The Wrong Way to Subdivide

Looking at the photo of the proposed subdivision makes me both sad and angry. We have all seen this done in suburbs around us and seems to be the most common way that subdivisions are done. Usually because of lack of education aka ignorance, I call it the lazy way to develop, because it shows lack of interest in the property owners from the surveyor or the project manager. There is also the issue of peoples ego and potential for under the table comission payments.

The only times I consider it acceptable to subdivide this way, is when the existing house is beyong repair or, positioned in such a way that it becomes impossible to create a profitable project.

If we were to assume that this particular house is 30 years old and in good condition, there is enough space down one side to create an independent driveway to the back block which creates a battleaxe block. It leaves the front house intact, or maybe the carport might need to be removed and the appropriate remedial work carried out, along with the construction of a new carport on the other side of the house. This is far more economical then a pull down and new build.

The concern for the property owners in this instance should only be around accessibility to the back block for deliveries during the construction stage.

Lets have a look at the upsides and downsides of doing this subdivision both ways;

Knock down and build x 2 new houses-

Benefits- easy access, easy to find builders, higher total sales price, higher visibility which creates more interest.(but for who)

Disadvantages- higher costs, high environmental impact, loss of income from rent

more dust, requirement for temporary fencing.

Leave existing house and build on battleaxe block

Benefits- continuous rental income, lower total cost including upgrade to front house, increased site security.

Disadvantages- lower total sales price, access issues to back block, difficult to find good builder for renovations.

Realistically, when you do the numbers correctly and fully, the excess build costs and loss of rental income from the first option RARELY produce more profit than the second option. Of course there are occasional exceptions.

Regardless of the advice you are given by different professionals, always remember that the advice they give is given from their perspective and may be biased -even unkowingly-

Taking a step back from all the hype and reminding yourself about what your reasons are for subdividing in the first place, will help you to make the correct decision for your family's long term financial future. It is very important not to rush into a decision, nor allow yourself to be pressured into a decision if you are not 100% sure of the numbers, and have everything in place.

Never be afraid to pull away from starting a project, its always possible to find another project manager who is more perceptive of your situation.