it's the zoning administrator, and others it's the, the assessor. And ultimately was the assessor. It was. Yeah, there's no— there's actually no zoning It's very— one of the few townships in the state of Michigan, I think, without a zoning ordinance where you purchase. We determined that actually ahead of the purchase, found out how many splits there are. Townships will look at what the Michigan Land Division Act— so they're going to look back in history and see how many times this has been split from the parent parcel. And usually either the zoning administrator or the assessor will then say, well, you have X number of splits available on this property. And how many were available?

I believe there were 4.

4.

It was indicated 4 initially.

4 on the 10 acres. Correct. Yeah, okay. So anyway, so they tell you that, that you have X number, in this case 4, and you decide, okay, well, I really only want to split it into about 1.5 acres and leave 8.5 in the barn. And then what was your next step?

Well, then in talking to the Joyful Township representative, she indicated that I needed to fill out an application. So fortunately, those things are now able to be accessed online and actually returned. You know, you can, you can do the electronic completion and return it, but a large portion of it was dependent upon the survey. And so I needed to find a surveyor. Well, it was interesting, the surveyors in, in this immediate area also report back to or represent Benzie County. So there was a stockpile or a a backlog of work that needed to be done because it was the time of year apparently that Benzie was doing a lot of re— I guess recons— I don't know what you call it. Reassessments or something like that. But nevertheless, it was going to take quite a period of time. So I was able to find an individual right there in the immediate area near the barn and the acreage who was able to do it and was able to start it in December. So it moved my timeline up quite a bit.

And that is an issue, just finding surveyors.

Absolutely.

For all the young kids thinking about a career to go into surveying, let me tell you, it's really hard to get a surveyor.

And then find estimates too from several different surveyors. Unfortunately, they're all about in the same ballpark. And so I hired the surveyor, they set it up, they went out and staked it and did the surveying work. Gave me the surveys that I needed indicating where the splits would be, and armed with that, then I could submit that back to the jury.

You guided the surveyor, obviously, is coming to survey the ten acres, correct?

Yeah.

But then you kind of just hand drew what you were looking for. Yes. And then he then determined that, surveys that based on the, the sketch that you give him, correct? And then he write two different legal descriptions.

He did not. He indicated the split, but the divisions were done through I guess the title process.

Yeah, and that's one of the things we just finished here at the closing. So, so each one of these two, then when we're at closing at the title company, they're writing separate legal descriptions. And ultimately it's going to take quite a bit of time for each to get its own tax ID number, right? It's like until 2025, I think. And here we are. So at least a year before each parcel will have its own.

Sure.

But you were talking about how you were talking to your kids through this process because there is some opportunity with this, with dividing land, and yet it's not just— it's not a turnkey thing. There's some effort to it.

You just don't flip the switch.

Yeah, you kind of had to use some of your skills that you acquired over the course of a career in education to nudge people forward.

Smooth things out, move things forward. Well, anytime you approach government officials, number one, they're probably very busy. Number 2, and I think you spoke to this as well, they may get lots of increase and maybe a high percentage of increase are just that, they're increase that never follow through. So I think they've built up kind of a little callus that says, "You know what, until something really happens from this person, I'm going to just, you know, kind of go through the motions." Once I developed some communications with them though, invariably they were very positive. They would offer suggestions. They would help me through some situations. And their communications improved greatly. So I think one of the things I learned was as you begin to work through these types of things, take the time to develop some connection with the people and let them know the appreciation that you have for the work that they're doing because they are the gatekeepers. This is contingent upon their willingness to help you through it. And in almost every instance, I wouldn't say they were standoffish, but it was pretty—

Slow to warm up.

Pretty slow to warm up. And as you warm up and you tell them what you're doing and you tell them the purpose and how how you're trying to do it and that you don't have a lot of experience doing it, you need their help, you know, how can they assist you, then they do warm up and they're more than willing to assist.

So, very favorable.

And she was—

you said after you got that, your point of contact was very responsive when you texted them.

Yep.

Okay, and then we've gotten the survey, you made your application, then when they approve the application, then a time clock started, right? That the— that it was, it was only approved for a certain time frame, and then these legal descriptions needed to be finalized by the writing of two separate deeds.

Correct. I could have done that a couple different ways. I could have gone ahead and had an attorney process that separately, but we were hopeful that it would dovetail into the sale of the property and could be done at closing through the title company process, which is what occurred, which is what— yeah, it worked beautifully.

So here at ATA Title in Traverse City, they're writing the two separate deeds.

But we are kind of in the 11th hour because our 45-day timeline is only about a week or so out.

And what's interesting, it seems like that deadline is set by the individual township. Correct. I couldn't find a state of Michigan deadline after. So I saw a different deadline for a different township downstate. It was 90 days. Okay. So that's another kind of nuance to this whole thing.

And something you'd want to be very attentive to because you don't want to do this a second time. Now you could be armed with all of the information, so it'd be easier, but you're still paying additional money.

I had another client up in Leon County do a very similar thing. There was a house and close to 40 acres for sale. The neighbor wanted to buy half of the acreage.

Okay.

To just preserve it. My client wanted to buy the house and the 20 acres.

Gotcha.

And couldn't afford the whole thing. So two real estate agents kind of put this deal together. But one of the complicating factors was the fact that there was a mortgage involved. In this case, you've paid off the mortgage that was used to buy the house and the entire property.

Correct.

All that's paid off. And now you're left with 8.5 acres and the barn.

Yep.

In this other case, they, they couldn't pay it all.

Gotcha.

So they had to— they were trying to explore either a refinancing or what's called a recasting of the loan.

Okay.

And ultimately they ended up refinancing with an entire different bank because they couldn't get cooperation from their current lender. Interesting. So you were coaching your kids through this because there seems to be some opportunity here.

Yeah, I think when you're looking at land, sometimes you have to look at it in an investor— with investors' eyes too. And I'm— in my eyes have shifted a bit toward that more at this point in my life too. I think you can see opportunities And having been in this region now for a number of years, you begin to start seeing trends of properties that are more attractive. And you and I have chased many, many and not been able to—

Yeah.

Not been able to get them. So we know we've got pretty good eyes. But in this case, I saw this property and the quirkiness of the acreage and the barn and this rental house troubled me, but I could see if I was willing to work through it, it would be of great benefit. And it did pay off, I think, in the long run. But I've tried to show my kids that sometimes you may have to do a little wiggling, a little maneuvering, you know, all above board, of course, and all constructively. But you do have to kind of plan what your endgame is and be prepared to invest a little bit of money, be prepared to invest some time, some effort. But it ultimately can pay off. And ironically, I can see exactly now why the original sellers were not interested in doing this land division process. It was kind of a pain. They wanted it just done. House, land. And so my willingness and ability and pursuit, I guess resiliency, of getting this done now afforded me the opportunity to do well with the sale of the home separately and have this piece of property that I wanted. For much, much less than what I would have paid otherwise.

Once we're told in our investigation process that you have 4 splits, you know you have that, and you know that ultimately it will be approved. Now, there are some sort of nuances in there where the township can literally— it's just an old saying from my grandfather. When I was a kid, he was supposed to go to visit my aunt, who was a professor in California, and we were prepping the house. We were going to take care of the house when he was gone and he hadn't left yet. And I went up to him and asked him why. And he said, well, Sander, I got out my map and took a look at it. I just didn't like the shape of it. And, and so I've always remembered that. I remember thinking, does Grandpa really literally mean he didn't like the shape of California on the map? He didn't like how it felt.

Sure.

But anyway, literally in this case, the assessor and the people at the township, right, they have to also like the lay of the land and basically the shape of it.

Sure.

And so that's a part of the approval process. So there's a—

tried, we tried to design it such that that would be as attractive to them too as possible. I think we did a good job kind of laying that out.

Yeah, yeah, because the easement on this part was, and this was a part of it because there's a shared driveway and that goes to the house and, and what we've What you have put in place with the survey is a shared access off of Benzie Highway, and then it splits from there.

And that's another interesting point too. I had to also get approval from MDOT. There was another application I had to complete as well because it wasn't a highway. So any property, which is going to be virtually every property that's on a road, is going to need some kind of approval from that.

And that was probably a significant cost savings given the topography there, but anywhere if you have to cut a new access onto the highway, that's a whole nother kettle of fish.

It would have been prohibitive, yeah. So really in looking at the outcome, the risk, and you mentioned your grandfather's, you know, he didn't like the shape of it. I think that's true as a buyer too. You have to like the shape of things, what your gut tells you. And I really felt that if the split could occur, the division could occur, then I could realize separate properties and come out, you know, a win-win. And so I think we've been able to do that. I'm sure the previous sellers could have done that as well, but their willingness to do what I did just wasn't there.

When I'm talking to sellers about situations like this is that the market segments are very important. Like the buyers that just bought this place, they couldn't have afforded that number. Correct. $295,000 was out of their price. $245,000, right? We listed it for $249,000, ultimately sold for $245,000. Um, that wasn't— that was at the top of their price range, and, and you still got the other 8.5 acres. So we brought it from, from marketing almost at $300,000 down to the $250,000 range. We opened up a whole segment of buyers, uh, that were interested in the property that couldn't have afforded there. And that's what, as I'm talking to this builder, where he's struggling with— he really wants to build a garage, and I'm along with this. Most people would like a garage, but you're also going to eliminate a whole segment of buyers who would otherwise maybe buy it and then add the garage later.

Exactly.

But right now that number pushes them beyond what they can afford.

Well, the other aspect is now too, I have been able to gain what I wanted for what I think is a pretty reasonable amount of money. And it also affords me to consider umpteen options with this property, this acreage, and the barn now. There are splits available still within this property.

Oh, I wanted to talk about, so what cost did you put into the home and the acre and a half? So you did put in insulation. Correct.

The insulation and the siding for the house, I think the total was about $6,000 that I added, invested into the home.

Actually, we just watched the buyers walk right by here to do their closing. Um, uh, so now you're on to, um, the barn on the 8.5 acres and the plans that you have there, correct? And you told me an interesting story, um, related to the driveway and the septic. Two different quotes that you got.

Lesson learned there.

Get at least three quotes.

But also too, I found Larger companies are great, and we have some very, very fine—

Yeah, we don't need to name the companies. Yeah, exactly.

There's some very fine companies in this area that do a great job. But I've learned that if you have a smaller job, I wouldn't call it a nuisance bid, but I think that they're less inclined to do a smaller job unless, you know, you're willing to pay for it. So I think oftentimes the larger companies are going to have a little bit higher bid. The other thing is too, I found proximity to where you're having the work done. If you can find laborers in the immediate area, and in Benzie we've been, I've been very fortunate to find many. They're great guys, great individuals. They have been very fair with their pricing. They've been negotiable with me. I mean, I've been able to say, well, what if I did some of this, or what if we, you know, shared some other things here? And they've been agreeable to that. So I think you do take your time to get several bids. Don't always look for the biggest and brightest company in the area. Look for some mom-and-pop type small companies. For example, my excavator, he doesn't have all this gigantic equipment.

So the one, the big company excavator, right, the price of regrading the driveway, it was in the $50,000s. And the septic was in the $50,000 range. You found a more of a local excavator. In the $15,000.

$15,000 to $20,000.

So difference of about $30,000 to $35,000.

Maybe it's not apples to apples. There may be some differences there if I took a look at them all, but for what I'm needing, it's dramatic.

You talk about the local guys, you think about mobilizing, right, to get to the site.

$7,000 just to get equipment to my place is what I was going to be charged.

From the bigger company? Yeah. Yeah. So I mean, that's That's the thing, versus the guy who's got a—

He rents it.

Yeah, oh, he rents it.

He rents it, so he only has that equipment as needed, which saves him tremendous expense. And so there's savings for me that I would not have otherwise known. So, you know, take the time to check out a bunch of different level contractors and so on.

And so then now you have some plans for Yeah, grading the driveway that goes down, putting a septic field in for the barn because you're thinking about converting it over.

Barn or a new home. It would serve either structure.

And then what are your plans with the barn so far? I mean, you actually got a structural engineer to take a look to see if it can be converted to a residence.

Correct, and we're finalizing that inspection. If it comes out where it's reasonable, a barn-dominium or conversion to a home would be something I would choose to do. But, you know, from the standpoint of opportunity, this property could be considered a venue spot. So that barn could be, as you know, one of the venue spots that they use for weddings, and it's got the pasture area for parking and so on. It could be converted into an RV park. I mean, it's got nothing in the— and the barn could be a common area lounge for RVers, and the woods could be a place for them to kind of hike around and so on. So again, as an investor—

or just a homesteader—

or homesteader, yeah, could pull his tiny house on the trailer up and it could be a hobby farm, you know, for someone who wants to come up and grow alfalfa or grow, uh, you know, some, some crop or flowers or something. It could be a horse farm, a small horse farm. So there's lots of things that I've now freed myself up to, those opportunities. My choice would be to convert the barn, but I'm open to investment opportunities.

And you're still, at this point, still sort of up in the air about whether you'll keep it or market it.

Correct.

Yep.

And it is a lucrative piece of property, and it has all of the attributes, as I said, that northern Michigan has with all the proximities to the attractions that are around us within 10 miles or so, you know, or less than 10 minutes. So I do know that there's a— and Benzie, I think, is poised for appreciation. I think that the land there is just choice to be bought up soon.

So let's talk about the cost of the land division. I mean, you had to—

you had to pay about $3,000 survey. Uh, the application, I didn't know if I paid more than $30 or so. Okay. Uh, and then what else would there have been?

And then they've charged you a little bit of work at the title company to write the deeds?

I would— so I'd estimate about $4,000, somewhere in that range.

Okay. And then land division. And then, uh, uh, have you gotten bills from the structural engineer? That's not a part of the land division, but that's part of your investigating the barns, what to do with the opportunity, correct?

Yeah, I've got about $700 in that right now too, so that's not too bad. So, and if I were to get an architect, obviously at some point I'd have to charge— I'd have to pay an architect to do all of the the architectural drawings so that the permits could be pulled.

But ultimately, through this process, you've ended up with 8.5 acres and a barn, right? For about how much?

I think I'm all in at about $60,000 or $65,000, which is pretty good considering I was looking at it maybe as a $120,000 possible purchase at one point. You've been great, and your work has been appreciated. In front and behind the scenes. And I think, you know, we will continue to look at opportunities like this too, because I think there are— both of us being northern guys, northern Michigan guys, having lived here your whole life, and in my case, you know, more than 35 years— we do have a way of seeing properties.

Yeah.

And for some reason, the competition right now seems to have lessened a little bit. There was a time for a year where we were offering 20% over asking and losing every time.

Yeah, the market was, it was just crazy seller market, and it's still a pretty good seller's market, but it's not nuts the way it was.

Yeah, but we were also fighting corporate purchasers and, and buyers and things too.

Yeah.

And I think now it's kind of back into the realm of people like you and I that can pursue some things and look for a little gem.

I think there's, there's opportunity there because it doesn't occur to most people.

Well, some people think too when you split land, you're going to have to put in all the infrastructure and stuff too. That's up to you to decide that. I mean, if you are a developer and you want to go that far, that obviously appreciates all the splits.

Anything else you want to share?

No, successful, happy, win-win for our buyers and for me.

Yeah, it was a very pleasant back and forth with that buyer's agent.

I think we had a sale within 30 days.

We did our My first ADTV episode was featuring your property and Gwen Frostic Prince, because one of the things that I think really attracted you to it was the fact that it was so well-appointed. Yeah, right.

It was already staged, already, already staged, decorated by local artists.

And so we went and got some artwork from Gwen Frostic Prince and put it in there. But I mentioned, if I do the job that I need to do for you, by the time this episode airs, the house will be sold. And ultimately We were right. Yeah, yeah, the prediction was correct.

Well, congratulations.

Yeah, and hey, thank you for doing this too. Absolutely. So, so yeah, depending on what happens next, maybe we get another—

love to have you up at the barn. We'll do some things at the barn.

So yeah, yeah, definitely, definitely. All right, well, thanks, Brian.

Thanks, Jeff.