Even before the rise of the COVID-19 pandemic, the Millennial generation already faced a considerable challenge when it comes to growing wealth. An unstable job market, flatlining wages, substantial university debt and record-breaking property prices are all significant hurdles on the path to financial growth. Yet there is a trend being seen with young investors, who are making clever financial manoeuvres to kickstart their investment portfolio and secure a strong start in life. In this article, we reveal how building a Granny Flat is one of the savviest investment strategies a Millennial can make.
Location, Location, Location
We’ve heard it all before – location is key. But rather than analysing scores of property location data or attempting to predict the future of area growth, there is an alternative method being used by Millennials to identify locations of value. It seems to be trending that smart young people in their 20s and 30s are buying older homes on larger blocks of land in locations they don’t necessarily want to live in, but are attracted by the investment opportunity.
In the case of NSW, these areas tend to be outer suburbs and semi-rural areas where you can still buy a house for $300,000-$350,000. Some examples of these areas include Maitland, Singleton and Lake Macquarie in the Hunter Region, Yass and Goulburn in the Southern Tablelands as well as some suburbs of the Blue Mountains.
Maximise the Space, Maximise Your Investment
Once the right location and block of land has been chosen, the current trend being seen is that Millennials are then maximising the use of space as an investment opportunity. They’re achieving this by tenanting the front home, while they build a Granny Flat in the backyard. Blocks of land need to be over 550m2 to build a Granny Flat, however this is usually no problem at all in the specific semi-rural locations being targeted by financially-savvy young people.
With the rental return generally being at least $600 per week for the combined dwellings, this provides more than enough revenue to pay off a loan between $500,000 - $550,000 and means you can use any leftover income to help with rates and maintenance.
Have Your Smashed Avocado on Toast, and Eat it Too
Building a Granny Flat on your investment property brings an array of financial benefits. It not only increases the amount of rental revenue generated from your investment property, but Granny Flats are also a financially savvy option for Millennials as you can counter any periods of vacancy by distributing the tenancy over multiple leases – the main house, and the Granny Flat. Other advantages go beyond the rental attractions. For instance, after your Granny Flat has been built it instantly increases the value of your investment property, as it is increasing the bedrooms, bathrooms and functional space on the land. In fact, recent CoreLogic data reveals that building a Granny Flat on Australian land can boost the property’s value by as much as 30 per cent! For a $350,000 property, that equates to as much as $105,000 instant value added
As an ambitious young couple with minimal cash, you even have the option to rent out the Granny Flat while you temporarily live in the main house (or vice versa – you may prefer the modern luxuries of a Cubitt’s Granny Flat!).
Trust the experts with your investment and get value for money when you build a Granny Flat with Cubitt’s. Our friendly and passionate team have been building Granny Flats and home extensions throughout NSW and the ACT for over 25 years. We have the knowledge and experience necessary to build your dream project on narrow, difficult or sloping blocks of land, so you can get the most of your investment property. Plus, our planning and drafting teams have vast experience with local councils throughout NSW and the ACT, avoiding unnecessary delays to your project so you can move tenants in faster.
Cubitt’s have perfected Granny Flat designs to optimise the sense of space and functionality, so your tenants can feel comfortable and at home, and won’t want to leave! With a wide range of 1-bedroom, 2-bedroom Granny Flats and even 3-bedroom Granny Flat models to choose from, we also offer customised solutions to suit your individual tastes and specific needs.
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The idea of building a Granny Flat is exciting and it can be easy to get carried away, however it’s important to carry out the appropriate research before getting started. Be sure to consult both your local council and state government laws, as these will vary depending on your area.
Looking for an investment, flexible accommodation or a future rental property? Granny Flats are a practical and cost-effective investment that can be designed to suit any use, whether you’re wanting a pool house, teenagers retreat or Airbnb.
Granny Flats are known as ‘secondary residences’ in the ACT and are required to comply with regulations that are slightly different to those in NSW, hence why it is so important to refer to your local and state laws in the planning stages.
At Cubitt’s, we get it – Cubitt’s understand your needs. With maximizing your property’s space whilst keeping family close such a hot topic, we wanted to give you a strong outline of why a Granny Flat is the perfect solution to plan for now. Now that we are in a lockdown, there has never been a better time to plan for your Granny Flat.
Try to purchase a block that is rectangle, with house to the front and plenty of rear garden. It is best if the house is square on the land not on an angle….it gives you more room for privacy from the house and the granny flat.
You may need to vacate your home while the extension is being built. All first floors, or areas beneath works need to be vacated during construction. Legally, no one is allowed to be beneath construction works during the construction hours of 7am to 4pm or until sheet flooring has been installed.