Advice sought: What to do about this bungalow? Worth a reno?

I have an unapproved Bungalow in poor condition in a house in Melbourne.
See photos and short video here in this google drive folder (no sign in required):
Google Drive: Sign-in

Not sure if it is worth it to overhaul it. Just tidy it up a bit. Partly seems like too far gone, on the other hand the shower and bathroom are useful infrastructure.
Needs connecting to the house electricity. Was before but wire has been cut. Has elec safety switch in Bungalow.
If I did, I think I would remove the stove to avoid liability. Just have sink and bench.
Advantages are that it adds a bedroom and bathroom. Good for teenager. Should be able to increase rent.
I dont think I would go down seperate lease path, as its not approved, and insurance would be problematic.

Here is a recent example of something similar (actually on a seperate lease). So the demand is there.
https://www.realestate.com.au/property-studio-vic-jacana-438964156

 

you dont need to sign in. THey are in a google drive folder. The reason I gave the folder is I want people to watch the short video.

Here are the photos but would be great if commenters could watch the short video. No sign in required its just held on google drive. Here:
https://drive.google.com/file/d/12KgTZwLOzFqoQVijbN_HUwfm30g79m0D/view?usp=drive_link

 

More photos


@andyboiii

 

Looks like it would make a good garden shed.

 

Yeah thats what I was thinking - take the stove out. Have to see how much extra rent would get though for an extra room with bathroom. Previous owners locked it up and did not make it available to the tenants.

The link will work now I did not have permission set to public sorry.
VF_VID_20240315_113841.mp4

 

Def need a bit of work, i agree remove stove. Repaint, repair everything and should be good to go.
In times like these an extra living space for an extra $50 is a bargain.
So it'll come down to costs.

Also look at repairs & maintenance rather than upgrading as it may be all tax deductable this FY.

 

how long do you have to wait from settlement until it is R&M vs capital upgrade?

 

That's a question for accountant to confirm, though AFAIK R&M are deductable at any time.

 

Check carefully about ‘initial repairs’. May become part of cost base / capital.

 

Yes will check out.
What do you think about what to do with it though?

 

I’d agree with others and remove cooking facilities and basic tidy up to use as an extra ‘space’ whether as office or similar under the one head lease.

 

Had one quote. To resheet ceiling. Replace cabinets with smaller kitchenette (basically just sink and bench to create more space), with extractor fan, no stove. New bathroom cabinetry and tiles. Redo floors including subfloor. And redo external roof. Put cornice.
Quote was $19k including electrician to connect again to front house.

But note that it is still low ceiling. So even if new still would feel a bit 'sheddy' as under legal height. But good for teen.
If I get an extra 100wk on the house plus bungalow then thats a pretty good yield. Would not seperately lease (couldnt really as no stove anyway).
@Piston_Broke @wylie @craigc

 

Every single element needs renewal. Roof leaks, all interior linings , flooring, kitchen. Water heater and probably plumbing and wiring + ;lighting...asbestos ? Needs a split system as it would be a hotbox in summer and cold in winter. You may be better off thinking of it as a granny flat and consider the cost to do it properly with insulation and rent it for some decent $$$. A new GF costs $250K plus so spending $80K could be a good ROI. Better than making it a extra space for just $100. Or may suit a family with parents etc seeking dual accomodation.

 

Are you saying leave it alone and put that money towards proper granny flat?
What is the 80k you refer to about?

 

How much Asbestos is in that shed?

Might be better for ROI to remove and replace with a new Shed / Garage