The main benefits to having a granny flat on your property:
- You can increase the value of your property
- You can earn a rental income while also living in the main property
- You can provide a place for a loved one to live if they need a place, or if you want them to be close while still maintaining your space
- They could provide a good working space if empty
The potential downsides however are as follows:
- They can be costly to build
- Not all councils allow granny flats
- Your state may not allow you to rent it out
- It could harm the potential re-sale value of the property as not everyone would want one
- You may have to deal with tenants living on your property
What are the costs of building or renovating a granny flat?
The following need to be factored in:
- A contribution fee to the council;
- The building slab;
- Plumbing and electricity;
- Carpeted bedroom and flooring in other rooms;
- The cost to install the kitchen and bathroom fittings;
- The laundry tub and other essentials;
- Power points;
- Doors, windows etc; and
- Exterior cladding (brick, wood etc.)
MCG Quantity Surveyors Director Marty Sadlier commented that “We have all heard stories and case studies on being able to build a granny flat out the back for $20,000. The reality is that yes, you can build a DIY kit home granny flat for a cheaper cost than a custom-built granny flat. However, once you have included the development costs (service connections, site works, council and authority fees), the average cost of a granny flat would be up to $140,000 for a 60sq2 area”.
Can a granny flat add value to your property?
According to Augmen Consulting Valuer and Buyer’s Agent Gareth Woodham, “while granny flats are more likely to increase your cash flow through rental income, as a general rule, the higher the underlying land value, the better the chance of increasing the overall value by adding an additional dwelling”.
How to finance your granny flat construction
So a granny flat can be very expensive and you are unlikely to have the cash on hand. You can therefore consider financing a granny flat construction in a number of ways:
- A personal loan
- An overdraft/line of credit loan
- A mortgage redraw facility
- Refinance to tap into your home’s equity
- A construction loan
Please do not hesitate to contact us if you wish to discuss your particular circumstances and requirements.