Anyone revalued after adding a granny flat

Has anyone revalued their property after adding a granny flat or converting a garage to access equity?

Having quite a bit of experience in this field, I'd say that if you spent for example, $50K on a granny flat from scratch then your property is going to be worth at least $50K more.

If you have removed a double garage (by turning it into a g/flat) then you have devalued the property at the same time as increasing its value and you should look to putting the car accommodation back - even if it is only a double carport - which will still turn up as "2 car" on RP Data.

It all comes back to comparable sales evidence (again). We often find it very difficult getting comparables on houses + granny flats. Sometimes it is OK if you can find 2 or 3 recent ones. Very often though we have to resort to other measures. i.e. If you have a 3brm, 1 bath, 2 car place and you build a 1brm, 1 bath granny flat, then sometimes your comparable sales will be 4brm, 2bath, 1 car properties.

These properties are always in demand from investors looking for high yield and therefore lower (or no) holding costs and also from people with extended families - people with elderly parent/s or married kids saving for their own home and so, much of the value, will derive from this kind of demand.
 
Thanks Propertunity.

I'm planning to convert a double-length garage into a granny flat and will be taking your ideas on board about replacing it with a double carport.

Currently waiting on the survey and drawings.
 
Here in Sydney, with rental returns being quite good, its simply impossible to lose value on a granny flat.

For example, a house worth say $400k. You add a granny flat that costs you say $60k. This will yield a rental return of about $300 p.w. It will take 4 years to pay off the investment from the rental income.

If you continued to rent the property out, you'd see a net rental income increase of say $12,000 per annum. That's $120,000 over the next decade; also great for offsetting the finance (if any) on the property.

If you decided to sell the property, you'd be looking at a price of around $500k for the entire property with the secondary dwelling. Dual Occ's are just very sought after by investors (especially on corner blocks). Either way you cant lose because you'll always see a profit from rent and also from capital growth if/when sold.
 
Here in Sydney, with rental returns being quite good, its simply impossible to lose value on a granny flat.

For example, a house worth say $400k. You add a granny flat that costs you say $60k. This will yield a rental return of about $300 p.w. It will take 4 years to pay off the investment from the rental income.

If you continued to rent the property out, you'd see a net rental income increase of say $12,000 per annum. That's $120,000 over the next decade; also great for offsetting the finance (if any) on the property.

If you decided to sell the property, you'd be looking at a price of around $500k for the entire property with the secondary dwelling. Dual Occ's are just very sought after by investors (especially on corner blocks). Either way you cant lose because you'll always see a profit from rent and also from capital growth if/when sold.

I both agree and disagree with this. I have watched properties with granny flats keenly in my area, and it very much depends on the market whether or not they hold their value. While properties are increasing in prices and yields reducing, a double income property is very much in demand by investors, however during a slump, the value plummets as there are a lot fewer investors in the market.

This does not deter me at all, because I like a good yeild and have not paid a premium for double income properties and am only interested in converting a single income property to a double income one if I intend to hold long term.
 
Granny Flats

Hiya

FYI, my accountant says to value the house before and after Granny Flat conversion for Capital Gains tax calculations further down the road should you sell....



hope this helps!
 
Hiya

FYI, my accountant says to value the house before and after Granny Flat conversion for Capital Gains tax calculations further down the road should you sell....



hope this helps!

Im assuming this is in reference to a PPoR with a granny flat as opposed to an IP with a granny flat?
 
Hi Garbage,
The banks are being very conservative with valuations at the moment, and often discount the value of a bungalow or granny flat.
I'd be ready with a list of good comparables by way of argument.
Cheers, Medine
 
Thanks Propertunity.

I'm planning to convert a double-length garage into a granny flat and will be taking your ideas on board about replacing it with a double carport.

Currently waiting on the survey and drawings.

Hi dreamgirl,

Is there anyway you can extend the garage and still keep 1CAR at the front? I did this and converted the rear into an Office or outdoor BR. it was what I needed at the time.

Regards JO
 
As to value, here is my take. (From personal experience not a banks ;))

I have always had a granny flat in one way or another, detached or attached to my PPOR. I admit I have not sold at both ends of the cycle, yet when I have sold, the Flat has always been an asset. I don't really agree that a house with a granny flat will drop more than any other in the downwards phase of the cycle.

Perhaps what Skater refers to is my belief that dual income properties tend to be over-priced in a stronger market. Therefore, in a slump it seems that their value drops considerably when in reality, the Vendor paid too much for it in the first place.

Paying too much for it depends on the return and we all know that we buy for the long term and not with the expectation that we will need to sell at the bottom of the cycle. :)

Regards JO
 
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Perhaps what Skater refers to is my belief that dual income properties tend to be over-priced in a stronger market. Therefore, in a slump it seems that their value drops considerabley when in reality, the Vendor paid too much for it in the first place.

I agree with you there Jo. The properties with flats are usually advertised as x% yeild and are snapped up by investors IMHO paying way too much for them.
 
Hi dreamgirl,

Is there anyway you can extend the garage and still keep 1CAR at the front? I did this and converted the rear into an Office or outdoor BR. it was what I needed at the time.

Regards JO

Hi JO,

This could be an option. Thanks for your input. That idea hadn't even crossed my mind. Will be discussing it with the private certifier.

Regards,
Jo
 
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