GRANNY FLAT investment PERTH

With the shortage of rental properties in Perth, a granny flat investment is a low cost method to maximize the overall value and profitability of your property. A granny flat makes any residential property far more inviting to large families and investors alike.

Many investors are now buying small homes on large land with a granny flat in mind to double the earning capacity in rental return.

Let’s Talk Numbers

Investment Scenario 1

The ideal situation for a granny flat investment would be to build the secondary dwelling on the same block as your permanent place of residence. This can add value to your property and also provide a fantastic rental yield, depending on where you live. In most Perth suburbs, two-bedroom granny flats can achieve a similar weekly rent to two-bedroom units.

So, let’s just say you spend $100,000 building a granny flat at your house. Once completed, you get a tenant in paying $350 a week. That is a gross rental yield of 18.2%.

With an interest rate of 6%, you could pay the mortgage off in under 7 years, or put a handy $12,000 in your pocket each year from day one if you choose interest only.

$100,000 investment + $350 rent per week = 18% yield

GRANNY FLAT Investment 
Granny Flat Outlay$100,000
Rental income per week$350
Rental income per annum$18,200
Gross rental yield pa18.2%
Interest payments - calculated at 6% pa$6,000
Return on investment p/a12.2%

Return on investment p.a. 12.2%

Investment Scenario 2

Another scenario smart investors are using is to use granny flats to convert their negatively geared investment to a positively geared one. For example, you purchase a rental property for $500,000 which can be rented at $450 per week. At an interest rate of 6% you would be negatively geared to the tune of $126 or 1.4%.

You build a granny flat for $100,000 which can be rented at $350 per week. Your investment is now $600,000 and your rental income is $800 per week. That is a gross rental yield of 6.93%, your negatively geared investment is now positively geared to the tune of $5,600 per year. Add DEPRECIATION to this and you’re way in front. Smart investors think outside the square.

BEFORE GRANNY FLAT Investment 
Property Purchase including stamp duty and fees$500,000
Rental income per week$450
Rental income per annum$23,400
Gross rental yield pa4.7%
Interest payments - calculated at 6% pa$30,000
Return on investment p/a(-1.3%)

This property is negatively geared to the tune of $126 per week.

AFTER GRANNY FLAT Investment 
Property Purchase including stamp duty and fees$600,000
Rental income per week$800
Rental income per annum$41,600
Gross rental yield pa6.93%
Interest payments - calculated at 6% pa$36,000
Return on investment p/a0.93%

This property is positively geared to the tune of $107 per week.
Add DEPRECIATION to this figure and you’re way in front.

A Granny Flat Investment That Makes Sense

Whether you want to maximize your return on investment or aiming to provide that little bit of extra financial freedom, particularly in a time of rising interest rates and tight budgets, a granny flat is stands firmly as a solid and intelligent investment.

Granny flats are popping up in backyards across the country as homeowners begin to take note of their money making potential and are an overall value raising property investment.

Whether you decide to add a detached flat to your principal place of residence to earn a little extra cash, or build a secondary dwelling on your investment property to up the rental earnings, much can be said for the flexibility a granny flat investment provides.

For an obligation free chat about granny flat investment, call 08 9284 7778 today!

ROI CALCULATOR
$
$
$5,200
5200.00%
5200.00 years
MONTHLY RETURN
%
$5.99
$5,194.01
5200.00%
$433

Add DEPRECIATION to this and you’re way in front. Smart investors think outside the square.

The information provided by the calculator is intended to provide illustrative examples based on stated assumptions and your inputs. It is advised that you consult with your financial institution or mortgage broker about your specific circumstances.