The Easy 5-Step Process to Finding the Perfect Investment Site for a Granny Flat, In Just 30 Days

Choosing to build a granny flat as an investment may have been an easy decision to make, but it gets harder once you start working out where to put it. Once the granny flat is in, you won’t want to move it again, so it’s worth taking the time to look at the pros and cons of the proposed locations before you take action.

Instead of arguing between yourselves or worrying that you’ve missed something in your thinking, you need a process to guide you. There is an easy 5-step process which will help you find the perfect investment site for your granny flat in just 30 days. Let me explain it to you.

Check your local council regulations

This might affect your plans. Each state has different rules and so do councils within each state. It’s vital you speak to your local council before you do anything. You will need to check the zoning to make sure you’re allowed to have a granny flat. The property will need to be in a residential zone, and you must meet the minimum property size, around 450sqm, before your build can go ahead. You’ll need to consider things like providing access, pathways and how close to the fence line you can build. (And don’t forget to think about where your water, sewerage and powerlines are situated before you begin to dig!) You must seek Development Approval from your local council before you can begin work. This normally takes around 14 days.

Eliminate these sites

Where can’t you put a granny flat? Granny flats cannot be built on unoccupied land, commercial properties or on community title land such as strata title properties.

Are you allowed to rent out the granny flat?

If you’re building the flat to rent out as a BnB you’ll need to check with the local council. Many states won’t allow the building of a granny flat for that purpose. If your council won’t allow it, you might need to buy elsewhere.

Are you buying land for the granny flat?

Because you can’t put the flat on vacant land, you need to look for a property with an existing home on it and with enough room to add the granny flat. This adds a hefty amount to your costs, so the returns have to be worth it. Choose a location with a long tenant waitlist, and close to schools, transport and other amenities. While you have the benefit of two rental incomes to look forward to, there will be a big outlay on the purchase of the property and the building of a granny flat. You need to know it’s worth doing.

What return will you get on your granny flat?

If you are allowed to rent out your granny flat, what rental income will it give you? Is it enough to cover the costs of building and maintaining the unit? If properties in your area are not in high demand, you need to be financially able to manage without that income for long periods of time.

Building a granny flat for investment purposes is a great idea if you can fund it. Just as a final word of advice, ask your local agent to value your property now and estimate its value with a granny flat. Remember that the granny flat may not raise your property value as much as you think. Going in with your eyes open will make sure you are prepared for the pros of the cons of the process so you make a well thought out decision.