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5 Reasons Why a Granny Flat is a Fantastic Investment

Building a granny flat in the backyard is becoming more and more popular as an investment, and not only because they’re a great choice for extra accommodation options for ageing parents, guests or teens. For a start, having a cute little granny flat means you make use of any excess space in your backyard. And through the construction of a functional dwelling, there can be some attractive financial benefits via rentals (depending on your State) and adding value to your property. The continual rise in property and rental costs means many Australians are now looking for other kinds of living arrangements. The result is an upsurge in demand for granny flats or secondary dwellings.  The following five reasons for considering an investment in a granny flat are worth checking out:

1. A Granny Flat as a Positive Geared Investment

An investment in the construction of a granny flat can shift a negatively geared property into a positively geared one. Many granny flats are bringing their owners surpluses of more than  $10,000 a year after paying the interest. Data gathered by BMT Tax Depreciation Surveyors(1) has suggested that granny flat construction has increased by 9.3 per cent across Australia over the past two financial years. The increase in granny flat building is thought to be legislative changes in many States with regard to secondary dwellings to boost housing affordability rates in the Capital cities.

Whether you own an investment property or have space on your existing property, a Fox granny flat is a simple and cost-effective solution to extra accommodation or rental

2. A Granny Flat as a Depreciation Asset

A granny flat can give investors some generous depreciation entitlements. A study by BMT Quantity Surveyors(1) reveals $5,288 is an average first-year depreciation, accruing over the first five years that the property is held to $23,713 in deductions. Renters often find granny flats attractive because they are generally more affordable, however, many property investors want to capitalise on the demand due to the high rentals they can achieve. All granny flat owners ought to understand their entitlement to depreciation to gain the most benefit.

Fox Transportables Pty Ltd is a Perth-based, family owned business serving WA since 2009 At Fox, we offer: Advice and Design Services Engineering – Energy Efficiency Reports – Drafting – Shire Application Management – Construction – Installation

3. Investment Affordability

The cost of constructing or buying a granny flat is very often far less expensive than financing an investment in a standalone property.  The average cost of building a granny flat is around $125,000 – which is a mere fraction of what it costs to buy a property or for building a standard three-bedroom house. What it means is that you can start small and build your property investment portfolio without a huge loan to pay off before you start making a profit. Building a granny flat on land you already own is wise, considering the rental income it will attract – which can be $350 per week in some areas in Australia.

All our Transportables and granny flats are engineer-certified and built according to the Building Codes of Australia, guaranteeing quality products and real value for money – this is our promise to our customers

4. Increased Property Value

Whether the purpose of building a granny flat in your backyard is for investment as a rental, or if its major purpose is as a teenage retreat, for elderly relatives or for guest accommodation, the value of your property will increase. Any kind of construction or renovation for extra room, for whatever purpose, will always add more value to your home and will pay dividends in the form of rent or property value. But by building a granny flat in the backyard, rather than extending the main house, you end up with a fully self-contained, private dwelling that can generate income if you so choose.

5. A Hassle-Free Granny Flat

Each council in each Australian State has its own requirements, which will influence what you can build on your block. Most councils now process granny flat approvals relatively quickly, for instance, in NSW there’s no necessity for council approval to construct a granny flat if it complies with the minimum site requirements which include:

  • The entire property has to be a minimum of 450m² in area
  • It has to be zoned residential, with a 12m street frontage
  • The property has to have a 12m width at the building line of the existing dwelling. If not, you could apply for an attached granny flat
  • The granny flat has to maintain a 0.9m setback from the side boundaries and 3.0m from the rear.
  • It must be 1.8m from other structures
  • It must maintain a 3.0m distance from existing trees that are more than 4m high
  • The area of your granny flat must be 60m²

References:

  1. https://www.bmtqs.com.au/maverick/mav-37-a-goldmine-in-your-own-backyard
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