If you own large property and live in Auckland, the new Unitary Plan has opened up some possibilities to subdivide your existing property. Whether your end goal is to build to sell or to rent out the property; a rear unit titled, or subdivided development could be a great way for you to start your property portfolio or investment. While subdividing off a rear site and selling it, or building a new home is not a new idea, the old district scheme restrictions, made this often unachievable in many areas in Auckland and I suspect other cities around New Zealand. So let’s look at some options.
Build To Sell
You could build a new property and sell it, therefore realising an immediate return. Or you could build a new house for yourself and sell your original home. Either way, you get to stay in the neighbourhood you love and get some financial benefit from your investment. If you move into the new house you should have lower costs, and enjoy everything that a new house provides. Or if you remain in your existing home you potentially decrease your costs of maintaining a large site and reduce your outgoings such as property rates. Obviously, before you embark on this project it is very important to do your market research on the potential sale price and seek legal financial and tax advice. Always have a backup plan in case the market has a downward correction and you are unable to sell the investment property.
Build to Rent
If you would like to add a long term investment property to your portfolio or you would like to start building one, the options are similar to the first scenario. You could build a new house and rent that property out while remaining in your own home. Or enjoy the benefits of a brand new build and rent out the original home. You are on-hand for your tenants if they need assistance and you are able to keep a close eye on your investment. When looking long term at property investment the longer you hold the property the more likely it is that you will not only have an income producing asset but also a capital gain when either of the properties sold.
Once again, make sure you have taken some sound, legal, tax and financial advice before planning your development.
There are certainly advantages to building within the boundaries of your existing property if you are fortunate enough to have the opportunity.
If you are wanting some real estate advice please do feel free to contact me I would be more than happy to help.