Property Investment Blog

New Call-to-action
All Posts

Subdivision - What are the Pros and Cons?

Subdividing a property provides potential high returns to property owners but there are also higher risks to be aware of.

This is a great strategy to manufacture large amounts of equity and can be implemented to an existing property in your portfolio as long as it meets all of council's requirements.

This blog will cover the pros and cons of subdividing a property.

Pros

  • Higher profits - a well planned project with a great product and in an excellent area can provide returns over $100,000.
  • Increase equity - subdividing a block in a great suburb can provide an instant increase in equity.
  • Provides multiple options - sell the land, build and hold or build and sell or a combination of the three.
  • Provides positive cash flow - sell off one property to pay off the other to be kept for immediate rental returns.
  • Smaller blocks - can be easier to sell to potential buyers requiring low maintenance. 

Cons

  • Smaller blocks - the new blocks are now smaller in size which may not be as attractive to some buyers.
  • Could reduce value - the existing home could decrease in value with a smaller block.
  • Unexpected costs - set a budget for unexpected costs as you never know what might arise when it comes to removal of trees or services such as power, sewerage and water.
  • Longer completion time - compared to other strategies such as renovations, subdivisions generally take longer to complete.
  • Time delays - a neighbour could object to the project and cause delays in the project which will also increase holding costs. Slow approval times from the local Council can also push out the project's timeline.
  • Market changes - demand for the area suddenly drops and becomes more challenging to sell during the development stage.
  • Unreliable Professionals - can cause huge amounts of stress and delays in the project, it is always best to hire a great team and do the required background checks.

Interested in finding subdivision opportunities as your next investment?

If you would like to save hours of research time and be able to find subdivision opportunities within seconds, register for our webinar!

Webinar - Find and Assess Subdivision or Development Sites Like a Pro

Real Estate Investar Editor
Real Estate Investar Editor
Real Estate Investar provides intelligent software, tools and data to help you save time and make money in the residential property investment market.

Related Posts

How to Combat Raising Interest Rates When Buying

This month, the RBA has come out and raised the official cash rate for the first time in more than a decade. 

Property Prices Rise 0.6 Per Cent In Last Month

Property prices across the country saw another increase in value last month, however, the rate of increase continues to slow down. 

2022 Federal Budget for Home Ownership

The 2022 Federal Budget had a key focus of reducing the cost of living with rising housing prices and increased rents becoming a common issue for many Australians.