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Granny flats: A sensible investment for your family?

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As living costs rise, many Aussie families are looking for extra ways to maximise their existing investments. A growing number of home owners are looking to granny flats as a way to increase their home’s value, adapt to the changing needs of their growing or ageing family and as an additional income stream.

But these flats are not just for Granny.

Although traditionally a granny flat was built to house ageing relatives later in life, this demographic is beginning to shift. Granny flats are an attractive housing option for empty-nesters and downsizers, young couples or newlyweds saving for their own home, single parents and retirees, and more.

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Advantages to building a granny flat

Disadvantages of investing in a granny flat

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How much could it cost?

The cost of granny flats varies; the size and accessibility of your block will affect your building costs. Costs will also depend on the size, style and finish of your granny flat; on average a purpose-built Australian designed granny flat will cost between $100-120k. There are some lower cost options, like transportable cabin style granny flats or flat-pack DIY granny flats sourced directly from overseas. Take care and research these ‘less expensive’ options thoroughly, as they may not comply with Australian building codes and retrofitting them to meet Australian Standards may jack up the price!

Return on investment

Will you get a decent return on your investment if you build a granny flat at your property? Unfortunately, there’s no way of knowing this for sure. A granny flat may increase your overall property value. However, this is not always the case. Adding a granny flat will convert your home into a ‘specialised property’ meaning it will be attractive to a particular segment of the market, including but not limited to investors, who only account for 25% of the real estate sales market.

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There are pros and cons to adding a granny flat to your property, and, for many families, it’s a great way to adapt to changing lifestyles and circumstances. Many lenders offer financing or re-financing options for granny flats at existing properties. Remember to always seek the advice of a qualified financial consultant when making investment decisions.

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