Subdivision is the process of splitting one property into two or more properties. The advantages to this are quite clear - provided the prices are right, the amount that several separate smaller properties is worth tends to be more than what one large one is worth.

Not every property can be subdivided. Every council has different rules as to the minimum size of a block, the minimum width or depth, and access to services like sewer lines and electricity. All of this information can be easily found via the Development Plan for the council in which you want to subdivide.

While this sounds easy on paper, the hard part is finding the right property to subdivide, at the right price. In areas that are experiencing high growth and high demand, property prices tend to be far, far more than someone on a low income can afford. Often a subdivisible block will be advertised as such, and the price of the property will at a point as if a subdivision has already been done, which means there will be no profit in it.

This brings up another good point - subdivision is not cheap. While you can subdivide blocks in rural areas for as little as a few hundred dollars, subdivision in metropolitan areas can run to tens of thousands of dollars. You will need to know what the anticipated costs of subdivision are in your area. A surveyor or the council's town planner will be able to go through this with you. Most good surveyors will be able to give you a quotation for the entire process, and will handle it all for you. All you will need to do is sign some forms, and of course pay for all the costs.

If you are on a very low income, buying a large property to subdivide will likely be prohibitively expensive. So when does it make sense to subdivide? This comes back to your situation.

If you already own a house, particularly a well-located one with a large backyard, look into subdividing it and selling the subdivided block. If you own the house outright or close to it it is likely you will be able to get a loan for the subdivision fees. As mentioned above, a discussion with a town planner or surveyor will be needed to find out if your property is subdivisible.

If your property is not subdivisible, consider selling it and buying one that is, preferably one that is cheaper than your original house so you will have some cash leftover for the subdivision fees while keeping your mortgage at the same level.

If you already have some money or are able to get a loan, consider buying property in a regional area that is very cheap. Some towns are experiencing growth but still have very cheap land, and it is possible find blocks that are already broken up into allotments and can be subdivided for only a few hundred dollars per block.

I know people who have bought a large country property on the fringe of a growing town consisting of 10 or more allotments for barely more than the cost of 2 or 3 blocks, and have then sold all the blocks off one by one making a massive profit. You will, of course, have to do a lot of research to find an area where it is worth doing this.

However, if you have no spare money and are not able to get any from any source, even if you already own a subdivisible property, subdividing will not be a technique you can use as it is impossible to achieve without injecting a reasonably large sum of cash upfront. There are a list of other techniques for making money from property on this page.

Remember that selling a subdivided property triggers a capital gain event, and you will have to declare your profit to both Centrelink and the tax department, so while the payoff initially is good, do check with an accountant about the possible impact on your entitlements.

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