Investment Property - Apartment/Unit vs Granny Flat

Ash-Say on 11/09/2015 - 08:22
Last edited 11/09/2015 - 10:21

I have recently purchased a house in Sydney which has potential to build granny flat(offcourse council approval is still required). I want to buy investment property now but confused between 2 bedroom apartment and 2 bedroom granny flat.

Granny flat is cheaper to build and rent will be higher than monthly loan repayment.The fence will also be built to provide privacy to new tenants and offcourse the new tenants will have their own separate access. However, it will eat majority of my rear yard and I am not sure how much people like to live in a granny flat. I am afraid about the vacancy period and potential to resell house with granny flat in it.

On the other hand, apartment/unit is expensive to purchase and I also need to consider Strata, water and council rates. The expensives will be more than return and I can make use of negative gearing. The only benefit is capital growth however I still need to pay capital gain tax.

I understand that the plenty of people on Ozbargain have investment properties so what is your suggestion?

Poll Options

  • 5
    Build granny flat as it provides high return on investment
  • 0
    Buy apartment/unit though it will only provide capital growth
  • 1
    Houses with granny flat are hard to sell
Home & Garden

Comments

  • JimB on 11/09/2015 - 10:19

    Being from Melb I've never been a fan of apartments, higher strata cost & lower capital gains compared to houses.

    Units are better, but houses are better again (all things equal).

    I'd build a granny flat if you are happy to reduce your land and have someone share your property.

    I'm sure you'll be able to rent it out.

    Resell? I don't think you can sell it separately from the main house, that's dual occupancy and a different kettle of fish.

    • Ash-Say on 11/09/2015 - 10:22

      I mean to say the potential to sell house and granny flat as a package (I understand they can't be sold separately).

      • JimB on 11/09/2015 - 10:26

        While it may put some buyers off, I think you will find someone who will pay more for it as it helps with mortgage repayments.

  • wal990 on 11/09/2015 - 11:16

    it really depends on your area, if your property is in a good location with high rental demand, granny flat would be the most obvious choice. But if your property is out far in the west, you will obviously have more vacancy etc…

    Houses with granny flats arn't necessary hard to sell, it just appeals to a different crowd. Investors will be happy to buy, while owner occupiers looking for more space maybe reluctant.

  • Flowerbomb on 13/09/2015 - 13:45

    Granny flats are great in inner Sydney, you can rent them out to students/young professionals etc. Like the above poster said, it really depends on which part of Sydney. If it's around redfern/chippendale, I doubt it will put buyers off. I know a friend who gets $230/wk in rent for his granny flat in this area. It's a very small studio granny flat without cooking facilities, if not he would be able to get around $270.

  • Baysew on 13/09/2015 - 14:01

    Have you considered the tax implications of having a granny flat ?

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