Rent out front house and live in granny flat - is it possible?

[EN710]

I'm wondering how possible it is to do so that I can live in the suburbs I want, with some garden (and maybe a pool).

• Location Sydney North Shore
• Buy existing property with big land
• Add pool
• Add granny flat - a big 1-2 bedroom. We don't need a mansion.
• Fence off the flat along with the pool
• Rent out the old house

Let's say the place plus flat and pool cost $1.4M

• Loan $1M ~ @7% interest rate $5,834 per month IO loan
• Rental for 3 bed house $700-750 a week, $2700-$3000 net per month after costs etc

Shortage - $2,834-$3,134 per month ~ $650-$720 per week. Affordable even with 1 person salary.
Put everything else in offset, I get a place with garden and pool

Assumptions:

• bank would lend
• I can afford repayment when the front house is vacant

Do you think it's possible?

 

[Biz]

Do you think it's possible?

Yes. Nothing wrong with that. Go for it.

 

[EN710]

Yes. Nothing wrong with that. Go for it.

What would be the potential hurdle? e.g. council approval?

 

[Biz]

Easiest way is just to buy something that complies with the Affordable Rental Housing SEPP so you don't even have to go through council. Either way there is nothing in NSW stopping you from living in a granny flat and renting out the house. It's totally fine.

 

[see_change]

Sounds like a great idea !

Cliff

 

[neK]

There are always tax implications with such strategies.

http://www.bantacs.com.au/QandA/index.php?xq=435

 

[spludgey]

• Loan $1M ~ @7% interest rate $5,834 per month IO loan

Name and shame your mortgage broker!

Low 4s are possible or if you want a longer horizon of safety, you can fix for 5 years for mid 4s.

What would be the potential hurdle? e.g. council approval?

None needed for a granny flat of 60m2 or less!

 

[Angel]

Name and shame your mortgage broker!

She is being ultra conservative for future scenario. Doesn't everyone over-budget?

 

[EN710]

There are always tax implications with such strategies.

http://www.bantacs.com.au/QandA/index.php?xq=435

Yes, will need to think about that too. Just in idea stage at the moment

Name and shame your mortgage broker!

later, when this actually Happened

Low 4s are possible or if you want a longer horizon of safety, you can fix for 5 years for mid 4s.

None needed for a granny flat of 60m2 or less!

Assuming I can qualify for $1M and actually find somethi ng that for the purchase criteria then yes, most likely will fix the rate at the lowest possible rate

She is being ultra conservative for future scenario. Doesn't everyone over-budget?

 

[perthguy]

She is being ultra conservative for future scenario. Doesn't everyone over-budget?

I always run my interest calcs on 7% too.

I think it is a fantastic idea to rent out a front house and live in a granny flat. My parents in Melbs had a huge house with a really nice, separate granny flat. I always stayed there when I visited. Every time I stayed there I thought that if I owned that house, I would live in the granny flat and rent out the main house!

 

[WattleIdo]

Yeah great idea. Will be watching your process closely.

 

[EN710]

I always run my interest calcs on 7% too.

I think it is a fantastic idea to rent out a front house and live in a granny flat. My parents in Melbs had a huge house with a really nice, separate granny flat. I always stayed there when I visited. Every time I stayed there I thought that if I owned that house, I would live in the granny flat and rent out the main house!

Yeah great idea. Will be watching your process closely.

Thank you all