I have recently commenced looking for my first IP in Western Sydney which is the area I live. I’m considering a house with a large block which has the potential of a Granny Flat.
Areas of consideration are Old Mt Druitt, North St Marys and Doonside. Can you consider an other locations up to $400K.
Can anybody offer advice on Council rules regarding Granny Flats? As an investor what type of property should I be looking for to hold a Granny Flat?
I’m new to this seen and any advice you can offer would be greatly appreciated.
Thanks.
Colin
Hi Hadoman,
Just a few things to hopefully get you started. I have worked on a few applications whereby the investor has a property of say $350k. They spend $80k for a GF. Therefore you imagine that the property would be worth $430k. However when the lender's valuer values the property it often comes a little less say $400k. So do not assume that the construction cost of $x will certainly increase the value of the property by $x. This is important when is comes to finance.
Secondly, you often do not need to go to council to get approval for GF's.
Take a look at this site for the conditions:
http://www.legislation.nsw.gov.au/fragview/inforce/epi+364+2009+sch.1+0+N?tocnav=y
Also re area – try looking at Mt Druitt and somewhere close to the station – there is plenty of investor activity their due to the rental yields and low entry points.
Hope that helps you in the right direction.
Regards
Shahin
TheFinanceShop | Elite Property Finance
http://www.elitepropertyfinance.com
Email Me | Phone MeResidential and Commercial Brokerage
Hello Shahin.
Thanks for the info.
I live close to Mt Druitt so I have been keeping an eye out for a reasonable property which is suitable to hold a Granny Flat.
I understand your point about investment (House Purchase + Granny Flat) not always matching Lender evaluation. I'm looking for a 5-10 year investment which has the potential to deliver good rental returns, hence the Granny Flat idea.
Have a great day and I love all the helpful info this forum has to offer.
Colin
Hi Colin,
I had a buyer purchase a brick house close to the station at MD for $312,000. The block was about 500sqm. The rental return is $360 per week.
Regards
Shahin
TheFinanceShop | Elite Property Finance
http://www.elitepropertyfinance.com
Email Me | Phone MeResidential and Commercial Brokerage
With regards to granny flats, it's important to adhere to the Council rules, as I know of people deciding not to follow them and some of them got caught. It also is just good for your peace of mind, even though it may cost you more in expenses for approval.
A quick way for your to get general advice for the Council rules is to just call up your local council and ask your questions. They should be helpful to you. Although if you want more specific services to go to your house and check your granny flat adherence, then there are paid services for that too, whcih you can find doing a google search.
TheFinanceShop wrote:Hi Colin,I had a buyer purchase a brick house close to the station at MD for $312,000. The block was about 500sqm. The rental return is $360 per week.
Regards
Shahin
Sounds like a good deal Shahin. Just wondering what sort of service you offer as you mention you had a buyer purchase a brick house.
Colin
Thanks for the info Matthew.
I wasn't too sure if Councils would be willing to assist.
Taking your advice I will certainly speak with the Council if I ever find the right property.
Thanks mate.
Colin
Hi Colin,
Mt.Druitt and Doonside fall under the Blacktown City Council, St.Marys belongs to Penrith. Both have different rules (believe it or not), Both Council will answer your questions over the phone, but will not under any circumstance commit to the answers, in other words, they will not put anything they say in writing, which will leave you flat when something goes wrong.
Mt Druitt at this time seems to be the best return as you can get a 3br brick house in the suburbs for as little as $220k and will return rental of up to $330.00 per week. Also the blocks in the areas such as Willmot, Bidwill, Tregear, etc etc are generally averaging 600sq, which is ample to erect a detached Granny Flat.
Look for distance from the boundary fence, eg. 3.0mtr clearance from the rear boundary will allow you to build under the SEPP program, which is much easier than the local council regulations.
Granny flats are the way to go, no doubt, but take care and do your homework beforehand. I went at it gung ho, thinking i knew everything and lost out in the interim.
good luck
If your granny flat falls under the new 10 day approval guidelines then they overrule council rules.
Hi Colin
Firstly, you say you are looking to purchase an investment property in the area you live in. This is probably the number one mistake I see people make when they start their portfolio.
secondly, you are looking for a granny flat, or to build one. Why? For better income?
there are many other ways to achieve this.
you need to broaden your options and consider what you are looking to do further down the track and also what buying this property will do for you further down the track.
this point of decision making will make or break your investment strategy, so you need to choose wisely.
Hi Colin,
The first important note about the area you're looking at is that Blacktown City Council charge what's called 'Section 94 Contribution Fees', which, for a 2 bedroom granny flat is around $5,000, whereas Penrith City Council charge zero if the 'soct of works' is under $100,000.
The second thing to note is that granny flats can be approved under new (2009) State-Wide Legislation called the 'Affordable Rental Housing SEPP'. This legislation overrides qall NSW Council's controls and allows you to build without council approval- you just need a Private Certifier to approve the development. This is generally cheaper and much faster (10 day approval). So the rules are state-wide and quite prescriptive; that is, you must meet ALL of the setback, height, landscaping and other general controls to qualify. The lot itself cannot be flood-prone, heritage listed etc.
As far as which property to look out for, that is 'granny flat friendly', I'd be careful about purchasing properties with the following issues:
1. Sloping to the rear and having no Drainage Easement nor adequate grassed areas for a dispersion (or rubble) pit. This is for roof-water drainage and can be an issue for some lots.
2. Excessively steep sites. This can add significant cost to the construction work.
3. Significant trees on the property and on the adjoining property's side boundaries. Tree removal ca only be granted by the Local Council, so it will mean risking refusal and there's the costs to chop the tree down and tipping fees etc. Council's can be 'tricky' to deal with so there's definitely some risk there when trees have to be removed. A new granny flat must be minimum 3 mtrs from tree-trunks, even on adjoining properties, so watch for that.
4. watch out for properties that are under 12 metres wide. This is because the SEPP doesn't allow new, detached granny flats on lots less than 12 metres wide. Again, you'd then be forced to go to Councuil for the approval, where there's no guarantee of approval + the approval costs are higher.
5. Properties with the Sewer Mains laying across the middle of the rear yard. If so, 'Sewer Encasement' will be needed and this isn't cheap- $10,000 isn't an unusual figure to encase the sewer mains'.
Granny flat-friendly properties are properties that have good drainage to the street, lots of distance between the main dwelling and the granny flat (5 to 6m minimum is good) and no significant trees on or around the development area. Corner blocks can be excellent for granny flat developments simply because you can provide separate entrances, parking and physical separation between tenants.
i hope this gives you a good idea on what to look for. my personal rant is this – Section 94 Contribution fees should be totally abolished!
Brazen.
Brazen | Granny Flat Approvals Sydney
http://www.grannyflatapprovals.com.au
Email Me | Phone MeGranny Flat Approvals Guru
Hi Hadoman,
As an investor, you are in a good position to search for a "granny flat friendly property", which will minimize costs and maximize privacy and separation between the 2 tenants as well.
The block must be minimum 450 sq m and be at least 12 meters wide, measured AT the building line. i.e. measured across the front of the granny flat.
When shopping for a 'granny-flat friendly property' I'd look for the following, in order of importance:
*1. No significant trees in the rear yard
**2. Property slopes (falls) to the street OTHERWISE has a Drainage Easement at the back.
3. Sewer Mains in the front of the block or at/near the rear boundary and not across the middle of the rear yard,
4. Corner Block is always a good granny flat friendly choice, but rare.
***5. having a laneway to the Rear is also very good.
6. Distance from the main dwelling to the rear house of at least 15m. This will allow adequate privacy and separation between tenants.
8. Look for a property that doesnt need any demolition work if possible.
9. Look for a property that has vehicular access to the rear yard (for builder's access).
10. I'd choose Penrith over Blacktown because Blacktown CC charge Section-94 Contributions whilst Penrith do not (as of writing this- may change very soon!).
* Significant tree means a native tree or one that is over 6m tall.
** If the block slopes to the rear and doesn't have an easement, a special pit (called a dispersion pit) has to be designed and built. Add about $2,500 to your build cost- it may still be worth it if the property lists well and has other quality aspects for granny flat development,
*** Under the SEPP you can build right up to a rear boundary which adjoins a laneway, as long as the granny flat is no wider than 50% of the length of the rear boundary. e.g 12.19m rear boundary means a 6.1m wide granny flat can literally touch the rear bdy.
Have a read of my Approval Guide which gets more in-depth: http://www.grannyflatapprovals.com.au/approval-guide/
There's a section 'for investors' looking for the right 'granny-flat-friendly property' as well.
Also have a read of my FAQ which answers some of your other questions:
http://www.grannyflatapprovals.com.au/faq/
I hope this helps you.
Brazen.
Brazen | Granny Flat Approvals Sydney
http://www.grannyflatapprovals.com.au
Email Me | Phone MeGranny Flat Approvals Guru
Hi Brazen, Does the SEPP AND 10 DAY RULE apply for NSW only. Or does it apply for VIC too. If not, is there something similar.
Regards,
Sinders
sinders wrote:Hi Brazen, Does the SEPP AND 10 DAY RULE apply for NSW only. Or does it apply for VIC too. If not, is there something similar.Regards,
Sinders
Its Just NSW only m8, sorry.
Brazen | Granny Flat Approvals Sydney
http://www.grannyflatapprovals.com.au
Email Me | Phone MeGranny Flat Approvals Guru
Ok. Thanks.
I came across this mob the other day – may be of interest: [email protected]
About $65k plus site costs and approvals. They're based out in Liverpool.
$65k?
Add the rest> $65k + Site costs (average around $25k) + Approvals (around $7k) + Section 94 Contribution (average $5k) = $102k is going to be the real price.
Best to be upfront about the REAL COST of building, no?
Brazen | Granny Flat Approvals Sydney
http://www.grannyflatapprovals.com.au
Email Me | Phone MeGranny Flat Approvals Guru
Hey Brazen, do you still know if this is the case with a GF built in Penrith?
Sorry with the section 94?
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