Building a Granny Flat on PPOR?

[kennyboi]

Anyone built a granny flat on their PPOR and rent it out can share their experience?

I am thinking of building one, but not sure about privacy, tax and capital gain. If you can give me some tips, that would be great.

Thanks

 

[Kylie Walsh]

Hi Kennyboi

The first thing you need to look at is if you city council allows granny flats to be built in your suburb. The next thing you need to consider is what would you do if the council changed the rules ie. in a local council recently they changed the rules to say granny flats can now only be rented to someone who is a relative of the person living in the front house.

You also have to consider that you will be limiting your market when you sell the property as not everyone wants to buy as house with a granny flat attached.

You will be subject to capital gains and tax for the granny flat as it will be an investment you are receiving income on. As for privacy, it depends on how it is built and where the access points are etc. to how much privacy you will lose.

A granny flat will cost you around $130,000 to build but will not add any more than that in value to your property. The benefit of a granny flat is the extra cash flow only. Have you thought of other strategies as there are quite a few out there which can create equity and cash flow at the same time.

 

[belvoir]

Hi Kennyboi

The first thing you need to look at is if you city council allows granny flats to be built in your suburb. The next thing you need to consider is what would you do if the council changed the rules ie. in a local council recently they changed the rules to say granny flats can now only be rented to someone who is a relative of the person living in the front house.

You also have to consider that you will be limiting your market when you sell the property as not everyone wants to buy as house with a granny flat attached.

You will be subject to capital gains and tax for the granny flat as it will be an investment you are receiving income on. As for privacy, it depends on how it is built and where the access points are etc. to how much privacy you will lose.

A granny flat will cost you around $130,000 to build but will not add any more than that in value to your property. The benefit of a granny flat is the extra cash flow only. Have you thought of other strategies as there are quite a few out there which can create equity and cash flow at the same time.

10/10 you can close the thread now.

 

[travelbug]

Kylie your first paragraph is true for Qld but not for NSW. They cannot change retrospectively even if they did change the rules for future builds.

I do not think a granny flat would detract from a sale in the future (unless it takes up the whole yard).

The balance needs to be right.

Whether it values up is subjective also. Some value up, others don't. So I wouldn't say it's for cashflow ONLY. I've seen some crazy prices in Sydney of places with granny flats.

 

[belvoir]

Kylie your first paragraph is true for Qld but not for NSW. They cannot change retrospectively even if they did change the rules for future builds.

I do not think a granny flat would detract from a sale in the future (unless it takes up the whole yard).

The balance needs to be right.

Whether it values up is subjective also. Some value up, others don't. So I wouldn't say it's for cashflow ONLY. I've seen some crazy prices in Sydney of places with granny flats.

You are correct out about retro changes so probably a 9/10 post but...

The consideration that goes through peoples head no is that a property with a granny flat demands a premium, why pay a premium for an average house when you can move to the next better suburb and get a better home for the same price.

Long term though they will be in demand as housing demand increases from boomers who still have their kids at home into their 30's.

 

[Big Dave]

Have you thought of other strategies as there are quite a few out there which can create equity and cash flow at the same time.

Are you able to list a few so I know what to search please?

 

[Sexyv40]

anyone done one recently in Melbourne, looking to add a modular style one that we can use for overseas students.

Thanks