Subdividing land for profit works when you underwrite the net, not the gross. Dave Denniston of Generational Family Properties was two weeks from closing on a $1.1 million parcel he plans to split into 15 lots, with a low-end aggregate resale belief of $2.2 million and a target net of $500,000 to $600,000 after roads and other costs. That’s roughly a 45% haircut between gross spread and take-home, and it’s the number most cheap-lot flippers never model.
Denniston has been in land since 2017 and has run three different engines: several hundred owner-financed notes, a subdivide business tracking toward roughly $4 million in revenue with about 12 staff, and a hard money book on land where he targets 15-18%. Each one trades yield against capital and time in a different way.
What follows is the deal math, why he moved up from cheap lots, the capital constraint he admits he underestimated, and how the three models compare on return per hour of your attention.
Key takeaways
- On a $1.1M purchase splitting into 15 lots with $2.2M of low-end resale value, Denniston targets a net of $500-600K — meaning roughly 45-55% of the gross spread gets consumed by roads and other project costs.
- Underwrite to the low end of your resale range. Denniston states the $2.2M figure as what he believes the lots bring "on the low end," not as a best case.
- Subdivides scale because each transaction is meaningful: parcels at $200K, $400K, $500K or $1M put real dollars on one closing instead of requiring hundreds of small flips.
- The tradeoff is capital. Denniston set out hoping to make an extra $100,000 and found the business "requiring a lot more capital than I thought," piling it back in year after year.
- Hard money secured by land at a 15-18% target is what he calls "very high return on time" — the land operating business, by contrast, is extremely time intensive.
From the Real Estate Pros Show
This article draws on an interview with Dave Denniston of Generational Family Properties (genfamland.com) on the Real Estate Pros Show, hosted by Issa Hanna.
The Deal: $1.1M In, 15 Lots Out, $500-600K Target Net
Here is the live deal as Denniston described it. A $1.1 million purchase, scheduled to close two weeks out, structured as an exempt subdivide and split into 15 separate lots. On the low end, he believes those 15 lots sell for a combined $2.2 million.
That looks like a $1.1 million gross spread. It isn’t the profit. After roads and various other expenses, his target net is $500,000 to $600,000.
Run the sequence:
- Acquisition: $1.1M
- Low-end aggregate resale of 15 lots: $2.2M
- Gross spread: $1.1M
- Roads and other project expenses: consumes roughly half the spread
- Target net: $500-600K
Two things in that math matter more than the headline. First, he anchors to the low end of the resale range, not the middle and not the optimistic comp. A subdivide with 15 exit events has 15 chances to disappoint you on price and timeline, and underwriting to the top of the range is how a good deal becomes a break-even one.
Second, roads are not a line item you estimate loosely. On this deal they, plus the rest of the soft and hard costs, absorb something close to half the spread. If you have never priced site work in the specific county you are buying in, that single unknown is larger than most wholesale profits.
Denniston’s own framing of the upside is worth noting for scale: “if we could do that every single month, we have an eight-figure business and a very, very profitable one.” One deal at this size is a year’s income for many operators. Repeating it monthly is the business he is building toward.
Why He Moved From Cheap Lots to Subdivides
Denniston started in land in 2017 doing what he calls “really cheapo properties” — low-price rural lots sold with owner financing at terms like $200 down and $100 a month. He did enough volume that he held about 500 owner-financed notes at the peak. Then he moved up to medium-size parcels, and today subdivides are the primary focus of the land business.
The reason is arithmetic, not preference. His words on it: “I think subdivides are a great way to scale because we’re buying stuff for $400,000, $500,000, $200,000, a million.”
At those price points each closing carries real profit. At cheap-lot price points you need hundreds of transactions to produce the same result, and every one of them costs you the same fixed work — acquisition marketing, title, closing, listing, buyer communication. The overhead per deal barely shrinks as the deal shrinks, so the small-lot model scales by adding headcount and volume rather than by adding value.
A subdivide scales by adding value to one asset. You buy a parcel priced as a single unit and sell it as 15, and the spread comes from the entitlement and improvement work rather than from finding a motivated seller at a discount. That is a different skill set, and it puts you in the path of surveyors, county planning departments, and road contractors instead of just a cold-call list.
The tradeoff is that cheap lots let you learn on small mistakes. A blown assumption on a $12,000 lot costs you $12,000. A blown assumption on a $1.1 million subdivide costs you a great deal more, which is why Denniston’s progression ran small, then medium, then large rather than starting at the top.
I was like, man, if I could make an extra $100,000 from this business, that would be amazing. And then you get there and you’re like, dang, this isn’t what I thought it would be. This business is requiring a lot more capital than I thought.
— Dave Denniston, Generational Family Properties
The Capital Reality Nobody Warns You About
The honest constraint on the subdivide model is cash, and Denniston is direct about having underestimated it. His original goal was modest: “if I could make an extra $100,000 from this business, that would be amazing.” He got there. Then, in his words, “dang, this isn’t what I thought it would be. This business is requiring a lot more capital than I thought.”
What followed was years of reinvestment — “you just kept on piling it in, piling it in, piling it in.” That is the part the land education market tends to skip. A $1.1 million acquisition plus road construction plus carry through a multi-lot sell-out is a capital commitment that does not return in 45 days like a wholesale assignment does.
Practical implications if you are considering the move up:
- Profit from a subdivide is not distributable income in the year you earn it if you intend to do another one. It is the down payment on the next parcel.
- Your capital is illiquid across the entire sell-out period, not just to closing. Fifteen lots do not all sell in month one.
- Multiple income streams are not a philosophy here, they are a funding mechanism. Denniston has run a financial planning practice throughout — roughly $90 million under management — and never stopped it.
He is equally blunt that the land business is “extremely time intensive.” Capital-hungry and time-hungry at the same time is a hard combination, and it is the reason he is deliberately building a lending book alongside it.
Owner-Financed Notes vs. Subdivides vs. Hard Money on Land
Denniston runs three engines simultaneously, and the useful comparison is yield against effort against capital.
Owner-financed land notes
He holds roughly 350 notes today, down from about 500 at the peak. The model builds durable monthly cash flow from cheap lots sold on terms. The cost is servicing. His word for it was “brain damage” — payment collection, defaults, taxes, buyer communication across hundreds of small accounts. Low capital per unit, high administrative drag, and it took him to a plateau where he decided he had taken it as far as he wanted.
The subdivide business
Roughly $4 million of revenue this year with about 12 people on staff. Highest dollar profit per transaction of the three, highest capital requirement, and highest time cost. This is an operating business with employees, not a passive position.
Hard money lending on land
He is building a lending portfolio with a target of $1 million deployed at 15-18%, which he sizes at $150,000 to $180,000 a year. His assessment: “that particular side is very high return on time.”
That last line is the real comparison. The lending book produces less absolute profit than a single good subdivide but consumes almost none of his week. The subdivide business produces the largest numbers and eats his calendar. The note book sits in between on yield and used to eat his patience.
If you are choosing among these, the question is not which returns more. It is which return you need — cash flow, lump sums, or hours back.
Where the Deals Come From: Tax Liens, Auctions, and Messy Title
Denniston’s acquisition channels are built around buying at a better basis rather than competing on retail-priced listings. Three sources come up.
Tax lien foreclosures. Still a meaningful share of his land pipeline after nearly a decade in the business. These are slow, procedural, and jurisdiction-specific, which is exactly why the competition thins out.
Tax auctions. He continues to participate in county tax auctions to acquire land. Auction buying rewards operators who have already done the diligence on access, zoning and use before the gavel drops, because there is no inspection period afterward.
Messy title. His newest lane, in Texas, on both homes and land. Buying properties with clouded title — heirship problems, breaks in the chain, unreleased liens — and curing them. The value comes from the fact that most buyers walk away from a title exception, so the seller pool is less competitive and the basis is lower.
Messy title work is not a beginner’s channel and it is not uniform across states. Curative procedures, heirship statutes, and what an underwriter will insure vary by jurisdiction, and getting it wrong means owning something you cannot sell. Denniston’s own framing is that he has been “dipping my toes” into it rather than running it at scale. Treat title curative as work you do alongside a real estate attorney and a title underwriter who will tell you in advance what they are willing to insure — not something to figure out after you close.
Frequently asked questions
What does an ‘exempt’ subdivide mean in practice for a land investor?
An exempt subdivide is a split that qualifies for an exemption from a jurisdiction’s full platting and subdivision review process, which is why Denniston described his 15-lot deal that way. In practice it means less time in front of a planning commission and lower soft costs than a full-blown platted subdivision.
What qualifies as exempt is entirely local — it can turn on lot count, parcel size, road frontage, or how the land was previously divided. Confirm the specific exemption with the county and with counsel before you underwrite to it, because losing the exemption changes both your timeline and your cost structure.
How much profit should you underwrite on a subdivide deal?
Underwrite to the low end of your resale range and then subtract every improvement cost before you call anything profit. Denniston’s deal shows the shape of it: $1.1M in, $2.2M of low-end aggregate lot value, and a target net of $500,000 to $600,000 after roads and other expenses. Roughly half the gross spread was consumed by costs.
Your own ratio will depend on how much site work the parcel needs. The discipline that transfers is the method — price the lots conservatively, price the roads accurately, and treat the difference as your margin for error.
Is subdividing land more profitable than flipping cheap individual lots?
Per transaction, yes, and that is the point. Denniston moved from cheap lots to medium parcels to subdivides specifically because buying at $200K to $1M puts real money on each closing rather than requiring hundreds of small deals to reach the same number.
Cheap lots win on capital efficiency and on the size of the mistakes you can survive while learning. Subdivides win on profit per unit of effort once you know how to price entitlement and site work. Most operators are better off proving the small model first.
How much capital do you need to run a subdivide land business?
More than the purchase price, and more than you expect. A $1.1 million acquisition also carries road construction, survey and engineering, carrying costs, and the time it takes to sell 15 lots rather than one. Denniston’s experience was continual reinvestment — “piling it in, piling it in” — rather than pulling profit out.
He funded that in part by keeping a separate financial planning practice running the entire time. If a subdivide is your only income source, one delayed sell-out can stall the whole operation.
What returns can a lender expect on hard money secured by land?
Denniston targets 15% to 18% on his land lending book, and is working toward roughly $1 million deployed, which he sizes at $150,000 to $180,000 a year. He describes it as “very high return on time” compared with operating the land business itself.
Those are his targets, not a market guarantee. Land collateral is harder to liquidate than an occupied house, so the rate reflects real risk. Lending terms, licensing and usury limits vary by state and warrant legal review before you write your first note.
The bottom line
If you are considering your first subdivide, get a firm road and site-work bid from a contractor in that specific county before you go hard on earnest money — that single number is the difference between a $600,000 net and a break-even deal.
