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  • Writer's pictureByron

Is building a granny flat on my property a smart investment?

Updated: Oct 11, 2023


Three little green trees sprouting from three stacks of coins

The average home loan in NSW is worth a whopping $456,000, according to CoreLogic. High property prices, huge mortgages and all the other expenses in the harbour city make life here seriously expensive.

One way to make living in Sydney more affordable is to use your property to earn extra income by adding one or more granny flats. Let’s take a closer look at how this could work.


How adding a granny flat can help you build wealth


Two main ways adding a granny flat could help you increase your income:


Capital gains: A Sydney Morning Herald article recently quoted RPG Valuers principal, Ron Gedeon, saying that a granny flat could add as much as 20-30% to your home’s value.


Rental income: Short-term accommodation rental platforms like Airbnb have seen huge explosions in popularity recently. Installing a granny flat on your property could be a great way to make the most of this trend, earning extra rental income on the side.


How can I rent my granny flat out?


If you intend to use your granny flat as a habitable space and rental accommodation, it needs to have both structural engineering and BASIX certification, as well as the applicable council approval. All BIBOs come standard with pre-certification, making the approval and installation process far easier.

When it comes to renting out your granny flat, you’ve got two options:


Airbnb or short-term accommodation: potential for higher income with a higher risk of vacancies and more work required. More flexible.


Long-term rental: less work and maintenance required and a lower risk of vacancies. Long-term tenancies are usually more permanent and less flexible.

Whatever option you choose, make sure you seek advice before you get started to ensure you’re acting within the law and doing everything you can to boost your income.


Subdividing your property and adding a granny flat

Tiny homes are becoming more and more popular in Sydney thanks to our city’s sky-high property prices. If you’ve got free space on your property, you could cash in on this trend by subdividing your land and adding a second residential property to the new section. If you plan to do this, make sure you speak to a conveyancer so that you understand the law and your property’s title.


After you’ve subdivided, you could sell the property for a healthy profit, or continue to rent it out and sell it when it’s time to retire or move.


Whatever you do, you must start by choosing a high-quality, architect-designed granny flat. Get in touch with the team here at BIBO to get started.

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