Build or buy?
Question from Raja updated on 30th January 2015:
I have council approval for building a room (size is approximately 25 square metres) underneath an existing standalone dwelling standing on pile foundations. It takes lot of energy and time to work on such a project. Is it worthwhile to do it or is it better to invest funds into buying a new investment property?
Our expert Ron Hoy Fong responded:
To build or not to build a room of that size under an existing standalone dwelling would depend on whether it's an emotional or an investment decision. If it is to extend your family home for reasons of needing more living space and it's not going to over capitalise the value of the property for the area (avoid having the best house in the worst street scenario) then that's a yes. If it is merely to expand your portfolio for investment reasons then I would think of the alternatives before going ahead. The amount of funds needed to do a 25 square metre extension would probably be equal to or more than a deposit on another property. I would rather use the money to purchase another investment property because it would be more simple and quicker. You would also have the extra property added to your portfolio, growing in value, increasing your equity and bringing in more rent over the long term.
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