[THE VAULT] COULD A GRANNY FLAT MAKE $100K IN A YEAR LIKE THIS APARTMENT DID?
This investor was persuaded to purchase an apartment instead of a granny flat, it was a good choice that made them over $100,000 in 12 months – and this property was just one of six.
RESCUED FROM A GRANNY FLAT SPRUIKER
When the client who purchased this property came knocking on our door, he was fresh from seeing another company that had tried to sell the idea of buying a house with a granny flat attached. Although this client wanted to build a property portfolio, the granny flat spruiker had made a convincing case – just not convincing enough.
The client decided to follow Nathan’s advice to build a foundation property portfolio.
CLIENT MADE $130,000 ON THIS PROPERTY ALONE
This two-bedroom apartment, situated in the western Sydney suburb of Penrith, was purchased for $250,000 in 2014. Comparable sales at the time were around $290,000.
Just one year later, in 2015, this property was worth around $380,000 to $390,000. The investor pocketed $130,000 in just 12 months.
A LAUNCH PAD TO PURCHASING SIX MORE PROPERTIES IN ONE YEAR
This property delivered an excellent capital return for our client – but it was just the beginning of their success story. The client went on to buy another five bread and butter properties within 12 months of their first purchase.
Could a granny flat have enabled this? No.
GRANNY FLATS – DON’T GET EATEN BY THE WITCH!
Most people think granny flats sound like a good idea, but if you are just starting out, they aren’t that great at all.
The granny flat is a bit like a ginger bread house – it sounds more delicious than a bread and butter property, but its allure will draw you in and eat your money without giving you a good capital return.
Sure, you may bring in a couple of hundred in rent each week, however, the cost of building a granny flat may be equal to two deposits on two bread and butter properties.
Which do you think will make more money in the long run, two bread and butters, or one house with a granny flat attached?
It is always better to build up a good stock of bread and butter before adding a bit of ginger bread into the mix.
Have you found out the hard way that granny flats aren’t as good an investment as they seem? Please share your experiences in the comments section below.