Kevin works in Sydney and owns an investment property in Yarralumla. The 750 sq.m property has a residence with three bedrooms and one bathroom and is popular among APS graduates for its easy access to the parliamentary triangle and Lake Burley Griffin.
His property generates $600/week in rent. He also pays land tax and rates, management fees, repairs and insurance. Kevin has rented primarily to APS graduates who have been great tenants. The current value of Kevin’s investment property is approximate $900,000.
Kevin wants to increase the rental returns for this, his only property investment, but is not sure how to do it. He has considered adding a granny flat, but is worried about constructing a sub-standard building that would devalue the overall property value or make it harder for him to sell.
Kevin turned to Canberra Granny Flat Builders and also spoke with a local real estate expert who encouraged him to add a custom, high quality residence. Kevin also did his homework, researching the market on Allhomes. He soon realised that the Yarralumla area has a high demand for new rental properties and his new additional home would rent quickly for a high return.
Kevin chose Design 330 and decided to add three additional bedrooms to the property and two bathrooms. Based on advice from the agent, this would increase the overall value of the property by a further $250,000 and bring the entire property value to $1,150,000. Adding this second home would bring in an expected additional rent of $500 per week. Since this residence is fully compliant, Kevin would not have any additional land tax or rates and would receive the entire $500 per week.
Through this strategy, Kevin can bring generate an additional $7000 per year plus depreciation, while adding $250,000 to the total value to his property.
Canberra Granny Flats Builders creates the proposal for Kevin, who then takes it to the bank. The bank offers him a lending rate of 7%. The proposal also includes careful consideration of the existing tenants during the 12-week construction phase by offering rent reduction. The total investment comes to $255,000. Canberra Granny Flat builders provides Kevin with a detailed proposal that can be used for property depreciation purposes. Kevin is excited by the investment opportunity presented. He goes ahead and builds a new granny flat with Canberra Granny Flat Builders.