Why a granny flat could be the best investment youve ever made
If you’ve got enough spare turf in the back yard, a granny flat or secondary dwelling could represent a clever property investment. And with more and more granny flats popping up across the country, homeowners and investors are beginning to realise their money-making potential.
It’s a great way to generate additional cash flow through rental income as well as increase your property’s value if and when you decide to sell. They can generally be built quite quickly and can offer a positively geared investment in most cases. Furthermore, another benefit of granny flats is that they can be used for a variety of purposes including additional accommodation for extended family, a home office, hobby space or rental income.
People are discovering that granny flats are no longer just tiny bedsits or rumpus rooms, instead they can represent good quality, separate dwellings on the same block without the need to subdivide.
The New South Wales government defines a granny flat as a self-contained extension of a home that is within, attached or separate from the home but on the same lot of land, and not in a strata plan or community title scheme. The granny flat must be self-contained, meaning it has its own entrance, as well as a separate bathroom, kitchen, bedroom, laundry and living area.
If you’re considering a granny flat, here are a few things to keep in mind:
- They can only be built on a Residential Zone property
- The owner of the granny flat must also be the owner of the primary dwelling
- They can’t be built on strata title, subdivided or community title property
- The block must be at least 450m2
- There is a limit of one granny flat for each residential property
- The granny flat can have no more than 60m2 of living space. However, patios, verandas or carports can be attached in addition to that allowance
- They must have clear, separate and unobstructed pedestrian access
Make sure you do your homework in deciding whether a granny flat is the right investment for you, including checking the following:
- Local council – check what you can and can’t do in terms of zoning and local restrictions
- Demand – talk to local real estate agents on levels of demand in your area
- Costs – get quotes from builders as well as a market appraisal on rent and value from your real estate agent to decide on viability
Before you make a decision, it’s also important to weigh up the cash flow benefits as well as resale considerations. Also ensure you consider potential issues around sharing utilities, maintenance and noise, and the rental implications for each property.