Renovation VS Secondary Residence?

Do you have additional land and want to create an opportunity where your land can make money for you? Or perhaps you want to extend the family house?

Either option, you want to make an informed and educated decision. After all, whatever you look at doing is going to be potentially the second largest investment or purchase you will make.

A question we receive all of the time is “should we renovate?” or “should I build a secondary residence/ granny flat”. It’s a tough choice and it can be different for each household and block. It will also depend on your circumstances, needs and budget. 

Here we outline the Pros and Cons of both sides of renovations Vs. Granny flat.

We are not financial advisers and therefore you’ll need to seek out your own financial advice, this information is general in nature and you should consult your real estate agent, broker, finance adviser and your bank about your situation.

Benefits of a renovation:


Depending on existing structures that you have to work around, having the ability to design something custom to your block plus your custom wants and needs can be much better and sometimes the only option when extending the main residence.

Increase home value

Most renovations, painting, additions, skylights, knocking out walls to open areas up, adding bedrooms etc can increase the value of your home. This can be from a potential buyers or bank perspective. 

In the past we have received advice from agents stating to do the renovations how we would like them done and to make use of them while we can enjoy them. To re paint a whole house, put new carpet in and clean up the garden someone could purchase and rip out the expensive new carpet, change the wall colour and take out the entire garden. We originally thought, if we sell the place we will update some things but the agent said people like to customise things their way so if you want something do it now so you get the benefit not the buyer. 

When doing a renovation for yourself, you can also ask the bank to come and do a re valuation to confirm that whatever has been done has added value and can potentially give you further opportunity to refinance or borrow on the equity. Again this is just from our personal experience.


Likely if you’re going to renovate there is a reason and it is primarily for additional space.

In this day and age, more and more people are wanting to be close to their families. We have pandemics, lockdowns and restrictions which means if you’re not around your family, you may not see them for a long time. Therefore providing more space for the family or for guests in future to come and stay, more space is a great asset to have. 

Less future maintenance costs

If you renovate now, less to maintain later down the track and you can potentially fix issues that you didn’t realise needed to be fixed sooner rather than later. 


We were building a Pod in someone’s backyard and Rob mentioned that wouldn’t it be nice to tie the Pod look in with the house and add a couple of nice windows to the main residence with cladding in the middle of it. The clients loved the idea and we proceeded with it, until we found an obscene amount of termites in the walls and roof trusses. This could have been a huge issue and could have collapsed in the missile of the night while the family were sleeping if this wasn’t found. Therefore if you’re thinking of renovating, doing something now before leaving it a long time could actually save you money and safety issues in the long term if something were to go wrong.

Potential cons to a renovation:

Finding somewhere else to live for the time of the renovation

Depending on what you’re looking to do, if you’re looking at updating a kitchen or a bathroom you likely won’t want to live there. You could be living in a mess and without a kitchen means you’re eating out for breakfast, lunch & dinner and without a bathroom means you’re without a shower or toilet. Also do you want the tradies there when you wake up in the mornings?

Another possible issue to think about, is that living in it day to day, the progress may not happen as quickly as you thought, and therefore you could be disappointed each day instead of returning and seeing progress from the last time visited. 

All in all if you’re doing any kind of bathroom, kitchen or major renovation, you’ll need to account for the cost involved to rent somewhere or stay with family/friends for the duration of the renovation.

Costs can blow out

During a renovation and dealing with existing structures, to be honest, there are always surprises. Some might be small but some might be big, and these are costs that no one can foresee when quoting. There will usually be provisions and exclusions in the contract to allow for this. This can blow the budget out and there isn’t a way of controlling this unfortunately, it’s more just hoping for the best and choosing the right builder who can look after you if surprises arise. 

A renovation can cost around $3000+ per m2 for just the build, let alone your inclusions and connection costs of plumbing and electrical work so the price can get quite high, also it you make variations/ changes during the build the builder makes 20% on those changes.


The time it takes to renovate is usually unknown. When dealing with an existing structure it’s hard to give exact details but a good builder will be able to give some time frames but just understand it’s likely that the exact timeframe will be hard to determine. You’ll want to check and confirm with the builder their timeframe and what would happen if the worst case scenario were to happen.

Benefits of a secondary residence:


Designs that are already completed, tried and tested are a quick and easy solution to get what you want faster and for an already estimated cost. This have multiple benefits as a pre designed granny flat helps with the builders and trades knowing what they are building, the plans have usually been created so it’s cheaper to edit them then creating a whole new set and the costs can be more efficient because of bulk buying power from the builder/ manufacturer. 

Increase home value and can provide passive income

Like a renovation the value of your home can increase, a secondary residence can have a higher cost than a renovation but it will also has the potential add a lot of value to your home. It can depend on what type of structure it is like a class 1a or class 10a, if it has a full bathroom & kitchen with cooking facilities, if it is modern and contemporary etc. Because that will all determine if it can rent for a decent amount. 

In the Pods situation, in 2018 an agent told us that the 1 bedroom prototype secondary residence Pod increased the value of the home by 280k. In 2021 a Pod was valued at 450k for a 2 bedroom 2 bathroom when the bank came to re value the main residence with now a Pod on it. Our Pods have been renting from $450 per week up to $700 per week as of today’s market (2021). 

This has been our experience living and working with secondary residences but I would suggest talking to agents, other secondary residence companies and your financial brokers to make sure you build a quality product that anyone could rent out because those types of yields, I don’t think would come from renting out a 80k tiny house/home.


Sometimes it is nice to have a set cost for your build. This can happen with a secondary residence. A fixed price contract without variations or extras is possible and this can save you a lot of money compared to renovating. In ACT as of today’s date (7th Sept 2021), you can build a secondary residence up to 90m2 and also make it compliant to all the disability codes, rules and regulations. With these set costs and inclusions you have picked prior with the set design, there are minimal surprises (if any).


It is nice to have the option of staying in the main residence while a secondary residence is being built and seeing the progress from a distance to keep an eye on the project. It also saves in the costs to find rentals or the hassle of living with friends/ family for the duration fo the build. Also traditionally secondary residences are a little faster to get built then renovations (considering it’s of a similar size) and therefore nice to have all of the luxuries of living at home until your new home is built. It also doesn’t put pressure on the situation if there are weather conditions that can delay the project.

Potential cons to a secondary residence:


When building a secondary residence for family it can be a disadvantage that it is not connected to the main home. You could have elderly or kids living in the out-house and they may feel separated from the rest of the family. Honestly this can be a disadvantage or advance depending of the situation and the people living in the properties. 


I have recently been told by a carpenter in the industry that the best builders start working for the government and commercial jobs in Canberra. Therefore it leaves smaller, less known and diverse builders for residential projects. This may or may not be true but even myself have come across builders who are just in it for the money and don’t care about the clients. This is a huge mistake and an issue when completing projects. The good ones who are honest and genuinely wanting to help are tough to find and I would recommend doing a bunch of research before making your final decision. If things are cheap there is usually a reason.


There might be additional rates and land tax, building extras including: bathrooms, kitchen & having a rental house on your land. You’ll need to check with your accountant what these extras could be, but this must be taken into account when building a secondary residence in your backyard.

We highly recommend that you do thorough research on companies offering what you feel meets your needs. There are so many options available to you. It’s best practice to get 2-3 quotes that give you details of what you’re looking to do at a minimum. You will likely have to pay for detailed costs as it takes a lot to put together the inclusions and therefore a lot of builders who are trusted in the industry charge for that time. 

You usually know what is right for you once you meet the people involved and their processes. Your gut feeling/ intuition is what will usually make the decision for you, as long as it’s backed with a good builder or person behind what you’re purchasing.

It really depends on your budget, preference, timing, living arrangements and your future goals. 

Here is some food for thought on the pros and cons when  comparing renovation to building a  secondary residence.  We may be biased when it comes to secondary residents as its our bread and butter but for a lot of people council regulations and plot sizes make this not an option and make renovating a great alternative. In either case we take great pride in what we do and can either help you directly by helping build your dream secondary residence or by recommending solutions.

Please note this information is general in nature and you should seek your own professional advice. Written by Lisa, Jacki & edited by Jack from the team at The Pod Canberra.

If you would like to contact us, please do so by calling us on 1300 843 763 or by entering your contact information on our homepage and we will get back to you as soon as we can. We can even check out if a Pod can fit on your block without even visiting site. Find out how by going on our homepage

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