Property Investment Strategies: Buy to Subdivide

* Image courtesy of Kriss Szkurlatowski

Property Investing Trivia:

“You must own a property, in order to find out if it can be subdivided”.

True or False?

Property Investment Strategies: Buy to Subdivide

The answer is false.

You do not need to own a property in order to find out its subdivision potential.

When it comes to investing in property, it is common for most investors to factor in:

• Potential for Capital Growth
• Potential for Negative Gearing / Tax benefits, or
• Potential for Positive Gearing / Cashflow
• Potential to Add Value through renovation

Savvy property investors, however, add one more factor to their property investing criteria:

• Potential to Subdivide

What does the savvy property investor know?

“You make your money when you buy”

The savvy property investor understands the criteria that make future subdivision possible and applies it to their investment property purchases.

They buy to subdivide.

The difference between a property that can and can’t be subdivided could come down to one or several of the following factors:

• Land size
• Land shape
• Easements & Covenants on title
• Building Envelope
• Precedent
• State & Local Planning Policy, etc

What might seem like an insignificant (or even, unnoticable) difference to the average house buyer might equate to hundreds of thousands of dollars of hidden value to the savvy property investor.

If you have recently been outbid on a large property by a seemingly, disproportionate amount – this may well have been the reason why.

Conclusion: Buy to Subdivide

If you are considering purchasing an investment property, maximise your return on investment by adding one more question to your property investing checklist:

• What is the subdivision potential for this property?

BUYING AN INVESTMENT PROPERTY?
Ask us how a Development Assessment can help
establish development potential – before you buy.

Postscript:

In the March 2010 edition of Australian Property Investor Magazine, Greville Pabst (Director of WBP Property Group and Certified Practising Valuer), was asked ‘What’s your Number One rule for property investing?‘. His answer:

“When investing in property I follow a simple set of rules: buy the worst house in a suburb’s best street, in walking distance to public transport and local amenities and those properties which have a development angle or a large land component“.

Related posts:

1. Property Investment Strategies: How to proactively add significant equity without building or renovating
2. What is the minimum size of land to subdivide in Victoria?
3. Subdividing Land in Victoria: The 5 tests your property must pass
4. Melbourne House Prices: What the media aren’t telling you
5. Subdividing Land: Are you being served? Part II

Tagged as: Dual Occupancy, Melbourne, Multi Unit Development, Property Development, Subdividing Land, Victoria