Are You Interested in Having Granny Flats? Here are the Pros and Cons
Many homeowners call up contractors to inquire about the cost of building a granny flat. Who wants to keep that idle space forever when there’s always an opportunity to make something out of it, something that increases the value of your property too. For most people, this is a worthwhile investment that also has the extra bonus of added living space. Its an excellent opportunity and one that’s easily attainable, especially in areas such as Sydney where local regulations allow for quick approval of such additions.
This building niche has well and truly taken off, and many Sydney granny flat builders have taken full advantage of this miniature housing boom. But experts who have been in the industry of home extensions, additions, and flats know there’s more to building these units than only increasing the value of your property and making profitable use of vacant space. It’s time you knew the pros and cons of having a granny flat in your backyard.
Pro: Rent out the flat and gain revenue.
If you keep your empty backyard, it will never generate any extra income and will only cost you additional maintenance expenses. This is the way smart property owners think about the costs of adding granny flats. Most Sydney homeowners don’t take this investment lightly because spending roughly $70,000 to $100,000 for an addition to your property is not to be taken lightly. However, with apt management, you can recover this money in a few years.
Con: You may not actually see revenue.
Renting out a granny flat takes time, and it’s possible that it can sit idle and vacant for weeks or months. If you’re like any busy property owner who has a 9-5 job to wrestle with, finding the time to interview and acquire a tenant can be burdensome. So its possible to end up with a new granny flat in your backyard with no one renting it. When you’re not generating any money of out it, you may have a $80K case of buyer’s remorse.
Many property owners don’t have experience in finding tenants and renting out their property. They don’t know how to advertise it properly, and they don’t know how to find possible renters. They fail to grasp current market values, and they don’t know how much rent is a reasonable amount to ask. These same granny flat owners’ are often poor landlords and don’t know how to manage tenants or enforce the lease and will be hesitant to knock on the door and collect the rent.
If you spent $75,000 to construct a granny flat and you’re leasing it for $200 a week your only seeing a return of $5,200 per year. It would take quite a few years at this rate to recoup your costs, and you may not experience any measurable gains until you sell your entire property. At $200 per week, you’ll see no returns for 12 years without even factoring maintenance expenses and vacancy periods, during which your granny flat generates no revenue at all.
Pro: You get to have a neighbor.
You may be thinking ‘what’s the big deal’ because you already have neighbours, but there are definite advantages gained from having a neighbour in your backyard. Having a tenant right on your property means someone can watch over your house and take care of your pets while you’re on a holiday. It’s also good to have someone to invite for a barbecue or tea party.
Con: Your new neighbor may be more of a nuisance.
We all have different personalities, and you’d have to be lucky to find someone to lease out your granny flat who shares the same interests as you. Common complaints include renters who love playing music too loud and who frequently invite friends over for parties. Other complaints include suspect activities, tenants who don’t clean up, and residents who disappear for long periods without notice.