A transportable, self-contained granny flat has many uses placed in the family backyard as in-law accommodation, craft studio, home office and more. Granny flats also offer golden opportunities for investors looking for an excellent return on investment.

Purchasing and installing a ready-built granny flat on your own property, or in the backyard of an investment property, is fast, easy and affordable and can provide a steady income stream. Your granny flat can be rented out full-time or as Air BnB type accommodation. Alternatively, you can choose to live in a comfortable, modern granny flat yourself and rent out the main house, a choice many retirees are making in order to have a lower maintenance home with a steady income stream to boot and the opportunity to remain in their current location.

Depending on your location, even if you borrow the full amount to buy and install a granny flat, you could still have a positive cash flow investment. For example, in Sydney, a granny flat can return a rental income of from $350 to $450 per week.

Why use a granny flat as a rental investment?

As a property investor, it is important to look at any potential investment in terms of return on investment (ROI). This is the percentage return over one year, as compared to the upfront amount invested.

As an example, if you were to spend $10,000 and, after one year, it had generated $1000 net return, your ROI on this investment would be 10 per cent per annum.

If you use this formula, you will soon see that investing in a granny flat for rental returns has the potential for a very profitable return on investment. Simply compare the rental income that would accrue over one year, against the total loan repayments you would need to make during that same year.

If you are not sure what the rental income would be, speak to a local real estate agent who specialises in property management. If you have a larger property in a rural location and are planning to rent out the granny flat as Air BnB type accommodation for travellers and tourists, do your research into holiday accommodation rates for comparable accommodation in your local area. Also, compare the booking prices of other properties to ascertain how many weeks bookings you are likely to get annually.

If you have the cash to purchase a granny flat outright, then to calculate your ROI divide the total cost of buying and installing the granny flat (which will include connecting the granny flat to water and electricity) by the annual rental return you would receive.

A modern, stylish and comfortable transportable home/granny flat can be ordered, delivered and fully installed on your property in a matter of weeks, quickly and easily adding to the overall value of your property and giving you a steady income stream from renting it out or moving into it yourself and renting out the main house.

As long as the granny flat you choose complies with government regulations as to maximum size and is placed on your property according to local council requirements regarding boundaries, there is no long process to go through regarding gaining council approvals.

Adding a granny flat is a quick, safe and affordable investment with high returns proving extremely popular with homeowners and investors alike. Modern, stylish designs with quality finishes and fittings are making the addition of a transportable home even more attractive.

Some additional benefits of adding a granny flat:

  • Additional income

Most Australians rely on a single source of income to fund their lifestyles and their retirement – their full-time jobs. This is risky. Installing a granny flat to provide rental income provides a second income that is a failsafe should you lose your job and have trouble finding another one.

  • Decreasing investment risk

If you are already a property investor, installing a granny flat on an investment property you own not only increases your overall income from rental returns but provides a safety net if the main house becomes vacant for any length of time.

  • Increasing the value of your property

Installing a granny flat can substantially add to the overall value of your property. A family viewing your property to purchase might view it as additional space for a teenage retreat or craft room, an investor will view it as an opportunity to derive additional income from their property purchase.

A granny flat adds extra living space to your property without the high expense of adding an extension to your home. It’s a cheaper option that can add just as much value and, in fact, can be even more desirable to buyers.

If you are considering adding a granny flat and are not sure how much value it would add to your property, speak to a local real estate agent you trust to get a free appraisal.

  • Tax advantages

A granny flat rental will give you more to claim at tax time on depreciation. As it is delivered to you brand new, you can claim depreciation each year to offset your tax obligations. Speak with your accountant to get accurate information on how installing a granny flat would benefit you over the long term.