There might come a time in the life of your Surfers Paradise investment property when you start thinking about alternative ways to turn a profit. As the area grows in popularity among buyers and renters alike, it’s worth spending a little time considering how to increase the returns you receive from the property. Hiking up rents on your property is one obvious solution, but this can often be a short term solution to a long term strategy.
You might also want to put some time and effort into renovating your investment to make it more appealing to prospective tenants, but overhauling the interior and extending the property can be a costly exercise – and it might not sit with your current financial situation. However, before you get too carried away with redecorating and home improvement, there is another option for the savvy investor: The granny flat.
Building one of these small structures onto the existing land could be a handy way to boost the income on your rentals in Surfers Paradise, but there are a few things you need to think about before making the leap.
One of the questions you need to ask yourself before you start construction is how much additional value the granny flat will add. There is the potential to increase the income you get from the property – essentially, you are killing two birds with one stone. You can have two sources of rental revenue from just one plot of land, without having to go out and purchase another. This can be an appealing feature for many investors. After all, the extra income you get from the small addition could transform a negatively geared investment into a positively geared one.
However, remember that once you’ve made the switch to a positively geared property, you’ll have to stop claiming tax deductions on your income. It’s worth checking with your property manager in this case, as it could impact how your property makes money in the long term. Depending on your investment strategy, that might be attractive – but if you’re focussing on capital growth over quick rental cash, it’s important to get advice.
Be aware that while you can save time and costs in building a granny flat, it might not suit the surrounding area – or even your current tenants. Do your research before proceeding. You tenants might have chosen your Surfers Paradise residential property for the expansive backyard, but carving out a space for an extra building could alienate them. Retaining tenants and filling vacancies promptly is crucial, so consult with your local real estate agent about whether potential renters will be put off by the addition.
There are some renters who might appreciate the smaller floor plan. Elderly couples or individuals looking to downsize would likely relish easy maintenance and compact spaces, while it might also appeal to younger people who are saving money for home ownership. Given the bustling tourism market in Surfers Paradise, you can even rent the property out for holiday accommodation.
You’ll also need to think about utilities when listing the property on the rental market. Setting up separate electricity, gas and water metering can be a time consuming process – and you might incur additional connection costs and charges. You can bundle these charges into the rental price at a fixed rate, but it’s important to think about this realistically. The cramped living quarters and close proximity to the existing rental property might mean a lower rent.
Keep in mind that local governments have strict development guidelines when it comes to building and usage of secondary dwellings. Contact your local government to ensure you stay within the law, or get in touch with the real estate professionals at Ray White Surfers Paradise. Their wealth of local knowledge can help drive your investment in the right direction.