Granny Flats

Granny flats are a great way of increasing the yield of a property, provided it has enough yard space to fit a granny flat. The rationale is very simple: if a house rents for $X, and a granny flat will rent for $Y, then adding a granny flat increases your rent from $X to $X+Y.

The ability to construct a granny flat will vary dramatically by council and even by state. Some councils require granny flats to be temporary structures and won't let you put in a separate electricity meter, whereas other councils will let you build a permanent structure that is completely self contained. As with any other kind of development, check with your local council first.

New granny flats will cost around $50-60,000 depending on their size, type of construction and quality of finish, so will be positively geared if you can get more than about $80-90 a week rent for them, depending on your expenses. It is possible to buy second hand granny flats for surprisingly low sums of money reasonably easily from places like eBay or the Trading Post. Most granny flats are very similar to each other in size and construction, so if you have council approval for a fairly standard granny flat you should be able to substitute a secondhand one for a new one without any issues.

In some cases you may want to build the granny flat for yourself, for example if you own a house that is far too large for you you might be able to rent out your house and live in a granny flat in the backyard.

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