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 cash-flow positive asset is a well-recognized 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.
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.
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.
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.
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.
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 unlikely 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!
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.