At Keith Hay Homes we get asked this question on a daily basis. In truth, it’s one of the reasons we
love this job so much. Don’t get me wrong, property is a pretty rewarding game but seeing and being part of taking a property to its full potential
is something else.
As a member of APIA, you will have had access to great material for how to manage your properties, but may not have thought about developing your property
further. Why would you? For so long landlords have been able to get a decent amount of return from rents alone. But with the growing trend of increased
compliance, more and more investors are pushed to explore different ways to add value and create new income streams. What if you want to maximise returns
by adding a new dwelling? Where to from there?
A few things that we would look at to start:
Why develop when you can buy new?
When it comes to building or purchasing a dwelling in New Zealand, more specifically Auckland, a large portion of the cost is in the section and not the
build itself. Greenfield sites (i.e, empty lots) within the Auckland region can start around $350,000 and often include restrictive building covenants.
If you own a property in Auckland and you have an existing home on a site larger than 600m2, then it is highly likely that you can develop this property
further. You are not buying a new section so you are funding only the development costs. All things going to plan, you will make equity and positive
capital gains on your investment that would be a lot higher compared to buying a greenfield site with a new...
