My Ugly Demountable Granny Flat Experiment

[nhg]

As requested.

Did this in Penrith Council under Section 64 (Manufactured Building)
Two demountables, did a lot of the labour work myself. I would never do this again but it was a good experiment, learnt a lot.

Cost: ~$60,000 ALL inclusive (eg. council fees, engineering, architecture, drainage, electrical, etc).
Rental: Was just told by agent $260/week incl. water, but I'm happy with $240/week.
Putting it up for rent in 2 weeks.
ROI: ~21-22% (land not included).

Photos don't do it justice, it turned out MUCH nicer than I expected.
These are the final photos, the before photos are hideous.

I had to reinforce the floor and did it as a retrospective DA eg. no prior council approval. Fired a couple of project managers and was told by several DA people it was impossible, until I found my guy who does all the council stuff for me. Made a few mistakes along the way but pretty happy with knowledge growth and, well end product has the ROI.

Only thing I would do different would be to bolt it down to a slab, this way I could get the bank to revalue the property as it wouldn't be movable (got an engineer trying to find their way around this one for me atm).

Please let me know your thoughts or ask questions if you're interested to know more.

 

[nhg]

And last of the final pictures.

Can't see the lawn, but it is 'landscaped'.

The land sloped backwards, to avoid buying an easement I found an engineer who convinced council to let me do a detention basin as per their legislation. Cost me <$3500 to build that drainage system incl. plumber, skip bins to move 12cubic metres of soil, aggregate, pumps and tanks.

Much cheaper than the estimated $15,000 I thought I was gna spend.

 

[Paul@PFI]

Is the valuation lower after that workshed was left behind by the builder ?

Seriously...Did you get same REA to give opinion on value before and after ?? I would be interested in the effect on value. Many buyers don't like a pool. Even more wouldn't like this I expect.

 

[nhg]

Is the valuation lower after that workshed was left behind by the builder ?

Seriously...Did you get same REA to give opinion on value before and after ?? I would be interested in the effect on value. Many buyers don't like a pool. Even more wouldn't like this I expect.

I don't quite get the question. If it is what I think you're asking. No change in valuation. I've had it valued by 2 banks. It is a rental. Total expenses were $390k (all inclusive), rent ~$630/week.

I paid too much for house in the front (bought this through a BA as most people know) and would have been better off just leaving it as is, as has happened with my other house around the corner. The one across the railway tracks has had much more growth (double and higher ROI), but that is unrelated to the build, just an observation.

 

[belvoir]

Total = $390k and your getting $630 a week?

Thats great. A couple more and you can retire comfortably.

Although I would expect that gross yield to fall to around 6% net after repairs/tenant turn over and other costs.

 

[knightm]

Good on you NHG for having a go! Whilst the immediate val might not be stellar I am sure with time it will be in demand either has investment or for large blended families. A couple of questions: (sorry if you have answered these elsewhere)

1 Are these Atco or another brand demountable?
2 What Basix conversion did you have to do (i understand they don't insulate site offices to the same degree as resi homes)
3 Is that lino on the bathroom floor or tiles? If so what guided the choice there?
4 I assume the living floor is floating laminate?
5 Is it the original wall linings inside just painted or did you have to gyprock?

Thanks
Matt

 

[nhg]

Total = $390k and your getting $630 a week?

Thats great. A couple more and you can retire comfortably.

Although I would expect that gross yield to fall to around 6% net after repairs/tenant turn over and other costs.

Working on my next one next month, plans already approved, ready to break ground. Total costs will be <$345k for $620/week (site had $80k + capital growth in 1 year so far with no work done). A third site will be completed hopefully by end of this financial year.

 

[nhg]

Good on you NHG for having a go! Whilst the immediate val might not be stellar I am sure with time it will be in demand either has investment or for large blended families. A couple of questions: (sorry if you have answered these elsewhere)

1 Are these Atco or another brand demountable?
No idea, I bought them of some random guy from the back of a newspaper 3 years ago, overpaid too I was so fresh back then

2 What Basix conversion did you have to do (i understand they don't insulate site offices to the same degree as resi homes)
Water savings stuff, water tank, that's it really, nothing crazy or expensive

3 Is that lino on the bathroom floor or tiles? If so what guided the choice there?
Lino, was original with the building. I can't tile over because water won't drain, will just paint over the top next week or so to make it look decent

4 I assume the living floor is floating laminate?
Vinyl, did it myself, could do it much better in the future, was trying to get advice from my vinyl guy over the phone, as mentioned, this place was an experiment to see what I personally could do or not do before I undertake some higher quality construction jobs starting next month, makes it easier to manage my tradies when I know from experience what can and can't go wrong

5 Is it the original wall linings inside just painted or did you have to gyprock?
painted original interior and exterior (latter was a council condition), fixed up some of the inside and outside, really hard to repair gaps in the outside as I had to cut steel sheets etc. When joining demountables together, cut out the sides with a angle grinder and used timber frame to make the joints look nice and presentable, then found new, similar internal walls to finish walls as needed.

Thanks
Matt

Answered in blue.

 

[neK]

How did you get this approved thru council? Crazy!

In comparison, if you built a granny flat, a proper one concrete slab etc, how much rent you think you would get?

 

[westminster]

Navid,

I think this is brilliant!!

Besides some of the learning lessons which are invaluable I still think this is great.

If you could get the banks to recognise it and therefore get a higher valuation it would be great news.

$60k for $240/wk is pretty good.

 

[nhg]

How did you get this approved thru council? Crazy!

In comparison, if you built a granny flat, a proper one concrete slab etc, how much rent you think you would get?

Found the right people.

A NICE 2 bedroom granny flat, at best would get $300/week.

I am building one of those and with a bit of creativity am hoping to hit $300. The total costs will be ~$80-90k. Will make capital but cashflow will be less.

That is more worth it IMO, and the third will also be well built on a slab.

Besides some of the learning lessons which are invaluable I still think this is great.

If you could get the banks to recognise it and therefore get a higher valuation it would be great news.

Thanks for the props. Am looking at duplex developments next. Will be asking you for advice, hope you don't mind.

 

[neK]

Found the right people.

A NICE 2 bedroom granny flat, at best would get $300/week.

I am building one of those and with a bit of creativity am hoping to hit $300. The total costs will be ~$80-90k. Will make capital but cashflow will be less.

That is more worth it IMO, and the third will also be well built on a slab.

Hey Navid, when you say worth it, are you referring to spending more and building a proper granny flat on a slab that looks like a house?

These are my numbers on this, what are your thoughts?

240*52/60,000 = 20.80%
280*52/90,000 = 16.17%

While percentage-wise spending less looks better,

From a cost perspective,
$2,100 in extra interest (30,000*7%)
$2,080 in extra rent (40*52)

No real difference... even at 7% interest.. at lower rates, you're actually better building a proper granny flat

Extra $30k then gets the place recognised as a proper dwelling. Assuming bank values it at 80% of cost, then you got a further $57.6k accessible (90,000 x 80% x 80%).

 

[mjft]

Looks good to me,

Without them being bolted down would make them easier to move in the future if you were looking at developing the block when the density/zoning goes up (Should occur around the railway stations)

 

[twodogs]

Nice job, what's involved with getting approval under Section 64 ?

 

[nhg]

Hey Navid, when you say worth it, are you referring to spending more and building a proper granny flat on a slab that looks like a house?

These are my numbers on this, what are your thoughts?

240*52/60,000 = 20.80%
280*52/90,000 = 16.17%

While percentage-wise spending less looks better,

From a cost perspective,
$2,100 in extra interest (30,000*7%)
$2,080 in extra rent (40*52)

No real difference... even at 7% interest.. at lower rates, you're actually better building a proper granny flat

Extra $30k then gets the place recognised as a proper dwelling. Assuming bank values it at 80% of cost, then you got a further $57.6k accessible (90,000 x 80% x 80%).

Pretty much, also personal pride on what you're constructing, resale value, ease of rent etc.

Loosing capital for cashflow really doesn't work for me, not at my age anyways.

 

[nhg]

Nice job, what's involved with getting approval under Section 64 ?

Same as sepp or da really. I did this one retrospectively, so just had to find solutions for all the items that came up.

Building itself required reinforcement in the floor, got a little creative there amongst other things.

 

[nhg]

Looks good to me,

Without them being bolted down would make them easier to move in the future if you were looking at developing the block when the density/zoning goes up (Should occur around the railway stations)

Half the cost was in the drainage/electrical/council approvals.

Other than council approvals, the rest is mostly recoverable. Will depend on the council on wether you can make this happen.

 

[knightm]

Answered in blue.

A belated thanks NHG for the reply, kudos given

 

[minki]

Good work NHG !
My husband and I were thinking of using shipping containers to build a granny flat within the Bankstown Council Area. But still waiting for them to return my call to ask them if we can.
Anyway, in regards to ways around Bank valuation problem, can you perhaps add a deck to it if space permit, or a mini verandah?

 

[nhg]

Good work NHG !
My husband and I were thinking of using shipping containers to build a granny flat within the Bankstown Council Area. But still waiting for them to return my call to ask them if we can.
Anyway, in regards to ways around Bank valuation problem, can you perhaps add a deck to it if space permit, or a mini verandah?

NICE! I've seen some great shipping container designs in the past.

I have a deck. It didn't count. It has to be fixed onto a slab of some sort. There were a few other methods but it all had to do with the foundation.