Strategy for inheritance
Question from Craig updated on 31st August 2015:
We are inheriting a house and land. The land is big enough to hold three houses total. We will be freehold with no debt. Do we subdivide and build the two extra houses, or only build one house and market for a higher rental income from both properties?
Our expert Kris Pedersen responded:
You need to work out your goals and also what position each option will leave you in. You may want to start by commissioning a valuer who may then be able to give you an idea on how the numbers stack up for each of the options. You should also discuss with a property manager what rental expectation they would have for each option so that you can run some numbers off the back of this to see which option works better for you.
You haven't mentioned where this property is so the strategy of this is dependent on where the property is. For example, if the property is in Auckland then land is at a premium so building all three would definitely be worth considering. But if the property is somewhere where the land is priced much more cheaply, there is not the same overall demand so then this may not be as good an idea.
Kris Pedersen of Kris Pedersen Mortgages is a commentator on property and finance. His team sources top finance strategies. www.krispedersen.co.nz