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Development Q&A: Minor dwelling or subdivision

Tuesday, March 01, 2016


APIA Ask An Expert

I have a section that is big enough to either subdivide or build a minor dwelling, how should I decide?  What are the pros and cons of a subdivision and a minor dwelling development?


APIA Ask An Expert

 

As an investor you need to understand what your end goal is and what you want to achieve with any development work.

If you are looking at purchasing more properties, then you may consider that it is a lot easier for you to obtain further finance if you have more equity in a property.  

Subdividing a property will increase your capital gain as your property will have two titles.  This will increase your equity and enable you to recycle your deposit.  In most cases I will always recommend subdivision over building a minor dwell.  That said, the answer at the end of the day will depend on your section and the feasibility studies for both a minor and a subdivision.

As a usual rule of thumb, we find that return tends to be higher in a minor dwelling situation though the investor won't get the same level of capital gain.  

There may also be further issues which will go to the heart of the actual construction of the project which may sway you one way or there other.

My suggestion for anyone who is sitting on a section big enough for either a minor or a subdivision is to contact your development expert with the section address and request a professional investigative report to work out the best option for you.  A suitably qualified consultant will be able to go through pros and cons that are specific to your section for both options.  

 

Barry and his team will be hosting an information night for would-be developers on the 17th of March: APIA x KHH development: Profiting from your own backyard.  Click here for more information and to register.   

Barry Walker 

Barry Walker is the National Sales and Marketing Manager at Keith Hay Homes having previously served as the Drury Branch Manager.  Barry is passionate about working with property investors to maximise the value of the land.  Over the years Barry has amassed an impressive development portfolio under the KHH banner and continues to lead the KHH team to deliver top quality projects for property investors nationwide. 

 

Do you have any building related questions for Barry?  Email your questions through to admin@apia.org.nz.  

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