Granny flats to improve property up to 21%
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Granny flats to improve property up to 21%

By Sasha Karen
Looking for a flat

A modular home building company is calling out for investors and first home buyers to consider adding a granny flat to their property, claiming a potential yield of investment between 13 to 21 per cent depending on location.

Housing affordability is always in the minds of both investors and first home buyers, and How-Nano Home’s managing director George Nori says granny flats are the answer to both adding value to a property, or providing additional housing.

“Although interest rates are at record lows, many Sydney first home buyers are still despairing at property affordability,” Mr Nori said.

However, with the first home buyer amendments coming into effect soon, those who intend to purchase a property for the first time will have various concessions granted, saving them a considerable amount of money. Mr Nori suggests these savings can be put towards a granny flat in order to raise the value of the property.

While this can help improve the value of a first home buyer’s property, this too can help out investors, with Mr Nori saying it can improve the return on investment by 13 to 21 per cent.

“For a normal house, [yields] … are sticking around the 3 per cent mark, or up to 4 if you’re lucky, but that’s generally what investors are looking that,” Mr Nori said.

“I gave details to a client who’s installing one of our products in Tempe, I set the specifications to a managing agent ... and she came back with a quote on the granny flat of $650 a week for a two-bedroom granny. That’s a pretty good investment.”

In order for investors to get on board with adding a granny flat, Mr Nori says the first thing that needs to be done is to determine the equity position the investor is currently in. If there is sufficient equity, then he says the next step is to appraise the land.

Lastly, Mr Nori says the last box to tick is to determine what kind of rental return is achievable, which can be done by analysing the rental returns the suburb of the property is located in.

“If you get green lights with that, then you can comfortably proceed with a pretty safe investment,” Mr Nori said.

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Granny flats to improve property up to 21%
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