Property Investment Articles

This article describes the third strategy of nine property investment strategies.

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Strategy 3 – Buy, subdivide and sell or hold

Pros

Fantastic opportunity for those not faint-at-heart.
Serious profits can be made by buying land capable of subdivision and doing what the previous owner was obviously too scared to do.

Cons

You need a large amount of capital (i.e. cash) behind you as, particularly in the current environment, the banks are simply not willing to lend serious money to even the most experienced property developer. If you are a novice your
chances of getting finance are seriously slim. It still can be done but you will need to put in a large portion of the funds for the development yourself. There are ways around this, such as: vendor finance, joint venture partners, and obtaining pre-sales. Above all else – seek professional advice.

In this instance, the tax man will definitely see you as a property developer rather than an investor. This means you will be subject to income tax and GST as opposed to the far more lenient capital gains regime.

You will also need to become involved with local councils and their development approval processes, surveyors, architects, etc. You will need to make this almost a full-time job.

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