Do you have an investment property with a large backyard and plenty of space but are not able to subdivide?

Using a granny flat to turn a negatively geared property in to a cashflow positive asset is a well-recognised investment strategy in many Australian states.  Particularly suitable for investors with a long-term view to derive income from their property, we’ve come up with six other reasons why a granny flat may benefit you.

granny flat finance property investor

  1. Extra income

Building a granny flat in the backyard of your investment property provides you with an additional source of income.  Turn that underutilised patch of grass in to a money making machine.

 

  1. Cashflow positive

    How do you know you’re working with a professional builder? Select the right builder and you will have a pleasurable experience, choose the wrong builder and it can be a heartbreaking and costly lesson. Find out the seven crucial questions you must ask. Click the book above to DOWNLOAD NOW.

    How do you know you’re working with a professional builder? Select the right builder and you will have a pleasurable experience, choose the wrong builder and it can be a heartbreaking and costly lesson. Find out the seven crucial questions you must ask. Click the book above to DOWNLOAD NOW.

Granny flats have a very high rental yield and return on investment in Perth.  They can generally be rented for significantly more than it costs to build and maintain them so granny flats are usually cashflow positive from the very start.

 

  1. Demand for affordable housing

The demand for smaller homes such as granny flats is increasing hand in hand with the demand for affordable housing.  This will continue to be driven by population growth, housing pressure and a trend towards single-occupant accommodation.

 

  1. Depreciation

Renting out a granny flat gives you extra claimables when it comes to tax time.  BMT report the average first-year depreciation deduction for a new granny flat is $5,288.  Any common areas such as swimming pools, patios and barbeques can also be added to your depreciation schedule even if you occupy the primary residence.

 

  1. Spreading your income risk

If you just have one investment property and it is vacant then you will have no money coming in.  With the addition of a granny flat however it is unlikelygranny flat small home perth both properties would be vacant at the same time.  Knowing you’ll have money coming in 52 weeks of the year will give any investor some peace of mind!

 

  1. Increase the value

And obviously, building a granny flat will increase the overall value of your investment property.

 

With a shortage of rental properties in some Perth suburbs, a granny flat is a low-cost method to maximise the overall value and profitability of your investment property.

To find out more contact Perth Granny Flat Specialist on (08) 9284 7778.

Are you thinking about building a granny flat but don’t know where to start? In this FREE GUIDE you will find great information about whether your property is suitable, how to choose the right builder for you and the steps to a successful building experience! You need to read this!

Before You Start Structural Renovations…

Conducting a structural renovation can be a great way to add an extra room onto your existing home, but the process can be complicated when it comes to determining how the new room will affect the layout of your home. In some cases, it can be extremely difficult to find a place to add the new room without having to rearrange a large portion of the rest of the house as well to accommodate access to the addition.

Consider a Granny Flat Instead!

Building a granny flat in the backyard can be a much more economical option, which will also give you a lot more flexibility in how you choose to use the additional space. For those who manage rental properties, this added flexibility can open up the property to a much larger pool of potential new tenants. You can even rent out the granny flat of your owner-occupier property as a holiday let to bring in a bit of extra income.

Bupa Landlord Insurance​ cited our advice in a recent post on improving rental properties through structural renovations. The article, ‘Structural Renovation Tips for Your Investment Property’, offers lots of great tips for boosting the value of your investment.

Give Perth Granny Flat Specialist a call today to learn more about building a granny flat on your property – (08) 9284 7778.

A lot of people ask us ‘How Much Should I Spend On A Granny Flat’?

Apart from “Can I build a granny flat on my property?” the second most popular question we’re asked at Perth Granny Flat Specialist is “How much does a granny flat cost?”

Well… even if we tell you that a 60m2, two bedroom granny flat will cost around $125-130,000, without all the details, how can you compare this with other builders?

So in actual fact, the question most people want answered is “How do I choose the right builder?”  Do you look for a builder with proven experience who is a specialist in what they do and focuses on your needs?

Do you select one of the big names because you’re happy with a cookie cutter design?  Or do you look for the cheapest quote available?

At the end of the day if you have the same design built to the same standard, prices are going to be very similar regardless of the builder. The main way companies provide a lower price is to compromise on the quality or exclude items from the contract.

We’ve all heard the horror stories… dodgy workmanship, hidden costs, delays and unfinished projects.  Although, most of the people telling these stories will have a moment when they say in hindsight the signs were there!

Building your new granny flat should be a dream experience and it often is if it’s done right!

So how do you find the right builder?

Ask plenty of questions!  Some of these include:

  • Are you a registered builder?
  • Do you have all the necessary insurances?
  • Do you have any current or past disputes and what was the outcome?
  • Look at their testimonials and ask to speak to previous clients…
  • Can you see a building in progress or just completed?

Having a display centre doesn’t guarantee a great job or a pleasant building experience.  It usually means high overheads and a pushy salesman only interested in commission!

Find out what systems the builder has in place to manage the project and how will they communicate with you once things get underway.  It is best to ask for a detailed schedule that they will share with you regularly.

A builder with the right systems in place will also be able to give you a detailed proposal listing their inclusions and estimated cost to build based on your sketch.

If you choose correctly, your builder will make constructing your granny flat a dream.

If you get it wrong, it could be more of a nightmare… never knowing what’s going on, rising expenses, no end date in sight and a mess in your backyard to come home to each night.

What else do I need to do?

In the early stages, it’s important to beware of sales people trying to sign you up to a building contract. A good builder will provide an estimate and then work towards providing a Fixed Price Quote before you sign a building contract.

A great way to get things rolling is to use a Preliminary Agreement, your builder will then be able to engage a surveyor and a draftsman in order to prepare a Fixed Price Quote.

A Preliminary Agreement is the best way to take the next step and ensure you don’t sign a Building Contract prematurely.  This means that if something untoward is discovered or site costs become substantial then you’re not locked in.

If you’d like to know more about the questions to ask before signing a building contract, we’ve produced a great guide which you can download now.

7 Things You Must Ask Before Signing A Building Contract

If you have any other questions or would like to discuss if a granny flat is right for you, please contact Shane and the team on (08) 9284 7778.

 

smarter small homeCheck out this video where founder of the Future Housing Taskforce, Kevin Doodney, talks about his joint venture with James Hardie creating a prototype for a compact solution to housing affordability – otherwise known as a smarter small home!

In an attempt to change the face of how we see housing in Australia, they’ve built a home for two families in just 65m2!

An intelligent choice of materials and efficient construction method were the key to ensuring an end product that was still liveable, stylish and sustainable all for under $150,000.

How do you know you’re working with a professional builder? Select the right builder and you will have a pleasurable experience, choose the wrong builder and it can be a heartbreaking and costly lesson. Find out the seven crucial questions you must ask. Download now.

 

Doodney explains that framed and light weight construction was a no brainer because the downside to brick is that you instantly lose 5% of your internal floor space, cavities cause issues and it’s too heavy.

They then chose compressed fibre cement board to line and clad the walls because of its structural strength, fire resistance and longevity. There are also so many architectural choices both internally and externally to assist achieving a variety of different styles.

At Perth’s Granny Flat Specialist we build using both timber and steel framing, and many of our clients are now opting for the weatherboard style of cladding to complete their new homes.

We are always looking at different ways to reduce costs and ensure we are environmentally sustainable – so important in this day.   The team look at a range of options, and chat with industry experts to stay on top of what is happening in the building industry.

Want to know more about the tiny house?  Watch Kevin tell us more about the process here now!  Plus read one of our previous blogs all about timer and steel framing options!

Are you thinking about building a granny flat but don’t know where to start? In this FREE GUIDE you will find great information about whether your property is suitable, how to choose the right builder for you and the steps to a successful building experience! You need to read this!

While we don’t build caravans or modular buildings this TEDx talk from Lara Nobel, co-owner of the Tiny House Company in Queensland, still makes you question the sacrifice many families are making in order to afford the ‘Australian dream’.

Our homes are a reflection of who we are and what we value. But as houses become larger and larger, so do their price tags, and mortgages, and our need to work harder and harder to pay for them.

So what do we really want our homes to provide? As both an architect and carpenter, Nobel suggests we should rethink the way we live, do more with less, and live more efficiently.

At Perth’s Granny Flat Specialists, we design and build high quality small homes and our clients usually feel liberated exchanging their house full of stuff for the lifestyle they’ve always wanted.

Watch Lara at South Bank: https://www.youtube.com/watch?v=UM-WdzT6rV8

Are you thinking about building a granny flat but don’t know where to start? In this FREE GUIDE you will find great information about whether your property is suitable, how to choose the right builder for you and the steps to a successful building experience! You need to read this!

Granny flats are continuing to grow as an investment option.

With the rent earned as a proportion of the cost, they are clearly great investments, usually higher than for an units and apartments. Check out our great ROI calculator!

With the high prices of Perth city properties, this means the rental yield can be much higher for granny flats. However investment experts say that its important the granny flat is of sufficient quality.

For a lot of people, the idea of someone living in their back yard can be quite uncomfortable, however it is sometimes a small sacrifice in return for the rental income you can receive.   Plus if you rent it to younger family members or older relatives, you can feel safe knowing you know your backyard tenants!

Some are worried about the quality of a granny flat, but with Perth’s Granny Flat Specialist we only build high quality granny flats, and use the talented Adriana from Hatch Interiors  to create a beautiful interior design. You can have a look at our inclusions page to find out exactly what you get.

Anyone thinking of building a granny flat has to take care over how the flat is financed, because lenders are generally charging investors higher mortgage interest rates than they do for owner-occupiers.

Some lenders will charge the investor rate for a granny flat if it is to be rented out or used for business purposes. You can chat further with Darren from Mortgage Choice about mortgage options for a granny flat.

The explosion in granny flat construction really is a case of homeowners realising the financial and lifestyle value sitting in their own backyard.

It’s important to be aware of any the tax implications. The principal place of residence is free of capital gains tax, but if the granny flat is rented out, that part of the property will be taxable in the event of a sale. And, of course, all investment income is meant to be declared in tax returns.

However if you aren’t planning on selling anytime soon, a granny flat can be a fantastic investment while helping out family or friends who are struggling to get into the rental market!

Are you thinking about building a granny flat but don’t know where to start? In this FREE GUIDE you will find great information about whether your property is suitable, how to choose the right builder for you and the steps to a successful building experience! You need to read this!

We get a lot of phone calls from people who are thinking about building a granny flat but are not sure where to start. This prompted us to put together a guide to assist people with what steps are required.

Before you start, sharing your space comes with a lot of compromises. This highlights why careful design and planning can go a long way toward creating two compatible, comfortable dwellings that can coexist peacefully where there was once only one.

Thoughtful construction details inside and out can make a new unit seem like it was always there. New landscaping helps to complete the effect.

The success of a granny flat also depends on whom you share it with, and how. With that in mind we’ve come up with a list of questions which will give you something to think about.

SHARING YOUR SPACE: BUILDING A GRANNY FLAT

This list explores how sociable you are, how much control you need, and how much experience you’ve had living with others.

  1. How many siblings did you grow up with?
  2. How much of last week’s downtime was spent with friends? How much did you spend alone?
  3. How relaxed are you about your material possessions? Do friends have any of your books, tools, cooking equipment, Tupperware? Do you annoy them to get it back regularly, or do you just trust they are good friends who will return things when they are ready?
  4. When you go to a restaurant, do you share what you order or do you keep it all to yourself and savour every bite?
  5. If someone cuts in front of you in traffic or at the supermarket, how do you react?
  6. When was the last time you had a fight with a neighbour and what was it about? In certain cases, these neighbours could be your parents or inlaws – could this cause issues with your partner?
  7. Is your work mostly solitary or social? Tightly focused or multitasked?
  8. Where are you on the “Speak My Mind vs Keep It To Myself” spectrum? Because that can make or break living relationships!
  9. Have you ever shared a house with anyone who wasn’t family of a loved one?
  10. Do you live with someone or alone? How long have you lived that way?

In general, people who have siblings, aren’t super fussy, can multi-task and don’t sweat the small stuff have an easier time sharing their property.

At the end of the day, communication is King. If someone does something that doesn’t sit well with you, talking is important.   Yes it might be your granny flat – but remember, its their home.

And a happy person living in your granny flat – is a good thing for relationships and investments!

Renting granny flats is a low cost method to maximize the overall value and profitability of your property, and investment.

A granny flat makes any residential property far more inviting to large families and investors alike.

Our Director, Shane, has put together some granny flat tips for investing:

Is the granny flat approved?
A granny flat must have received proper building and planning approval before it is rented out. If you purchased a home with an existing granny flat, you can check your sales documentation or with your local council to ensure the structure has been approved.

Selecting the right tenant is important
As it is likely the landlord will be living next to or in the same premises as the tenant, landlords should take particular care in the selection process.

Get employment and personal references, then follow them up. Obtain photo identification from the tenant. Meet the tenant to get to know them and discuss the property. If a property agent is being used, ask them to check the tenant’s previous rental history.

Be honest and up-front with potential tenants about the positive and negative aspects of the property, this will reduce the risk of any misunderstandings.

Which agreement?
If you are thinking of renting out a granny flat it is important to understand which tenancy laws may apply as this will determine both your rights and your responsibilities.
It is not always easy to work out whether a person is a tenant or a lodger but as a general guide, a tenant is more likely to have a right of exclusive possession of the granny flat.

Lodgers
If you enter into a lodging agreement, the terms of the contract you enter into should set out all of the rights and responsibilities of each party. For example, some basic matters to cover include:

How do you know you’re working with a professional builder? Select the right builder and you will have a pleasurable experience, choose the wrong builder and it can be a heartbreaking and costly lesson. Find out the seven crucial questions you must ask. Download now.

• how much rent is payable and when;
• each party’s responsibilities for maintaining and cleaning the premises;
• who can enter the premises and when; and
• how and when the agreement can be terminated.

Tenants
If you enter into a written tenancy agreement (lease), the Residential Tenancies Act requires you to use a prescribed (standard) tenancy agreement.

The tenancy agreement becomes a key document between the tenant and landlord. It covers most of the matters concerning the rental of the granny flat. It is important to ensure tenants understand the provisions in the agreement.

In the case of granny flats, it is important to remember you will probably be living very close to the tenant/lessor and sharing some common areas, such as back yards, driveways and maybe even kitchen space. A tenant or lessor will need to be mindful of this because you are not allowed to end a tenancy agreement simply because you do not like the person or have had a disagreement with them.

Property condition reports
The Residential Tenancies Act requires a property condition report describing the condition of the premises when the tenant moves into and out of the property. This helps to determine if there has been any damage to the premises during the tenancy and whether the tenant is liable for the damage.

RCDs, smoke alarms and security
Before a premise is leased, lessors must have:
• two RCDs installed on the switchboard, and
• professionally installed hard-wired smoke alarms fitted

Premises must also have minimum standards of security including a deadlock on entry doors, lockable windows and a light to the front entry of the premises.

Public utilities
Some granny flats will not have separate accounts for public utilities such as water, gas and electricity. If this is the case, the Residential Tenancies Act has specific rules about the payment by a tenant for their consumption of a public utility.

If the granny flat has a separate sub-meter for the utility, the tenant must be provided with a copy of the account which will set out the tenant’s consumption based on the sub-meter readings and the charges for that consumption.
If there is no separate sub-meter for any of these services, the Residential Tenancies Act requires an agreement to be made in writing about how the tenant’s share of the total consumption charges will be worked out.

Thinking of building a granny flat?

For further information, contact the team at Perth Granny Flat Specialist, your experts in granny flats Perth for more information. We are happy to help!

How do you know you’re working with a professional builder? Select the right builder and you will have a pleasurable experience, choose the wrong builder and it can be a heartbreaking and costly lesson. Find out the seven crucial questions you must ask. Download now.

This week I wanted to go into more detail about YOUR input into the plan and what you need to do to make sure you get your perfect granny flat.

Building used to be easy. You’d choose a builder and a design…and that was about it.

But today, you have so much more choice. In fact, you have almost infinite choice… which can have its advantages and disadvantages!

For example, what sort of toilet do you want for your new home? At first this may seem like a simple decision. But when you are faced with a range of 50 or more toilets, things can get pretty confusing.

What about baths, showers, floor coverings, paint colours, light fittings, bench tops and doors? That’s before you even start to think about kitchen appliances. Are you starting to feel like a cup of tea and a lay down?

To make things even harder, designs and models change all the time. Updated models and new colours may even be available before construction is finished.

For example, although you may have already chosen your bath, a new model may catch your eye. This may cause you to rethink your taps, and your shower head!

Your perfect granny flat

Don’t worry. The team at Perth’s Granny Flat Specialists spend time helping you make these choices – explaining the differences in products and putting you in touch with the best suppliers who stock all the latest designs and models. And because we work to a ‘building plan’ you’ll know when you can and can’t make product substitutions along the way.

We work with you to make sure you get the exact granny flat you want.

If you’d like to talk through some of these options, feel free to get in touch and we’ll arrange a time to chat.

Shane Williams

P.S. After spending hours making decisions about specific inclusions (like toilets, bench tops etc.) some home owners are disappointed to find their builder has made a substitution along the way.

 

Are you thinking about building a granny flat but don’t know where to start? In this FREE GUIDE you will find great information about whether your property is suitable, how to choose the right builder for you and the steps to a successful building experience! You need to read this!

What Do I Need To Know and Do To Convert My Existing Patio or Carport Into a Habitable Room Such as a Family Room, Games Room, Sunroom Or Bedroom?

The primary requirement for a habitable room is to ensure moisture does not enter into the structure through the floor, the walls and the roof.

The Building Code of Australia (BCA) specifies the manner by which this can be achieved and will normally necessitate modifications and additional works to be carried out to the existing patio or carport. Most existing patios and carports do not achieve many of the requirements.

It is usual that major modifications are necessary to achieve the requirements of the Building Code of Australia for a room to be used for habitable purposes. Use the following information as a checklist to assess how your existing patio or carport compares to the minimum requirements of the Building Code of Australia for habitable rooms.

Converting a Patio

  1. All habitable rooms in a building shall be lined and be provided with a ceiling.
  2. Minimum height of habitable rooms in a building shall not be less than 2400mm.
  3. The brick external walls of a habitable room shall be constructed so as to prevent moisture penetration.
  4. Where a concrete slab or paved floor is laid on the ground or on filling, moisture on the ground shall be prevented from reaching the inner surfaces of the floor and adjacent walls by the insertion of dampproof courses or membranes or by other approved damp-proofing means. This may require the replacement of the flooring with a suitable concrete slab with new waterproof membrane.
  5. Natural ventilation shall be provided by means of permanent openings or windows, doors or other devices which are capable of being opened and shall comply with the requirements of the BCA.
  6. Natural lighting shall be provided in all habitable rooms of buildings. Natural lighting shall be provided by means of windows or doors provided with glass having an aggregate area of not less than one-tenth of the floor area of the room concerned.
  7. Extensions built over windows to existing internal rooms may be lightened by way of a glazed area or other opening facing directly into an adjoining room if they comply with the BCA.
  8. Hard wired smoke alarms may be required if the habitable room is a bedroom in accordance with Part 3.7.2 of the BCA.
  9. Energy Efficiency Certification of compliance or verification to show the proposed habitable room will comply with the energy efficiency measures as described in the BCA.


Converting a Garage or Carport

  1. A carport may be converted to a habitable room if there is sufficient space elsewhere on the lot to provide a vehicle shelter.
  2. Generally, carport floors are constructed without a waterproof membrane, a membrane must be provided for a habitable room. This may require removal of the existing floor, or if the ceiling height can be maintained at 2.4 metres a membrane may be laid over the existing floor and a new floor added.
  3. The walls of the new addition must prevent “moisture” penetration. The floor to ceiling height must be a minimum of 2.4 metres. The window light area must be a minimum of one-tenth floor area and the window opening area must be one-twentieth of the new floor area.
  4. Should a meter box exist within the proposed enclosure, it must be relocated to an external wall.
  5. Hard wired smoke alarms may be required if the habitable room is a bedroom in accordance with Part 3.7.2 of the BCA.
  6. Energy Efficiency Certificate of Compliance or verification to show the proposed habitable room addition will comply with the energy efficiency measures as described in the BCA.

In most cases a Planning Application will need to be obtained and in all cases a Building Permit will need to be obtained before any work can be started.

If you would like to know more, then please contact Perth Granny Flat Specialist now and find out more! (08) 9284 7778

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