If you and your spouse are undecided about having a granny flat built for you, or if one of you is still unsure about whether such is a good investment decision or not, it is worthwhile to look at the pros and cons before settling for a firm decision.
Although the outcome for each individual investor will depend on several factors, knowing the advantages and disadvantages of having a granny flat on your property will put you in a better position to ascertain whether such will help you achieve your investment goals.
More income from your property
With the addition of another unit to the main property in the form of a granny flat, you are assured of increasing your monthly income. In short, you will be getting two income streams.
With the additional income from your granny flat, you can turn your property that is negatively geared into a positively geared property. The drawback of ceasing to get deductions is offset by the fact that you will earn more money.
Many tenants are looking for these
Many tenants prefer these flats over apartments because these are often pet-friendly and the tenant gets access to a backyard. On top of that, many landlords include utility bills in the rent due to difficulties in securing separate meters. In turn, this makes a granny flat more attractive.
A buffer against vacancy
There will surely be a time when you cannot find a tenant for either the granny flat or the main property. However, you are assured that you are still getting income from either of these as each acts as a buffer against vacancies.
Possible reduction of rent from the main property
Some tenants will try to negotiate for a lower rent from their landlords because of the presence of other tenants on the lot.
Possible longer vacancy periods
Although a lot of tenants prefer granny flats over apartments, some tenants who are eyeing to rent your main property may take issue with the presence of other tenants on the lot. Simply put, prospective tenants for the main house want to avoid disputes and privacy issues.
No additional value to the property
While there are surely some property buyers wishing to buy a house with an attached granny flat, many prospective buyers feel that one does not necessarily bring value to the main house. If you are going to spend money toward a granny flat, be aware that it may not yield much in the form of property value. Another reason for that is that a granny flat does not exactly look good, and it can minimise the number of potential buyers.