Determining the property value of new granny flat
Do granny flats return more than the cost to build? Is it a smart addition to your home? In NSW, granny flats are more popular than ever with the new legislation that permits granny flats to be built without formal council approval. Here’s how to determine the value of your property:
KNOW THE AVERAGE COST OF A GRANNY FLAT
The cost of a granny flat will depend largely on the package you choose. For instance, a 3 bedroom granny flat with built in wardrobes, separate laundry, kitchen and a spacious bathroom would be more expensive than a studio granny flat. Generally the cost of a granny flat in Sydney can be anywhere between $80,000 and $120,000, so on average you would be looking at around $100k.
CHOOSING DESIGN THAT’LL FIT WITH YOUR LIFESTYLE
When it comes to choosing the design of your granny flat, your backyard space will play a large part. For instance, for the 3 bedroom granny flat design like the one mentioned above, you would need at least 60sqm to work with. Of course you still want some backyard left, so use your space wisely.
Also think about how the new living space will be used. Is the granny flat being built for family and friends when they come to say? If it is, then the cheaper studio apartment may be your best bet. Alternatively are you planning on renting out the space to students or a young couple in order to gain a rental income? Then you may be better off investing in a granny flat solution with 2 or more rooms.
You can also choose granny flat designs that come with a partially-covered alfresco area, which is perfect for outdoor entertainment. Before you commit to any granny flat design remember it’s important to speak to a granny flat specialist to ensure you choose the right one for your home.
KNOW HOW MUCH A GRANNY FLAT CAN ADD TO YOUR PROPERTY
A recent article by LJ Hooker explains that a granny flat could potentially add 20-30% of what it cost to the bottom line of your home straight away. Once your property has been built there are two ways you can determine what your property is now worth. The first tactic is asking your local real estate agent to conduct a free estimate of the value of your property but keep in mind this is just an estimate to give you a rough idea. You can also ask your bank or financial lender to send a professional valuer to your home for a more precise figure.
DON’T FORGET RENT
The great thing about choosing a granny flat over an investment property is your rental yield is likely to be positively geared, as your home loan repayments will be drastically lower.
For instance say your granny flat costs $100k, with a 4.5% interest rate paid back over 25 years your weekly repayments would be just $128. Whereas if you had bought an investment property worth $400,000 your repayments would have jumped up to $513.
According to Domain, depending on the location a decent granny flat can be rented out for between $200 and $600 a week, which will more than cover that $128 repayment.
Want to know more about the different granny flat solutions available? Give us a call today!