The value of a physical property on a plot of land depreciates with time, whereas the land it's built upon will generally go up in value. This is why buying land to subdivide can seem like a great investment opportunity, since you are left with numerous plots of land to sell. It's not quite so straightforward, and while the financial returns can be significant, it's also possible to be stuck with land that cannot be subdivided to your original plans. It's for this reason that novice investors should tread carefully when it comes to land subdivisions. If this is something you're considering (whether it's with an existing piece of land or simply a possibility for the future), there are a number of factors that need to be carefully considered.
Your First Port of Call
Check with your local council with regards to their zoning regulations. It might simply be that the plot of land you wish to buy cannot be subdivided. Or it might be the case that the minimum distance required between dwellings means that not enough properties can be built on the prospective divisions of the plot of land to make it a worthwhile investment. Check with your local council's town planning department and familiarise yourself with their requirements for future reference. This should be your first port of call when you are thinking about subdividing land.
Even if the land seems to have sufficient space to make subdivision worthwhile, you need to consider access. WIll it be possible for each potential property on the subdivided lots to have its own driveway? Again, there will be restrictions imposed by your local council as to the minimum space required for this access. Some types of townhouses might be suitable for shared access, although this is not always the case.
Is the entirety of the land to be subdivided actually useable? This might render some plots of land to be unsuitable. If any of the land is on a slope, this portion could easily become problematic space. To build on land of this nature might require additional underpinning on any constructed property. Retaining walls might also be necessary. Such modifications can significantly increase any construction costs. So with anything other than a flat space or a very gentle slope, the land in question might not be a good investment.
You also need to consider that other investors might also be eyeing available plots of land for the possibility of subdividing. This is why it's important to know what to look for, and to have a working knowledge of your local council's zoning regulations. Sometimes a good investment requires you to move quickly, and to know whether or not it's worthwhile to move at all.