Investment tip: What type of subdividing should you do to double your money?
While many investors are well aware that property investment is a wealth-creation business that will take time to generate considerably high income, there are a few strategies that can provide “instant equity,” such as subdividing or, simply put, dividing one property into two or more properties for added value.
Subdividing will obviously won’t lead to an overnight success, but a property investor who will be able to do it right can expect equity gains within a year. As motivating as it sounds, a lot of people are still hesitant to subdivide their real estate assets because aside from being time-consuming, it’s also a strategy that can be stressful, especially for investors who fail to be diligent about their preparations. However, if done right, this strategy could definitely boost one’s property portfolio significantly in short period of time.
According to Positive Real Estate’s Sam Saggers: “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.”
Once you have subdivided, you can hold the lots and wait for a good time in the market, develop by adding an additional property or sell one of the properties to reduce debt or gain extra income.
Here are the different ways you can subdivide your investment property to double your money:
1. Strata title
“[This strategy] involves converting a single title into multiple titles—splitting up [a] block of 10 units on one title into 10 separate titles,” Sam explained.
Aside from increasing the value of your existing properties, strata titles can also give property investors the liberty to sell each one individually.
2. Granny flat
Among all the types of subdividing, this is probably the most familiar to many property investors.
However, according to Sam: “Not every state allows for granny flat construction, nor is it suited for every market. This is why it’s important to know the area you’re investing in very well.”
3. Second property
Simply put, this means “splitting a large block of land into two or more lots and then building a new property on the vacant land.”
4. Raw land
This process requires more involvement for the property investor, as well as more capital, because of its two main components: Legal splitting of the property and physically changing the use of land.
No matter the type of subdividing you choose to do in order to increase the value of your property portfolio, Sam reminds every property investor to do their due diligence and seek the guidance of experts and professional for smarter decision-making.
More from this writer:
-
Why it’s still worth selling – even in lockdown
-
Over 200 Perth suburbs see winter price growth
-
Auction volumes on their way back up
-
Low interest rates drive record refinancing
-
Tassie’s own $20k HomeBuilder grant finds early success
-
Capital cities see stronger auction success
-
2020 vs 2021: How lockdowns have impacted the market