Granny Flat needs council approval

[Crystal]

Hi everyone,
I was right in the middle of converting the garage of an IP into a granny flat, when a gentleman from the council arrived at my front door. Apparently one of my 'friendly' neighbours had dobbed me in. A disastrous situation for me as my IP would be negatively geared without a second income from a granny flat.
I contacted an experienced local draftsman to discuss the possibility of council approval for my half finished garage/flat.
To my surprise (and his) all the rules and regulations required by council for a dual occupancy will be able to be met but my property.
Plans will be submitted to council within the next 2 weeks and I should have approval 6 weeks later!
Can anyone suggest what sort of property value increase I could achieve with this approval? According to state regulations, after council approval is obtained, my property could be strata titled.
I haven't considered selling part of the property but would strata titling increase the value further?
Thanks for your advice,
Kind Regards,
Crystal

 

[geoffw]

Crystal,

A few thoughts.

First, anything like this really has to be approved. (but sometimes you can get away with things. Obviously if neighbours arenn't too nosy).

Second. It does not have to be strata titled. But if it is not, it may appeal only to investors, and that may limit vale. If it is strata titled, you may get lower value from the main property. As an income producing property, strata fees would lower profits.

 

[Crystal]

Hi Geoff,
Thanks for your reply.
As I do not plan to sell, what action should I take to receive the best valuation from a valuer?
Would council approval suffice to improve value or would strata titling achieve a higher valuation?
Cheers,
Crystal

 

[geoffw]

Crystal,

Pay for advice from a valuer. But get a valuer who understands IPs. Many don't. Maybe even get a second valuation.

Strata tiltling may not well get a higher valuation. But it might. Talk to your vluer first. It would probably lower income (strata title fees, and maybe higer rates).

 

[just do it]

Which council are you dealing with? All this stuff varies dramatically depending on the council.

 

[foxysilvers]

Not exactly sure why you would think a granny flat would add any value to a property...........rental income certainly.

In any property I buy with a granny flat my only considerations are.........is it legal.......is it removable.

Certainly I do not know your market in Sydney but granny flats are strictly controlled in Melbourne and neighbours are usually the policemen.

For a few years I bought and sold granny flats or removable ones anyway. The most I paid for one was $1000 which cost $15000 new. Usually access is poor for the truck and if a crane is required the cost goes thru the roof.
Often I charged to take them away.

Converting a garage into a flat seems like a great idea for your purposes.....ie rental income.......and if its the go in your area what the hell as long as you look at the big picture.....ie what would a potential buyer want.

Cheers...

 

[Crystal]

Hi foxysilvers,
The addition of granny flats has ensured fabulous capital growth for me and enabled me to continue to buy property on a single income. Valuers certainly do (in my experience) recognise the value of granny flats both for the increase in rental income and the increase in value.
I haven't bought or moved any granny flats, have only improved existing structures.
They are quite common in my area and most do not have council approval. I always buy property with good access eg rear lane. Potential buyers/investors would be climbing over each other to buy a property with such a good rental return.

Cheers,
Crystal

PS Please see Daily Telegraph article today regarding granny flats.
The Daily Telegraph , 18-01-03
The surging property market has given a new lease on life to the granny flat, writes NICOLE LENOIR-JOURDAN The granny flat is back. Its shape and function may have changed but a separate, selfcontained unit in a traditional house is as popular as ev...

 

[foxysilvers]

Hey sounds good.........well done!

Without giving your exact location what are the general demographics of the areas that you do these deals.

Cheers

 

[Crystal]

Hi foxysilvers,
Central Coast, NSW, just north of Sydney.
Cheers,
Crystal