There are a few options for investors looking for ways to maximise their granny flat rentals. Once your granny flat is built, you can certainly improve your chances of attracting quality tenants, especially in the design process. What can you do to increase your granny flat rental income?

Great Planning and Design

Here are a few tips to make your new granny flat irresistible to tenants :

1. DESIGN – It’s vitally important to design your new granny flat with a view to creating visual and acoustic privacy between the two occupants.

2. LOCATION – It’s always wise to purchase a property which has convenient access to shopping centres, schools and transport. If all three aren’t close by, we recommend public transport as first priority since transport makes getting to schools and shops a lot easier and faster as well.

3. RENTAL HISTORY – Talk to us about what other granny flats are achieving in the target area. If no granny flats exist, try to plan for privacy and separation. This can include providing separate parking and pedestrian access. Whilst not always possible, it does attract tenants easier and can command higher rents.

4. FINISHING TOUCHES – This means providing your new granny flat tenants with adequate soundproofing, quality fittings, ease of access, good-sized bedrooms and bathrooms. This can be achieved through clever design, good fencing, including solar energy and even a small garden shed for their gardening tools, knick-knacks and storage needs.

Summary

A lot of investors come to us for help in building their new granny flat. Often, their first priority is building as easily and cheaply as possible. We are of course experts at achieving this goal. We always remind the client, though, that once the builder leaves the building site, there’s a little more to do. This includes providing a separate letter box, clothes-line, garbage bins, pathways etc. These are the things which will can make renting out your new granny flat so much easier for you, us as your Property Managers and of course, your new tenants.

We trust this guide has highlighted the need for careful planning to include privacy, separation and aesthetics. This means adding quality inclusions which will ensure you can attract quality tenants and maximum granny flat rentals, for now and for many years to come.

Julie Adams
Director
Ipswich Granny Flats

There isn’t one property investment or wealth creation group in Australia at the moment that isn’t singing the same song : 2014 – Queensland is the place to invest.  Particularly SE Queensland, especially where you can produce two incomes from the one property without having to do dual occupancy and all it’s associated fees and charges ie: Dual Living as they are all calling it …

Have I mentioned yet that we are the only council in Queensland to allow this from an investment point of view – Come in Ipswich !

Of interest is RPData’s view on the take : much lower days on market stats, and lower levels of vendor discounting, all good signs the market is moving and on the rise.

The world according to According to RPData …

Market insights for your postcode: 4305

Rental Median (H) : $285 Rental change over 5 years (H) : 5.6%
Rental Median (U) : $275 Rental change over 5 years (U) : 12.5%

RPDATA : Tim LAWLESS

Welcome to RPdata update on housing market condition for March 2014.

Last month we saw dwelling values track sideways, the first time in eight months where capital city dwelling values didn’t rise on a month to month basis. With interest rates remaining low we are expecting further value growth but probably not at the same pace of what we saw in the second half of 2013.

This was the first month where capital city dwelling values didn’t move higher after posting a ten percent rise over eight consecutive months of growth. Whether this latest month on month is signalling a change in housing market conditions is yet to be seen. We’ll need to see a few more months of flat to negative movement to know if a weakening trend is becoming established.

What’s more likely is that the flat February result is simply an adjustment to previously strong December and January readings where values were up a cumulative 2 percent with a rolling quarterly gain across every capital city apart from Darwin. Most other indicators are still showing very robust conditions at least from a macro level.

Auction clearance rates remain high with the key auction markets in Melbourne and Sydney continuing to record clearance rates well above the seventy present mark as well as higher than normal auction volumes.

Average selling time is showing its typical seasonal spike in January however the reading remains much lower than previous January periods and follows a record low average days on market in November and December. Vendor discounting is also tracking at a very low level with a typical capital city vendor discounting their initial price expectations by just 5.6 percent.

Since the start of the current growth rate back in June 2012 dwelling values are up accumulative 13.2 percent. Sydney’s housing markets has been the primary driver of growth over the cycles to date with values up 18.6 percent since June 2012. Darwin and Melbourne and Perth have also recorded double digit growth over the cycle to date with values now 14.5, 14.4 and 13.8 percent high respectively. Apart from Hobart the remaining capital cities have seen dwelling values rise by less than five percent over the current cycle so strong capital gains have taken Sydney’s values 12.6 percent higher than the previous peak which was back in November 2010. The Melbourne and Perth housing markets are also showing dwelling to be a record high while all other capital cities needs to see further value rise before posting a nominal recovery.

Another positive indicator in the housing market is a mortgage index. Over the month of February RPdata was tracking record levels of mortgage actively across its valuation platforms. The mortgage index is still ramping high after the seasonal average slow down and we expect the index to move to a new record high over the coming weeks. This index show a very strong correlation with housing finance starter for the Australian bureaux of statistics so we expect to see a significant volume of housing finance commitments when the bureau report the housing finance date in six weeks’ time.

The Brisbane housing market had continued to rub contrary to both expectation with dwelling values posting a two percent fall over the month. The trend data is also relatively soft showing a 0.6 percent rise over the past three months and a 2.8 percent rise over the year.

I still think that Brisbane housing market is the one to watch for capital gains this year due to the higher rental yields, better affordability and much earlier stage in the growth cycle.

Buyer demand has increased substantially over the past year with a number of home sales over 25 percent over the December quarter compared with the same time last year and it’s likely this initial demand coupled with a relatively insufficient level of new housing construction will start to push local values higher.

Overall the zero capital gains result in February needs to be viewed in line with the most recent trend in other market data flows considering the strong results in auction markets and mortgage related evacuation activity over the month the soft index result is likely to be more reflective of the market taking a breather after such a strong December and January reading rather than a sign of a faltering market.

Its important to remember that the RPdata is mark value index is not seasonally adjusted so the flat rate of growth can partly be attributed to the seasonal factor at this time of the year.

The next few months of data will provide a much better indication to whether or not a slowing trend is becoming apparent. Interestingly the flat February result did coincide with the slump in consumer confidence as well.

The Westpac Norman institute index of consumer sentiment posted a three percent fall over the month to reach its lowest value in nine months. The correlation between buy demand and dwelling values consumer sentiment is well documented. If sentiment levels remain low going forward we can expect that to result in lower level of housing market activity.

Labour market condition weakens also based on the most recent data for January with the Australian Bureau of Statistics posting that unemployment rates moved to six percent with a deterioration in the labour market health can also be seen in the decline of the total number of full time jobs however part time of numbers have risen over the past year indicating that businesses are still creating jobs but seemingly lack the confidence to recruit full time staff.

The Reserve Bank is looking increasingly reluctant to lower interest rates any further and their recent statements have indicated a neutral interest rate setting for the foreseeable future.

The ASX cash rate for the future has implied yield curve is a stable cash rate setting with a trend suggesting there will be no change to the cash rate for at least the next twelve months.

With interest rates remaining low we do expect housing market conditions to continue along the growth expectory however our view remains that conditions for capital gains across the largest capital Sydney and Melbourne will start to taper a more sustainable rate of capital growth while high yielding cities, particularly Brisbane, will start to show an improvement in what has been a relatively weak growth trend to date.

…….

CASH IS KING, but so is PRIVACY !

So now you know what sort of property is suitable for a Granny Flat, it’s crucial to design your new Granny Flat with a view to creating privacy between the two households, whether both are investment properties, or a home owner that has built a granny flat investment in his backyard.  You need to create visual privacy as well as acoustic privacy.

The idea of building a new, separate stand alone ‘Auxilliary Dwelling’ or granny flat is a no brainer, a great idea!  But it does need some strategic thinking and careful consideration and planning to ensure the new building doesn’t detract in any way from the already existing principle dwelling.  This means enhancing visual privacy, providing landscaping to suit and improving the over all aesthetic appeal.

There will be occasions, such as can be seen in our Raceview Investment Property Case Study where investors have bought a flat vacant block of land, and built a new 3 bedroom x 2 bathroom x SLUG + 2 bedroom x 1 bathroom + single carport (granny flat) with a common wall in between.  Even in this instance, careful design and planning was essential so that both tenants have visual and acoustic privacy, ensuring that both also have separate backyard space and appropriate privacy.  If good design is applied at the beginning of the planning stage, this can be achieved so that it’s a WIN / WIN for both tenants.  And we all want happy tenants!

CASE STUDY EXAMPLE :

We have a good example of a work in progress in the early planning stages.

Check out our YouTube videos : Ipswich Investment Property Project Diary: Newtown –  Part 1 and 2.

This property is a reasonably flat level site of just over 1500m2.  The owners have nearly completed the sub division that will result in two separate titles : a rear lot of approximately 1,000m2, and front lot that has an existing highset Queenslander on the front right hand corner.  The end product : two clear titles.  Unfortunately we have had to clear the site because of the position of the trees, but we now have a great building envelope in which to commence building work, 20m x 43m + driveway access.

The trick for the rear lot (newly created vacant land) was to be able to position a new main dwelling of 4 bedroom x 2 bathroom x DLUG with reasonable yard space and privacy, whilst still allowing for a new separate stand alone granny flat that also had to have a private back yard and not be encroaching on the main house.  And not end up with two new houses that were dark and dingy with no private space.  One of the key benefits of using an architect : a designer whose absolute passion is being able to provide an affordable product that uses sustainable building principles, passive solar orientation and yet still not compromise on good design principles.

This then brings us to the existing front lot.  We have a highset Queenslander positioned in the front right hand corner of the block, leaving us a reasonable size backyard.  The newly created access drive way sweeps down the left hand side of both properties, thus enabling rear yard access via the newly created drive slipway into the front lot.  New dividing fence between the existing Queenslander and soon to be separate stand alone Granny Flat in it’s backyard !

The Queenslander is in the process of having a new front verandah which has a prevailing breeze and magnificent views across Ipswich – imagine sitting there at the end of the working day sitting, complete with glass of wine in hand …

Maximum use of the original whole property – great for the interstate investor concerned.    His investment is now extremely cash flow positive.  Great design without compromising on sustainability or budget.  But still achieving complete privacy for all concerned – truly a WIN / WIN / WIN …

Do you have an investment property ?

Would you like us to show you how you can achieve the same as this interstate investor ?

Want the solution : Call Sonia from Ipswich Granny Flats

0403 309 136

With our demographics changing and our population growing the need to provide adequate housing is putting more and more pressure on Local, State and Federal Governments.

Ipswich City Council has stepped up to the mark with the introduction of auxiliary dwellings included in the revised planning scheme. Not only can you add an auxiliary dwelling (commonly known as a Granny Flat) you can also rent it out to a ‘third’ party. Essentially this means renting it to tenants. You can live in the house and rent out the Granny Flat, or live in the Granny Flat and rent out the house. Investors can rent out both the house and the Granny Flat as individual entities to two completely separate parties.

Vision Property Group manages most of the new Granny Flats in Ipswich. We were aware of the councils intention to introduce auxiliary dwellings since it’s early inception and have working diligently in perfecting the formula to put the ‘right peg in the right hole’.

So, who rents a Granny Flat?

The Downsizers

Tracey was a home owner who decided to sell and rent, taking the pressure off meeting the mortgage payments every month. Living in a granny flat provides the security, the space and the affordability that Tracey needs, not to mention less mowing! She has formed a great friendship with her immediate neighbour, they watch out for each other, helping with everything from babysitting to collecting the mail. It’s a win/win for both parties.

The Savers/Newlyweds

Max and Trish are saving to buy their first home. They are young and savvy. They want to be independent from their parents but at the same time want to bank some of their wage each week toward the deposit for their new home. An “Ipswich Granny Flats” design is modern, sleek and individually designed to utilise the unique elements of every site and affordable. If Max and Trish are first home owners, they maybe entitled to the Queensland Government’s $10,000 Great Start Grant if they wanted to build a new home + granny flat – ask Ipswich Granny Flats for more information.

The Single Mums

While there is always a stigma attached to single mums, the reality is that there are a lot of women out there who have been given the responsibility of raising children on their own. Their needs are safety and security. By making sure that consideration is given for both parties, Granny Flats are the perfect scenario for a woman on her own to have that security while also maintaining independence.

The Retirees

It might not be your mum and dad, but it might be someone else’s who has the desire to live in a new, modern home without the cost and all the work associated in maintaining a large home. Even a real Granny is the perfect candidate, an elderly person happy with some companionship whilst maintaining their independence at the same time.

The rise of the Granny Flat phenomena is growing Australia wide as we speak!  There is a chronic housing shortage across the board and, coupled with housing affordability it seems to be the next logical step to be looking at.

Western Australia is the latest state to jump on board and now allows the humble Granny Flat to be built as an investment as well as for the immediate family.  Homeowners and investors alike have begun to realize the huge potential of this – I’m talking about a positive return on investment (ROI).  The maths is really quite simple, particularly if you are in a negative geared situation : this may be the way to turn that situation around.

So how can you secure your granny flat construction loan?  The simplest way to secure funds for your new granny flat is either via a ‘Redraw” facility or a ‘Line a Credit’ on your existing housing loan.  To put it simply : If you owe $200,000 on a property that is worth $400,000 you have $200,000 in equity.  And say a granny flat is going to cost you $110,000, you could finance the building of through the $200,000 equity you have.

If you don’t have any equity or don’t want to use any redraw facility you have the next best thing is a ‘Construction Loan’.  This loan product is slightly different from a standard mortgage loan as you use the value of the existing property and the proposed construction build as security against the granny flat loan.

How do I apply for Finance?

If you have an existing bank manager or mortgage broker, this is probably your first port of call.  As this is a Queensland first initiative, Ipswich City Council is a leader in the approval for Granny Flat or ‘Auxilliary Dwellings’ for investment purposes.  We here at Ipswich Granny Flats have been instrumental in the building of the first two new builds and in the process for a number of other stand alone, purpose built Granny Flats.  Each individual owner has had their own personal financial situations, and each one has been financed differently.

But essentially the process has been the same, with the lender needing two documents as part of the approval process :

–                Your Granny Flat Approval from Ipswich City Council
–                Your Builder’s Contract

There are a number of ways that you can reduce costs associated with financing the building of your Granny Flat.  It’s not brain strain stuff and it pays do some of your own research.  Here are some ways to minimize these costs :

–                Home Loan Establishment Fees
–                Granny Flat Approval
–                Construction of the Granny Flat
–                Valuation of the property

As part of the pre-approval process the lender will do a Valuation.  Find a lender that doesn’t charge YOU.  Ask about Loan Establishment Fees or any other fees and charges they may have.  Shop around, and certainly don’t be afraid to ask what is the best they can do for you  – it’s amazing what you get if you ask for it …

One of the requirements for your finance is the actual formal approval for the Granny Flat.  For Ipswich City Council, either a Private Certifier or one of the council’s certifiers can provide this for you.  My advice to you is to choose a designer / draftsman that is experienced and familiar with the council’s requirements for the local Ipswich area.  This will ensure that between the design and final approval process, it will be as smooth and easy flow as possible, thereby keeping your costs to a minimum.  You need to engage the experts in their field ie those that deal with this every day – and Ipswich Granny Flats are the leaders for your granny flat builds.  We sold the land and have been instrumental in building the first brand new build for the buyers to live, and have completed the first new build for interstate investors in Raceview.  It’s a very exciting time for us all …

The final and probably most important part of the equation is the Building Contract which needs to be completed prior to the loan approval.  As with a contract for a house or land, the building contract is a legally binding document that should be prepared by a Licenced Builder.  It will either be on a Building Services Authority (BSA), Master Builders Association (MBA) or other commercial Building Contract such as provided by the HIA.  Your certifier will also want evidence of insurance for the project and Long Service Levy if applicable.  ‘Home Warranty Insurance’ also needs to be addressed for each project, and you will find your lender won’t release either the progress payments or the finance without this.  This is extra protection for you during the whole granny flat build process.

Summary : Without the formal building and plumbing Approval from Ipswich City Council and the Building Contract from a Licenced Builder the lender will not approval your Construction Loan.  So have all your ducks in place first …

We would also recommend that you use a lender or broker with the experience and the local knowledge of the whole process, someone who lives and breathes Ipswich – we can point you in the right direct here as well, just ask us!

Ipswich Granny Flats

We here at Ipswich Granny Flats have done the only developments of this type here in Ipswich under the new relaxation of the planning scheme.  With building experience spanning 35 years, and a hands on, local knowledge and understanding of the specific planning requirements, why would you look at using anyone else?  It’s a no brainer for those looking for a quick effective solution to their families needs or for the astute investor looking to gain a positive return on investment (ROI)!

The second new build has been completed, but its actually the first project to have Ipswich City Council approval from a pure investment point of view – we are the local market leaders!  Just ask us, we’ll tell you …

Building Payments, the drawn down ..

An initial 10% deposit based on the total contract price, on signing the building contract will be required.  Once construction then begins, it will progress on a drawn down payment system.

Through the progress of the job, payments for each stage will be requested through to final completion.  The lender will have a loan assessor / registered valuer confirm each stage before signing the next progress payment approval.  Once construction is complete and the Certifier issues the Form 21 Completion Certificate, final payment will then be made.  It’s at this stage that your Construction Loan then coverts to a standard loan product whether it’s setup up as a redraw facility or interest only loan

Turn Key product

This is what we like to do best.  We understand that for most home owners or investors, time is so precious.  Who wants to be buying clothes lines, putting in dividing fence lines or worrying about carpet and curtains?  Let us do this for you – it’s what we do, let us finish it off …

We hope the above has been a guide that helps you understand how to secure a granny flat construction loan

Want further information about finance to assist you in

the Granny Flat process?

Call Sonia at Ipswich Granny Flats – 0403 309 136