The pros and cons of investing in a granny flat

By
Real Estate Agent with Be Basic CEO

Many homeowners who are lucky enough to have some extra space in their backyards decide to use it for building a granny flat. These are self-contained secondary housing units equipped with their kitchen, bathroom, living areas, separate entrances and walkways, built on the grounds of a single-family home. They can be completely detached from the main house or they can be attached to it as extensions

When deciding to build a granny flat, most owners have in mind the advantages offered by the additional living space and the potential income they could benefit from should they rent the unit. But does such an investment pay off? Lets see what are the pros and cons before embarking on this type of project. 

Pros

The most obvious advantage is having the extra living space that you can use to accommodate other members of your family such as aging parents (hence the name granny flats). But you can also use it for your own needs, as a home office, studio etc. 

From a financial perspective, additional dwelling units are an affordable way to invest in a property. If your budget doesnt allow you to buy a house, a granny flat is probably the next best thing. 

If you decide to rent it, an ADU can become a stream of income for years to come. You could earn a significant amount of money that would come in handy for paying your mortgage. You can also choose to move into the granny flat yourself and rent the main residence.

Its much easier to maintain and manage a dwelling that is situated next to your house, rather than owning a property in a different location.

Also, building such a unit can increase the value of your property. You will probably get a better price for your property if you decide to sell it later. 

Lets not forget the safety aspect. Having tenants living so close to you will make you feel more secure as their presence can discourage prowlers and other intruders. 

Cons

Now lets look at the other side of the coin, because a granny flat also has some disadvantages that you should consider. 

For starters, a granny flat does require a serious investment. Its not as expensive as buying a separate property, but you cant ignore the fact that you need a healthy budget if you want to build an ADU that is legally compliant. Until it starts generating money, youll have to pay for everything from your own pocket.

Second, if youre not a people person, having tenants might not be an experience that you would enjoy. You might get along with them just fine or you might find them completely annoying, theres no way you could tell until you try it. 

Finally, maintenance doesnt come cheap either. You must think that in the long run there will be other expenses as well. Just as you invest in maintaining your house, youll also have to look after the granny flat and keep it in good condition. 

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Rainmaker
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John Pusa
Berkshire Hathaway Home Services Crest - Glendale, CA
Your All Time Realtor With Exceptional Service

Stephen Marshal very good report about pros and cons of investing in a granny flat.

May 23, 2020 12:02 PM #1
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Stephen Marshal

Stephen Marshall is a Director of Be Basic CEO
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