What returns are you achieving?

Anyone keen to share their experience with granny flat in regards to below issues?

1. Financing
2. Building
3. Finding tenants
4. Tenant management (both for gf and the original house)
5. Any repair and maintenance issues
6. Rental return
7. Capital gain

Thank you

 

Cash or a construction loan or combination of both.

Time spent in finding property suitable for a CD (complying development) means a PC (private certifier) can get things done in 10-14 days which avoids the need to get Council Approval via a DA process (minimum 6 weeks) with no certain outcome.
There are many building companies that specialise in granny flat construction now.

Tenant pool for a granny flat is usually made up of those who would otherwise rent a unit but appreciate not being in a complex with many others. Granny flats seem (in my experience at least) to have the lowest vacancy of all.
It can take a bit longer to find a house tenant as they are renting a property in most cases with a very small backyard (since the granny flat is in it). But there are a number of tenants these days who don't want to have a big back-yard to maintain. Rent for the house is generally $10-30pw less than a regular house without a gf, so there is a ready market for these types of house tenant also.

The arrangements that work best, are where the house tenants and the gf tenants have a high degree of separation - ie corner blocks with separate street access, or well fenced off from each other. NOT where you see in parts of W Sydney where you walk out the back door of the house and almost hit your nose on the side wall of the granny flat.

This is the same for any property - you need to perform repairs and maintenance. Maintenance on the granny flat, being new, will be less for the first few years. Only one issue I have come across is where a tenant (don't know if it is the house tenant or gf tenant) flushes feminine sanitary products and causes a blockage that the LL has to pay a plumber to fix. The LL cannot pass the cost on to the tenant because they share a sewer line and therefore cannot identify the culprit. But this is fairly minor in the overall scheme of things.

Much higher than a single property (obviously) and most of the time cash flow neutral to positive. What's not to like?

In line with the suburb if you buy a median priced property to start with.

We purchased an existing house and approved granny flat for a client recently that was showing 6% rental yield (with mortgage rates of sub-4% at present, this is cf+). Before the price rises of the last few boom years, it was not uncommon to get over 8% rental yield. But this is the part of the cycle where CG takes a pause and rents play catch up.

Thank you

 

2 on 1 title is acceptable to all banks

In NSW, where I sell houses with granny flats ( dual occ's) , they are built at the same time,using construction funding.

The granny flats always rent first on the dual occ's... usually within a day or two of the property being handed over. Its the opposite of what the regional naysayers said would happen - they all said no one would want the 1 bedders. It turns out that we cant get enough of them.... demand is strong every time we complete a property and it goes to market.

My clients use the same tenancy manager for the house and the granny flat

New builds, so we havent experienced any repair or maintenance issues that arent covered by the builder

The granny flats are achieving 225-230 per week.

re-valuation of the dual occ's has seen results of 620K + . The purchase prices were 530K -570K , depending on the land size/cost.

The answers to all of these questions may be different if you are adding a granny flat to an existing dwelling....I dont operate in that space so I cant comment .

 

Some progress pics of one of the dual occ's currently underway ...

 

The big thing you are probably missing from the list but could be linked to finance is "valuation".

Depending on the area the lender may lend anywhere from 60% to 100% of the construction cost.

You are likely to get more bang for your money when it comes to the valuation for a GF in say Bondi than Bidwell.