How to subdivide and boost your earnings

This strategy obviously won’t lead to an overnight success, but if done right, you can expect equity gains within a year.

Subdividing property is a great way to boost profits. When you divide one property into two or more, you’ve added value to the property simply by registering the new lots.

You could hold the lots and wait for a good time in the market to sell, develop on the subdivision by adding an additional property or sell one of the properties immediately to reduce debt or gain extra income.

Here are four subdivision options to consider:

1. Strata title

This strategy involves converting a single title into multiple titles. An example would be, splitting up [the] block of 10 units on one title into 10 separate titles.

Aside from increasing the value of your existing properties, strata titles can also give you the liberty to sell each one individually.

2. Granny flat

A granny flat is one of the most familiar forms of subdivision.

However, some states prohibit the building of granny flats, so check with the local council before making a final decision.

Not every state allows for granny flat construction, nor is it suited for every market. That’s why it’s important to know the area you’re investing in very well.

3. Second property

Instead of extending an existing property, this strategy involves splitting the block of land to construct a separate property.

This simply means splitting a large block of land into two or more lots and then building a new property on the vacant land.

4. Vacant land

This process requires more involvement (and capital) for the property investor because it alters both the property and the land.

Developing raw land requires not only a legal splitting of the property but also physically changing the use of the land.

No matter the type of subdividing you choose to do in order to increase the value of your portfolio, it’s strongly encouraged doing your due diligence and seeking the guidance of experts and professionals, where appropriate, for smarter decision making.

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This article via Smart Property Invetment does not constitute advice; readers should seek independent and personalised counsel from a trusted adviser that specialises in property, a tax accountant and property design specialist.