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8 Pros and Cons of Building a Granny Flat

Property and tax specialists say that granny flats offer up to 15{1973852c3d03fa9c7b89cf4e32c90950349d2a7529a1646edaa4b9e79bec0c07} rental yields. A granny flat, for those who aren’t aware, is a stand-alone structure or an extension of a  house that is turned into a separate accommodation for elderly people. Today, many families use it as a form of investment regardless if they know the senior person or not. Certain laws have been passed and approved, which made building one easy and a more preferred option for investment.

Nevertheless, before you go planning on building this space near your home, you might want to learn about its advantages and disadvantages.

Advantages of Building a Granny Flat

The laws in Western Australia, Tasmania, and the Northern Territory allow granny flats to be rented and become sources of extra income. However in other places, such as South Australia, Victoria, and Queensland, this is not so. With the right location and proper management, your backyard flat could just be turned into a gold mine. Here are some of the benefits of building one right in your own backyard:

  1. Extra Income. Backyard spaces are not used as luxury areas anymore these days. People have become smarter and have thought of ways to cope up with the increasing cost of living. Building astand-alone apartment in your own backyard could generate extra income, which you can use to pay the bills, student loans or mortgage. This can become one of the ways to get your financial freedom faster.
  1. Increase of Property Value. An investor can see this space as a source of extra income, so he or she might be more willing to pay a higher amount to acquire the property. For a family buyer, extra space can mean more people or relatives to bring in the house. Eitherway, ask your real estate agent for the exact value a granny flat could add to your property.
  1. Tax Depreciation. According to tax specialists, portable granny flats provide more claimables on your depreciation schedule. Moreover, this space can offset the yearly tax that you need to pay if you build it from scratch. Get in touch with your local tax advisor to give you specific data on your claimables and schedules.
  1. More Comfortable Lifestyle. Relying on one income to sustain you is not wise these days. That’s why most people opt to have two jobs or invest in a rental apartment. Constructing a flat gives you an alternate steady source of income and may mean you can forgo getting a second job, meaning a more comfortable and planned lifestyle.

Disadvantages of Building a Granny Flat

While there are benefits of owning a granny flat, there are also certain risks involved. If not managed well, this gold mine in your backyard could turn into a giant sinkhole that drains your money, time, and energy. Here are four things you need to look out for:

  1. Maintenance and Property Costs. Sincethis space cannot be put on a separate ownership title, its cost is added to the price of the main home. If you’re planning to sell just the          flat, you won’t be able to since they can’t be sold separately.
  1. Possibility of Increased Expenses. When setting up a granny flat from scratch, you can’t really tell how much you’re gonna spend. It is important to do your research and obtain accurate quotes in order to allocate a budget accordingly.
  1. Over-capitalisation. We’re not saying you already over-capitalise but there is a high potential you might. Sometimes the cost of the such space does not reflect higher in the overall home value. Moreover, the market depends on construction quality and rental yields.
  1. Privacy Concerns. If you’re the type of person who values peace and privacy, owning a granny flat might disrupt this. You might wake up next to noisy children playing dodgeball or a group of elderly people who are exercising on the patio.

Building a granny flat is a big decision and investment. Make sure you’re making the right one. For a stress-free construction, try transportable homes. These granny flats aren’t built on site and are transportable, which means you’ll be spared the hassle of cleaning your property or dealing with disruptions caused by construction.

Give Fox Transportables a call to learn more about transportable homes. We’ll be happy to take your call and answer your questions.

Fox Transportables Pty Ltd

12 Beringarra Ave, Malaga WA 6090

(08) 6377 8335