AU Granny flat growth area
Property Here - Saturday, June 01, 2013
FORGET the in-ground pool or outdoor pizza oven, savvy property investors in western Sydney are getting on the "Gran-Wagon'' - filling their backyards with granny flats to boost their rental income.
The latest real estate craze, which has pushed some suburban rental yields close to the 10 per cent mark, is gaining significant traction, with a flood of companies now offering granny flat construction packages as part of their property deals.
The numbers are attractive: buy a house for $300,000, spend $100,000 on a granny flat and bring in two rental incomes which add up to more than $600 a week.
But property experts are beginning to raise serious concerns over a potential glut in the market, claiming investors who failed to do their research were being burnt.
They claim that, while the properties can be rented separately, the granny flat cannot legally be sold separately from the main home.
That leaves investors who later decide to sell faced with trying to offload an over-priced property to a limited pool of buyers.
"People say they add value, but granny flats don't go up in value - houses and land do,'' said Nathan Birch, B Invested buyer's agent.
"For a similar amount of money you could buy into two properties that will achieve good rental returns and also appreciate in value.''
Granny flats are better suited to owner-occupiers who build in their own backyard for an extra income stream, or investors looking to add positive gearing to their portfolio.
"If you're looking for positive cash flow, it's quite a safe strategy,'' said Rich Harvey, director of propertybuyer.com.au.
Mr Harvey dismissed the idea too many were being built: "We are undersupplied for rental. Sydney's vacancy rate is at 2 per cent.''
Read more: http://www.news.com.au/realestate/investing/granny-flat-growth-area/story-fndbarft-1226654963082#ixzz2Uvnuy2Pr