Are Granny Flats a Foolproof Investment?
- Thread starter missgreeneyes
- Start date
Im with Sunfish.Most peoples backyards are their own space under a lease.Would not happen if i was your tenant.
I didn't reduce the rent in fact I increased it by $10 after eveyrthing was finished.
Why would any tenant agree to that?? Does not add up!
just a movement in the market I would guess
holding off too
I have been looking at doing this for ten months but have the same reservations as this. i worry about degrading the main property. I also think and indeed know that the rent on the front property would go down alot more than thirty dollars. My house would rent for $450 but I think it would only rent for $350 if I put a granny flat in back yard. Why would someone pay only $30 less and lose the back yard, the privacy etc. I am still thinking about it but I am apprehensive. I think they are great if it is a big corner block and has completely separate access but otherwise it is a bit risky. It's great to look at it from all angles. The products themselves that I have seen are lovely but it is about the investment stacking up???
I have been looking at doing this for ten months but have the same reservations as this. i worry about degrading the main property. I also think and indeed know that the rent on the front property would go down alot more than thirty dollars. My house would rent for $450 but I think it would only rent for $350 if I put a granny flat in back yard. Why would someone pay only $30 less and lose the back yard, the privacy etc. I am still thinking about it but I am apprehensive. I think they are great if it is a big corner block and has completely separate access but otherwise it is a bit risky. It's great to look at it from all angles. The products themselves that I have seen are lovely but it is about the investment stacking up???
Im currently working on an Interactive Approval Guide so you can enter your propertys' particulars and it spits out your aproval options + pricing
The html coding is proving to be quite difficult
Happy hunting.
That would be worth it's weight in gold.
You have no idea (well you probably do
) the run around I have been getting this last few weeks. FINALLY sorted and making headway.
I think granny flats CAN be a great idea but it doesn't suit all situations. Many people just think "put a granny flat in the backyard, solve all my cash flow worries" without doing the sums.
For example if you build a granny flat costing $100K on a property worth, say $280K. It may be worth $350K (not normally $380K) so a capital loss there.
Again, assuming a $100K build with a rental return of $300pw.
So minus managemrnt fees (there may be other charges also but lets just kerep it simple) so you clear $270pw = $14,200pa.
First year costs you $6,000 in interest (if you're lucky) so you've made $8,200. You use this to pay down the loan each year. Even with rent increases it's going to take over 7 years to pay down the loan from the rent. THEN you start making money. I haven't taken depreciation into account so it would be shorter. By how much?
Correct me if I've missed anything or I'm mistaken. Just guessing figures. Of course some people get them built for less and if you are in a good area you'll get more rent.
Thanks everyone, especially brazen.
It's given me alot to think about.
I never thought about it from the perspective of downgrading the value of a rental house by 'taking away' the backyard and 'privacy'. I think I'm bred into 'apartment' mentality as I'm a unit-owner.
I was thinking more along the lines of, say, a 350k property with a 250k mortgage. Let's say for that price you own an apartment renting for $400.
Or you own a house worth $250k in Penrith, that you currently rent for $300-400.
So you build the granny for $100k.
Then rent it out for $200-250.
So it seems, for the same capital outlay, you are getting more in rental return?
It's given me alot to think about.
I never thought about it from the perspective of downgrading the value of a rental house by 'taking away' the backyard and 'privacy'. I think I'm bred into 'apartment' mentality as I'm a unit-owner.
I was thinking more along the lines of, say, a 350k property with a 250k mortgage. Let's say for that price you own an apartment renting for $400.
Or you own a house worth $250k in Penrith, that you currently rent for $300-400.
So you build the granny for $100k.
Then rent it out for $200-250.
So it seems, for the same capital outlay, you are getting more in rental return?
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Granny flat dunce question
Are all councils in NSW allowing them under SEPP?
I really liked the 2 storey one that Serge (with a bit of doodling from me) came up with. Serge how much was the end cost on that?
Are all councils in NSW allowing them under SEPP?
I really liked the 2 storey one that Serge (with a bit of doodling from me) came up with. Serge how much was the end cost on that?
Granny flat dunce question
Are all councils in NSW allowing them under SEPP?
I really liked the 2 storey one that Serge (with a bit of doodling from me) came up with. Serge how much was the end cost on that?
No.... + if the house is part of certain flood zone, bio-hard, fire zone etc it may not fall under SEPP as well..
Granny flat dunce question
Are all councils in NSW allowing them under SEPP?
I really liked the 2 storey one that Serge (with a bit of doodling from me) came up with. Serge how much was the end cost on that?
Council's have nothing to do with it- in fact they're totally bypassed ...except for:
1. They're ability to charge Section 94 Contribution Fees
2. They're ability to randomly inspect any approval they deem worthy of their scrutiny
3. They're ability to police any construction infractions, like dumping mud on road etc.
They cant stop the development, but they can certainly make it more expensive. many in my profession feel that Council's are 'lashing out' at the State Government for taking the approval power away from them..your thoughts?
That 2-bedroom granny flat has been scrapped for now- client has changed his mind.
As I said in another thread, they may claim it's about the nasty state government taking their power away, but in reality it's about the loss of income from doing DA assessments.
Same thing with the Housing Code.
Hi Mick,
Flood Zone- Can be approved under the SEPP as long as the structure is not built in:
(a) a flood storage area,
(b) a floodway area,
(c) a flow path,
(d) a high hazard area,
(e) a high risk area.
3.36C Development standards for flood control lots
Bush-Fire Zone- Can be approved under the SEPP as long as the property is not in:
(a) A Flame Zone
(b) BAL-40
3.36B Development standards for bush fire prone land
http://www.legislation.nsw.gov.au/maintop/view/inforce/epi+572+2008+cd+0+N
Bio-Hazard- Ive never heard of this.
Wow Councils here would be freaking out to lose that control.
Shame about the 2 storey granny flat being scrapped. I loved that idea for a small footprint.
Yea, he changed to a single-storey, not becasuse of the price (it was around $95,000 quoted) but because we were able to do a garage-conversion instead.
Council's have always been difficult. Prior to 2009 I did 99% of jobs as DA/CC Applications. The approval process was so subjective that I often had to 'time' my enquiries to ensure I wasnt getting an assesment officer on a bad day (Monday mornings are bad)...you literally have to be an expert tactician and understand how to be extremely passive to get something done. Its also a mission to get calls returned or the same answer twice.
DA and CC is just way harder and so unpredictable. The SEPP has made it so much easier, not so much in the submission material (although that, too is easier now) but in knowing the path to fast, efficient approvals for your client.
God Bless the SEPP's!
..But now Councils are biting back with S94 Contributions on what is literally termed "Affordable Housing.."
Its nuts when you consider the housing shortage and that Council's hoard the contributions anyway.
Hi Dave,
To be classified as a 'secondary dwelling' (granny flat- Class 1A under the BCA)) the structure must have cooking facilities hard-wired (or gassed) into the infrastructure. If not, its not a granny flat but a 'studio. Studios are habitable buildings (Class 1A) as well and they are subject to BASIX, but they are not 'habitable dwellings'. i.e. They cost just as much to build (sq m to sq m)but are less valuable.
A structure with a toilet/basin/shower and a bare frame can also be classified as just a 'shed' (Class 10A under the BCA) if you can find a blurry-eyed certifier. They are not subject to BASIX (energy efficiency) requirements and are only good for storage and the bathrom is supposed to only be used for a quick shower after your fishing trip, for example. You cannot habitate these structures.
In my opinion, you'd be nuts to build a self-contained unit (attached or detached), say for the purposes of a party-room, a studio or pool-room etc and not get it approved as a granny flat. This is simply because they cost pretty much the same to build and granny flats are much more valuable as an end-product than a studio or shed.
I hope that made sense?
Brazen.
Yep sure does thanks. I have found a property with a garage thats just ripe for being made a GF and already has 2 rooms built.
The area it is in could be better yield by making it a 2br and using the house kitchen (it would be leased as a whole property to one head tenant) so losing a bedroom to make a kitchen/lounge would not add any rental value.
But if its required then thats what required. Thanks!
The area it is in could be better yield by making it a 2br and using the house kitchen (it would be leased as a whole property to one head tenant) so losing a bedroom to make a kitchen/lounge would not add any rental value.
But if its required then thats what required. Thanks!
Sorry, is this garage attached to the main dwelling or detached from it? If it's detached, wouldnt it be a good idea to convert it into a GF?
Detached. Its currently 2 rooms and a bathroom, being used as addtional bedrooms/teenage retreat from main house.
It could certainly become a proper GF, would just mean losing one of the rooms into a lounge/kitchen. It could also be continued to be used as bedrooms by a head tenant, but as the house is currently owner occupied, I would like to ensure that its at least legal and insurable before it gets rented out to a third party.
It could certainly become a proper GF, would just mean losing one of the rooms into a lounge/kitchen. It could also be continued to be used as bedrooms by a head tenant, but as the house is currently owner occupied, I would like to ensure that its at least legal and insurable before it gets rented out to a third party.
