Should A Subdivided Land Be Used For Construction or Selling?

Partitioning a parcel of land into smaller portions is subdivision. After the land has been subdivided, a specific title is allocated to each new portion. Now the owners can choose to build, sell out or transfer the parcels. 

 

A land subdivision is likely to range from creating separate titles for dual occupancy, partitioning a single land lot into two, to complete residential development with a number of parcels to construct strata units.  

Subdivision in Perth is generally undertaken for optimizing its permissible use and for generating maximum profit. Land subdivision can be said to be a significant investment. So, the landowners have to understand each stage of the subdivision process and follow the land-specific professional advice from land surveyors which includes the present circumstances and investment objectives. 

Small subdivision projects are treated as wealth-creation strategies for most investors. The different planning stages taking place throughout Perth's suburbs serve as the impetus for permitting higher-density housing. 

 

But the land developers have a common question to ask, that is would they be better off if they have sold the land lots or had done constructions before selling them after the subdivision has been done? 

 

However, every situation is unique, so making a concrete statement supporting one decision is indeed a tough job. But a good start is essential for being familiar with the major pros and cons of each choice. 

 

When the land developer sells off the subdivided land lot, then the cash is immediately transferred to his/her account. The professional gets the potential to shift over to another project quickly. Here in, a lot of assumptions are considered, which include selling the land with the least difficulties, which certainly cannot be assured. 

But this strategy does not promise any reasonable profit. Nevertheless, there are successful stories relating the developers holding on to the property for a significant amount of time and then developing it. Selling land is difficult to get the top dollar in return since comparing one lot with the other is relatively easier on the part of the buyers. Buyers will no doubt want to make a profit themselves.

 

Selling a subdivided land lot works out better in areas with land scarcity and higher-density living being a common factor. 

 

So, to sell off the land with approved plans and permits in place, the land developers have to focus on and create strategies. In these instances, the developers will have to work with a builder for advertising the land as a home-and-land package. 

Construction could be a riskier option on the surface, in the sense inferring the land developer should fund the construction cost. Even they will have to consider the hassles and longer time frames. 

However, the profit will generally be greater than when the subdivided land is sold off in its original form. The reason is partly because the building process is value-adding beyond all construction costs. Next, achieving a stronger price at the time of selling a nice brand-new home to an emotional purchaser is easier. 

 

Construction even creates some additional opportunities. Let us say, selling a fully complete home is seemingly difficult, but potential are existing for holding on to the properties and benefitting from the strong rental income as well as depreciation allowances. 

Determining the suitable option for a specific circumstance involves calculating the possible end values and all the involved costs in detail. Even the risks and efforts are to be considered. Critically, tax implications are even applied which could dramatically affect the decision-making process. Hence, the land developer has to talk to the accountant and related professionals before taking any step. 

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