Granny Flats are a popular option for some property investors in Australia. This video discusses a few things to consider before making to decision to add a granny flat, or buy a property with a granny flat already built.
VIDEO TRANSCRIPT
Okay, this one’s a little bit more controversial, perhaps than some of my other videos, but today I want to talk, you know, really quickly about the idea of adding a granny flat to a property. So, you only have to pick up sort of any sort of magazine or you know, or sit on Facebook or anything, and you’re going to find a lot of people sort of advertising you know, the ideas of adding extra income via adding a granny flat. Look, there’s nothing wrong with that, but I think that a lot of people sort of misunderstand the risks of adding a second dwelling. So, look, at the moment, these sort of places or these sort of strategies rather are really, really popular in parts of Brisbane, and they were popular in parts of Sydney, you know, a little while ago. So, look people are really keen on exploring the idea of granny flats, and I certainly know why. On the surface, it looks really attractive. You know, you buy maybe an established house or an old house at the front you find something that, you know complies with the existing council regulations and then you look to put sort of around that sort of 55 square metre granny flat on the back and add that sort of secondary income. So on a spreadsheet that can look really attractive. There’s plenty of companies that can help you buy these things. Plenty of companies who can actually sort of, you know turnkey manage the entire build for you and it doesn’t need to cost that much. So certainly I can understand where people are coming from there. But the big thing for me and what I you know am really at pains to explain to my clients is that just because you can put a granny flat on the back doesn’t mean you necessarily should. Okay, so one of the things that you need to understand is certainly from a risk mitigation or risk management point of view is if everything hits the fan, how can you exit that asset, and that’s what we sort of like to look at before we even purchase it. For example, if you lose your job, have some health issues or whatever it might be, you might not have wanted to sell that property, you know, in 2 years you might have thought maybe you want to sell it in 20 years. But if that happens then I want to be able to get access to as many potential buyers as possible. One of the big issues I have with people sort of, always going for that you know, find a place and put a granny flat immediately on it is in a way you’re kind of chopping out around 70 percent of that potential market. Right so, say a suburb has 70 percent of it is owner occupiers, and you put a granny flat on the back then really you’ve kind of chopped off 70 percent of that market. So, that’s one of the things people don’t generally consider in my experience. And you know, quite often to be perfectly honest. You know, I’ve seen examples of it. You know people put the build on the back. The add might cost them 150 grand all including fees and stuff but you know that property hasn’t actually added 150 so in a way they’ve sort of lost value in that time so that’s obviously not ideal. So look when you’re looking at granny flats I think there’s quite a few things to think about. The immediate cash is just one thing you know, you have to look at your strategy again, work backwards and understand if that’s the right thing for you and if it is, good luck. You know I’ve seen plenty of people get it to work but it’s certainly not as simple as what they say on Facebook.
