There are some really good points above. I too suggest approaching this idea very cautiously.
You'd need to buy the property/land below value, have favorable zoning, plan & execute everything meticulously while staying on budget (time & $$.) Its easy to dream about the perfect plan, but when considering infill projects, consider your worst case scenario and see if your plan is still viable.
In Edmonton, the sub-divided infill properties can get too expensive for buyers to purchase (like the in Edm Journal article above.) The City of Edmonton is promoting infill in certain areas, so its definitely do-able.
If this is what you are thinking, you'll need a 50' lot in a desirable area. Budget for at least a year of holding costs (demolition, permits, permits, permits, construction, then time to sell once everything is ready.) Budget for Realtor & legal fees up front, as well as holding costs (may take a while to sell for the amount you are need to make this profitable.) Holding costs means mortgage/taxes/utiltities/management (snow removal, mow lawns, etc.) and insurance.
If you are thinking of higher density such as a tri-plex, look for an affordable RF3 corner lot in an area that already has plenty of infill AND supports the resale prices that you need to make this project work.
If you are thinking of demolishing a house to rebuild a legal suite - my opinion is its too much time and $$ for the potential returns. Most neighborhoods have a ceiling on resale values of legally suited houses - in most tenant friendly neighborhoods, Im going to say that's around $450k give or take. In the university area, that may be in the $600's - but expect that vacant lot to cost you well over $400k to start. Look at the sold comparables in the area & don't try to defy math....that rarely works. My suggestion here would be to buy one that needs some work to legalize and has opportunity to uplift and add value/appeal.
If you are considering high end single family homes or higher density (4/6 plex or an apartment), you'll need to partner with someone who has development experience. At these prices, this is far too lucrative for most people to dive into it on their own unless you (or your partners) have really deep pockets.
I am an investor and a Realtor in the Edmonton area; I'd be happy to explore this conversation with you further, and discuss some opportunities that I know of around the city.