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  1. #1

    Default Home and Income Property - Best Areas To Find?

    My wife and I are looking at purchasing our next property and completing a home and income renovation on an existing house that we will eventually grow into - live in the top floor and rent out the lower or viscera. The type of property we are looking at is large two story, stand along houses with an existing large rumpas room/bedroom/garage/bathroom downstairs that we can convert.

    I know that there are an abundance of this type of property in Pakuranga, Auckland (I presume this was the in style while this area was developing). Is anyone aware of any other areas in Auckland that has a large supply of this type of property?

    Thanks!

  2. #2
    Join Date
    May 2008
    Location
    Manukau Auckland
    Posts
    1,049

    Default

    Do you plan on doing a legal conversion? To do it right is VERY expensive. A couple of points to consider
    - Must fire proof the ceiling of the downstairs to create a fire barrier between downstairs/upstairs
    - Must get separate services and connections installed (water, sewage etc)
    - Council want contributions and fees. Installing separate water meter alone cost over $10,000 now
    - Must meet council vehicle parking requirements so may require adding drive bays etc

    I think it makes more sense to purchase a home on a 600+sqm section and add a stand alone minor dwelling at the back. Or even better buy one that is already done.

  3. #3

    Default

    Hi Shane,

    No we do not plan on doing a full conversion to create two separate units BUT we do not intend to treat this property as another investment so will not rent the other unit while we are not living in it. The upstairs/downstairs will stay connected (although locked off) and the same with all services; more of a granny flat i guess. In the event we were to rent or sell the property it would be treated as a single dwelling.

    This is more about subsidising the expense of a larger home while we grow into it but renting out the downstairs. The way we look at it we are currently paying our mortgage of $2500 p/m for a 2 bedroom home but would like to upgrade to 3+ bedrooms (3 up with 1 or 2 downstairs). If we can generate some income from converting and renting the down stairs our monthly expenses will hopefully remain relatively static but we will enjoy a larger home with the option to grow into it as we need it.

    Does anyone have any experience doing this?

    Are there the same legal compliance requirements if the upstairs and downs stay connected and are treated as the same? In my mind the downstairs tenant would almost be treated as flatmates so we are not looking to create two separate units.

  4. #4
    Join Date
    Jun 2013
    Posts
    2,116

    Default

    The cost of what your proposing isn't worth it on any kind of investment return basis. Your better off just picking a house that you want that suits flatmates too. There's plenty around like that in most areas of Auckland.

  5. #5
    Join Date
    May 2008
    Location
    Manukau Auckland
    Posts
    1,049

    Default

    Quote Originally Posted by tom.d.r.g View Post
    Hi Shane,

    No we do not plan on doing a full conversion to create two separate units BUT we do not intend to treat this property as another investment so will not rent the other unit while we are not living in it. The upstairs/downstairs will stay connected (although locked off) and the same with all services; more of a granny flat i guess. In the event we were to rent or sell the property it would be treated as a single dwelling.

    This is more about subsidising the expense of a larger home while we grow into it but renting out the downstairs. The way we look at it we are currently paying our mortgage of $2500 p/m for a 2 bedroom home but would like to upgrade to 3+ bedrooms (3 up with 1 or 2 downstairs). If we can generate some income from converting and renting the down stairs our monthly expenses will hopefully remain relatively static but we will enjoy a larger home with the option to grow into it as we need it.

    Does anyone have any experience doing this?

    Are there the same legal compliance requirements if the upstairs and downs stay connected and are treated as the same? In my mind the downstairs tenant would almost be treated as flatmates so we are not looking to create two separate units.
    The situation you mention above is common place in South Auckland. It's not strictly legal in the eyes of the council but budget accommodation is in shortage they seems to turn a blind eye. And you, the owners will be living upstairs so its more of a flatmate downstairs situation.

  6. #6

    Default

    Isn't there some sort of insurance issue if there is an un-permitted second kitchen?
    Insurance / Liability would be my concern. Lots of people seem to do it though (and quite a few of those sorts of properties come up for sale).
    Someone here will know about the liability aspect I expect.

  7. #7
    Join Date
    Jan 2011
    Location
    NZ
    Posts
    218

    Default

    Quote Originally Posted by Rentals View Post
    Isn't there some sort of insurance issue if there is an un-permitted second kitchen?
    Insurance / Liability would be my concern. Lots of people seem to do it though (and quite a few of those sorts of properties come up for sale).
    Someone here will know about the liability aspect I expect.
    perhaps safer bet is to not put in a second kitchen, but just a sink and benchtop. No oven or stove.
    Tenants/flatmates can decide to put in a fridge and a small microwave and portable single cooktop. No different to what you find in some hotel rooms.

  8. #8
    Join Date
    Jun 2013
    Posts
    2,116

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    Quote Originally Posted by grip View Post
    perhaps safer bet is to not put in a second kitchen, but just a sink and benchtop. No oven or stove.
    It's not. Installing a sink requires consent. There is no requirement for a permit for a 'kitchen', you can install as many stoves or ovens in your house as you wish without consent. As long as they are installed correctly, where is the issue?

  9. #9
    Join Date
    Jul 2012
    Location
    Tavua, Fiji
    Posts
    3,347

    Default

    There are huge issues with this. It is illegal and if you ever get a single complaint to council about noise or anything and they find the second illegal conversion you can be sued. I know it happened to me twice.
    Not to mention you give your insurance company a huge loophole to not pay out if it burns down.

    DON'T DO IT!

  10. #10

    Default

    Unless you take a calculated risk you will continue to be a conservative landlord/investor , one guru said , takes long to reap rewards. I would do it , I guess, if my circumstances are such. It's not get rich quick approach however, doing things in a less cumbersome way is the way to go. As per your scenario you'll have then from 3 x rooms downstairs say minimumx $655pw even if you set aside $100p4 for power/water/wifi you still have $555 in hand.

    Have an outside bbq for them, safely setup, for their stake or so for every now and then and or on the house sharing contract add that no cooking facility is provided - thus you are safe.

    I would buy in Central Auckland, close to high socio economy area , close to transport so the downstairs flat mates are 'professionals' who hardly cook, spend time in pub or gym after work and handy to take aways and remember buying within close proximity to 24hr shopping and nice restaurants so their needs are met and you upstairs house with 5 bedrooms gives you enough liberty you to stretch and send your kids to best schools of high decile, what more you need. Even you may rent out another room upstairs ( as these days families mostly have 2 kids) a room with own shower and a door opening to separate deck with easy access to bbq area so you don't see him at all,for say $300 pw. If you live upstairs, some might come and pay you cash rather DC. Options gallore, isn't it, i know a house in double grammar zone similar profile over 760sqm owner intending to sell for 2.85mil (however he was saying that he still is wondering to keep it, as unitary plan changes going to make him mega bucks in few years) Looks this combination of income/life style/pride are unique features and seems a very reasonable recipe for those who are smart and to live life they dream, of course not for those who are faint minded


 

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