Building on rear section in christchurch or selling section

[Sarushka]

We are having a little trouble in some decision making in regards to one of our Christchurch investment properties.

We have a property that we have owned for some 7 years and have always intended to subdivide and build at the rear to live in ourselves.
However an ever expanding family means this would not be an option low due to size etc.
The subdivison is now almost complete and we were planning to just put the section on the market. However looking at yields in the current market and property values in Chch we had the thought to build and rent out for a few years. We are able to get finance for the build no problem so this seems an attractive propositon. The problems we seem to be encountering are getting a builder who can do this build next year and confusing information about building costs in chch.

Those with knowledge of the Chch market- what would you do? We are worried that if building takes too long we will miss the real boom in the rental income area. How busy are Chch builders really?

We were hoping to build for around $1800 per square metre (a stock standard 3 bed new build). Friends have suggested we are in dreamland.

We would really love to be able to build but now worry it is not possible or will backfire economically if timeframes blow out. Anyone got some golden information or advice?

[charlotte30]

Dear Saruska

Yes you can do a build for that price but you need a lot more specific information before making a decision. Your first problem will be get plans drawn and out of Council. Currently this will take longer than the build. There are many variabes in costing a new build. Foundations, single or two storey, type of cladding. Are you going to do your own project management? I suggest that you talk to a local build company as a guide with regard to price.
Charlottte30

[Rosco]

Tax - generally if you subdivide, then any profit is taxable.

Some of the Exemptions;
1) If held for 10 years before subdivision
2) personal house under 4500 sqm of the top of my head. You might be this one, but wasn't quite sure from your post.
3) If done for rental income. So if you put houses on section, then rent out for a reasonable period

Ross

[Rosco]

What about moving on a house?

I heard Jack House Transit speak at a local Waikato Property Investors meeting, and they have moved houses around the south island, so maybe even some of the north island companies can help. If builders are impossible to get, then moving an existing house on would be another option. If it is your own section, then shouldn't have so many restrictions.

Also there is quite a few 3 bedroom houses being built that are moveable. They are built in the builders yard then transported. Again if possible to buy out of town or north island and transport, it could work out.

For a builder, I would try GJ Gardners to set the benchmark. They won't be the cheapest but they do a good job, no hassles etc and their price isn't normally that bad.

Ross

[imd6662]

Did a similar thing a couple of years ago, with Peter Ray Homes, who did a great job.

[Hamish_West]

Hi Sarushka, depending on the size you're looking at building $1800 a square could be entirely reasonable (you'd probably need to be over 160m2).
All of the building companies I know of are hugely busy, and getting busier. Only about 10% of rebuild payouts have come yet, so it's going to get a lot busier over the next few years with them and everyone else, with most authorities expecting the height of the boom to be 2016.

At the moment I'm guiding people 6-10 months from concept to built. Council can get up to about 10 weeks, truss and slab designs are both taking almost a month (those were both 5 days earlier this year).

If you can finance a build, you're going to make money from doing so. Most buyers want something already built, and demand is only going to be going one way between now and when your build is complete with so many more people arriving in Christchurch.