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Should I subdivide and build?

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Your Investment Property | 21 Jun 2012, 12:00 AM Agree 0
I’m considering this property with a large backyard and my friend suggested that I could subdivide the land and build a three bedroom house behind the one already there. I’ve estimated the costs to be around $400-$500k. Will this be a good long-term investment for me, or should I buy a new property altogether?
  • Rob | 05 Jul 2012, 10:56 PM Agree 0
    Brendan, great example! In terms of making the hardwork to subdivide and build worthwhile, typically what percentage of ROI do you look for? Cheers.
  • Katherine Z | 20 Jun 2017, 06:50 AM Agree 0
    i think the person who has responded misunderstood the am not the person who wrote the question in but the way i read it they have around half a million to spend. They are asking is it better to spend the money developing the back of their existing investment property or buying another one which i would answer it depends what you are looking for increased cash flow/yeild or capital growth. Given the person who wrote it is only in their 30s and can obviously afford the debt so probably already working and has her salary providing cash flow the answer would be to spend the money on another property in a high capital growth area preferably with a large yard, frontage, wide driveway access, orientation and good zoning. This will give them the most wealth for their $500k long term. (however, if they are likely to lose their current cash flow e.g. job and may be in need of cash they are better to develop the back as this would give them cash in the short term but give them less wealth overall into the future due to no additional capital growth).
    • Rebecca | 06 Sep 2018, 11:58 AM Agree 0
      We have seen many properties with high yield return will gain great capital gain, the new buyers are not silly, as long as there is good rental return, people know how to do the calculations.
  • Guess | 14 Nov 2018, 07:07 PM Agree 0
    Just a question but would not the fastest and largest return come from subdividing and selling both properties, I.e. one with a house and the other as a vacant lot for someone else to build on. Based on the resale figures and cost on subdivision I would suggest that even if the rear lot went for 250k the return would be higher.
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