Minor Dwelling / Granny Flat ROI Calculator NZ

This calculator works out the return on building a minor dwelling or granny flat to rent out in New Zealand, showing the net annual rent, the gross and net yield, and how many years of rent it takes to pay back the build cost. Adding a small self-contained unit to a section you already own has become one of the most popular ways for homeowners to create income, and recent rule changes have made compact standalone dwellings easier to build in many areas. The appeal is the maths: because you are building on land you already have, the rent is measured against the build cost alone rather than the price of a whole property, which often produces a yield far higher than a standard rental. You enter the build cost, the weekly rent you expect, and the annual running costs such as extra rates, insurance and maintenance, and the calculator returns the net annual income, the gross yield against the build cost, the net yield after running costs, and the payback period in years. Use it to judge whether the build stacks up and to compare it against other uses of the money. Council rules on size, parking and services apply, and a minor dwelling can change your rates and insurance, so check those before committing. Estimate only, not financial advice.

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13.3%
net yield on the build cost
Net annual rent$20,000
Gross yield15.6%
Payback7.5 yrs

Yields are against the build cost, not the whole property. Council rules, rates and insurance changes apply. Estimate only, not advice.

How it works

Annual rent is the weekly rent times 52. Net annual rent subtracts the running costs. Gross yield is the annual rent divided by the build cost; net yield is the net annual rent divided by the build cost. The payback period is the build cost divided by the net annual rent, the years of net rent needed to recover the build.

Worked example

A 150,000 dollar granny flat renting at 450 dollars a week earns 23,400 dollars a year. After 3,400 dollars of running costs, net rent is 20,000 dollars, a gross yield of 15.6 percent and a net yield of 13.3 percent, paying back the build in about 7.5 years.

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Frequently asked questions

Is a granny flat a good investment?

It can be, because you build on land you already own and the rent is set against the build cost rather than the whole property, which often gives a high yield. The payback period shows how many years of net rent it takes to recover the build.

What is net yield?

Net yield is the rent left after running costs such as extra rates, insurance and maintenance, divided by the build cost. It is more realistic than gross yield because it reflects what you actually keep.

What rules apply to minor dwellings?

Minor dwellings have council rules on size, parking and services, and may affect your rates and insurance. Recent changes have made small standalone units easier to build in some areas. Check your council's rules before relying on any return.