So you’ve got a patch of land and are wondering – should I subdivide this thing and make some money? It’s a fair question, but not one you can answer on a whim over your morning coffee. Assessing a site’s potential for profitable and feasible subdivision takes some homework.
Before calling in the surveyors, first understand that land subdivision refers to splitting a large parcel of land into smaller lots or parcels. This opens up the possibility of separately selling off or developing those new chunks. But not all land can or should be subdivided willy-nilly.
Doing a thoughtful analysis upfront will help determine if pursuing a subdivision makes good sense for your site and can avoid nasty surprises down the track. I’m going to walk through key considerations when evaluating subdivision prospects.
More Reading: How to Subdivide Land in Victoria
So to kick things off, what size is the parent lot that has caught your eye? Local planning rules likely specify minimum lot sizes created by subdivision, and these vary based on zoning. A 1000 square metre minimum may enable splitting a standard residential block in two. But elsewhere two acres might be the smallest parcel allowed. So some basic area calculations need to happen early.
Navigating the Red Tape Jungle
Now before your mind races ahead to counting future coin from a suburban slice-and-dice, we need to simmer down and understand council planning schemes. These complex legal documents dictate if subdividing land is even allowed under its zoning classification. There can be surprises like overlay districts with special rules or legal precedent because of previous decisions.
Basically you need to confirm what uses, densities, and development types the lot can legally be subdivided into. Carefully review planning maps and zone codes or hire a professional to do so. In rural residential areas, there may be limits like just 5 lots allowed per 50 hectares. So don’t assume splitting and sprawling is straightforward. Patience grasshopper! By poking around here initially, we can avoid wasted efforts later.
While immersed in official red tape, check if physical access is straightforward too. Landlocked lots with no street access can’t be built on without legal easements. Guaranteeing purchasers eventual road access gets tricky without these. Safest to inform buyers upfront if access depends on a dodgy gentleman’s handshake decades ago. Let’s keep this all above board shall we? Carts before horses and all that business.
Getting the Lay of the Land
Now that we’ve wandered through bureaucratic fine print, let’s literally survey the land itself. A site’s contours and slopes set physical limits on land subdivision options. Large elevation changes or steep gradients make carving out level house sites tougher or dictate extra earthworks spending.
While out kicking tires onsite, mull over drainage patterns too. See where rainfall naturally flows or pools based on the topography. Are there any clues of periodic flooding that could dampen development enthusiasm down the track? Any infrastructure like dams or water tanks interfering with flows if areas get re-levelled?
It’s smart to request an expert contour survey marking out slope grades across the property if they aren’t already available. This helps model and map future drainage impacts when we start scribbling in potential new boundary lines. We can then better estimate earthworks and mitigation costs too.
If the lot naturally slopes more than 20 percent in areas though, be wary of subdivision viability. Mass earthmoving and retention wall works pile on expenses very rapidly. The council may even mandate geotechnical reports to back up claims that newly-created lots will be structurally stable. Best we understand the terrain before working up buyers with picturesque lot photos! Forewarned is forearmed, as they say.
Connecting to the Grid
Alright, with the physical land limitations and opportunities mapped out, let’s check on infrastructure availability. Access to utilities like power, water, sewage, and telecoms is essential for future subdivision inhabitants. Being unable to connect to existing networks or insufficient infrastructure capacity are showstoppers.
Start by identifying where surrounding utility corridors, pipes, and cables route. Contact service providers to understand network capacity constraints for extra demand. Key info needed includes mains power proximity, drinking water pipelines in the area, and sewer lines with room for more discharge.
If infrastructure is found inadequate and upgrades unavoidable, steel yourself for some intense negotiations over who funds the extensions. Just piping water mains or electrical feeders hundreds of metres starts becoming big dollars, diminishing profitability.
In a worst-case off-grid scenario, individual utilities would need installing on each new allotment separately. This not only risks blowing out subdivision costs but could deter buyers expecting modern convenience. Let’s assess these critical inputs now before we etch new boundaries! Good infra underpins good liveability.
Crunching the Numbers
Okay, we’ve now reviewed the property constraints and opportunities from every angle – on paper at least. Before grabbing the CAD software and drawing up potential plots, let’s tally up the ledger and build a business case.
Add up the projected expenses should the subdivision go ahead – council application and approval costs, surveying and title fees, civil contractor earthworks, utility installations, project management. Then compare this total project cost against the potential sale revenue from the newly created lots.
Critically assess if the profit margin is satisfactory and worth the time and risk. Research values for comparable residential land lots in the suburb sold recently. Make conservative assumptions on potential pricing given factors like market softening or affordable quotas.
Building a financial feasibility model brings together all the subdivision analysis we’ve done so far. It determines if creating multiple titles could achieve the capital uplift that’s making you salivate. Tweak the potential lot layouts and recalculate until an acceptable Return on Investment looks possible.
Further Reading: Build a financial model testing viability
If the numbers just don’t stack up, it doesn’t necessarily mean outright rejection. Get creative – build townhouses instead of detached homes, limit costly contouring works, offer modest pricing incentives. Refining a profitable formula takes real analytics. Let’s crunch away!
Wrapping Up
After all that, the idea of attempting to subdivide land probably seems even more daunting! But breaking the process into staged analysis makes it strategic rather than speculation. Jumping in headfirst risks wasting money and ending up with unusable sites.
No two development sites are the same, so practical feasibility relies on methodical reviews tailored to the individual property and location. Follow the steps we’ve run through:
- Confirm local zoning allows intended densities
- Prove viable physical access for future owners
- Model earthworks needs and drainage impacts
- Verify adequate utility infrastructure availability
By proactively identifying deal-breaking deficiencies early, the heavy lifting on due diligence gets done upfront. Only once a subdivision is viable on paper does on-ground activity commence.