Regional NSW & Granny Flats

[qonyx_sydney]

Hello Everyone,

As the consensus across SSters, that Sydney is too hot at the moment. So subsquentely i'm interested in peoples thoughts on Regional NSW and the general rental market responses to granny flat accommodation.

Most would be aware that a 2br 60SQM granny flat in most part of Sydney would achieve a $350/week yield.

What would this be like outside of Sydney in markets like Goulburn, Bathurst, Wollongong, Newcastle?

Is there granny flat construction activity occurring in these markets? And are these easily rented at a decent rental return.

Thoughts....?

Q

 

[Nick Valsamis]

Unless you do a cheap build, the main thing is that yield would be much lower, and depending on housing supply in the area, people may just opt to go for a house instead when renting.

 

[Propertunity]

Most would be aware that a 2br 60SQM granny flat in most part of Sydney would achieve a $350/week yield.

What would this be like outside of Sydney in markets like Goulburn, Bathurst, Wollongong, Newcastle?

Is there granny flat construction activity occurring in these markets? And are these easily rented at a decent rental return.

We've been doing these in Newcastle for some years now. 2br 60SQM granny flat in Newy would achieve approx $320/week yield.

House on land as the initial purchase (before the granny flat build) would be just under $450K. On the Central Coast same thing $380 - 440K in the northern parts.

 

[lawmich]

GFs in newy and CC

Hey Propertunity,

I've been looking at properties in Newy, those suburbs close to city are pretty small in land size when thinking of GF. Are you talking about those further away from the CBD?

CC seems to have good blocks of land. Expectation of vendor seems to be higher now. Flow on effect from Sydney?

 

[qonyx_sydney]

We've been doing these in Newcastle for some years now. 2br 60SQM granny flat in Newy would achieve approx $320/week yield.

House on land as the initial purchase (before the granny flat build) would be just under $450K. On the Central Coast same thing $380 - 440K in the northern parts.

Thanks for the response, in Newy are you finding that you have to find premium locations/suburbs for these purchases or is it just pretty much wherever you can find decent stock with good land size element.

Have you preferred to shoot for land that allows full dual access like corner blocks (rather than having a small walkpath to get to a granny flat in a backyard?)

 

[knightm]

Qonyx given your other post I will assume by regional you mean Illawarra as well as Northside up propertunities way. Similar thoughts for the gong it can work. Rents are higher up north but entry costs a little lower down south. The further down the coast you run the lower the rents but occasionally gf can still work if it's a ore exisiting conversion (cheaper) or block with good amenity. Corners are great but other blocks can work too as long as decent access and separation.

 

[Truly Exotic]

depends on how regional, I wouldnt consder newcastle regional, nor bathurst, GFs do work,

but in areas such as goulburn, id say not likely to work if you are going to build a GF from scratch, rents much lower, lets say 3bdr house rents for 250ish, then a 2bdr gf is going to rent at say $180, plus your demand for the house will drop as well,

ROI wise inc all fees, it might be 9% odd but id be more careful in the regionals

 

[Coconutwheels]

I've done a small cheap build in Valentine (Lake Macquarie), 38m2 with own access via lane way. It easily rents for $255/week.

If I'd spent another $30k I'd Ibe getting around the $300/week Mark. It's on ppor though and I wasn't willing to sacrifice anymore backyard.

They are now catching on around Newy though, there's two local companies specifically do GFs. They both have a "display home" too, and sales agents

 

[knightm]

Yep I know someone starting to do these and dual occs as house and land packages soon. I think the OP was talking about existing housing though? Percentage wise the highest returns seem to be on buying the house plus UN approved GF, then doing a retrospective conversion. Cheaper then building new and often the GF isn't priced in as its not approved. Thesedays anything like a lined garage in W'gong is getting called a GF whether approved or not and vendors agents want to price them in at 80k! Further out they are still affordable

 

[Propertunity]

Hey Propertunity,
I've been looking at properties in Newy, those suburbs close to city are pretty small in land size when thinking of GF. Are you talking about those further away from the CBD?

Yes, inner CBD blocks are too small.

CC seems to have good blocks of land. Expectation of vendor seems to be higher now. Flow on effect from Sydney?

Yes, absolutely the flow on effects (or ripple effect) from Sydney.

 

[Propertunity]

...in Newy are you finding that you have to find premium locations/suburbs for these purchases or is it just pretty much wherever you can find decent stock with good land size element.

There is no skill in buying the right sized block just anywhere . We are pretty picky, so it can take some time, but we prefer the better areas with decent CG and amenities.

Have you preferred to shoot for land that allows full dual access like corner blocks (rather than having a small walkpath to get to a granny flat in a backyard?)

In an ideal world we would buy suitable corner blocks, but in reality they don't come up that often. I'm happy with a big block with good separation, side access or rear lane access.

 

[qonyx_sydney]

There is no skill in buying the right sized block just anywhere . We are pretty picky, so it can take some time, but we prefer the better areas with decent CG and amenities.

In Sydney, finding and securing the right sized block at FMV does take skill

But i take your point for regional areas

 

[Retiree]

Hi Q

I concur with Prop's buy & rent estimates.

Last Aug 20114, we bought at Warners Bay, Lake Macquarie. We were seeking a house & land combo ready to add a GF, but we found a 3,1,1 brick / tile house on a 770 sq mtr block, with a new, council approved 2 BR 55 Sq Mtr GF at the back of an upward sloping block. The attractions were location, already built & new approved GF, and the rent rates.

We bought for $567k, on the high end of acceptable. The partially reno'd house rents at $425 and the GF rent at $320, so it's nicely cash flow positive from the start, & likely to have good capital growth in time. Without the GF, the buy price would have been approx. $430k - $450k.

We have a number of IPs in the Newcastle, Nelson Bay & Central Coast regions. By comparison to the various Sydney markets, I remain confident that the coastal cities north of Sydney continue to offer quality IPs at affordable prices.

I hope this helps your questions.