Determining Granny Flat Potential

[DennisLeung]

Hey guys,

Just wondering if anyone has a general checklist of things to consider when looking at houses to buy to build a granny flat in. Currently I have:

- Wide frontage (more than 12m)
- Land Size (450m2 or more)
- Easements (not sure what is required in terms of this)
- Sewerage pipes (not sure what is required in terms of this)
- Slope (can't be too steep?)
- Land zoning?
- Contract of sale details

Currently looking at a few properties for sale, most of them meet the frontage, land size requirements but I'm not sure of the others. And some of them have multiple huge trees in the backyard. Does anyone have the lowdown on which councils will approve tree lopping for the purposes of granny flats, or should we just avoid ones with tree altogether?

Thanks

 

[BWebTV]

Depends what state you are in. In NSW, it's easier of course but "multiple large trees" are going to be a problem wherever you are.

 

[Singo]

Brazen has given a checklist "Serge's Granny Flat Friendly Property Hunting Guide"

http://somersoft.com/forums/showthread.php?t=90830

 

[somer_hut]

on a rectangular block. after putting the GF right behind the main house...there is 12.4 metre between back wall of front existing dwelling and GF wall...

is that good for privacy and give a bit of space to both front house and GF.

what are your thoughts...

how less gap would be too less or cramped up?

somerhut

 

[somer_hut]

One other quick question. costs being same...cladding or blue board finish for exterior?

Any preference and what would be better?

somerhut

 

[Tyla]

Sorry to sidetrack a bit from OP's thread. I have been thinking about picking the brains of experienced investors here about the numbers for GF.

What things should one consider before going GF path in NSW? If you have to choose one from sub-dividing, developing 2 or more townhouses or GF, is there usually a stand out performer or does it all come down to risk profile and experiences?

Considering a GF costs 80-100k and the bank val after GF may not increase significantly, for the rent of $250, it will take an investor more than 10 yr to breakeven. So do you normally start considering GF after you have ruled out any possibility of building duplexes, etc for next 15+ years, for example?

I appreciate any comments and am happy to learn from veteran investors

Thanks in advance

Tyla

 

[brazen]

As an investor and 'approval guru' I can reveal some interesting stats based on over 200 granny flat approvals annually as follows:

1. My investors have reported post-development valuations as little as 60% and as high as 120%. Interestingly, this year I have yet to see an investor (myself included) report valuations at <90% of costs. I'd say this is due to the increasing prevalence for these types of valuations in NSW. Even rural centres like Newcastle have seen a surge over the last 3 years. The Illawarra not so much yet.

2. The cost to buy land with subdivision potential (in Sydney) is always much higher as professional developers tend to scamper for these types of lots.

3. The legals costs for subdivision/strata is around $40,000 in my experience. The legal costs for a secondary dwelling are $0. This is a much lower risk investment.

4. Developing for townhouses/villas/duplexes carries higher risk and much higher construction costs but has much higher capital-growth potential. It IS very easy to get the costs wrong though, especially on difficult sites.

4. Many of the investors I work for are now doing their 5th and 6th granny flat developments and they genrally have three different profiles/strategies:

(a) Maximise capital growth by buying in more expensive suburbs. These people are usually very high income earners.

(b) Generally disregard capital growth because they want volume and they generally have a long-term plan. These investors are usually younger (<40 yrs old).They also express an intention to never sell. They have planned for retirement with multiple dual rental-incomes being their vehicle for that strategy.

(c) A mixture of the two strategies above. e.g. One property in Blacktown and one in Ryde or Manly etc.


P.S. I'm personally of type (c) with a mixture of lower and higher capital growth areas.

P.S.S. As Singo wrote (above), I've written a thread (and articles) on what to look for when searching for a "Granny Flat Friendly Property". I always say that creating privacy and separation betwen tenants is vitally important. The following guides clearly spell out what to look for in order to create an attractive property for tenants.
http://somersoft.com/forums/showthread.php?t=90830 and
http://www.grannyflatapprovals.com.au/granny-flat-friendly-property-guide and
http://www.grannyflatapprovals.com.au/why-granny-flats-are-free

These guides are intended to help people become much better 'property hunters'. I see too many people grabbing lots which are nice and wide but have, for example, only 12 m from the back door to the back boundary. Makes me cry.

Brazen.

 

[Tyla]

As an investor and 'approval guru' I can reveal some interesting stats based on over 200 granny flat approvals annually as follows:

1. My investors have reported post-development valuations as little as 60% and as high as 120%. Interestingly, this year I have yet to see an investor (myself included) report valuations at <90% of costs. I'd say this is due to the increasing prevalence for these types of valuations in NSW. Even rural centres like Newcastle have seen a surge over the last 3 years. The Illawarra not so much yet.

2. The cost to buy land with subdivision potential (in Sydney) is always much higher as professional developers tend to scamper for these types of lots.

3. The legals costs for subdivision/strata is around $40,000 in my experience. The legal costs for a secondary dwelling are $0. This is a much lower risk investment.

4. Developing for townhouses/villas/duplexes carries higher risk and much higher construction costs but has much higher capital-growth potential. It IS very easy to get the costs wrong though, especially on difficult sites.

4. Many of the investors I work for are now doing their 5th and 6th granny flat developments and they genrally have three different profiles/strategies:

(a) Maximise capital growth by buying in more expensive suburbs. These people are usually very high income earners.

(b) Generally disregard capital growth because they want volume and they generally have a long-term plan. These investors are usually younger (<40 yrs old).They also express an intention to never sell. They have planned for retirement with multiple dual rental-incomes being their vehicle for that strategy.

(c) A mixture of the two strategies above. e.g. One property in Blacktown and one in Ryde or Manly etc.


P.S. I'm personally of type (c) with a mixture of lower and higher capital growth areas.

P.S.S. As Singo wrote (above), I've written a thread (and articles) on what to look for when searching for a "Granny Flat Friendly Property". I always say that creating privacy and separation betwen tenants is vitally important. The following guides clearly spell out what to look for in order to create an attractive property for tenants.
http://somersoft.com/forums/showthread.php?t=90830 and
http://www.grannyflatapprovals.com.au/granny-flat-friendly-property-guide and
http://www.grannyflatapprovals.com.au/why-granny-flats-are-free

These guides are intended to help people become much better 'property hunters'. I see too many people grabbing lots which are nice and wide but have, for example, only 12 m from the back door to the back boundary. Makes me cry.

Brazen.

Thanks for the info, Brazen. It's really helpful.

Cheers

Tyla