Showhome or spec home opportunities
20th January 2015
I have just recently learned of a couple of potential showhome opportunities or spec home opportunities with established building companies. These are a little different and not for the normal investor.
SHOWHOME FOR BUILDING COMPANY IN ST KILDA, CAMBRIDGE
This is an exclusive subdivision, with an average section size of 1600m2. http://www.stkildacambridge.co.nz/
The showhome has been architecturally designed.
Investing in a showhome is different to a normal investment for six main reasons:
- The home is never lived in and is maintained in an “as new” condition.
- Suppliers normally give discounts, which are passed on to the investor.
- Some suppliers upgrade their products for no extra cost. So the investor gets a higher spec’d house for the normal price.
- Delayed land settlement is often available.
- The builder leases the house back for a period of time.
- Often the builder gets approached by potential buyers, so that investor can often sell easy without real estate commission.
This property will be top range, and the land and building, including landscaping will be over $900,000.
The rent will be $50,000 to $60,000 per year, with a lease in place for 1 year. In this case, this is likely to be above market value, so an investor would need to consider their long term plan.
So as a Gross Yield this will be 6%, which won’t give great cash flow for a full mortgaged investor, but may suit more cashed up investors.
SPEC HOUSES, WORKING WITH A BUILDING COMPANY
The building company is based in Waikato and is a well known brand, with franchises nationwide.
The exact property and build is not set. The building company would find a suitable section and building plan.
The investor would fund the land and building, and the investor and building company would split the profit (most likely 50/50). The property would be a spec, so built and then sold at a profit.
The total cost is likely to be around $650k to $700k, but builders term on the section can mean the section is only paid for once the property is sold. Or at least delay the cash cost.
SHOWHOME
With the building company doing the Spec houses, there could also be an opportunity to be an investor in their future showhomes and having the building company being a tenant.
If you feel you could be interested in any of these opportunities, give me a call on (07) 839 2801 or click here to email us, and we can discuss a little further before I pass on any details.
Coombe Smith are property accountants and property experts in Hamilton, who help the Waikato property community and are proud to have property clients throughout New Zealand and the World. Do you need a property accountant to help with your rental properties?
