Build an investment property in your own backyard

Backyard Grannys are the granny flat specialists and have created a guide on how to build an Investment Property in your own backyard.

Backyard Grannys

21 Aug 2024 · Finance

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With rental prices at an all-time high, and rental availability at a historical low, there’s never been a better time to build an investment property in your own backyard. The ongoing housing crisis is placing pressure on the local community, and the opportunity to create additional income through an investment property is stronger than ever.

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The benefits of a granny flat investment property

You own the land already; this is a massive saving. With a granny flat, you can become a property investor at a much more affordable price point. If you have an existing investment property which has space for a secondary dwelling, a granny flat will increase the rental yield and annual return on that investment. A beneficial factor is what you won’t need to pay: escape paying stamp duty, and other associated costs related with buying an investment property.
Granny flats have proven to be a sound investment with potential returns of up to 15% per annum in the Newcastle, Central Coast and Hunter Valley Region. This is an exceptional return based on the affordable initial investment and the relatively simple process involved.
Have your investment safe and secure in your own backyard. First time investors will understand the concerns involved with not being close to where your investment property is located. In this instance, you will have greater visibility of your investment and greater comfort.
A granny flat can be a versatile investment. As your needs change, so can its purpose. Over time you could convert your investment property into a home for older parents or young adult children if needed.

We spoke with Pippa Rose from Leah Jay, a leading property management agency with over 30 years’ experience located in the Newcastle and the Hunter Region who specialise in property investment services, helping owners to maximise their returns and create strategic property portfolios.

“Leah Jay Investment Services work with property investors who are looking to maximise their Return on Investment (ROI).  Adding a Granny Flat is an excellent opportunity to add an additional property to their portfolio without the need to purchase again. Generally, we see the ROI is in the region of 12-15% ROI” says Pippa. “When the time comes to sell, it shouldn’t be assumed that it would only be property investors who would be interested in purchasing the two properties…. we’re seeing an increase of owner-occupiers interested in properties with granny flats due to more multi-generational living in recent times, and as housing affordability is forcing young adults to stay with parents for longer.”

We have worked with many clients (sometimes several times over) who have used this investment method to fast-track their property portfolio strategy and take advantage of a lucrative market. Current examples of investment granny flats built for Backyard Grannys’ clients include a two bedroom granny flat at West Wallsend, newly leased for $550 per week, a two bedroom with single attached garage at Woodrising leased for $550, and a third two bedroom granny flat located in Floraville, recently leased for $530 per week. If you have the space and the means to build a granny flat in your own backyard, why not turn your biggest asset into a cash flowing investment?

To learn more about this investment method and decide whether it’s right for you, read our Guide on Granny Flat Building Cost & Prices in 2024.. There are plenty of considerations to make before you build a granny flat on your land to act as an investment property; check out our Guide to Renting Out a Granny Flat in NSW to help you make your next move.