Granny Flats.
An Oldie but a
GooDie.
Add to your property portfolio but
not to your stamp duty.
A dual occupancy means two separate rental units, without additional land. This maximises the rental income potential and diversifies your tenant base.
Achieve up to 15% ROI
Investing in a Granny Flat is generally more cost effective compared to constructing an entirely new dwelling, and they can be a good option for investors with a limited budget who are wanting to expand their rental income potential.
Granny Flats have become increasingly popular due to changing demographics and housing needs, not just for investors but also for owner occupiers with multi-generational living, some home owner occupiers even build one as an Investment property.
CASE STUDY: ADDING A GRANNY FLAT
John’s Hamptons hideaway
John has been a client of Leah Jay since 1996, growing his portfolio over this time. “I first gave Leah a call because I rented with her when I was younger, and I knew once it came time to invest, I wanted to go back to her,” John said. He constructed a granny flat at the rear of an existing New Lambton investment property. “New Lambton has seen incredible growth recently and I wanted to be a part of this, plus it’s considered as only one block of land that is charged 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 Rose reached out to John, to offer advice on what key considerations needed to be decided before the build began. “Privacy and access are often a major concern 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 explains.
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.
John’s beautifully designed 2-bedroom, 1 bathroom granny flat is a testament to this.
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
The project came to a total cost of $267,000 and the results were:
Rent Before: $0
Rent After: $580/week
11.3% ROI
Given the quality of the granny flat, John also wanted to refresh the main house, completing renovations at the same time by:
- Internal repaint
- New windows
- New blinds throughout
- Landscaping
- New vinyl flooring throughout
- Ceiling fans added
- Free-standing wardrobes
- External weatherboards repaired & repainted
The renovations plus cost of vacancy during the project came to a total of $103,000, with the results:
Rent Before: $420/week
Rent After: $630/week
10.6% ROI
You have the idea but don’t know if you have the finances to follow through?
Leah Jay has partnered with Castle finance to give you access to an online calculator, giving you an immediate estimate of your borrowing power.
FAQ's
Answers to the crucial questions asked by investment property owners.
General
Leasing Your Property
We can work with you to maximise your investment and ongoing yield through targeted improvements to your property. This can be done with regular maintenance, freshening up the property and maximising the presentation through painting, pruning of trees etc.
The underlying aim is to help maximise the benefit from your investment right through the investment lifecycle, from acquisition to divesting.
Our Investment Services team can assist you with guidance about the local rental market, what is in demand and what rent can be achieved.
A lot of real estate agents add ‘property management’ onto their standard buying and selling of homes. Often these companies will charge lower fees because their core focus is on the income they make from sales commissions. We focus 100% on property management, have managed properties for over 27 years and have a strong team, which together give you the service you deserve.
We strongly recommend that you have landlord insurance in addition to building insurance. This covers you for tenant-related risks, including loss of rental income and loss or damage to your contents and building by the tenant.
Routine inspections of the property are carried out eight weeks after the tenancy has commenced and then every six months thereafter. Owners receive a copy of all reports and your property manager will communicate any concerns they may have with you. We encourage owners to view their property at least once a year – this should be arranged with your property manager.
Approximately 63% of Australian households own pets. The majority of pet owners are responsible and ensure no damage is caused to the property or grounds. It’s certainly worth considering when you are looking for a good tenant that you consider tenants with pets.
Here’s some more information about pets in rental properties.
The owner is responsible for the supply and installation of Australian Standard approved smoke alarms, ensuring there is the correct number in the right location in accordance with Regulations. If preferred, Leah Jay can arrange a professional inspection by a smoke alarm provider for an annual fee.
If your property has a swimming pool or spa then a copy of a valid Certificate of Compliance issued in the past three years is required. This must be done prior to any lease or renewal being signed; without this your property cannot be leased.
For more information about swimming pools in rental properties, take a look at our article: Is Your Pool Compliant?
Your property manager can arrange all maintenance and repairs to be carried out on your behalf should you prefer. General repairs and maintenance are included in our management fee. However, there is a fee applicable for insurance claims and larger projects.
Due to the recent COVID-19 legislation introduction the notice period to terminate a tenancy agreement has changed when providing notice to a tenant. You are now required to provide 90 days’ written notice when in a fixed term agreement. The notice may be given at any time up until the fixed term expires but this cannot take effect until the agreement term ends. You as the owner must give 90 days’ notice and the tenant must give you 14 days’ notice.
If the lease agreement has expired, it may be ended by the landlord or the tenant by giving written notice of termination. The notice may be given at any time. The owner is required to give 90 days’ written notice and the tenant must give you 21 days’ notice.
If the property has sold and the lease agreement has expired, the owner may terminate the agreement by giving 30 days’ written notice, on the exchange of contracts for sale. The tenant is not required to give counter-notice during this time if on an expired lease.
If you decide to sell your investment property, talk with our Investment Services team about the process. We have preferred real estate agents who share our values that we can put you in touch with.
If the property has sold and the lease agreement has expired, the owner may terminate the agreement by giving 30 days’ written notice, on the exchange of contracts for sale. The tenant is not required to give counter-notice during this time if on an expired lease.
We process funds on the 10th and 25th of each month. If these dates fall on a weekend or public holiday we will process the business day beforehand.
It’s vital to have high-quality photos. Yes, you or your property manager can probably take passable shots yourself – but ‘passable’ shouldn’t be what you’re aiming for! There’s a noticeable difference between a photo taken on a phone or amateur camera, and one taken by a professional photographer with top equipment.
Professional photos can help you highlight the best features of your property and make them the focus of your listing. A photographer knows exactly how to frame and present photos to show a property in its best possible light (both literally and figuratively).
KNOW A GOOD OPPORTUNITY
WHEN YOU SEE ONE
When it comes to property investment, without knowing what you’re trying to achieve, how will you ever know how to get there? Opportunities are everywhere, let us show you where to look.
