What do people think about this idea.
I live in Ryde, an inner west suburb of Sydney. A 1 br granny flat was on offer the other day for $400pw. The location wasn't even that good. I don't know if they got it but I would think so. This week there's a pretty nice 2br up for $480pw. Anyway the point is they seem to be renting for decent prices.
I know you can get a pretty nice 60sq 2br transportable granny approved & installed for about $100K.
The demographics of Ryde are such that there's quite a few old age pensioners that are living in houses with 600-700 sqm blocks. They love their homes & don't want to move. They're cash poor (especially since the budget) but they're probably not that attached to their big back yards. For some it's probably even a drama having to maintain a large back yard anyway.
There are quite a few blocks that have rear lane access or corner block access.
So my idea would be to approach someone with a suitable block and ask to long term lease (say 5 years) their back yard for say $100pw. I'd fence it off then install a granny flat & rent it for say $400pw. So the numbers would be:
Rent $400pw
Interest + principal 20 years @ 7% $178pw
Depreciation @ 5% $96pw
profit $126pw
gross yield after land lease 15.6%
I know there's a whole lot questions to consider like:
-Does the lease increase or decreases the value of the land.
-What if the owner terminates after 5 years
-Removal costs etc.
Anyway just like to know people's thoughts.
I live in Ryde, an inner west suburb of Sydney. A 1 br granny flat was on offer the other day for $400pw. The location wasn't even that good. I don't know if they got it but I would think so. This week there's a pretty nice 2br up for $480pw. Anyway the point is they seem to be renting for decent prices.
I know you can get a pretty nice 60sq 2br transportable granny approved & installed for about $100K.
The demographics of Ryde are such that there's quite a few old age pensioners that are living in houses with 600-700 sqm blocks. They love their homes & don't want to move. They're cash poor (especially since the budget) but they're probably not that attached to their big back yards. For some it's probably even a drama having to maintain a large back yard anyway.
There are quite a few blocks that have rear lane access or corner block access.
So my idea would be to approach someone with a suitable block and ask to long term lease (say 5 years) their back yard for say $100pw. I'd fence it off then install a granny flat & rent it for say $400pw. So the numbers would be:
Rent $400pw
Interest + principal 20 years @ 7% $178pw
Depreciation @ 5% $96pw
profit $126pw
gross yield after land lease 15.6%
I know there's a whole lot questions to consider like:
-Does the lease increase or decreases the value of the land.
-What if the owner terminates after 5 years
-Removal costs etc.
Anyway just like to know people's thoughts.