Any granny flat success stories?

R

Radicals

I'm in QLD and looking at the idea of adding a granny flat, in future, to the back of my PPOR, living in it, and renting out the main house (potentially).
I live in QLD.

Any success stories where the flat has increased the yield?

I am aware that in QLD at least, for someone to live in the flat, they need to be of the same family in the main dwelling. Is this hard and fast, or can you apply for an exception to this rule?

Cheers.
 
Hi,

In Sydney, it's very easy to put a granny flat at the back yard.

However, I found there are many potential granny flat site in western Sydney are overpriced in the current hot market condition. Hence the rental return is not as attractive as buying 2 units or townhouses.

See below links for some information on NSW granny flat

http://www.planning.nsw.gov.au/Port...docs/Affordable Housing_Fact_Granny Flats.pdf

http://www.grannyflatapprovals.com.au/

There are some experts on the forum who can guide you the process in putting a granny flat at back of your existing house.


I guess the regulation is different up in QLD.

Just wondering how different it is compare to NSW ??
 
The legislation changed in WA. Last year to allow non family members to rent out what they now call ancillary accomodation, maximum size 70 sqm not including verandah or a storeroom, etc. I have just signed up for one,it was not cheap but the council are very specific about what they will allow. It should rent out for market value, maybe $300 pw?
 
The problem with Sydney and Granny Flats is that you don't get the realised cost of building returned in a valuation.

For example:

If the property was purchased for $1,000,000 in the middle ring suburb of Bexley the property as a stand alone in good condition would rent out for approx $550 a week.

Adding a granny flat will improve the cash flow by about $350 (depending if its close to a train line).

Overall the cash flow would increase to $900 gross. Seems good, doesn't it.

However, residential property in Sydney has detached from being valued as a metric of income. It is purely based on comparables. Valuers find it hard to find good comparable for granny flats and so are reluctant to add the cost of the granny flat onto a valuation regardless of the rental income.

In this hypothetical the valuation after one year might come back at $1,100,000 but you have to account for the 10% price growth so in reality the return from the granny flat from a capital investment is 0. Its actually a loss.

You just spent $100k and traded it for an income stream of $18,200 (net $15k). Thats a return of 15% which looks amazing. But again, you are not factoring opportunity cost. You could have used that $100k from the granny flat to purchase another property valued at $400k. If you had done that and the price grew by 10% it would have returned you $40k on your $100k, which works out to be a 40% return.

Overall a granny flat is only a logical upgrade if you can manage to get the cost incorporated into a future valuation or, if you are going to hold the property for a long time and are a passive investor.

A granny flat upgrade in Sydney is a poor cost for deployment of funds if you are paying with cash or equity.
 
Not a Granny Flat, but...........

We bought a PPOR with a second 3 bed home on the same block, all for little over the price of similar blocks with one home on them. They're both now IP's. Purchase price in 2011-12 $260k, Rental income now $660pw.
 
There are some councils in Qld that allow non relatives in granny flats. I'm told Ipswich is one (do your own checks though).
Belvior that is not typically the case.

Done properly a granny fat will value up pretty well. If it is well placed, both properties have privacy you will get a good valuation. It is only when there s little privacy and the original property has negative effects (eg no yard) that valuations suffer.

I've not heard of a negative rainy flat story, especially where yield is concerned.

Where else can you get $300+rent per week for a $100k spend?
 
skater said:
Not a Granny Flat, but...........

We bought a PPOR with a second 3 bed home on the same block, all for little over the price of similar blocks with one home on them. They're both now IP's. Purchase price in 2011-12 $260k, Rental income now $660pw.
Click to expand...

That's a great story!
 
travelbug said:
There are some councils in Qld that allow non relatives in granny flats. I'm told Ipswich is one (do your own checks though).
Belvior that is not typically the case.

Done properly a granny fat will value up pretty well. If it is well placed, both properties have privacy you will get a good valuation. It is only when there s little privacy and the original property has negative effects (eg no yard) that valuations suffer.

I've not heard of a negative rainy flat story, especially where yield is concerned.

Where else can you get $300+rent per week for a $100k spend?
Click to expand...

I actually do agree with Belvoir on this... granny flats can be difficult to value due to lack of comparable sales.

Add on the fact that valuers need to inspect both properties at the same time and give ridiculous inspections times (Mon-Fri 8am to 1pm).... its near impossible to get two unrelated tenants who just happen to be free with 1 weeks notice....
 
Logan for Dual Occ

This is a written reply I got for Logan, QLD..
This draft incorporates dual occupancy that is similar to granny flat that can be rented out 2 unrelated parties.

<quote>
Thank you for your query regarding the adoption of the new Logan planning scheme.

Council will submit the draft scheme to the State government in November 2014, with the intention to adopt this year. However, given the expected turnaround time of new schemes being reviewed and approved for adoption by the State government, we now expect that the new Logan planning scheme will be adopted in the first quarter of 2015
<quote>
 
neK said:
I actually do agree with Belvoir on this... granny flats can be difficult to value due to lack of comparable sales.

Add on the fact that valuers need to inspect both properties at the same time and give ridiculous inspections times (Mon-Fri 8am to 1pm).... its near impossible to get two unrelated tenants who just happen to be free with 1 weeks notice....
Click to expand...

I never said they were easy to value. So valuers can only estimate a value if they have 2properties the same that they can visit at the same time? Really??

How many cases are you basing your opinion on?

A prominent granny flat installer in Sydney begs to differ, based on hundreds of builds.
 
travelbug said:
I never said they were easy to value. So valuers can only estimate a value if they have 2properties the same that they can visit at the same time? Really??

How many cases are you basing your opinion on?

A prominent granny flat installer in Sydney begs to differ, based on hundreds of builds.
Click to expand...

I'm confused now.

I'm saying granny flats are difficult to value due to lack of comparables. You say that you never said they easy to value. Then you say a prominent granny flat installer in Sydney begs to differ. Care to clarify what you are trying to say here?

Also, if the bank requires a full valuation, the valuer must be able to physically access the property (otherwise it would be a driveby/desktop). If a house has a granny flat on it, they would need to access both in order to value it.

While the valuer could (if they wanted to) go value the main house on one day and then on a completely different day come back and value the granny flat - I have yet to encounter any that are prepared to - simply because it is inconvenient to them. In the end, it is possible to line up two unrelated tenants, but it usually takes about 2-3 weeks to achieve this. This has been my own experience over the last few years.

Anyway, recent valuations on house and granny flat will be coming in shortly. I'll see if there has been any value added on (after deducting the organic growth Sydney has had)
 
I've recently had a valuer come back a week later to inspect the granny-flat as they weren't home when they got there. It ended up taking 3 weeks to complete the valuation. The property was purchased with granny flat in place (unapproved) all I did was get the paperwork for the approval. The val came back at $700k based on purchase price of $560k 14 months ago. 25% growth in just over a yr.
 
neK said:
I'm confused now.

I'm saying granny flats are difficult to value due to lack of comparables. You say that you never said they easy to value. Then you say a prominent granny flat installer in Sydney begs to differ. Care to clarify what you are trying to say here?

Also, if the bank requires a full valuation, the valuer must be able to physically access the property (otherwise it would be a driveby/desktop). If a house has a granny flat on it, they would need to access both in order to value it.

While the valuer could (if they wanted to) go value the main house on one day and then on a completely different day come back and value the granny flat - I have yet to encounter any that are prepared to - simply because it is inconvenient to them. In the end, it is possible to line up two unrelated tenants, but it usually takes about 2-3 weeks to achieve this. This has been my own experience over the last few years.

Anyway, recent valuations on house and granny flat will be coming in shortly. I'll see if there has been any value added on (after deducting the organic growth Sydney has had)
Click to expand...

OK sorry to be vague.
I thought you were agreeing with this statement saying granny flats do not value up:-

The problem with Sydney and Granny Flats is that you don't get the realised cost of building returned in a valuation.
 
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