QLD About to build my dual key dwelling...

Hey guys

I've just had approval and a quote to build dual key occupancy (granny flat) on my corner block in Kingston, QLD

Was just wanting any useful feedback/information fellow investors may have on this topic.

Property is currently a 760sm corner with a well positioned house and driveway which allows a fairly straight forward granny flat build. Quoted 140k finished 70sm 2x1 with front and rear large covered deck for entertaining.

Purchased the property 2 years ago @ 240k. Worth around $280k now. So with the build my loan would total $380K

Original house 3x1 lowset rented for $315 and my builder seems to think I could rent the new one for $280-$300 which is a strong total yield + the depreciation of the new dwelling.

Just a couple of questions:
Has anybody done a similar project in the Logan area?
What price have you paid to have a granny flat built?
If the property(s) was put on the market Both tenanted, could I expect to add value beyond the cost of the build? Say high $400s for example?
Would I need to drop the rent of the existing property since the tenant isn't getting as much lawn now?

Large post I know, but any pointers would be greatly appreciated ☺️

Scott

 

You should call Logan council and check this option if it interest you:

Instead of a proposed 2 bed annexed on one title..

Why not go for a full dual occ 3 or 4 bed single with single or double garage that you can strata title hence sold seperatly. The disadvantage of this is the extra 28k infra fee and stricter development approval.

 

What would be the approx cost to strata title? I am looking at the same thing in Loganlea, to spend 130k and get 280-300 a week sounds better than spending a lot more plus the infa fee and probabaly only get 350-380 a week, but your plan would probably work out better in the long run for CG...

 

I have seen a few for sale on the market in Logan central where there were 2 on one block, the original house plus a GF at the back, both the GF's were the 70m2. Both blocks were not corner blocks, to access the GF was side access beside the main house. Both also felt a little cramped as the GF was pretty close to the main dwelling. They were both advertised for close to 500k from memory (one was 'contact agent' for price, it was 500k when I called) the other one listed at about 500. Both had good yields as expected. The one I actually inspected inside the GF was modern and nice. They stayed on the market for a while, my suspicion was they didnt have a lot of interest at 500k. Both were located in Logan Central in the last 6 months approx. (Have a look through sold listings RE.com you might see them)

I think your end selling value should be 280 + 140, doubt there would be much more in it unless you are lucky because an Owner occ most likely wont want to spend 420 for a 3/1 lowset in Kingston with a GF. So its more suited to an investor, but if the investor can go and buy 2 separate houses in Kingston/Logan Central/Woodridge for probably 520k he/she might prefer that option, or one at 260?

Also be careful to check how the bank will value a removable style GF as opposed to a non removable type.

If on a corner block then the GF become more appealing IMO, but depends if the GF has good access to the driveway/parking without issues with the main dwelling. PM me the address I'll give my opinion if you like.

 

I've been looking at this a lot lately. My take on it is I feel a GF style setup will work better and be in more demand in the the more upmarket areas of Logan like Rochedale South, Daisy Hill etc. I think the returns overall will be better there too on completion. Generally I have always found they work out better in areas where a standard house is yielding around 4.5-5%. More than that and you can be better off just buying another property in the area.

So places like Kingston, Woodridge, Logan Central etc... better to just buy 2x houses at 6.5-7% yield.

 

Thanks for the reply. Yes we looked at this option, the guy I'm building with has done Afew of these projects before, with the way the house is positioned, it was going to be difficult with council and wasn't going to gain anything by spending the extra on the infra costs and extra build costs to make it worth while.

 

I've seen an example of a house in Rochedale South with newly built Council approved 2 bedroom granny flat listed recently on re.com. $380 rent for the main house and $290 for the granny flat. Yield of 6.45%. Asking price 535k.

http://www.realestate.com.au/property-house-qld-rochedale+south-120676905

Managed to get a picture of the granny flat from the agent. Do you reckon it is a removable granny flat or a non-removable one? I was told it was fully insulated, steel framed and approved by Council.

 

Hey @Beanie Girl , Yeah I have seen that one. That's definetely just a removable unit. You can get them approved but I don't like them personally and either do the banks. I like permanent setups where it basically looks like 2x houses rather than a house and site shed.

535K is too much for that imo. The house without the flat would probably go for about 420-430 that flat would have cost around another 60-70 with approvals. so asking for an extra 30-40k over for not a very good setup IMO. A good example of how you can sell on yield though and ask a premium for it.

I think they are dreaming at $290 rent for that GF. more likely around 240-250 if that.

 

Is that a 2 bedroom GF? What size internally? Looks very removable to me. Removable ones can be steel framed and fully insulated..

 

I agree, just looked at the plans for the GF, its 2 bedroom with no living space and a tiny kitchen and bathroom, OR I would call it a one bedroom GF myself. I reckon 240-250 rent too.

Oh well you cant blame them for having a go...?!