VIC Areas under $500k with subdivision potential

Hi everyone!

Looking into hopefully purchasing a property for under $500k which I could potentially subdivide at some point in the future (next 6 months - 1 year)

Ideally looking for something where I could:
- perform cosmetic reno then rent out
- an area with decent rental yields (4%+) so it doesn't cost much per week to maintain
- look to subdivide and either sell off 2nd block or build at some point in the future

Strategy would be to buy somewhere with good CG growth prospects so I can ride the wave plus manufacture further growth/equity through the reno/subdividing

Any suggestions on areas to look into would much be appreciated.
Any specific things to look for regarding block sizes etc as I have never done a subdivision before

 

Dinner Plains? Bright? Omeo?

 

Narre Warren would go close to meeting all your requirements - depends on 4% yield is on initial or post Reno numbers.
Issue you will have is Casey Council want to see the build usually done & completed as a requirement of approving the subdivision so you would need to do the build not just split & sell a vacant block.
Do your own dd of course & I suggest having a chat to town planners who work in whatever areas you are looking at. Check also whether the numbers make it worthwhile & where you think Vic is on property cycle for 'riding the CG wave'.

 

Thanks Craig. I actually live very close to Narre so I'm fairly familiar with the area. Had a look and it's a bit out of my price range, looking at $550-$600k for a block big enough to have subdivision potential.
With those sorts of numbers I'm not sure if a deal would stack up considering a unit at the back would sell for around $400k after construction. But then again I'm throwing rough numbers around in my head so could well be missing something?
Seems like they definitely factor the development potential into the price per sqm

 

Plenty of properties in Ballarat would meet that criteria.

 

Never done any building, but I thought sub-division and building another property would require more expensive land than a 500k purchase (?)

My assumptions (actually should be called guesses), are
- if property meets subdivision attributes, then slightly more expensive (say 10% or 50k)
- cost of building 200-250k
- value of each would be less than the original 500k (say 80% or lower?) of original since it has half the land

So for a 500k property, this would add up to 500+50+250 = 800k, which means no actual profit when you sell for 400k each.

Like I said, I just made most of those numbers up. Curious what the real numbers would come out as, and whether it would be profitable to sub-divide a 500k block without waiting for it to appreciate in value over the next 10 years.

 

Craig C has got it almost right. You'll have to have endorsed plans for development of the block out the back, but you shouldn't need to actually build it to complete the subdivision. You have to enter into a Section 173 Agreement that goes onto the Land Title. This ties the lot to being developed in accordance with the approved plans. Basically you run it as a multiunit development application and then add the S173 agreement plus the subdivision. Whoever buys the land has to develop according to the plans, but they are usually allowed to make variations.