Hi All, To cut a long story short our first investment property is a lemon with low yield and the property values in the area has been going backwards ever since it was purchased in 2008. Plan A was to cut losses and get out. However, it has been on the market for quite a while with no takers and we are unable to get out without taking a huge loss. The block is 1100 square meters in Hervey Bay with 3 street frontage, walking distance to shops and beach. It’s zoned medium density. It currently has a three bedroom house on the block that’s getting dated and the rent we can get reflects its condition ($270 pw with most 3 bed houses in the area at least $300 pw). Plan B is to look at a cosmetic reno on the existing property to increase the rent to $300 pw and add a second dwelling (i.e., 2 bedroom granny flat) and rent for $200 pw. Assuming ~100k for the granny flat it should take the sting out of the negative gearing and allow us to hold it until property values increase. Interested in advice on if Plan B is worth pursuing and if so where do I start with getting approval for the second dwelling? Are there other options I should be considering, I don’t think I’m up to doing a full on development so far from home (Brisbane) and in an area I don’t think has short term potential so want to keep the outlay low. I have attached a plan of the block, its ~55 x 20 meters, and two streets do not have curb and channelling and suspect if I do anything with the block the council will stipulation we need to pay for it. Not sure if this is normal and what it would cost at this stage.