build a granny flat or leave as it is?

[seemaraghav]

I bought a house in South west suburb of Sydney(Hammondville). It is corner block and land is 550 sqm.

I bought it for 550k. It will rent as it is for 550 per week. But if we put granny flat on it for 100k then the total rent will be 300+500 = 800 and our total spend will be 650.

But we are confused if spending 100k on granny flat will appreciate the property value by 650 or how valuer will look at this.

As it is sideyard and granny flat tenant will have separate access from the main house it will not affect privacy of both tenants.

I have attached the photo of the lot where we are planning to build the flat. It is the area which we not use.

Thanks in advance.

 

[seemaraghav]

Photos of the lot

 

[belvoir]

Maybe, if you do get $800 a week then that is a very attractive yield for an investor.

From a valuers point of view, probably not. Unless there are other comparable sales of houses/granny flats.

The question you must ask yourself. Can I spend that $100k purchasing another house for say $350,000. If it grows at 5%p.a. $17,500 is it better than a gross rental of $15,600......

 

[nhg]

granny flat actual costs will be more along the lines of $115k.

granny flats in that area are valued at 80c in the dollar of the construction cost. so likely to only increase value by $80k.

higher rental income is great, yet with land that size chances are rent of property at the front and quality of tenant may decrease.

need to look at your end goal. are you after cashflow or capital. if capital i would suggest find a new site and only build on a slow buying year.

 

[gach2]

Notsure about your house+land configuration
It is a bit more timely and costly but what about a dual occupancy (if you can give 250m2 to the granny flat build as complete land you may be able to subdivide as well)

 

[seemaraghav]

Thanks for the advise guys. It made my decision easy.