David & Sylvia from Melbourne engaged us in the latter part of 2014 to find them an established house with land suitable to build a granny flat.
After some considerable searching on our part we ended up securing 183 Kahibah Road Charlestown. This was ideal with rear street access for separate access for the granny flat tenant – becoming known as 40 Edward Street Charlestown.
As a buy, reno, build, sell*:
Purchase price of the original un-renovated property $440,000
Reno original property $20,000 approx
Construct granny flat $125,000
*Sales price of renovated house with new granny flat once completed $655,000
Gross profit (exclusive of transaction costs such as stamp duty, real estate agent commissions, loan setup fees etc) $70,000
**Note: a change in the client’s circumstances dictated that they needed to sell.
As a buy, (reno, build,) hold forever*:
Value of the property $655,000
Rental yield: ($380pw + $350pw) = $730pw on $655,000 is 5.8%
On current mortgage interest rates this property is positive cash flow – just set and forget which is ideal for a SMSF (which is who owns it now).
* Our preferred strategy.