This calculator works out what it costs to hold a piece of bare land in New Zealand before you build on it, a cost that catches out many people who buy a section early and plan to build later. Land is unusual among investments because while you hold it, it earns nothing yet still costs money every year. The biggest piece is interest on the money tied up in the land, whether that is a loan you are servicing or your own capital that could be earning elsewhere. On top of that sit council rates, which you pay even on an empty section, plus smaller ongoing costs like insurance, mowing and keeping weeds down. You enter the amount borrowed or invested in the land, the interest rate, the annual council rates, any other yearly costs, and how many years you expect to hold the land before building, and the calculator returns the total holding cost over that period and the cost per year. Use it to decide whether buying now and building later really stacks up, by comparing the holding cost against how much you expect the land to rise in value and how fast build costs might climb while you wait. Figures are estimates only and not financial advice.
Interest is on the money tied up in the land; rates and other costs apply each year. Compare against any rise in land value. Estimate only.
The annual interest is the amount borrowed or invested times the interest rate, treated as interest-only while you hold the land. The annual holding cost adds council rates and other yearly costs to that interest. The total is the annual cost multiplied by the years you hold the land.
On 400,000 dollars at 7 percent, interest is 28,000 dollars a year. Adding 2,500 dollars of rates and 1,000 dollars of other costs gives 31,500 dollars a year, so over 3 years the holding cost is about 94,500 dollars, of which 84,000 dollars is interest.
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