Granny flat finance - Logan

Hi, was wondering if anyone has been successful in recent times in obtaining finance for a granny flat in the Logan area? I am having trouble specifically with valuations. The bank valuer has stated that based on sales evidence (there is a lack of market sales of properties with granny flats) they have valued the current property plus the proposed granny flat build at $310k.

Seeing as the current house on its own is already $280k and the combined rent received would be $580 a week, $310k seems quite low to me? (gross yield of 9.7%) I have read that some people have been able to obtain construction loans of 80% of the proposed combined value but in my case it would be only $248k which means I would have to find more than $100k in cash if I decide to build (all-in building costs estimated at around $140k).

 

Valuations on Granny Flats are always going to be tougher in lower end areas versus higher ones.

Did you get a valuation done with jut the one lender?

Recommend getting an upfront valuation done with a couple of different valuers.

Also recommend having someone experienced as the point of contact with the valuer so they can discuss the construction in more detail with them. You would be a good contact for them.

 

There are some aweful GFs out there. Value destroyers. Agree that the area plays a part and Logan / Crestmead etc may not be a great example. Others enhance value...Integration and quality v's cheap prefab / build quality.

I know someone who owns in a quality NW Sydney area with a semi-integrated GF with sep dual private access and own single garage. Cost to convert rumpus to a GF with all self contained services was $50K and the value was enhanced $150K on val....High Chinese demand in Castle Hill area and Chinese love the inlaw accom for older parents. At auction they were outbidding each other specifically due to the GF. While not solely the GF as reason but at auction went $250K well beyond best estimate. Agent says they all wanted the GF as its rare to find the quality.

 

Yes the valuation was only with one lender. I didn't want to have to pay multiple valuation fees and have multiple applications against my name. The bank did say I can try to find 3 comparable recent sales if I want to refute the valuation but I had trouble finding them although the builders are saying they have done quite a few granny flats in that area. I guess people are keeping them for the cashflow and are not offloading them.

 

We have almost reached our maximum borrowing capacity as I am only working part-time after a baby and are looking for more cashflow and maximising our current equity base. But perhaps you are right and the money might be better off in more income producing ventures like commercial real estate or shares.

 

The upfront valuations are free and prior to the submission of an application - this way you get the valuation results first before submitting with the lender.

 

Hi
How did you progress with valuations & funding?
Planning to do a couple on side by side block in Woodridge.
Thx for shareing

 

H

Not successful unfortunately. You might be ok if you are willing to put a lot of cash in as then the valuations won’t matter as much but at this stage I would rather use the cash somewhere else.

 

Have done 2 in the last 2 yrs. Valuation was the standalone market value of existing + construction cost, ie no new equity value created by adding granny.

So for a 3 bedroom existing + 2 br granny it came out at $433k - 4118 and 4132 postcodes.

 

We are in Woodridge purchased well, but not sure if the valuation will stack up.

 

If valn doesnt stack up now and you delay the construction, it will struggle even more once LCC charges $23k for granny flats.

 

Have properties in the area, but never considered putting GFs up, when they were cheaper you could get one for about $60-80k, not sure about the quality but they looked pretty good

however, ive just had a look at properties for rent, and only 2 GFs for rent, and it was fairly cheap,
so either theyve all been rented out or no one is building them.

the low vals dont surprise me too much,

however as rolf said, maybe in a few years they will be acknowlegded as a separate dwelling in terms of valuation, who knows

 

Hi Valuations apart, wonder if they might be good cash flow strategy in Logan (Woodridge) market?
We are looking at 2 ancillary units behind existing 2 houses in a side by side blocks.
The ancillary cost about 110k each expecting rentals of 270.
Thx

 

Are they strata titled or subdivided? This is a bit of an odd set-up, the whole idea of Auxiliary dwellings is usually that you DON'T strata title them.

 

Thx Rolf
Will consider that input. We are taking a pause currently & focusing on increasing Cashflow the idea is to use all that serviceability & some equity from out portfolio to upgrade our home in Sydney & convert current house to IP.

 

Hmm they are complying development so just a simple council application. we will fence the back & central strip between houses to provide privacy & access.
Hope that answers.
I am not sure of rates & elec & water meter.