The housing market has been on the rise for a while now, and it doesn’t show any signs of slowing down. This means that property prices will continue to increase as well, which is great if you’re looking to sell your house!
This article is to give you a better understanding of value-adding property strategies. If done correctly by seeking professional advice prior to physical changes to your property.
Firstly, what is a granny flat?
A granny flat is a small, detached home that’s built on the property of the main house. It usually consists of one bedroom and bathroom with an open plan kitchen or living area and laundry facilities. A Low-cost, High return investment, in your backyard!
Secondly, how does it benefit you as a homeowner? Firstly, having the correct compliance paperwork, instantly adds value.
What to consider prior to building, is the layout and if it would be valuable to your property in the future.
3 key points to consider when adding a granny flat to your property!
Access- How will potential renters enter the property? Parking – Will you provide parking, or will they have to park on the street? Privacy – Are they directly looking into your property or are you looking straight into them through the backyard?
With that said a granny flat is beneficial for families with regards to an increase in their quality of life for grandparents and other older relatives if you’re not looking at selling your property at first.
The greatest benefits are in regards to rental income and property value. In Sydney for example, this would translate into potentially generating $2300 per month from renting out your space while increasing the sale price by up to 20% if you ever decide to sell your property.
That sounds like a pretty sweet deal right there!
What about the cost? If I’m getting such great returns on my investment, then why is it so expensive?
Granny flats are expensive because they require a lot of labour and materials. Depending on the size, you could be looking at $150k to construct one or more granny flats depending on your budget.
Keeping in mind that it should relate to the existing property, what we mean by this is it shouldn’t look like it’s just been dropped into your backyard, it should feel like a part of the property as well as spacing with regards to the garden, as you don’t want to lose your garden which could end up having a negative effect on your property value.
Granny flats are classified as “residential dwellings”. This means that, technically, you’ll have to pay taxes on the rental income. However, there’s good news!
You get some tax relief depending on how many granny flats you own and if they’re being rented out all year round or just for holidays – which is exactly what most people do with them anyway.
The bottom line? If your property value has increased significantly in recent years due to sky-rocketing prices, then adding a granny flat could be an excellent investment opportunity for you too!
Tax is payable on the rental income you earn from your granny flat, just like any other investment property. Navigate here for professional advice regarding adding value or any future decisions in relation to a property.
Author Bio –
Daniel Miller – LinkedIn Profile
Daniel Miller is an extensively experienced Senior Property Valuer who has been with WC Valuers for a decade. He has expert skills in property valuation across all types and purposes, including the preparation of reports that ensure compliance with taxation, superannuation and litigation requirements. Daniel is continually enhancing his industry knowledge through career development opportunities and further education, both as an attendee and presenter.