Granny flats tend to be added to a property more these days as an afterthought. However, as people are beginning to understand that a granny flat is a smart investment, we are seeing more new builds being created complete with a ready-made granny flat out the back. If passive income is what you seek, then it is time you learn how to make your granny flat a reality and a cash positive investment to boot.
Understand the granny flat legislation in your state
To build a granny flat in New South Wales, it needs to be established in conjunction with another dwelling and be on the same lot of land as the main dwelling. It can be within, attached to or even separate from the main dwelling to be considered a granny flat. As per the NSW Government, the property must be a minimum of 450 square metres and maintain a setback of 3 metres from the rear. The granny flat itself should not exceed 60 square metres. If you are looking to build a separate granny flat, ie a second dwelling, the property must have a minimum width of 12 metres at the building line of the proposed granny flat. Once you have ensured that the size of your property is suitable for a granny flat, and you understand the benefits and the risks involved, you can then decide whether it’s right for you.
A chance to increase your assets
While you are not able to sell your granny flat off separately, you can still reap the benefits of the addition by adding value to your main home. This can be done through one of two ways, either selling your home for a higher amount or renting out the granny flat for a monthly income. Remember, however, that the increase in the property will never, unfortunately, be as much as it cost to build the granny flat in the first place.
It’s a relatively small first investment
If you are looking to get into the property market but don’t want the hassle of finding additional land, you can start small and build a granny flat off the back of your main home. For first time builders and landlords, granny flats are a great way to understand the market without the risk that comes with an expensive apartment or second home.
Don’t be afraid to set your criteria
When you are looking or tenants, it is important that you lay down the ground rules to increase the chances of finding reliable tenants. If you don’t want the hassle of meeting and interviewing potential tenants for your property, you can rent out the services to a property management company for a fee. Don’t forget to always have some backup funds available, because as a landlord, you will be responsible for any issues that occur on the property.
As with any real estate decision, it pays to do your research and speak to financial advisors, designers and property builders. Know that, however, when you are ready to build, it takes less than two weeks for the approval to be given by the local council, so it could happen sooner than you think.