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28 Oct 2013

Sub dividing property

A key trend that has emerged in recent years is the subdivision of land.  The curious investor is always querying whether this is actually worthwhile, and whether there is a decent demand for subdivided properties.  Further to this, the more serious about sub-dividing attempt to weigh up the positives and negatives of the sub division process. This article aims to answer some of these pertinent questions.

 

Sub-divisions are expanding

 

There is definitely a trend towards subdividing in built up and outlying city areas. This can be driven through multiple markets, such as baby boomers whom have reached an age where they no longer need or want a large back yard and may require income.  This market recognise the potential they have with their existing asset and the option of sub division allows them to continue to live in the suburb they are comfortable in with the bonus of having less maintenance to worry about.  The returns on this type of investment can be impressive if done correctly.  Especially if you consider the fact that the initial investment in comparison to other alternatives is relatively minimal.

Sub dividing as an investment idea is a good one, but there must be proper research and advice sought from a reliable estate agent, particularly if the sub division includes building rather than just selling off the block.  An agent such as those at Alert Property Group should be able to advise what type of property will sell or rent easily and if you choose not to go that step further and build, whether it is a viable option to sell the land alone.  When deciding you must consider the impact on the value of your current home, parking and separate driveway access amongst others.

 

What kind of demand is there for this type of property?

 

Demand is relevant to the area where you live so again, speaking to a reputable real estate agent who has knowledge of what people are currently looking for can help you to answer this question.  Certainly there has been a growing trend for this sort of accommodation as it is relatively affordable and not all of the market is looking for a large home on a big block that requires constant upkeep.  It also provides a cheaper option for people to purchase a home in an area they might otherwise not be able to afford.

 

Advantages and disadvantages?

 

Advantages

The main advantage is being able to create a good return on an existing asset.  Further to this sub division is making property more affordable and making use of current infrastructure it helps reduce the pressure of population growth.

Disadvantages

The disadvantages can range from poor planning surrounding access, parking and aesthetics.  Particular care needs to be taken in areas of historical significance to preserve visual serenity; but even this is possible if planned correctly in the first place.  Another downside is that subdividing could have the potential to reduce the value of your property significantly if you have a large home and it reflects that the land surrounding it is no longer in proportion to its size.

 

For more information contact Alert Property Group today.

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