Why Consider Granny Flats in Wollongong?

 

 

Your house is the crown jewel of your life achievements, but even it can, eventually, become insufficient for the growing demands of your family. Do you simply need more space? Your children are all grown up now, and you are thinking about starting a new home business and you need extra space for storage and bureau activities? If so, you will have a tough choice to make. The real estate market in Sydney is currently on its last legs and for this reason, finding a property with a good listing price that will check all your boxes is almost impossible.

You can’t realistically afford to spend more than $1.3-$1.5 million on a house that will be just slightly bigger and 10% closer to your place of work, don’t you? So, the next best thing would be to utilise the services of granny flat builders in Sydney. ADUs might not look like much at first glance, but realistically, they represent perhaps one of the most intelligent real estate moves available to the average Australian family.

Granny flats are self-contained dwellings that must be constructed next to a main property and that are limited by a maximum floor plan of 60 square meters. They are fantastic to accommodate a growing family, to be converted into a separate office space and to be rented out for a supplementary source of income. Are they for everyone? Maybe not, but they are the best choice available if you want more space, you are not planning to deal with DA approval, and you want to expand on the real estate value of your main property.

What Can You Do with Them?

When it comes to granny flats, the only limit to their usefulness comes down to your imagination. In my parents’ case, for instance, their newly built ADU was converted into a separate bedroom in which my late grandma was housed until she passed away a couple of years ago. Now, that room is rented out for around $600 per week, and the money they get from that is used to fund their yearly holiday in Europe.

Likewise, one of my friends needed some extra storage space for their purchases, as they were planning to start a drop shipping business, and an ADU was the best way to increase the square footage of their main property without investing a fortune into building extensions.

ADUs are cheap to build and straightforward to design; they usually require only a CDC for building to take place, and typically, if you plan to rent them out, it’s likely that the money you invested in them will be recouped in around five to ten years. In fact, this is why I invested in my very own ADU.

A Substantial Financial Help

I live in Wollongong, and my current three-bedroom dwelling has an internal usable space of 160 square meters, while the total land of the property is just slightly under 590 square meters. It might seem like a lot, but it’s really not when taking into account the growing space demands of my family, and the square footage necessary for the continuation of our business activities.

Our house was valued at $1.1 million, but anything else that was bigger and closer to our children’s school was at least $1.5 million. Now, we do well for ourselves, but $400,000 is $400,000, and it’s hard to justify paying this much when the real estate space is marked by such increased volatility. So, we decided to invest in the market of granny flats in Wollongong. Was it worth it?  I think so.

A Way to Obtain a Positive ROI

We invested a total of $170,000 in the services of granny flat builders, and I think we can recoup this amount solely via the valuation increase that the granny flat brought to our main property. Plus, at least for now, we decided to rent the ADU for $550 per week, and we currently have a long-term tenant who, fingers crossed, will stay here for more than a year.

We did the math. At $550 per week and with around $2,500 in expenses, our total profit will come to around $26,100 per year. Our marginal tax rate is currently set at 30%, but if we are smart with our deductible expenses, I think we can achieve a total rental income, after tax, of $20,000 per year. Which is not bad, as, realistically, this will mean that we will recoup the investment in the ADU constructed by the granny flat builders in only eight and a half years.

A Flexible Investment

Granny flats in Wollongong are one of the best investments you can probably make in this city. The average property price in Wollongong is currently set at $1.3 million, and the past 12 months’ growth was only 0.9%, so you can say the prices are staying relatively stable. Buying new property around here, therefore, cannot realistically be considered a good investment, at least not when many are predicting a new housing crisis in the next five to ten years or so.

ADUs, when built by granny flat builders in Sydney, are a safer bet. Additional dwelling units are fast to build; they require less paperwork than other types of construction projects; they can often be built for less than $200,000; and it’s not unusual for them to bring around 10% to 15% to the overall real estate value of your main property. For some, they are the future of affordable housing in cities such as Sydney, Melbourne or Perth. But for others, they are just a good deal.

ADUs Can:

•                      Allow you to expand the usable square footage of your dwelling while remaining in the neighbourhood you already formed connections in
•                      Be a way to future-proof your home
•                      Be a tool to improve your quality of life, by adding lifestyle features to your existing property
•                      Improve the functionality of your property’s layout by allowing you to expand on storage solutions and enhancing the spaciousness of your working area