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Buying Properties With Subdivision Potential

Property development is becoming an increasingly lucrative way to capitalise on an investment. Whether you intend to subdivide land you currently own, or purchase a parcel with the intention to develop, it is important to plan ahead and recognise the key stages throughout the process. The following information has been prepared to help you recognise each stage and make informed decisions to assist your property intentions to turn into a reality.

Property development is essentially the process of expanding the use of cultivated land. Property developers transform existing land and reorganise the site for a range of different uses. A once detached home may be demolished to make room for three townhouse, or the land may be reorganised to add a separate unit on the block. Whatever the change, the purpose of property development is to maximise the financial potential of the land.

SUB-DIVISION  (LAND)

Subdivision is the act of dividing land into pieces that are easier to sell or otherwise develop.

 

Dual occupancy is simply a property with two sources of income with multiple dwellings on the one property. Returns for both the short and long term are superior and this assists tax payers with the recurring question of “how can I make my property positively geared? (Positive gearing: positive gearing occurs when the income an investment property is generating exceeds the cost of owning and maintaining it. Investments are supposed to make money.)

Dual occupancy Property


Top Tip’s On Making a Profit by Subdividing

Corner blocks are Hotspots

If you buy a corner block property for the right price, this is like finding gold. The reason is that corner blocks provide easy access for both properties, and it provides street frontage for both properties as well. Remember that if the corner block has guttering and a curb on one side, the council may ask you to complete this on both sides, in order to get an approval for subdivision. A 50-metre kerb including guttering could cost you $30,000, which could potential minimise your profit margin.

Positive Gear Property by Subdividing.jpg


Level or gentle sloping properties are the way to go

Before purchasing a property, try to subdivide on blocks that are level, rather than sloping blocks, as it will be cheaper and easier to subdivide. If you decide to subdivide on sloping blocks, it will require you to pay a lot more for extra services, and the council will demand a greater minimum size plot. For example, a minimum size plot for a sloping block may be 400sqm, compared to 300sqm for a level block.


Find a property with a minimum plot of 600sqm

Every council will have their own guidelines on the minimum land size that you are able to subdivide on. But when you look at Melbourne/Victoria as a whole, properties that are larger than 600sqm are normally allowed to subdivide.


Ensuring there is adequate room for a driveway

Most councils will require that the property will have enough space to build a driveway between the bound of the property and the house. Therefore, before you decide to buy a big block of land to subdivide, ensure these is adequate space for a driveway, this will range from 3 – 3.5 metre, comprising of any landscaping.


Zoning Rules 

Ensure that you consult with the local council about zoning. If you plan to build a townhouse or a unit (example project), and make sure that the property is zoned for each of the structures.


Property Structure

If you purchase a block, that has an existing property on it, make sure you get it inspected, to ensure that is has been built properly, in order to keep the cost of constructions to a minimum.

People often have the ambition to subdivide and try to make a huge profit margin, however they do not always have the knowledge to do so. However, Buyers Agents can assist you through this process of finding a property or a block that can be subdivided.


The Truth About Sub-Dividing. 

So many people think that subdivision or dual occupancy is a simple process, where you buy a block of land, split it into two, three or four blocks, and then trying to sell it for a huge profit margin. However, in reality the process is complicated.

The reason why it’s a complicated process is because for you to subdivide on a block of land it is vital to get approval from the local council, as each council will have their own regulations on what can be done, and what can’t be done.

Getting approval from your local council can be a sluggish process, and there is a possibility that you may not even get an approval from the council. Therefore, if you want to maximise your time, and avoid wasting time, it’s important to consult the local council first and familiarise with the regulations of subdividing, or consider consulting a buyer advocate to assist you in the process.

For your property to be permitted for subdivision, it needs to comply with the council’s minimum lot size. Other requirements involve the width of the property, the overall area and zoning. Zoning is important when it comes to subdividing, as there are many areas where you cannot subdivide due to zoning. Requirements are accessible on most of the council websites.



How can a buyers agent help me find a sub-dividable property. 

  • We target existing properties that have the potential for multiple dwellings in a range of suburbs across Melbourne.
  • Ensure your project is successful with the knowledge of building a cost effective property that will maximise return.

Multi-dwelling projects can be plagued with hidden costs that diminish profit. Our experience can reduce the risk of costly errors and ensure a profitable experience. Example Project: Two Lot Subdivision 

With our combined experience we have helped subdivide over 100 multi dwelling properties across Melbourne.

Our team consists of an experienced Property Surveyor, Development Consultants, registered Multi Development Builder and qualified Real Estate Agents.


Our Step by Step Process:

  • Assess the buyer’s requirement’s.
  • Find a property with multi-dwelling potential.
  • Market appraise, negotiate, and post-sales service all the way to settlement.
  • Architectural designs.
  • Manage and organise town planning/building permits.
  • Subdividing.
  • Selecting a builder.

 

 

 

Case Study: 2 Lot Subdivision in Melbourne. Construction of a two bedroom back yard dwelling.

Positively geared propertySub division Melbourne example


How to begin in property development

Before you make the decision to embark on the property development journey, there are key people who will be able to offer you insight and support to make an informed decision:

 

  • Development Expert: a trained property development expert is a vital ally to help you venture into property development. They are trained in all processes of development. A project manager can inform you of the process, advise you of the different regulations to adhere to, or help you manage the different stages of your development from permits through to sourcing architects and trades. Many elite experts also have a background in real estate to appraise the potential of a land parcel and forecast the likely value of your development before you begin.
  • Financial Support: discussing your plans with your bank or financial institution will help ascertain whether your borrowing capacity will be enough to actualise your goal. Once your finances are in order, speaking with a financial advisor or strategist will help make sure the decision is right for you.

How long is the development process?

Property development is rarely a ‘get rich quick’ venture. The majority of developments take at least 1 year, but usually they are closer to 2 to 4 years. The process of organising development plans, council permits and liaising with a host of different contractors is a timely process. Many potential developers are overwhelmed with the magnitude of considerations and the time required to organise their development. Many developers enlist the services of a project manager to overlook the day to day progress of their development as their connections with council administrators, trades and surveyors often speeds up the process.

 

After deciding that property development is right for you, what is the process?

  1. Property purchase: if you do not already own the land required to achieve the development you desire, it is important to locate the right parcel. A buyer’s advocate is a key player is land acquisition and will help you achieve your sale by negotiating the most favourable price and conditions. Premiere buyer advocates are also trained to investigate any restrictions on a property to ensure it suitable for its intended purpose.
  2. Planning: before making any changes to the land you must first receive council approval. Different permits will be required depending on whether there are existing dwellings, excavation is required, as well as permission to build the type of properties your propose.
  3. Drafting: your architect or draftsperson will help you design options to make the most use of your land. These drawings will require more than just the aesthetics; they will also need to include engineering reports. Depending on the value of the development, a quality surveyor may need to be employed. Your final drawings will need to be approved by the council and a specific permit will need to be obtained.
  4. Contracts: enlisting appropriate contractors is a vital step. Finding quality contractors is essential to make sure your development runs on schedule and within budget. Experience also plays a key role, and knowing the development history of potential candidates will help you make informed choices.
  5. Construction: the construction process is long and requires a lot of organisation to make sure every element of the development is running appropriately. Scheduling trades and surveyor at appropriate intervals is key, as well as staying on top of your budget to make sure each body is paid appropriately and on time.
  6. Finalisation: once the construction is complete, you need to apply for different titles for each of the properties. Titling your new properties is essential to be able to rent or sell the different dwellings.

 


What to do now:

For an obligation-free conversation, contact Wise Realestate Advice on 1300 009 473 to discuss how their professional property development managers and buyer advocates can turn your property goals into property development success.

Speak With One Of Our Expert Buyers Agents. Click here to book your complimentary, no-obligation phone call.

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