A MILITARY GUIDE TO PROPERTY INVESTING by LACHLAN VIDLER AND TORI COLLS

Author:LACHLAN VIDLER AND TORI COLLS
Language: eng
Format: epub
Publisher: MAJOR STREET PUBLISHING PTY LTD.
Published: 2021-01-15T00:00:00+00:00

Table 5.16 shows some example figures for a small subdivision.

Table 5.16: Small subdivision example

Value

Original property cost $600,000

Acquisition costs $40,000

Subdivision costs $80,000

Total costs $720,000

Original property – new value $440,000

New subdivided land – value $350,000

Total portfolio value $790,000

Net profit $70,000

As you can see, there is massive value that can be created through subdividing property. Without even building a second house, this investor will have realised a profit of $70,000 which was through a predominately administrative process. If the investor decided to build a dwelling on their new piece of land, they could expect an even greater profit. The investor would then have the option to hold the property, sell the property or withdraw the equity and purchase another property.

Our second type of development is splitting. The difference between a splitter and a subdivision is that a subdivision occurs when a single plot of land is divided into two plots of land, whereas a splitter contains two plots of land on the title – the land is then ‘split’ across two titles rather than just existing on one (see figure 5.4). Splitters can be fantastic development opportunities because there is often less red tape in dividing up the titles than you commonly see with a subdivision. This is because the property is already split into two different plots of land – they have just been combined at some point in the past, often to build a bigger house and backyard.

Figure 5.4: Splitter

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