Minor Dwelling ROI Calculator NZ

This calculator works out the likely return on building a minor dwelling, sleepout or granny flat to rent out, so you can judge whether the build stacks up financially before you commit. You enter three figures: the total build cost including consents and connections, the weekly rent you expect to charge, and the annual running costs such as rates, insurance, maintenance and management. From these it works out your net rent per year, the annual rent less running costs, and expresses that as a net rental yield on the build cost. It also shows the payback period, the years of net rent needed to recover what you spent on the build, and flags the added value potential from any lift in your property's overall worth, a benefit the yield figure does not capture. Use it to compare a minor dwelling against other uses of the same capital, such as a term deposit or another rental property, and to test how the return moves with different rent or running cost assumptions. Consent costs, connection fees and finishing standards vary widely between councils and builders, so get a firm quote before relying on the numbers. Rental income from a minor dwelling is taxable, so factor that into your real return. This is an indicative estimate only, not financial or building advice, and your actual costs and rent may differ.

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11.1%
net rental yield on the build cost
Net rent per year$19,900
Payback period9.0 years
Value added potentialplus possible value lift

The yield is net rent over the build cost; the payback is how long the rent takes to recover the build cost, before any rise in your property value, which a minor dwelling can also add. Rental income is taxable. Estimate only, not financial advice.

How it works

The calculator works out the net rent as the weekly rent over a year less the running costs, then divides that by the build cost to give the net yield. It also shows the payback period, the years of net rent needed to recover the build cost. On top of the rental return, a well-built minor dwelling can add to your property value, which is a further benefit not counted in the yield.

Worked example

A $180,000 minor dwelling renting at $450 a week earns $23,400 a year. Less $3,500 of costs, the net rent is $19,900, a net yield of about 11% and a payback of around 9 years. On top of that, it may lift the value of the whole property.

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Frequently asked questions

Is building a granny flat worth it?

It depends on the build cost and the rent it earns. A minor dwelling can add rental income or house family, and this calculator shows the yield and payback so you can judge whether the return stacks up.

What return does a minor dwelling give?

The return is the net rent, rent less running costs, as a percentage of the build cost. The payback period is the build cost divided by the annual net rent.

What costs come with a second dwelling?

Beyond the build, there are rates, insurance, maintenance and any management, plus the tax on rental income. Consents and connections can add to the build cost, so budget carefully.