Calculating potential ROI
Question from Poornaka updated on 10th August 2018:
I am thinking about building additional dwellings on my existing plot to rent out. But how can I figure out my return on income? Is there a professional entity that provides forecasting on what the return could look like based on some basic input assumptions? My goal is to back-calculate how much I should be spending to build based on the potential rental gross income from the area.
Our expert Kris Pedersen responded:
You probably need to start with ascertaining what your additional dwellings will cost. Once you have information pertaining to that you should then be able to show any plans to both a registered valuer to ascertain end market value and a couple of property managers who could then estimate likely rental returns. But do note that the numbers are likely to move around a bit as the estimates will be on the current market and the market may move slightly by the time the dwellings are actually completed and ready to take to market.
Kris Pedersen of Kris Pedersen Mortgages is a commentator on property and finance. His team sources top finance strategies. www.krispedersen.co.nz