Increasing & Securing your property with a Granny Flat

Increasing & Securing your property with a Granny Flat

Granny Flats are a very positive investment that can both increase the value of your property & help service the loan on an investment property.

Granny Flats can increase the value on the property by adding another dwelling (Secondary Dwelling) on the land, in essence allowing dual rent from both the primary & secondary dwelling, which in the eyes of a potential buyer, is very attractive.

For home owners who are looking for holding on to the property for long term, a Granny Flat is able to service the debt and in some cases, is able to allow the property to be positively geared. lets say you have property loan for $1M, which is not impossible in Sydney's current property market. The current rough repayments on a 90% loan at 5% interest will be around the $900 per week, the rental return from the property will average around $650 per week, this means you will be paying out $330 per week to service the loan.

Now lets add a Granny Flat to the equation.
Granny Flat construction can cost around $100,000, which you can add to the loan of the mortgage, so now the total debt is $1.1M which will also increase the mortgage repayments to $970 per week, this may seem scary at first, but we haven't added the Granny Flats rent to this yet. The rent from a Granny Flat can average out to around $450 for a property worth $1M, so that means the rental return on the property will be around $1,100 per week, while the loan repayments are $970 per week, this in essence puts $130 back into your pocket per week.

So as you can see, a Granny Flat can be both a good short/long term investment that can be beneficial to adding value to your property and help service the loan.