Didn't know this about granny flats.

So I finished one of my granny flats. Brought on-site, approved by council etc.

I wasn't aware of this. As of 18 months ago, unless it is built directly on a slab it is considered 'transportable' and the bank is advised by valuers to assess it as $0.

There are a few exceptions, but even a house cut in two and brought on site is still 'transportable'.

Turns out the banks had the surprise of repossessing a few properties and finding the owners had driven off with the granny flat.

I'm not particularly fussed. $50k investment for $260/week return. However I won't be doing that again any time soon. And my options aren't entirely exhausted. I can negotiate with bank as I'm only borrowing 80% LVR.
 
Interesting, but not all buildings (whether its granny flat or not) may not be feasible to build on slab and bearers & joists are the only alternative... seems a bit unfair.
 
Interesting, but not all buildings (whether its granny flat or not) may not be feasible to build on slab and bearers & joists are the only alternative... seems a bit unfair.

There was another method, joist wise, but needed to be approved by an engineer as 'this building cannot be moved'.

I mentioned to the valuer I was an engineer and was willing to approve it, he just laughed. I didn't get the joke. My mate then suggested we offer to rig it up with explosives that will detonate if we try to move it in the future as a compromise. He didn't agree with that either.
 
Interesting thread. I'm thinking of maybe doing a GF build in the near future, so thanks for the heads up.

There was another method, joist wise, but needed to be approved by an engineer as 'this building cannot be moved'.

I mentioned to the valuer I was an engineer and was willing to approve it, he just laughed. I didn't get the joke. My mate then suggested we offer to rig it up with explosives that will detonate if we try to move it in the future as a compromise. He didn't agree with that either.

Haha, gold.
 
That's for sharing.
The value thing always gets me .... whether g/flats are built on site or not. From discussions I have had with various brokers I was advised that it is very difficult to access equity from a g/flat regardless. Considering that someone could be spending $100K for an average return and not able to access equity, is it worth it?? I thought the only way I would ever looking at this option is if the g/flat was already in situ and just needed a tidy up.

cheers
MTR:)
 
That's for sharing.
The value thing always gets me .... whether g/flats are built on site or not. From discussions I have had with various brokers I was advised that it is very difficult to access equity from a g/flat regardless. Considering that someone could be spending $100K for an average return and not able to access equity, is it worth it?? I thought the only way I would ever looking at this option is if the g/flat was already in situ and just needed a tidy up.

cheers
MTR:)

I believe at best you receive 80% of the CONSTRUCTION cost back as equity if it meets all criteria.

It is purely a cashflow option. Only reason it works for me is I build them for myself cheaper. I would never spend $100k+ for a granny flat myself. I'd rather buy another place which was my argument from the start.
 
I believe at best you receive 80% of the CONSTRUCTION cost back as equity if it meets all criteria.

It is purely a cashflow option. Only reason it works for me is I build them for myself cheaper. I would never spend $100k+ for a granny flat myself. I'd rather buy another place which was my argument from the start.

Valuation differs from area to area. Its like buying a unit in Chatswood vs a unit Mount Druitt. Same size, different price.

But i do agree that building a granny flat for an equity play is not necessarily the best move.
 
A Case Study:

So valuation came back.

Valuation: $400k (granny flat not included as it was classified as 'transportable').
Purchase Price: ~$318k (all costs inclusive) - in 3 years, far from amazing, but not bad.

If I was to sell it at $450k, I'm guessing I would have a lot of trouble as new buyers would not get the val from the bank.

Say you wanted to sell/buy, what would you do if you wanted to sell a house + granny flat?
 
I just taken on a new client, their previous MB stopped giving the service they wanted. They had purchased in Sydney in 2012, put a GF on the property and wanted to refinance and pull out equity for their next IP. Valuation came in okay except for a paragraph noting the GF was constructed on steel piers and may be wholly transportable in nature and requires an engineer's certificate stating it isn't.

A previous valuation from another valuer/lender did not mention this at all.

We had to go through some hoops but the client obtained a letter from a building certifier that it was not movable as defined by the Local Government Act. It was a standard 'To whom it may concern' letter so I expect the GF building company has dealt with this before. Loan was finally approved. It seems as if lender was not too concerned but as it was noted by the valuer, it had to be addressed before they would approve.
 
I just taken on a new client, their previous MB stopped giving the service they wanted. They had purchased in Sydney in 2012, put a GF on the property and wanted to refinance and pull out equity for their next IP. Valuation came in okay except for a paragraph noting the GF was constructed on steel piers and may be wholly transportable in nature and requires an engineer's certificate stating it isn't.

A previous valuation from another valuer/lender did not mention this at all.

We had to go through some hoops but the client obtained a letter from a building certifier that it was not movable as defined by the Local Government Act. It was a standard 'To whom it may concern' letter so I expect the GF building company has dealt with this before. Loan was finally approved. It seems as if lender was not too concerned but as it was noted by the valuer, it had to be addressed before they would approve.

Yes the valuer called me privately and told me as such. About the engineers approval etc.

It is up to the banks discretion. So it was simply a to whom it may concern huh?

Hmm.
 
Navid, I can hear your brains working from here...:D
I guess you're now looking for a structural engineer that will write you this To whom it may concern letter?

Haha.

I knew about this but I just assumed it was a very detailed process.

You do know I'm an engineer right. :D I'm surrounded by certified engineers.
 
It depends on the area and the GF construction type. A client did a street facing GF (rendered and spent $150k on it) and got all of it back via the valuation.

Also I dare say you just got the wrong valuer. I have never seen valuers make that comment about GF's.
 
Back
Top