Have You Examined The Hidden Costs In Building Granny Flats

Buy sell Property & Real Estate Investment Guide

Buying Property Tips#1: Choose the Right Location
Before you choose a location, it is of utmost importance that you consider the development prospect of the area. Other factors to consider here is crime record of the area, availability and nearness of public facilities and utilities.
Buying Property Tips#2: Study the Local Market Dynamics
It is important to get well familiar with the local realty market. Learn the variation in property prices by street. Don’t shy away from asking a few realty investment agents questions to get better insight on the matter.

The interest rates have dropped to abysmally low levels, and most Australians are finding granny flats in Sydney as a sensible measure to augment their income. When you consider all the attributes of this apparently juicy deal, you can look at an annual return exceeding 10% when all gets right. So what are the primary drivers that will take you closer to the objective of getting better returns?

Location is Important

The location of your granny flat is important, particularly when you expect financial returns from the investment. Understand the demand for housing in your area and speak to your friends/neighbours to gain an informal understanding of the trends. Speak to real estate agencies and rental agents in your neighbourhood to confirm your findings. You must be able to find good tenants willing to pay the expected rent for a reasonably good tenure. What type of business or other activities is creating the demand push in your neighbourhood? Are there some new industries coming up soon, or perhaps a University? You can speak to granny flat builders in Sydney, and they will have the latest news ready for you. After all, it helps their business in a big way.

Buying Property Tips#3: Choose the Right Property
Getting the right property right away is quite unlikely. First, you need to be clear on why you want to buy an investment property. After that, you will be able to make right decision based on factors like remoteness or accessibility of the property.
Buying Property Tips#4: Do the Math Properly
Get a precise idea on the value of assets you have available. If you are investing in rental property, make sure you can easily cover the mortgage payment through rents. Additionally, get a clear idea on the appraisal value of the property beforehand.
Buying Property Tips#5: Consider Additional Expenses
When purchasing an investment property, it is not only the selling price that investors need to consider. There are various additional expenses such as property tax, home owner’s insurance, repair & maintenance that must be considered.

Have a Clear Understanding of What Constitutes a Granny Flat

If your property is not in a residential zone, your local council will not grant permission to build a granny flat. In fact, checking with your local council is the first step before venturing into granny flats. It should also be distinct from the principal dwelling with independent access and self-contained in other aspects. Only one granny flat can be built on one residential property, and the living space cannot exceed 60 square meters. Some local council allows additional allowances for carports, verandas, patios, etc. Similarly, if your primary dwelling unit is unoccupied, you may not qualify for a granny flat.

Get Help to Understand How the Numbers Pan out For You

Individual circumstances can differ significantly, and therefore illustrations can be only guiding points. Therefore, ahead of finding granny flats Sydney builders, getting some help to understand how the numbers pan out for you would be a shrewd measure. For instance, the weekly rent expectation in Blacktown is $350 against a mortgage payment liability of $200. So that leaves you with an annual return of $7,800. The flip side is, a tenant must occupy your granny home for all 52 weeks of the year.

Buying Property Tips#6: Inspect the Property
To ensure that you are getting everything you are paying for, a thorough inspection of the property is essential. Besides ensuring that you are not overpaying, a rigorous property inspection also gives you a good estimation on what the additional expenses might be.
Buying Property Tips#7: Pick the Right Financing Option
While interests on investment property loans are tax free, some borrowing costs aren’t immediately tax deductible. Knowing that, and structuring your financing in accordance is crucial. Don’t hesitate to ask for help from a financial advisor.
Buying Property Tips#8: Invest through Equity
One of the best ways to purchase an investment property is to leverage the equity of another property (including your primary home). This is a preferable way among regular investors, especially due to added tax deduction advantages.
Updated: May 3, 2018 — 4:10 am
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