Sub diving land can be a profitable investment strategy. Unlike buying run down homes that need a lot of manual labor, subdividing a block is a lot quicker and simpler providing you do your due diligence before you buy. In fact the profits are made when you buy, not when you sell.
The reason why I say this is because we buy profits, not land. It is this mind set that separates a seasoned investor from a beginner. A seasoned investors knows his values. He understands the market intimately and is able to fairly accurately put a price on any individual block with speed. Having this skill, it is easy to look at a block and identify quickly whether the block is profitable just by knowing the asking price.
Subdividing land is not risky if you can do this and is very very profitable because it can be turned over more quickly than a house and land. The lower entry costs of land also make it an ideal choice for entry level investors.
Your due diligence should be conducted before you purchase and not afterwards. A quick trip to the city town planning department will give you all sorts of publicly available information about the block you intend to subdivide. The first thing you need to know is what the minimum allowable sizes a block of land may be in the zoning laws.
This will allow you to understand if the block can be split. For example in my area, the minimum is 450sqm, so the block would need to be at least 1000 or maybe more. The reason why is because on every block of land there are city easements that need to be left free and clear so utilities and such can be accessed. Also room for drive ways etc are needed so subdividing a block you need to allow for these requirements. Your local town planner can advise you on their local ordinances and they are a valuable source of information. If you intend to subdivide land regularly in your area, it would be wise to get to know these officials and communicate with them effectively. The ideal blocks are corner blocks. But the key is the zoning code.