There are many advantages of adding a granny flat to your Australian home. In addition to their functional benefits, Granny Flats can also add significant value to your property. So how is it that this addition can generate excellent ROI, what factors are involved, and how can you maximise the returns? Find out in this guide.
Expected value addition
According to a 2019 report by Core Logic/Arch start Report, adding a granny flat can enhance a house’s value by up to 30%. It can increase the rental income by up to 27%. At the same time, the report claims that the added value will be influenced by factors like the type of granny flat and your property.
Before you build a granny flat, it is important to ensure the appropriate use of your space. A well-designed structure should not dominate your property or affect the green space. It will be a good thing to consider whether an external or internal construction will work best for your property.
Factors affecting value
It is recommended to know about the factors that can affect the value that Granny Flats Builders Sydney can help add to your property. Some of the most important ones are as follows:
- The type of granny flat and its purpose
- The area or council zone where you live. Check the current density of granny flats in the area.
- Your construction budget versus the potential returns. Check whether there is a demand for these additions if you decide to sell or re-value your property.
You should also consider if the dwelling can be monetised once the project is finished.
How to get the most out of a granny flat project?
Constructing granny flats is considered as a value-adding strategy. But it needs to be done right. There are two ways in which it can add value:
- Generating extra cash flow through rental income
- Increasing your property’s value
From a perspective of rental income, you can expect up to $600 or even more in weekly yields. This makes granny flats an excellent strategy for long-term ROI. In addition to secondary income, you can also benefit in the form of additional claims on your depreciation schedule.
From the perspective of adding value to your property, you should understand the cost of construction. Typically, the cost of construction will be higher than the expected increase in the value of the property. But you can expect to recover the initial cost over the long-term as the value of your property appreciates.
It can be a freestanding structure or one built on top of an existing structure, such as a garage. Freestanding granny flats tend to be more affordable because they require lesser engineering work. On completion, you can expect your property’s value to jump by 20% to 30% of its current value.
The rental return of a property is considered as part of the assessment by valuers. But it is not the only factor. If there is a high demand for properties with rental income in your area, a granny flat is certainly going to give you an edge when you decide to sell. So, you will have to keep many points in mind when deciding to hire Granny Flats Builders.