Real Estate

How to make Granny Flats work for you

With the onset of the housing shortage, many homeowners quickly saw an opportunity to earn extra income by renting out their extra rooms. Some, on the other hand, considered building second homes or extensions to their primary residence, but the only problem was that it wasn’t allowed in most areas. That is, until the government decided to relax the laws on granny flats, allowing them to be built but only if the owners met certain conditions.

Among the conditions that the Government set regarding the construction of these accessory dwellings, is the fact that they can only be built on farms in residential areas, that each residential dwelling can build a single dwelling, that the block is built must not have more than 450 square meters and must not have more than 60 square meters of habitable space even with the addition of patios and galleries and that they cannot exist in strata, lots or community property.

Also, they may not be built on vacant land or on property that will be used for commercial purposes and may be attached to the primary residence or be a separate unit on the property. More importantly, they must have clear, unobstructed and separate pedestrian access and if you convert part of your house into an apartment, you must ensure that it has a separate entrance.

Given all those rules and regulations, many went ahead and applied for DAs to build their granny flats, mainly because current times dictate multi-generational living arrangements to be the norm. Children riddled with student debt coupled with elderly parents in need of help have no doubt added to the situation, as has the rising cost of elder care facilities and of course the need for the elderly to still have an appearance. of independence.

To give you an idea of ​​what to expect, real estate experts estimate that you can expect rental returns of around 13% to 20% per year plus principal growth each year. Renting these flats also gives you tax depreciation benefits of up to $6,000 per year, but the best part is knowing your investment isn’t dependent on unpredictable actions, giving you priceless peace of mind.

For starters, the fact that these second homes can increase the home’s resale value and provide a great rental yield are just some of the benefits one can get from building granny flats on their property. For this strategy to work for you, you’ll need to consider the physical limitations of your property, the layout and configuration of your home, the area of ​​the lot, and the proximity of neighbors. You might consider spending anywhere from $10,000 to $20,000 to turn your extra bedrooms into a livable residence and this includes adding a bathroom which can double your rental rates.

You can also consider a garage or basement conversion which would be very inexpensive and just add a frame opening for the windows and possibly a new front door if you are considering a garage conversion, but if you are looking for a basement conversion, would be the best. if your home is located on a hill, as the downhill side can be used to add large windows to allow in natural light and ventilation. As long as your spaces are legally habitable, you’re good to go.

The next thing you can do to make sure this granny flat strategy works for you is to make sure you have access to a number of tenants who will want to rent it. You can talk to your local real estate agent to get an idea of ​​the demand for these flats and how many are actually looking to rent or lease one. Take a drive around the suburbs and check out the types of flats in your area and find out how you can offer potential renters better options.

So go ahead and do your research now about the paperwork needed to get the ball rolling, check out the demand for these flats and more importantly the cost of building one. In the right location, these flats can provide fantastic returns so you can see some real income to get you ahead.