All Topics / General Property / Can Rezoning and Subdividing be Profitable?

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  • Profile photo of dan569348694dan569348694
    Participant
    @dan569348694
    Join Date: 2022
    Post Count: 0

    Hi All,

    I came across this property https://www.realcommercial.com.au/for-sale/property-169-part-street-berserker-qld-4701-504182599

    It’s a commercial property in a mostly residential neighbourhood. The quoted yield looks decent, but it’s being sold vacant, so basically at 0% yield. The area wouldn’t be suitable for heavy industrial, and it’s not on a main road, so not great for retail either, so I suppose finding a tenant may be a challenge. So I was wondering if rezoning as residential and subdividing, then selling the two residential properties could be profitable, but factoring in building costs vs sell price, it doesn’t look like it would make money. Can this strategy be profitable in today’s market?

    • This topic was modified 2 weeks, 6 days ago by Profile photo of dan569348694 dan569348694.
    Profile photo of Steve McKnightSteve McKnight
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    @stevemcknight
    Join Date: 2001
    Post Count: 1,763

    G’day there. This is a question of whether the improved value exceeds the cost of acquisiton and improvement (rezoning) by enough of a margin to justify the risk and aggravation. You’ll need to do your numbers to find out.

    One thing I would be trying to figure out is whether there is demand for such land, and if so, at what price. Pre-sales would be important to de-risk the deal, so chatting to an agent would help. Start with end sale proceeds, deduct costs, and see how much profit is left over.

    Bye,

    – Steve

    Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
    https://www.propertyinvesting.com

    Success comes from doing things differently

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