Granny Flats and Investment: Is It Worth It?
With the property market getting tighter and tighter, affordable investment opportunities are getting harder to come by. A solution to this is the granny flat, an increasingly popular answer to this problem made by property owners with the aim of boosting their investment option. Does taking on this risk spell reward for those willing to pay for the approval and construction? This article will answer it, as we analyse Granny Flats and Investment: Is It Worth It?
What Are Granny Flats?
Simply put, a granny flat is a small, detached house suitable for 1-2 people, which is built on the grounds of a larger property. The appearance, layout, functionality, and furnishing differs between them and is a large driver of expenditure and investment income. In NSW, these need to go through a council approval process. Below are some examples of the different type of granny flat designs:
What Are the Benefits of Investing in a Granny Flat?
Earn Rental Income with Less Upfront
Compared to purchasing an investment property, granny flats do not require you to take on large amounts of debt. You also aren’t required to pay significant up-front amounts such as stamp-duty or lenders’ mortgage insurance.
Flexible Property Investment Option
Building a granny flat is also a flexible investment. You can earn double the rental income through dual occupancy if you choose to rent out the main property as well. If you have a large primary property and smaller living requirements, you could live in the granny flat, and earn larger rental incomes by renting out your larger property.
Increase Property’s Value
A granny flat can greatly increase the value of a property, with some of these investments providing investors with a 20-25% boost to their original property’s value. Water and electricity meters can be attached to the flat as well, meaning that you do not need to pay more with your bills.
What Are the Costs of Investing in a Granny Flat?
A granny flat can cost around $100,000 – $120,000. The rental income you can earn off this to offset this investment depends on the area and the quality of the granny flat, with it varying from roughly $300 – $500 a week.
A problem that can occur with a granny flat is the lack of privacy between the granny flat tenant and the primary property tenant. This can be rectified through proper placement of the granny flat on the property, or with dividing walls and gardens
Vision Property and Finance’s award-winning team has helped out hundreds of clients with upgrading their homes and boosting rental incomes. If you are weighing up a granny flat, please get in touch with us here, we’d be happy to help.