The Advantages of Garage Conversions
Garage Conversion investment:
Is it worth it?
One of the significant benefits of converting a garage into a self-contained studio is that it can add significant value to your property. Not only does a garage conversion provide extra space, but if you decide to rent the space out it also adds value by providing another income stream.
Home and Income is also valuable as it is extremely attractive to potential buyers. Even if you’re not looking to sell, the expense of converting your garage will quickly be paid off by the convenience and business opportunities it offers you.
How can it be financed?
At the moment, the banks are required to ask for at least a 30 percent deposit from all investor buyers.
That's a significant amount if you're buying in Auckland, where the median price is now $856,000, according to the Real Estate Institute.
Property investment is more tangible than shares. The fact you can borrow from the bank to get started also amplified potential gains (although it would also magnify losses).
But if you bought a house five years ago, when the median in Auckland was $600,000, you might have built up enough equity to borrow against to invest into the garage conversion.
Mobile Mortgage manager Denis Kim, of BNZ, said banks would allow buyers to increase the debt against their own homes to up to 80 percent of the property's value. They could then use that money to finance such house improvement as a Garage Conversion.
Is it a Good Return on Investment?
There are several ways to determine the Return on Investment or ROI. The most frequently used method is to divide net profit by total assets.
The average cost of the conversion of the double garage to the separate studio in Auckland is $130K-150K. This should include all costs including all building costs, council fees, and developers' contributions.
The average rent price on a self-contained studio in Auckland depending on an area is $300 to $400 per week, totaling 15K-20K annually.
Answer these questions to see if Garage Conversion works for you. Whatever scenario you will choose - invest your savings or borrow against your house - discuss it with your financial adviser and your legal aid.
It is substantial money .... much smaller than any investment in to ...
You can see some finishing options at our showroom at 12 Trimaran Drive, Gulf Harbour, Whangaparaoa, Auckland.