John yields success from double project
John, a client of Leah Jay since 1996, carried out two projects on an existing investment property with the assistance of Leah Jay’s Investment Services team. The granny flat is now yielding an 11.3% return on investment, while work undertaken on the existing premise is now contributing a 10.6% ROI. John reflected, “I first gave Leah a call because I rented with Leah Jay when I was younger, and I knew once it came time for me to invest, I wanted to go back to Leah.” In April of this year, John constructed a granny flat at the rear of an existing New Lambton investment property. “New Lambton has seen incredible growth and I wanted to be a part of this, plus it’s considered one block of land to charge for land tax!” John said.
John first contacted Backyard Grannys who provided an overview of the process from approval through to build, the designs available, and customisations he could add to achieve the “class” he desired.
At this stage Investment Services Manager, Pippa Rowntree reached out to John, to offer advice on what needed to be considered and decided before the build commenced. Pippa explained some of the matters she covered, “Privacy and access are often major concerns so I discussed separation options with John, suggesting a dividing fence with a separate gate, separate water tanks and meters, and a carport for the granny flat tenants. Considerations like these often protect from high turnover and vacancy, as there is a clear separation of responsibility and residential space established from the very beginning,” Pippa reflected.
John was proactively involved in the process, so encountered firsthand the rules and regulations imposed by local council and the costs associated with almost every stage of the development. “You don’t know all the costs that are going to be included, all the hurdles you have to jump first,” John said. This is why it is crucial owners are introduced to developers, conveyancers, surveyors, and specialist builders like Backyard Grannys, as they bring niche expertise to the project.
And John’s beautifully designed 2-bedroom, 1 bathroom granny flat is a testament to this –
Contents
Project One: The Granny Flat
Works Undertaken
The works undertaken as part of the high spec construction of the Newington design granny flat were –
- LED downlights
- Vertical Blinds
- Oak Laminate flooring
- Built-in wardrobes
- Kitchen Appliances
- Timber patio
- Low-maintenance landscaped yard
- Removal of asbestos garage
- Covered carport
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Costs and Return
The project came to a total cost of $267,000 and the final results were –
$580 rent per week = 11.3% annual return on investment
Project Two: The House
Works Undertaken
Given the quality of the granny flat, John also wanted to refresh the main house, completing renovations at the same time.
The works undertaken on the main house were –
- Internal repaint
- New windows
- New blinds throughout
- External weatherboards were repaired and repainted
- New vinyl flooring throughout
- Ceiling fans added
- Free-standing wardrobes
- Landscaping
Costs and Return
The renovations plus the cost of vacancy during the project came to a total of $103,000 and the results were –
Before: $420 rent per week
After: $630 rent per week = 10.6% annual return on investment
John is extremely proud of the end result “I would do it all over again, even with the costs, I can see the results in bricks and mortar.” Leah Jay secured a 12-month lease for both properties and the additional $790 weekly rent means John will achieve a strong capital return for the foreseeable future.
Key Takeaways
- Adding a granny flat can significantly boost investment property returns, as demonstrated by a case study with an 11.3% ROI from the granny flat alone.
- Essential considerations for a granny flat project include privacy, access, utilities, and ensuring compliance with local council regulations.
- The successful addition involves understanding upfront costs, potential hurdles, and engaging with specialized professionals for design and construction.
- The project highlighted the importance of strategic planning, including property separation and amenities, to enhance tenant appeal and minimize vacancy rates.
Wondering if it is worth adding a granny flat?
To talk through options or other ways you can optimise your investment property, get in touch with Pippa and the Investment Services team today.
