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Would you really go granny flat

Discussion in 'Renovation & Home Improvement' started by MTR, 16th Jul, 2015.

  1. MTR

    MTR Well-Known Member Premium Member

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    Over the last 12-18 months, seems the trend has been build a granny flat at rear and you go from negative cash flow to positive.

    However possibly looking at 100k for this.

    Would The smarter option be to purchase another property with these funds?

    What people don't realise is that depending on State, location it may take much longer to secure a tenant for the g/f, therefore cashflow out the window.

    ReFinancing values and accessing equity can be very difficult.

    2 properties on site, however can not be sold Separately?. Hint, hint

    I have had good experience with this in West Syd but g/flat already in place, Qld a distaster, wrong area/demographics, very difficult to rent as I said goes from positive income to negative.

    My view is 100k is a **** load of money, I would not do it regardless of cashflow
    I am sure there are some smart cookies that have worked there way around this:)

    Anyone want to share their experience

    MTR:)
     
    Last edited: 16th Jul, 2015
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  2. devank

    devank Look, lets just get on with this, ok? Premium Member

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    I would do granny flat (in NSW) only if:
    - I want cash flow rather than capital gain
    - can properly fenced off to give a battle axe feel
     
  3. Biz

    Biz Well-Known Member

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    Where is your one in QLD Mtr?
     
  4. Special order

    Special order Well-Known Member

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    Your not going to build a granny on the Gold Coast cause then you are competing with units, but one in Logan would be a different story,
     
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  5. MTR

    MTR Well-Known Member Premium Member

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    Absolutely, this is the area Which is a no go for g/flats specifically goldcoast

    MTR:)
     
  6. MTR

    MTR Well-Known Member Premium Member

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    Nerang
    I have since sold, took 2-3 months to rent out
    G/flat already in on site
     
  7. Biz

    Biz Well-Known Member

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    Council there will give you a wrap of the knuckles for leasing it to an unrelated party no? Is that the issue with leasing it?
     
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  8. MTR

    MTR Well-Known Member Premium Member

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    Agree in terms of providing privacy for tenants
    Corner lot ideal
     
  9. doobynuts

    doobynuts Member

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    Just built a GF (WA) and found it was easier to rent the GF than the main house due to it being a new modern build as opposed to a 70s brick and tile.

    Both were rented around same time.

    GF - 15 prospectives on first home open and 7 applicants.

    Main house - 2 prospectives on first home open and a few no shows after that - took 3 weeks to rent in the end.

    Went from negative cash flow to positive cash flow. $400 p/w to $700 with GF.
     
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  10. MTR

    MTR Well-Known Member Premium Member

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    Great
    So what was the total cost?
    What area/suburb in Perth
     
  11. Biz

    Biz Well-Known Member

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    Well done dooby. And Perths rental market is supposed to be sluggish at the moment.
     
  12. monalisa

    monalisa Well-Known Member Premium Member

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    Hi @MTR

    Agree with your points in the first post.

    @MsAli and I would rather use that $100k toward another property - instead of going backwards in terms of equity; it is better to have that extra exposure to the market (ie instead of spending $100k on a GF, its better to have another IP for a few 100k) - especially when one is in early stages of their investing career.
     
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  13. Mumbai

    Mumbai Well-Known Member

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  14. Perthguy

    Perthguy Well-Known Member

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    It is sluggish. But it depends on the area. Always does. My house is coming up to 3 months vacant. Priced aggressively. There are 47 properties on the market for rent in my suburb. The majority of those have been vacant for more than 10 weeks.
     
  15. HD_ACE

    HD_ACE Game-Changer Premium Member

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    I would go another property.

    More fingers in the CG pie.
     
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  16. Gingin

    Gingin Well-Known Member

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    With everyone's situation being different , APRAs influence and investors serviceability may encourage the use of increasing ones serviceability stream as opposed to just CG , especially those with average incomes.

    I see a place for granny flats, especially in nsw. 150k inv for 450/ week returns would make already owned properties better levers for future investments else where.
     
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  17. Westminster

    Westminster Tigress at Tiger Developments Business Member

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    I would consider it in some R20 areas where there is high rental demand - possibly near University or Hospital if the block was the right shape

    I would also consider a slightly different option which QLD-ers call a Fonzi flat which is above a garage. This has been popularly done in Joondalup near the Edith Cowan Uni. It is more like a studio apartment in the around 40sqm size and rents for around $250-325 depending on the area.
     
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  18. Daniel007

    Daniel007 Well-Known Member

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    Yep, looked into it but the prospect of spending 120k all up for a granny flat was silly when we could buy another property with the capital gain benefits. A comparable property to our ip recently sold down the road, only went for 75k more with a gf on it.
     
  19. Be Developer

    Be Developer Property Developer Business Member

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    If the game is cash flow and looooong time buy n hold..... Go for it.

    But if you looking for CG.. Best to invest money on new purchase.

    Building a GF may not increase a valuation of property and you cannot sell separate dwellings.
     
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  20. Subodh Shirodkar

    Subodh Shirodkar Well-Known Member

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    Hi MTR & Other's

    Thanks for this thread. Been investing since past 7 years. We reached a stage where our baseline portfolio is in place. All are long term buy & hold. Our mindset is buy & never sell.

    The next phase is to consolidate this baseline portfolio & then be aggressive or adventurous i.e development or flips.

    As part of this phase couple of Granny Flats are in active consideration.

    We are ready to construct granny in Leaumeah. It is a cash flow strategy. Yes we will lock in some equity & narrow our base if we need to sell, but it consolidates that particular IP.

    Increases our knowledge of development / Construction handling tradies builders etc.

    Anybody with experience in GF in around Cambeltown happy to share notes.
     
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