With the onset of the housing shortage, many homeowners were quick to see an opportunity to earn additional income by renting out their extra rooms. Some, on the other hand, considered building secondary homes or extensions to their primary residence, but the only problem is that it was not allowed in most areas. That is, until the government decided to relax the laws on granny flats, allowing them to be built but only if the owners met certain conditions.
Among the conditions established by the Government for the construction of these accessory dwellings, it is included that they can only be built on farms in residential areas, that each residential dwelling can build a single dwelling, that the block to be built must not exceed 450 square meters and they must not have more than 60 square meters of living space, even with the addition of patios and galleries, and they cannot exist in strata, subdivisions, or community property.
In addition, they also cannot be built on vacant land or on property that will be used for commercial purposes and can be attached to the primary residence or be a separate unit on the property. More importantly, they must have clear, unobstructed and separate pedestrian access and if you are converting part of your house into an apartment, you must ensure that it has a separate entrance.
Given all those rules and regulations, many went ahead and applied for DA to build their granny flats, mainly because current times dictate that multi-generational living arrangements are the norm. Children saddled with student debt along with elderly parents in need of help have certainly added to the situation, as has the rising cost of elderly care facilities and of course the need for the elderly to still have an appearance. of independence.
To give you an idea of what to expect, real estate experts estimate that you can expect rental returns of around 13-20% per year plus capital growth each year. Renting these apartments also gives you tax depreciation benefits of up to $6,000 per year, but the best part is knowing that your investment isn’t dependent on unpredictable actions, giving you priceless peace of mind.
For starters, the fact that these second homes can increase the resale value of the home and provide a great rental return are just some of the benefits one can reap from building granny flats on their property. For this strategy to work for you, you will need to consider the physical limitations of your property, the layout and configuration of your home, the area of the lot, and the proximity of neighbors. You can consider spending something between $10,000 and $20,000 to convert your extra rooms into a livable residence and this includes adding a bathroom which can double your rental rates.
You may also consider a garage or basement conversion which would be very inexpensive and just add a sash opening for the windows and possibly a new front door if you are considering a garage conversion but if you are looking for a basement conversion then It would be best if your house is located on a hill, as the downhill side can be used to add large windows to allow natural light and ventilation. As long as your spaces are legally habitable, you’re good to go.
The next thing you can do to make sure this granny flat strategy works for you is to make sure you have access to a number of tenants who will want to rent it out. You can talk to your local real estate agent to get an idea of the demand for these flats and how many are actually looking to rent or lease one. Drive around the suburbs and check out the existing types of apartments in your area and discover how you can offer better options to potential tenants.
So go ahead and do your research now on the paperwork required to get the ball rolling, check out the demand for these flats and most importantly the cost to build one. In the right location, these flats can provide fantastic returns so you can see some real income to get you going.