09 Feb How To Pick Properties To Subdivide For Profit
You buy a large block of land, split it into two or three blocks and then sell it for a massive profit. Subdivision sounds pretty simple, right? Of course, the reality is far more complicated.
The main hurdle is getting approval from your local council, which unfortunately is less than guaranteed.
Each local council has its own regulations, which means that every subdivision presents a unique set of challenges. And so the local council should be your first port of call.
Essentially, in order for a property to be approved for subdivision, it needs to conform to the local town planner’s minimum lot size.
The first requirement pertains to width, the second to overall area, and the third to zoning.
Subdivision is not allowed in certain zoning types.
The exact details of each requirement are easily accessible via each council’s town planning scheme, most of which can be viewed online.
TOP TIPS FOR FINDING PROPERTIES WITH SUBDIVISION POTENTIAL
While there are no hard and fast rules when it comes to picking a property to subdivide, here are six tips to help narrow your search:
1. Look for properties that have at least 700sqm in land size
Exact minimum plot sizes for subdivision differ from council to council, but most properties sitting on plots larger than 700sqm will be eligible.
2. Check that the property allows ample room for a driveway
Councils generally insist there be enough space between the exterior of the house and the boundary line to build a driveway. Which means that your plot often needs to be larger than the minimum size outlined in the council requirements.
Generally, a driveway is anywhere between 2.5m and 3.5m long.
3. Look for level or gently sloping land
As a rule of thumb, flat land is easier and cheaper to subdivide than a sloping block, because a steep slope is difficult to build on.
The shape of the plot may also affect the minimum plot size required by the local council. For example, some councils might stipulate a minimum plot size of 300sqm per dwelling on a level block, but a minimum of 400sqm on a sloping block.
A sloping block also requires you to build retaining walls, which will increase the costs of construction.
4. Look for corner block properties
Corner blocks are good for subdivision and development as they are easily divided into two lots with street frontage and access.
Building on a corner block means that the two new lots will have kerbs and guttering on each side, which many councils will require as a condition of subdivision consent.
And so choosing not to build on a corner block could eat into your profit margin, as you might need to add in extra kerbs. Fifty metres of kerb and guttering can cost up to $30,000.
5. Check out the structure of the property
If you’re planning to subdivide within an existing dwelling, make sure that it’s well-built; working with solid foundations will reduce your construction costs.
6. Understand the zoning rules
Check with the council to ensure the property you’re about to buy complies with the zoning rules.
If you’re planning to build medium-density housing, such as a townhouse or duplex, ensure that the property is zoned for this structure.
Subdivision is one of the quickest ways to make a profit in the property industry, but it’s a highly complex and heavily regulated process.
Make sure to carry out appropriate due diligence and gather as much information as possible before buying and subdividing. You may also want to consider seeking professional help to get your development application and project off the ground.