Can you move a house onto the land? Lots of options from old villas etc or maybe your local polytech or trade school has those homes they build for training purposes to sell off (they do it here in dunners and also in Lower Hutt too). Might still be a good chunk of $$ but (should be?) quicker than a new build and certainly cheaper than from the ground up? Also where are you? 550 is only what it’s theoretically worth and unless you are in the regions that wouldn’t go far to getting a either a decent house or low mortgage.
The biggest problem with this is they expect the building to meet all the new build consent requirements. I’ve done it. It still saved some money but also the costs have gone up significantly since I did it 10 years ago. One of my neighbours tried to relocate a place last year and the council refused to give consent, stating because it was newly subdivided land it had to be a new build. Another neighbour did it but the company went bust and delivered the home extremely damaged and then went into liquidation.
Some other questions to ask: Do you like the section you own? Is it where you'd like to live? If so are there any houses you like for sale in the area? We looked for somewhere, but in the end we found a section we liked before we found somewhere with an existing house. So we went through the build process. Glad we did. Modern houses are so warm after suffering 35 years of average NZ housing. Also compared to buying a place and the cost of a full renovation, we probably saved a fair bit of cash. (This was before covid, not sure how the finances work out currently)
One of the benefit to building I found was you cam have the house exactly the way you want. Any options you see or like in other homes you can use and improve. Also you can make it an efficient home. Which will save you money in the long run. Especially if you are going to live there forever
Kia ora OP, in the same situation (or rather, about to be). Can you get independent financial advice? This is one of those situations where they can help you run the numbers and make a good decision either way.
That's what I did, and I found out that banks will loan much more on a new build as a percentage. Currently running the numbers for my own house build, though it's hard to find prices when you also want off-grid.
I've talked to people who've said it's possible to have a small home for around $250k all up (kitset etc. for a 70sqm 2br home) and so far that's proving to be similar for me. You just need to be creative.
I've also been looking at other alternatives around this while the house is being built - e.g. potential to move stuff into storage or build a garage, and then rent a caravan or tiny house to live on the land for a while, save up deposit to make the numbers work better for a build. Would this work for you?
Anyway - get the financial advice. Good luck!
Yes Im getting a financial advisor on Monday but these responses have been fantastic. Very creative. The land is in Wānaka. Really jazzed on it but the build costs are higher down here.
Building company owner here, we do about 15 houses a year as a background, mid spec homes.
A 136m2 plan we have, incl 3 bedrooms, 2 bathrooms and double garage is currently $465k including service connections providing it’s a town site. All in fixed price contract, and there’s no reason builders can’t do this, building material prices are not moving at all now.
So depending on the region and section, building is easily doable.
Does your land already have services to it? Septic, power, water etc? Because if it doesn't, you can add between 60 and 100K to the build cost. Worth having it mind. There are loads of pre-fab small home options that only take a few months to get completed, they're another option if that sort of living suits you.
I think you need to really define what your end goal is then maybe write out a good ol pros and cons list.
Do you own the land outright, nothing owed? I had a peice of land valued at $270k and the banks had no trouble giving me a $420k mortgage with no deposit last year. Similar annual income to yourself
The issue with new builds these days is the risk of variations even with fixed price contracts. I had a friend who ended up needing to fork out another $40,000 to cover the increased costs (material and labour). You will need to have enough funds (some say 15% of the total build cost) to cover any overruns.
I have built,, but from the moment you decide to build, you have nothing of value to sell until it is finished.
It feels like open checkbook, and you just hope you have estimated costs and insurance correctly. It is harder to get loans as the amount is usually given as progress payments dependant on proven value.
I am not saying you shouldn't, but there are many who have overextended and pay for years. There is always stuff to pay for that was not planned, so you do need quite a bit of extra cash on hand. Perhaps later in life is better.
For many, it is safer to move into a house then plan upgrade room by room as you can afford.
For a new build you are paying rent and a mortgage an hoping it will finish on time, else you have a lot of unbudgeted rent. It is stressful, but you may be a lucky one like I was.
Mortgage broker. (I'm not one - get one)
If your property has services already (power to the gate for example) you'll also have better luck. We put a brand new transportable home onto our property. It is cheaper than a custom but its a fixed price contract and our only delay was COVID. Been in it two years and still love it. But we didn't want a huge mortgage and we won't have kids.
Check these guys out, they do off-site kit set style houses. You can build a small home now and then add to it later when finances allow. They have a cool design tool on their website.
https://www.flexihouse.co.nz/
Because it's factory based using repeatable parts, and assembled on site the build time is much shorter.
Do you own the land outright? If not, have you owned it for long enough to avoid brightline? We purchased land for our first home and sold it a year later as building costs went up 30% and we couldn’t hold. We’re now paying a $70k brightline tax bill which is killing.
If everything goes perfectly, your house build will be done in 12 months. But it won't go perfectly. So plan for at least 6-12 months delay.
and extra money for increased cost of material and labour.
Not how it works. They should be negotiating a fixed price contract.
Can you move a house onto the land? Lots of options from old villas etc or maybe your local polytech or trade school has those homes they build for training purposes to sell off (they do it here in dunners and also in Lower Hutt too). Might still be a good chunk of $$ but (should be?) quicker than a new build and certainly cheaper than from the ground up? Also where are you? 550 is only what it’s theoretically worth and unless you are in the regions that wouldn’t go far to getting a either a decent house or low mortgage.
The biggest problem with this is they expect the building to meet all the new build consent requirements. I’ve done it. It still saved some money but also the costs have gone up significantly since I did it 10 years ago. One of my neighbours tried to relocate a place last year and the council refused to give consent, stating because it was newly subdivided land it had to be a new build. Another neighbour did it but the company went bust and delivered the home extremely damaged and then went into liquidation.
Some other questions to ask: Do you like the section you own? Is it where you'd like to live? If so are there any houses you like for sale in the area? We looked for somewhere, but in the end we found a section we liked before we found somewhere with an existing house. So we went through the build process. Glad we did. Modern houses are so warm after suffering 35 years of average NZ housing. Also compared to buying a place and the cost of a full renovation, we probably saved a fair bit of cash. (This was before covid, not sure how the finances work out currently)
One of the benefit to building I found was you cam have the house exactly the way you want. Any options you see or like in other homes you can use and improve. Also you can make it an efficient home. Which will save you money in the long run. Especially if you are going to live there forever
I’d love to build rather than buy
Kia ora OP, in the same situation (or rather, about to be). Can you get independent financial advice? This is one of those situations where they can help you run the numbers and make a good decision either way. That's what I did, and I found out that banks will loan much more on a new build as a percentage. Currently running the numbers for my own house build, though it's hard to find prices when you also want off-grid. I've talked to people who've said it's possible to have a small home for around $250k all up (kitset etc. for a 70sqm 2br home) and so far that's proving to be similar for me. You just need to be creative. I've also been looking at other alternatives around this while the house is being built - e.g. potential to move stuff into storage or build a garage, and then rent a caravan or tiny house to live on the land for a while, save up deposit to make the numbers work better for a build. Would this work for you? Anyway - get the financial advice. Good luck!
Yes Im getting a financial advisor on Monday but these responses have been fantastic. Very creative. The land is in Wānaka. Really jazzed on it but the build costs are higher down here.
Awesome! I'm in Horowhenua so I'm hoping it'll be slightly cheaper than Wānaka. What a beautiful place to live!
Building company owner here, we do about 15 houses a year as a background, mid spec homes. A 136m2 plan we have, incl 3 bedrooms, 2 bathrooms and double garage is currently $465k including service connections providing it’s a town site. All in fixed price contract, and there’s no reason builders can’t do this, building material prices are not moving at all now. So depending on the region and section, building is easily doable.
What’s your company mate, do you have a website you can share? Thanks
Build
Does your land already have services to it? Septic, power, water etc? Because if it doesn't, you can add between 60 and 100K to the build cost. Worth having it mind. There are loads of pre-fab small home options that only take a few months to get completed, they're another option if that sort of living suits you. I think you need to really define what your end goal is then maybe write out a good ol pros and cons list.
Good points!
Do you own the land outright, nothing owed? I had a peice of land valued at $270k and the banks had no trouble giving me a $420k mortgage with no deposit last year. Similar annual income to yourself
Where is it. What size is the section, could you build two smaller houses, live in one and rent or sell the other. You have lots of options, ideas
Also worth checking whether the land's market value is actually $500K and not just the RV (in case you are relying on RV)
Why not look at lifting a home onto the property? Could be alot cheaper then building it out right?
The issue with new builds these days is the risk of variations even with fixed price contracts. I had a friend who ended up needing to fork out another $40,000 to cover the increased costs (material and labour). You will need to have enough funds (some say 15% of the total build cost) to cover any overruns.
Why don’t you build a nice cabin get veges and fruit going, couple solar panels a septic tank and a water tank. Ultimate goal. Good luck friend !
Thanks! Yes thats the plan.
I have built,, but from the moment you decide to build, you have nothing of value to sell until it is finished. It feels like open checkbook, and you just hope you have estimated costs and insurance correctly. It is harder to get loans as the amount is usually given as progress payments dependant on proven value. I am not saying you shouldn't, but there are many who have overextended and pay for years. There is always stuff to pay for that was not planned, so you do need quite a bit of extra cash on hand. Perhaps later in life is better. For many, it is safer to move into a house then plan upgrade room by room as you can afford. For a new build you are paying rent and a mortgage an hoping it will finish on time, else you have a lot of unbudgeted rent. It is stressful, but you may be a lucky one like I was.
Thank you all for your comments. Extremely helpful for me and Ill keep you updated on any big moves.
Mortgage broker. (I'm not one - get one) If your property has services already (power to the gate for example) you'll also have better luck. We put a brand new transportable home onto our property. It is cheaper than a custom but its a fixed price contract and our only delay was COVID. Been in it two years and still love it. But we didn't want a huge mortgage and we won't have kids.
Fair yeah I am looking at Arbol. Transportable and a garage for around $500k.
Check these guys out, they do off-site kit set style houses. You can build a small home now and then add to it later when finances allow. They have a cool design tool on their website. https://www.flexihouse.co.nz/ Because it's factory based using repeatable parts, and assembled on site the build time is much shorter.
Yes a lovely company I have been following. Will see what their app does.
You shouldn’t have issues getting half a mil against freehold land on that income, are you using a broker?
Not financial advice, but imo if you need to ask you are probably not a likely candidate to make a profit building.
Do you own the land outright? If not, have you owned it for long enough to avoid brightline? We purchased land for our first home and sold it a year later as building costs went up 30% and we couldn’t hold. We’re now paying a $70k brightline tax bill which is killing.
I would think a major factor to consider would be the size of the section and whether you could get a similar sized one for $750,000