Catching homes on the hop
Relocatable and transportable homes have become a top choice for investors diversifying their approach to rental property and investment, as Sally Lindsay discovers.
1 May 2023
Relocatable homes are a stylish and effective way in which to inject extra value into existing properties.
Relocatable and transportable homes offer convenience, affordability and sustainability, say companies involved in the sector.
In contrast, building a new home on-site involves planning and design costs, challenges in finding a builder and materials as well as dealing with council delays and inflation.
Operators in the sector say the process of finding a relocatable house is quite simple. It involves finding, or already having suitable land, examining the local council’s regulations, obtaining the necessary permits and approvals and having enough funds to see the process through.
Forde Brothers House Removals works all over the North Island and director Mike Forde says every council allows relocatable homes that fit in with their regulatory requirements. However, some private developments can have covenants blocking relocatable houses.
He says it is important to consider the layout of the house as well and the aspect of the rooms once it is relocated to maximise light, sun and views, which can lead to changes being made on the building consent application. A council will usually also require geo-technical, storm water and sewerage reports.
Surprisingly, 99 per cent of Forde’s relocatable homes are sold to Chinese investors.
“Most home-grown Kiwi property investors will not look at a relocatable home – moving a house to the back of a section and making room for another one, two or three relocatable homes as rentals,” he says. “We have found Chinese property investors have the land and finance, get on with it and improve the value of their property in a short time.”
Forde Brothers provides a complete service, including a feasibility study of the site, design, consenting, project management and delivery of the houses.
“I can have days of discussions with Kiwi investors and they generally cannot get their heads around it.”
He says many look at possibly putting new builds on their land, but find the figures do not stack up economically. “While it is possible for some investors to put five, six, seven houses on one site, they soon realise the price is prohibitive.”
Forde says putting on two or more relocatable houses as rentals is a lot cheaper and immediately increases the property’s value. “We show a lot of houses to potential buyers, but Kiwis are slow on the uptake.”
To give a rough idea, he says an average relocatable house ranges in price from $200,000-$220,000 ready to go, while a new build can be anywhere from $700,000 to $900,000.
On average it takes three months for a chosen relocatable house to be installed on its new site and be ready to be lived in or rented.
Forde says it is important investors and homeowners put together a sensible plan, calculate all costs involved, and confirm they will be able to come up with the funds to finish the project.
‘A great advantage of relocatable homes is that they are classed as a new-build’ RICHARD HUTCHINSON
FOLLOWING THE STEPS
Chrissey and Richard Hutchinson, who co-founded The Relocatable Home Company, based in Mt Maunganui, say anyone undertaking a successful relocation project usually follows a series of steps. These include carefully checking project and budget feasibility, land and finance requirements, design and consents for the site, the house itself, and any necessary alterations.
The company caters for clients all over the North Island, including savvy investors, and adds houses to sites with existing properties as well as vacant sections.
“With the introduction of the bright-line property rule we have noticed a shift in the investor profile. Whereas once we had investors who were short-term ‘flipping’, now investors are buying to hold for five years,” Richard Hutchinson says.
“A great advantage of relocatable homes is that they are classed as a new-build for tax purposes, which means that they’re only subject to the five-year bright-line test, instead of 10 years, and can still claim mortgage interest payments as an expense for their tax.”
In addition to investors, The Relocatable Home Company has a strong client base of regular house buyers, who have usually bought and sold houses before. They are typically aged 45-plus and looking to increase their equity in a cost-effective way. They also want to create a cash flow positive rental return to meet their lifestyle
requirements in retirement.
The most popular and cost-effective houses for investors are three-bedroom 8m by 14m timber houses, tidy inside and out, requiring little renovation and can be delivered in one move. Larger houses may have to be split into two or three moves, which can increase costs.
A ballpark figure for a standard house is about $250,000-$350,000 for relocation to a simple site, says Richardson. The cost includes house purchase, transport and relocation, building consent and connection to services. There can be a lot of variables to the cost, such as the age, style and condition of the house as well as
complexity/ease of access to the section.
Typically, the company recommends allowing four to six months for the full project, based on a straightforward relocation.
LEFT Transportable homes are cheaper than a new build.
ABOVE AND RIGHT 8m by 14m homes are delivered in one piece.
Transportable new homes are another option for investors. They are compact but not cramped and have ample space for at least two bedrooms, a proper toilet and bath, a functional kitchen, cosy living room, and often decks extend the living space.
They are not, despite a common misconception, moveable homes or those on a trailer.
As well as selling and transporting relocatable homes Forde Brothers also delivers newly-built houses by Drury-based Transbuild.
The new home company prefabricates houses that are fully completed at its factory before delivery and connection to onsite utilities and services. The houses, generally between 100-150m2 with two bathrooms and three to four bedrooms, leave the factory with a code of compliance certificate.
This suits investors. Many are looking to put a minor dwelling for rent on an existing site, says managing director Sam Paterson.
“Prefabrication has the opportunity to revolutionise the housing and rental market. As a construction method prefabrication has been globally proven and adopted for years.”
He says Transbuild’s controlled environment includes factory construction but also allows for client process and fit-out decisions, enabling certainty over costs and time schedules. “Couple this with the ability to complete site works concurrently while the build is completed in the factory, there are significant time savings.”
LEFT Transbuild homes leave the factory with a CCC.
ABOVE AND RIGHT Transportables offer lower build costs and quicker completion times.
Transportable new homes have the advantage of lower build costs compared with on-site projects and faster completion times due to simpler logistics, says Sam Dyson, EcoPod business manager.
Auckland Greenhithe-based EcoPod specialises in minor dwellings built at its own factory.
It specialises in building to high wind zones and sea spray zones within 500 metres of the coast. There are two extremities EcoPod also caters for – extremely high wind zones where specific roofing is designed, and extra bracing is added, and dwellings sitting 100 metres from the coast.
EcoPod’s main clientele are investors, says Dyson. “Mums and dads who have the finance and land for a minor dwelling for elderly parents, a rental, or a bach they can rent out when they are not using it.”
Pods start at 20m2 going up to 110m2 for single-level buildings. The company has done the occasional two-bedroom house and it has concept designs for three and four-bedroom transportable houses, but none have been completed.
Dyson says in Auckland it is possible to build a 30m2 minor dwelling without resource consent as long as it doesn’t contain plumbing, meaning no bathroom or kitchen, which is a major constraint. “Basically, it’s a sleep-out or cabin.”
Another limitation is the cabins need to be their height away from boundaries and buildings. “These rules place a huge restriction on most suburban sections,” he says.
Transportable pods have been delivered to EcoPod clients from Waikato to Whangarei and each council in those areas has differing regulations around minor dwelling sizes. In Auckland a minor dwelling is classified as 65m2, Waikato 60m2 and is now considering 120m2, Whangarei 90m2 and is now considering 120m2.
Dyson says the logistics of building mean the smaller the pod the higher the construction costs, but on average a 50-60m2 dwelling costs $4,500m2 and that includes consents, foundations, services connections and the dwelling. For just the pod it costs about $3,500m2 to build.
“It compares well with traditionally built architecturally designed houses that can cost up to $10,000m2,” he says.
EcoPod built and delivered 30 minor dwellings last year. “People like the simplicity of the process,” says Dyson. “We do the designs in-house, take care of the consenting and build off-site. We can deliver a lot faster than a traditional builder, having a consented pod completed in five weeks and delivered to site in 12 weeks.”
ABOVE Most banks have specific mortgage products for new prefab homes.
LEFT EcoPod built and delivered 30 minor dwellings last year.
While increasing property value, relocatable and transportable houses can be classed as new builds.
The Inland Revenue Department says relocating a property and obtaining a fresh code compliance certificate (CCC), will be considered a new build and will be exempt from certain taxes.
Even if a house is picked up from down the street, moved on to another section and connected to services, it will be considered a new build for tax purposes.
Additionally, even if an existing house is simply nudged to a different part of a section making room for a new minor dwelling and both obtain a new CCC, they will be considered new builds and receive tax incentives.
Obtaining finance is a major hurdle difficult to overcome for first home buyers. It’s almost impossible for them to get a mortgage on a relocatable house if not consented to the site and without an initial deposit of at least 20 per cent.
Banks don’t consider a relocatable home suitable security for a loan until it’s on the ground, on piles, fixed to the ground.
It’s not so difficult for investors because they’ve already got equity in their existing property.
For new prefabricated homes most banks have a transportable building mortgage product specifically tailored for buildings constructed in a factory environment off site and then delivered on site.