The Experts Maximise yields with granny flats (Part one) Bookmark and Share I’m hearing more and more about investors using granny flats to maximise their rental yields. This is an increasing trend occurring in New South Wales as a result of changes to the planning laws back in July 2009. The State Government made the changes to encourage greater supply of affordable housing in a climate of chronic undersupply. It was a clever move and a fantastic win-win idea. With every granny flat built, a new home is made available to tenants, generally at a lower price than an apartment – a big win for tenants. And because they cost very little to build, the yields on granny flats can be well over 10 per cent – so a big win for investors. The new laws made it easier to get approval for granny flats and they also allowed them to be rented out. Previously, granny flats were only allowed for a dependent relative such as a teenager, or obviously, a grandparent. While you can build a granny flat out the back of your home and rent it out positively geared, you can also add a granny flat to an existing investment property to increase the yield. In some cases, adding a granny flat can turn a negatively geared investment into a neutral or positive one overnight (as long as you can find a tenant and there can be issues with this, which I’ll get into later). Granny flats are also cheap to build. I’ve seen advertisements for granny flats, fully installed, for less than $70,000. Obviously, you’ll pay more depending on the size of the flat and how many rooms you put in it. Say you spent $80,000 and rented it out for $250 per week. That’s a remarkable 16 per cent yield. Of course, yields vary nationwide, so talk a local property manager about how much a granny flat in your area typically rents for to determine your potential income. You should also ask them how easy it is to rent them out. Unfortunately, the opportunity to rent out a granny flat is only available in NSW, Tasmania, the Northern Territory and, as of December last year, in the city of Fremantle, Perth. Tasmania and NT have more restrictions in place than NSW, such as the flat having to share connections to essential services with the main house. Here are the basic rules for granny flats in NSW. If you can meet these criteria, you’ll get approval very quickly through a private certifier or your local council: Your block size must be a minimum 450 square metres Your block must have a minimum 12-metre frontage You need a three-metre clearance between the flat and the back fence You need about a one-metre clearance between the flat and the side fence The floor area of the flat can’t exceed 60 square metres The floor area of the flat and the main residence can’t exceed local council restrictions The height restriction is 8.5 metres. Interested? If you do a quick Google search, you’ll find many companies specialising in granny flats. Check out some of the designs and you’ll be pleasantly surprised. Granny flats are no longer drab little cottages; there are plenty of stylish designs available that will appeal not only to you but also to your prospective tenants. Now, there are some risks. I had a chat to our head of network property management, Michael Connolly, who confirms they are seeing a few more clients renting out granny flats in areas where there are larger blocks of land, such as Sydney’s Western Suburbs and Northern Beaches. But he does have a few words of warning. Next week, Michael and I will fill you in on the pros and cons of using granny flats as an investment strategy. We’ll also tell you about our experiences in leasing houses with granny flats attached or on the same lot. Stay tuned and please write to us if you have a granny flat that you’re using for investment – we’d love to hear about your experience.

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About ljgrealestate 据联大

Removing the Hassle from Sales and Rentals across South East Queensland. Aim to Empower other like minded Property Investors. L J Gilland Real Estate is a prestigious boutique agency specializing in Property Investment Management Services and the Sales of Investment Properties with tenants in place. Comprised of a top performing group of handpicked specialists, our Agents proudly serve Property Investors in Queensland. Since 1996 our Agency has demonstrated a genuine enjoyment of working with people, developing long-term relationships and delivering on the promise of great service. Carlos and Linda Debello offer property investor's the confidence to sell and lease in any market. We provide comprehensive market appraisals, exclusive multimedia marketing campaigns, and knowledgeable, highly personalized counsel on all aspects of real estate. Our Property Management Team is equally considerate, offering investors with in-depth advise, well-researched rental valuations, and highly professional rental management services. http://goanimate.com/movie/0M4bvcZzgIbI?utm_source=linkshare&uid=0u6RGtWsmlVc Carlos’ direct mobiles are 0400 833 800 & 0413560808. Linda’s mobiles are 0409995578 & 0414978700 (prefer email contact for Linda). Office 07 3263 6085. http://www.ljgrealestate.com.au http://www.yellowpages.com.au/qld/aspley/lj-gilland-real-estate-pty-ltd-14091356-listing.html http://au.linkedin.com/in/lindajanedebello http://twitter.com/GillandDebello http://www.facebook.com/pages/ljgrealestate
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