granny flat add value?

[Propertunity]

If the valuer uses either of these methods, there seems to be little chance they will value the property at less than the purchase price + the cost of the granny flat, which is all I really need.

Ali, that's not necessarily the case. i.e. the RE market may have fallen since you purchased initially, for example.

...... I don't want the GF to reduce the total value either, because it may limit the market of potential buyers to investors only. Cheers Ali

The GF will not reduce the value - unless you do a really awful job of placement or you don't blend the styles of the new build with the existing house.

It is a fallacy to say that houses & granny flats only appeal to investors. There are many OO situations where they want exactly this too. Here's some examples:
1. Families with an elderly relative (or ganny etc) that can live independently, but who they want to live close enough to, to keep an eye on in case of a fall or ill health.
2. Older teenage son or daughter still living at home but wanting to live separately and do their own thing, especially if they come home late night/early morning.
3. People who work from home and need a bigger home office than 1 bedroom in the house can supply.
4. Retirees who are self-funded but who could do with the additional income from the granny flat.
......and so on.

 

[Rolf Latham]

on the finance side, pls be aware that some lenders dont like em above 80 %.

Unless ATTACHED, lenders that use WLMI as an example wont usully insure them

ta
rolf

 

[devank]

The GF will not reduce the value - unless you do a really awful job of placement or you don't blend the styles of the new build with the existing house.

Does it mean a brick granny flats would be a better choice for a brick house?

 

[Propertunity]

Does it mean a brick granny flats would be a better choice for a brick house?

Yes & No.

For instance, if your brick house has some cream coloured hardiplank infill here and there, then a cream coloured, all hardiplank granny flat might work visually.

But if you are doing all brick in both house & flat, and you can't match the colour & type of brick, then the mismatch would look pretty dreadful.

 

[ali]

on the finance side, pls be aware that some lenders dont like em above 80 %.

Unless ATTACHED, lenders that use WLMI as an example wont usully insure them

ta
rolf

Hi Rolf, that is interesting - it is obviously not going to be as simple as plonking on a GF and reaping the (rental) rewards. I am not sure how
I am going to finance the GF build yet but I was hoping to borrow against the GF, sort of like a construction loan.
Cheers Ali

 

[brazen]

Hi Rolf, that is interesting - it is obviously not going to be as simple as plonking on a GF and reaping the (rental) rewards. I am not sure how I am going to finance the GF build yet but I was hoping to borrow against the GF, sort of like a construction loan.
Cheers Ali

Hi Ali,

Here in Sydney you can't go wrong from what Ive seen. Ive done approval + build for over 80 DETACHED granny flats in the last 12 months and I can only tell you what my investors are telling me:

1. The value of the property has always increased by at least what the thing costs to build
2. The rental income will pay the loan off in about 5 years; then it's all profit + increase property value with the GF from there onwards.
3. Construction Loans arent hard to get if you have min. 20% equity in the property.

The central coast probably has quite a few unapproved granny flats due to it's 'weekender' lifestyle. An approved granny flat is a good investment no matter where you are Id imagine. The additional bonus that the cost of a granny flat (less than $100k) is a relatively small investment versus say a duplex investment and takes only a few years to rake 100% income from.

 

[ali]

Hi Brazen, thanks for the reply. I have been reading your posts for a while now, and I guess you would be the resident GF expert, so what you say is reassuring. We did buy the block for it's granny flat potential in an area with a very tight rental market and my figures show the GF will pay for itself and outgoings on our other IP (the existing house on the GF block should pay for itself straight away anyway). I think because of the land value where we bought, a granny flat makes more sense than spending more on a "real" house build. Also, the new SEPP is a real opportunity in my opinion.
Cheers, Ali

 

[robbiec]

Hi Ali,

If you are still thinking of the granny flat option, I suggest building it on piers, bearers and joists. This will allow you to lift the GF and move it onto a truck at a later stage and and transport it to another site, or even sell it to another investor looking for something similar. It sounds like you are land banking and waiting for the right time to develop something on the block.

 

[brazen]

Hi Ali,

If you are still thinking of the granny flat option, I suggest building it on piers, bearers and joists. This will allow you to lift the GF and move it onto a truck at a later stage and and transport it to another site, or even sell it to another investor looking for something similar. It sounds like you are land banking and waiting for the right time to develop something on the block.

This^ can be a good choice but 2 things to note:

1. The SEPP says that the building cant be more than 3.8m from natural ground to top of ridge- any height above this has to be TRIPLED and added to the 3m rear setback. Now, most buildings (on slab) are 2.7m + ridge height (22 degree pitch)= approx 3.8m. Putting the building on bearers means adding at leat 600mm to this height. As per the SEPP, this means increasing the rear setback by triple that= 4.8m to the rear boundary instead of 3m. Thats a lot on most sites.

2. Transporting a building over 4m wide means cutting it in half and taking the roof off, then rejoining it at the destination. This costs more $$
Lastly, a gabled roof is better for transporting versus a hipped roof (for recutting).

Hope this helps.

 

[ali]

Hi Ali,

If you are still thinking of the granny flat option, I suggest building it on piers, bearers and joists. This will allow you to lift the GF and move it onto a truck at a later stage and and transport it to another site, or even sell it to another investor looking for something similar. It sounds like you are land banking and waiting for the right time to develop something on the block.

Hi RobbieC. You're right, we are land banking and hoping in the future it will be worth developing once values improve and it is a great idea building something easy to move down the track. Especially as the block has excellent street access to get a truck and crane in. I guess from Brazen's comments following your post there will be issues with this approach that I need to investigate.

Thanks for your advice, and thanks too, Brazen. BTW Brazen, do you do work on the Central Coast as well as Sydney?
Cheers Ali

 

[brazen]

Thanks for your advice, and thanks too, Brazen. BTW Brazen, do you do work on the Central Coast as well as Sydney?
Cheers Ali

Approval: Yes
Building: Maybe.
We have to either use one of our builders (costs more 4 daily travel) OR we find you one locally.

Serge.

 

[Cartoon]

Brazen, got any job going?

 

[brazen]

Brazen, got any job going?

heh hi Cartoon,
I just hired a draftsperson to take care of my other work, so that I can concentrate on the granny flat projects more. Id love someone with my knowledge to answer the phones but I really don't have the time to train someone + I can't justify that cost at the moment.

P.S. A Private Message might've been wiser, no? Thanks for asking though

 

[virgo]

Jobs?

Hiya

I know for a fact that Brazen just came back from Thailand before he started my job and left midway to go to Hawaii before he finished my job...

Business must be good eh? Brazen...one of your recommended builders mentioned he should have done draftsmanship ha ha!

 

[brazen]

Hiya

Business must be good eh? Brazen...one of your recommended builders mentioned he should have done draftsmanship ha ha!

I went to Thailand in March for 6 days for my HONEYMOON and Hawaii in August for 8 days- I visited my relatives. I think I spent less than $3,000 on that entire trip. Actually until this year, I hadn't been overseas before. Apart from that I get NO other holidays all year. Sorry lol.

I also work 16 hours a day.

I think this thread just went silly, no?

 

[virgo]

Business

Hi Brazen

Congratulations ! you are but a newly married man!

BTW, no sarcasm implied at all in my post, mate; i just want to say good on you that your business is booming; i for one know you work very hard and go out of the way to do the best for your client (me included!

 

[brazen]

Hi Brazen

Congratulations ! you are but a newly married man!

BTW, no sarcasm implied at all in my post, mate; i just want to say good on you that your business is booming; i for one know you work very hard and go out of the way to do the best for your client (me included!

It's ok virgo. But for the record my business isnt booming. It's a steady struggle like the rest of us. Remember I just get paid to design and get the approvals + I organise everyone and help my clients by keeping the bast**ds honest. I dont personally make a cent for the building works.

Two days ago i went to a job in Padstow. The clients live with the husband's MIL. They were about to give me about $3000 but were worried that she (the MIL) could possibly kick them out after they build the new granny flat. So I refused to take their money until they are 100% sure their investment is safe. I told them to sleep on it until they are 100% sure they want to build. My point is that Im not trying to 'boom'. I work hard for my clients. They can see it. I've always worked hard. So a once in a lifetime honeymoon and trip to see relatives is hardly proof of a 'booming' business.

Im just a little offended at the insinuation to be honest. I think anyone would.
Id prefer that my private life also not be posted in a public forum.

Nonetheless, I really think we should just steer this back on topic and leave my business out of it.

Last relevant post was about designing granny flats so that they are transportable in the future...

Im actually surprised noone has bought an existing house and had it cut/transported to a new site. I wish I took photos when I did mine years ago. It looked awesome travelling down the Hume Hwy..they actually hit a parked car and had to pay $5000 for the damage to it

 

[devank]

My ANZ manager said that the LVR will have to come down to 70% if I'm going to build a granny flat!
That means for example:
80% of a 600K single dwelling = 480K loan
70% of a 700K same above house + granny = 490K!
That means the bank can give only 10k!
Something is not right

 

[Propertunity]

That means the bank can give only 10k!
Something is not right

It might be time to flip ANZ, "the bird" and get yourself a broker that can get you a loan from a more reasonable lender.

 

[Rolf Latham]

My ANZ manager said that the LVR will have to come down to 70% if I'm going to build a granny flat!
That means for example:
80% of a 600K single dwelling = 480K loan
70% of a 700K same above house + granny = 490K!
That means the bank can give only 10k!
Something is not right

Thats just ANZ : )

you can get up to 90 % lvr subject to the usual rules with a bunch of lenders

t
arolf