Subdivide or build a granny flat in Balga, WA?

Discussion in 'Development' started by klffu, 6th Apr, 2024.

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  1. klffu

    klffu New Member

    Joined:
    1st Dec, 2023
    Posts:
    4
    Location:
    NSW
    Hi everyone,

    Kindly share your advice with me, please.

    I recently bought a property in Balga, 695m2, R40, 1 existing house 3 beds 1 bath which is rented for $550pw. This one can be divided into 3. Some neighbours have divided/built into 3 seperate houses.

    If I want to divide it into 3, I have to knock out the existing house which is a waste. I am thinking about 2 options:

    Option 1: Keep the existing house for rent, subdivide the back of the existing house, build a new house (4beds, 2 baths) so we can have 2 house in total
    => This option takes us longer to do as the cost for 4beds, 2 baths higher and time to build is longer but get more rent and gain in the future. It takes me at least 2 year to start this option (finance preparation, approval waiting time...)

    Option 2: Keep the existing house for rent, build a granny flat at the back. So we can not subdivide it in the future.
    => This option with the new rule of Granny flat from April 2024, we can build it quicker (around 150k for 70 m2 granny flat) in a few months, cost less, quicker and can rent it out for $400-$450 pw for 2beds, 1bath (I reckon). However, less rent and less gain in the future. I can start this option in a few months that can bring me more rent soon.

    What option would you choose please? I don't live in WA. It is IP.

    Please advise. Thank you so much
     
    klffu, 6th Apr, 2024
    #1
  2. thatbum

    thatbum Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    5,869
    Location:
    Perth, WA
    What was your original strategy with the property?

    Building a GF and wasting subdivision potential seems like a terrible idea generally speaking.
     
    thatbum, 7th Apr, 2024
    #2
    Propin and mrdobalina like this.
  3. mrdobalina

    mrdobalina Well-Known Member

    Joined:
    22nd Jun, 2015
    Posts:
    1,981
    Location:
    there's more to life than working
    What provides a better return?
     
    mrdobalina, 7th Apr, 2024
    #3
  4. Shogun

    Shogun Well-Known Member

    Joined:
    26th May, 2018
    Posts:
    2,900
    Location:
    Perth
    Probably neither for me.

    $150k of shares returns about $8k a year in franked dividends. Do nothing spend nothing receive income.
    A granny flat means future buyers are limited. Will you net $8k a year?
    Maybe the SBD talked about on here.

    Many houses are very central on the block. Retain and build. The original house open the back door and walk into a fence.

    Many old houses are money pits requiring a lot of work just to maintain the property.

    Under the new R codes will it still be a triplex site?
     
    Last edited: 7th Apr, 2024
    Shogun, 7th Apr, 2024
    #4