First Home Grant + Kiwi Saver + Duplex

[HiDAVE]

Hi team

Has anyone has success with this?

Either buying or building a duplex or similar, living in the smaller / cheaper side of it and renting out the rest..

Could this almost make us cash flow neutral in some areas?

Just something I'm brain storming at the moment, any input would be great

Dave

[Kay]

Duplexes - building or buying

Hi Dave,

Duplexes have always been a great way to get into the market. Back in the day, we used to start by buying an old villa and split it into two flats - let one half and live in the other.

The next step up the ladder was to buy a house-and-granny-flat arrangement, being a 3 or 4 bedroomed unit and a 2-bedroomed unit joined together. This meant that when the older children were students, and wanted a bit of space, they could live in the smaller unit (or pay rent). The final step was when the family left home, and the parents could move into the granny flat, and rent the 3-bedroomed house.

I have recently wondered why these 5-bedroomed properties in Auckland now seem to be illegal - with the second kitchen being un-permitted. It seems that duplexes and granny-flat arrangements will be illegal under the new Unitary Plan. It this true? If this is indeed the case, it will make investing and/or owning your own home in Auckland much harder than before, and almost impossible to downsize in Auckland to release equity for retirement.

Duplexes are the best solution for getting started, and make adjustments and changes cheap and hassle-free during the life-time of the investment.

The new system of duel-keyed apartments and duplexes (such as in Christchurch and Wellington) means that properties can be let as two income producing properties on one title. I couldn't see any mention of this being legal in Auckland.

Mum and Dad investors in Auckland are at a great disadvantage in the property market, and we may have to eventually all retire to somewhere like Nelson, as Bob Jones predicted in his excellent article in a recent Listener.

I would like someone who knows about the Unitary Plan to explain whether the duplex or Granny-Flat options are available in Auckland. They are the answer to starting and surviving on the property ladder.

Kathryn

Hi team

Has anyone has success with this?

Either buying or building a duplex or similar, living in the smaller / cheaper side of it and renting out the rest..

Could this almost make us cash flow neutral in some areas?

Just something I'm brain storming at the moment, any input would be great

Dave

[Nick G]

Dual keys are in Auckland too, just not as popular

[Anthonyacat]

Purchased a dual key in central Auckland in February; rents very well, $770pw for the 3bed and $395pw for the studio; plus I had (and plan to again have) the studio on Airbnb during the summer months which brings in a fortune.

[Kay]

Sounds great. Is it in an inner-city apartment block? Do you use the building manager for maintenance? It sounds just the ticket for staring investing. Would it be suitable for your family to live in at a later stage?

Kathryn

[Nick G]

Nice work Anthony

[Anthonyacat]

Sounds great. Is it in an inner-city apartment block? Do you use the building manager for maintenance? It sounds just the ticket for staring investing. Would it be suitable for your family to live in at a later stage?

It is in the Bianco building (which is now undergoing potential structural concerns, but that's besides the point) on White Street, near Aotea square. Not a great ticket to start investing though, at over $700k you'd struggle to raise a deposit - but then, you'd struggle anywhere in Auckland now.

It would absolutely be suitable for my family to live in later. We are thinking super long term it'd be nice for our (presently nonexistent) children to use while at university, or as a city-crash-pad for the two of us when we want to get away from it all, instead of renting a hotel. But for the next 15-20 years it's a rental - none of this mixed-use-asset nonsense!

[Kay]

Duplexes to start.

Hi Dave,

I think your idea of dividing a house into a Duplex, or buying adjacent (or duel-keyed) apartments is a great way to start.

The cheaper option is to start with apartments. Bayleys have apartments - two on one title, which makes it cheaper, although you couldn't sell one separately if you needed some quick cash. The idea of running the second unit as a Airbnb sounds a fantastic way to pay down your mortgage, if you can do your own management.

Buying a run-down house, and making it into a Duplex is great if you have enough starting capital and can get a loan. If you are in Auckland you would need to buy a property with a THAB zoning - it amazing the list of things you can choose to do in this Zone. All the other Unitary Plan zones are too restricted to be worth purchasing as an investment if you are planning to extend or alter. You could eventually end up owning a 5-storied block or apartments for your retirement plan.

At the moment there is a window of opportunity in the Auckland property market, because at the moment most people (including myself) have been having trouble working out the ramifications of the Unitary Plan. The market is slow, and there are lots of people who need to sell, giving plenty of choice. The hard part is getting the finance - so shop around the brokers.

Good luck. I think your timing is excellent and should work well.

Regards,
Kathryn

PS: I was a Freshie back in the 70s, but that was a while ago!