With the rise in popularity of granny flats, more and more investors are keen to know what potential investment yields can be achieved. In this blog post, we will explore the potential investment yields for granny flats and what factors should be considered when making an investment decision.
What is a granny flat?
A granny flat is a self-contained living space that is attached to, or part of, an existing house. Granny flats are typically used to accommodate elderly family members, but they can also be used as guest rooms, home offices, or rental properties. In recent years, there has been a significant increase in the number of people looking to build granny flats as an investment property. This is because granny flats can offer a high return on investment thanks to their relatively low cost of construction and higher rental prices.
What are the potential investment yields for granny flats?
The potential investment yield for a granny flat will depend on a number of factors, including the location of the property, the size of the granny flat, the quality of the construction, and the local rental market. Generally speaking, investors can expect to achieve gross rental yields of 5-7% for a granny flat in Australia. However, it is important to keep in mind that these figures are only a guide and actual yields may vary depending on the above-mentioned factors.
Pod investment yields have been seen from our clients at 5%-12% and would depend on the fit out, backyard space and furnishing of your granny flat.
What factors should be considered when making an investment decision?
When considering whether or not to invest in a granny flat, there are a number of important factors that should be taken into account. These include:
- The location of the property: Is it in a high-demand area? What is the surrounding infrastructure like? Is there good public transport access? These are all important questions to consider as they will have a direct impact on the rental price you can charge and the likelihood of finding tenants.
- The size of the granny flat: Larger units will obviously fetch higher rents than smaller units; however, they will also cost more to construct. As such, you will need to carefully consider what your target rent is and whether or not it is achievable given the size of your proposed unit.
- The quality of construction: It goes without saying that properties built to a high standard will attract higher rents than those which are poorly constructed. If you are planning on constructing a granny flat yourself, it is important to make sure that you use high-quality materials and employ experienced tradespeople in order to maximise your chances of achieving strong rental returns.
- The local rental market: Finally, it is also important to research the local rental market before making an investment decision. This includes analysing comparable rentals in the area so that you can get an idea of what your target market is willing to pay. It is also worth noting that areas with strong future growth prospects tend to see higher rents than those stagnant or decline areas.
By taking all of these factors into consideration, you will be able to make a well-informed decision about whether or not investing in a granny flat is right for you.
In conclusion, investing in a granny flat can offer strong returns; however, there are many different factors that need to be taken into account before making an investment decision.” These include location, size, quality of construction, and local rental market conditions.” By taking all of these things into consideration,” you will be able increase your chances”of achieving desirable yields from your investment.”