Benefits of Building a Granny Flat
Even if you don’t intend on living with your in-laws at this point, it can be a great idea to have your property extended to include a granny flat unit. Here’s why:
Increase the Value of Your Property
Made $200,000 worth of payments and owe another $300,000, your current equity is $200,000 if your home value stays the same. However, if you increase your property value through renovations, such as building a granny flat, your equity increases to match. Say you make several renovations, and your area is developing, increasing the market value of your new house to $700,000. You still owe $300,000, but your equity is now $400,000 — double what you have paid off in your mortgage. Having equity can help you leverage future loans and increase your property portfolio.
Add Cash Flow by Renting it Out
While you’re living in your family home and paying off a mortgage, you can gain positive cash flow by renting out a granny flat on the side. With a private entrance, you and your tenants can maintain boundaries, and there can be easy communication between the two of you if there are any issues. This additional cash every month can help you pay off your mortgage sooner.
Create Private Space for a Working Studio or Bedroom
Creating a private space outside of the main house is a great opportunity for a particular family member who may need it. Whether it’s a separate space for a fussy teenager or a soundproof room for a would-be rock star, a granny flat could be the ideal solution. You could even create a guest room for friends and family to stay in when they come to visit – no more sleeping on the floor!
Plan for the Future
Your needs now might not be your needs in 20 years. By building a granny flat, and expecting your property to go up in value at some point in the future, you’re securing your retirement fund as well as a place to live. For either your parents now or yourself down the road, it’s good to know you’ll have a roof over your head that you own outright.
There are many reasons to build a granny flat when you get started with your first house. Whether it’s to use now, to enjoy in the future, or to source extra income, its worthwhile considering this smart extension.
Talk to the experts on home mortgages for advice on financing build extensions onto your property.