Granny flat option for my IP in Birmingham Gardens - Seeking your Feedback

Hello,

I am soon to settle on an IP purchase in Birmingham Gardens (Newcastle). I felt I paid good price for property, currently negatively geared but want to make it cash flow positive through Student accommodation and Granny Flat.

If I move very quickly it is likely that I can build in time for the student year - March - Dec. Current Tenants lease also runs out at about this time, so it feels timing wise that I should make a move now. The income it generates will help my overall portfolio position. My only concern is the current tenants freak out and leave or demand a massive rent reduction.

I am getting bogged down with a number of choices I have to make between 2 - 3 bedder, positioning on the block, investment return and concerns of how it may impact the value of the property.

As you can see in the attachments it is a corner block. In effect if I put up a dividing fence the block could look subdivided. There is enough grass area remaining for the main building to have a mini backyard.

I spoke to the rental agency and they suggested a three bedroom in general is more attractive for a family and potentially greater income if leasing to students.

I have attached drawings of the two proposals.

1) 3 bed 60 Sqm, will leave about a 1.8m gap from the main building (which has an extension on it. this makes me nervous as i wonder how sunlight may be blocked to the back of the house and also for the feeling o the two rooms in the extension view suddenly become a fence or the side of a granny flat.

There is also floor plan issue with no easy access to a backyard for the granny flat.

- Cost is likely to be $122,000 (all inclusive, with demolition of current garage)
- Rent, conservatively $320 - $360pw for the house rented to a family. For students maybe $150 - $160 Per room =$450pw

2) 2 Bed 60 Sqm, provides a much bigger space between the house - 3.18 meters. Has a nice layout with two toilets (Overkill) but direct access to a back yard.

Concern is that
- Cost is the same if not more. $123,000
- Rent, i'm unsure for a family but potentially $180pw for students *2 =$360pw


I'm pretty confused at the moment and don't know how i should proceed. There is good things and bad things about each option but i am quite turned off by the price of the two bedder.

Another issue is car parks.

With the forced 3 meter set back from the back fence, do you see any issue. With a car parking in that 3m gap and potentially turning it into a carport? also i have to consider a car park for the main house which if left in it's current position will be a bit odd if the granny flat is fenced off from the main house.

I could try to make a space on the front lawn of the house that is right on the roundabout like every other house on the roundabout except mine. I'm sure council will not be of much help to me here.

These are Ian Cubbit's building plans adn they have been excellent in helping me to get to this stage. I liked the look of 'Affordable granny flats designs and contacted them today but they don't do Newcastle. Other providers in Newcastle haven't been so helpful.

Your experience, insight, guidance will be much appreciated as i'm truly lost at the moment.

Thank you
 

Attachments

  • Site 3 bedroom Bottlebrush 60m2.pdf
    588.9 KB · Views: 122
  • Site 2 Bedroom Banksia 60m2.pdf
    560.6 KB · Views: 108
  • 3 bEDROOM BOTTLEBRUSH FLOORPLAN.pdf
    225.4 KB · Views: 98
  • Banksia 2 Bedroom Option 1 60m2.pdf
    211 KB · Views: 93
  • Property Photo.jpg
    Property Photo.jpg
    112.1 KB · Views: 135
Rent reduction, don't fuss too much about it.
I've built a granny flat while tenants lived in the existing house. Dropped the rent by $20 ($430 to $410 during construction).

3 bedroom 60sqm is really tight. It will appeal to students sharing accommodation. It don't think it will appeal to any other demographic. You will also need to cover water, electricity, internet if you are considering renting to students.

2 bedroom is my preferred option because it widens the demographic even though the potential rental income is less (assuming you can always keep each room rented out).
 
I'm not actually convinced that students would really want 3 bedrooms crammed into a 60sqm space. I would go for 2 bedrooms, most people want some space away from their bedrooms IMO.
 
Thanks,

Any concerns about the cost of the two bedder when the return on the 3 bedder is likely to be higher? Or the valuation of the property will be way less than what i spend on the 2 bedder.

I do have the option to shrink the two bedder to 50sqm and save about $8,000.
 
There are plenty of GF designs around. I'd probably try to find a 2br 60sqm option with access to the garden & without the cost / space of 2 loos. For students I think ideally you will separate the bedrooms for privacy reasons. 60sqm isn't huge so you really want to minimise wasted space.

I believe there's a new chunk of student accom being built for Newcastle Uni so it'd be worth checking that out if you can, you want a point of difference - why will people rent yours instead of someone else's?

I personally don't think students give a toss about parking unless the street is a nightmare for parking.

Here are a couple of other design options. Serge posts on this forum. (I'm in no way affiliated).

http://www.grannyflatapprovals.com.au/granny-flat-designs/2-bedroom/the-susanna

http://www.grannyflatapprovals.com.au/granny-flat-designs/2-bedroom/the-stephen
 
Thanks,

Any concerns about the cost of the two bedder when the return on the 3 bedder is likely to be higher? Or the valuation of the property will be way less than what i spend on the 2 bedder.

I do have the option to shrink the two bedder to 50sqm and save about $8,000.

Its still 60sqm. The cost is an extra wall.

If you build a 50sqm, i think this is something you will regret in the long term. 60sqm is pretty small as it is.

Unsure about the valuation as I've never purposely built a 3 bedroom granny flat that has no living area and applied for a valuation.

Also 2 bed + 1 bath is sufficient. If you want, split the shower/toilet so they can be used independently. But for me space is a premium so I've always gone for combined bath/toilet.
 
The car park is to provide flexibility to rent to family or others than just students. It would also allow me to leave the current car park space devoted to the main house.
 
Its still 60sqm. The cost is an extra wall.

If you build a 50sqm, i think this is something you will regret in the long term. 60sqm is pretty small as it is.

Unsure about the valuation as I've never purposely built a 3 bedroom granny flat that has no living area and applied for a valuation.

Also 2 bed + 1 bath is sufficient. If you want, split the shower/toilet so they can be used independently. But for me space is a premium so I've always gone for combined bath/toilet.

This two bedder design is pretty fancy, As the laundry has it's own space combined with the 2nd toilet and access to the backyard.
 
Fancy usually (not always) comes at the expense of usable space.
Don't worry about what the outside looks like, its about the usable space of the inside.

The 2 bedder you've posted up, where does the lounge and tv go? From there, what is the gap between the sofa and the tv?
 
Fancy usually (not always) comes at the expense of usable space.
Don't worry about what the outside looks like, its about the usable space of the inside.

The 2 bedder you've posted up, where does the lounge and tv go? From there, what is the gap between the sofa and the tv?

There is a decent amount of room for the Lounge and tv. The display suit had a dining table opposite the front door and the lounge to the left of it facing the tv on the wall.

Three bedder had a dining table and lounge, but the lounge was really too close to the wall for there to be a normal tv.
 
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