The Granny Flat Building Process Explained

Building a granny flat isn’t a difficult process. In this episode we share the exact granny flat building process including what you need to do, how long it takes and some important things to think about.

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Resources Related To This Episode

How To Find A Property To Build A Granny Flat On

How To Not Over Pay For A new Build Property

Handovers.com

2 Properties To Financial Freedom

Transcription:

When it comes to building a granny flat, it can be a little overwhelming to think about what’s it going to be like to build this granny flat, how hard is it going to be? But it’s actually a really simple process and so today I have with me Ben Everingham. Why is I jumped from pumped on property event Iran and we’re going to be talking about the granny flat building process. So what is it like to go through this process? So if you’re thinking about investing using the two properties to financial freedom strategy that we’ve talked about, you’re thinking of using that strategy, purchasing a property and building a granny flat, what is it going to be like once you purchased that property and now you want to build the granny flat, how does that work? So for those of you out there a bit worried about that or just want to get I guess a teaser and you know, really understand the process. That’s what we’re here for today. So pen, how many granny flats have you built personally yourself or help it will not built yourself but hire to have built.

I’ve done it without my own hands because I’m hopeless. You definitely. I’m not a trade. You can tell them I competed, man. Look at my posture and my hands, but I’ve built a number of these things myself. I’ve built them on existing homes. I’ve also found piece of land and build the house and the granny flat at the same time. And as a business we’ve helped a lot of clients in Sydney and Brisbane execute on this strategy. But what I wanted to say, as you mentioned it, is super, super simple to build a granny flat and people should not feel overwhelmed about it.

Yep. So first thing you need to do before you go ahead and do this is to make sure that you can legally build and rent out a granny flat on your block. We’ve talked about how to find the right block for these granny flats in the previous episode. So if you haven’t checked that out, go to on-property dot Condo, you four dash five, 48, and you can see the details over there. So we’re assuming that you have the right block to build this, that you know, that you meet the council regulations and the state regulations to build a granny flat. So now it’s just a process of getting it built. And so the first step is obviously to get a design for the property.

Yeah. So the design is the most important thing. And you’ve always putting on your tenant hat or your own or occupy hat and going, what is the most functional design for this site? I’ve got a designer called the pumped on property. We pay, I pay one, which is a big rectangle. Um, you know, I wish I could draw this Adam, identify the technology, do it, but let’s think about a big rectangle. You’ve got a big bedroom on one side you’ve got a middle area which is your lounge room with the kitchen. And then on the side you’ve got a smaller bedroom with a bathroom slash laundry. So it’s a big box. That’s the 55 to 60 square made design, which is pretty much what you can build in most places in Australia. And that rent’s really, really well. And it’s got functional space for everything that people need.

Yup. And so with most people, when they’re getting design, do they need to go to an architect to people use granny flat company, so they contact local builders.

What do most people do? I have some and pretty pimped architecturally designed granny flats, but I would not recommend that for someone looking to spend a hundred and 10 to 115, so get rid of the granny flat builder. Obviously they’re the specialists. They will have a heap of designs that they’ve built for other people, which you can have a look at effectively. You’ve got to go to them with a price because they can easily get carried away with the design and build something that you may or may not need for that market. So talk to the granny flat builder, come up with a functional design for the site. Now there’s three parts of the design. There’s the physical granny flat design, and then there’s the site plan, which I think is equally important and not a lot of people focus on the site plan. When I’m talking about the site plan, I’m talking about the position of the house, the position of the granny flat, the position of the fencing and the driveways, etc.

To make sure that it really makes functional sense and ryan and I did talk about that in more detail in terms of my ultimate granny flat lot in the last video and so you’ve got to get your design. The next step is to get a fixed price on the bill so you don’t want to build. That’s going to go over budget. You want to get your builder to commit to a fixed price on that build. Yeah, so builders, particularly granny flat builders of the kings of not giving you a fixed process on. So what they all do in this industry is they suck you in with a really ridiculously low advertising price. Get you signed up, paying a deposit, and then go, whoops, the product didn’t include xxxx x. So I’m not sure if you not done a video on how to get it fixed price before we have.

I have to go back and have a look. You keep talking and I’ll try and find it so I can link people up to it. That’s cool. So you know, getting a fixed price is kind of like an art. There’s checklists that you can download online that enable you to compare a builder, the builder and to make sure everything’s included, but the things that build is generally don’t include in their fixed price, might include floor coverings, window finishing’s, blinds, etc. they might not include lights, they might include tiles. They often don’t include fences or turf or driveways, car accommodation sometimes. So there’s heaps of things of a strip out of that base advertising price to make it look really attractive. And then they stitch you up as soon as you’ve got it. So make sure you let them know that you want a hundred percent turnkey ready, fixed price contract that your tenant can move into the david completed type thing as opposed to, you know, signing a contract for 90,000 dollaRs, which is what a lot of people do. And then any up having to pay 30, 40, $50,000 on top of that wIth non bank financed money. But physically out of your own pocket, once they increase the price after that. And so we did do an episode called how to not overpay for a new build property where we talked about getting this fixed price contract. So that’s an on-property dot condo. You ford sas 3:19

if you want to check that out. But what we will do is we’ll leave all the links in the description down below. If you’re on youtube, you can check out those links. If you’re listening to the podcast, just go to on-property dotcom, you four slash five, four nine. And anything that we talk about in this episode, we’ll link up there. So we’ll link up to the previous video where we talked about the blocks will link up to yeah, that video on how to not overpay and we’ve got some other resources we’ll talk about as well. So that’s on property dot Canada u four slash 5:49. Check that out and you’ll get all the links there. So fixed price, super important just makes things so much easier than you will talk about finance in a bit, but you know how much you’re going to pay and you know that you’re not going to overpay either, which is really important.

So, you know, in brisbane for example, I’ve got a relationship with one of the top four granny flat builders have worked with all four of them. Um, you know, they’re, they understand wholesale rates and they’ve been able to give. Our clients are very, very competitive policy. Al right? Um, and then on top of that is your fences and your driveway and your car port and etc. like those little things that you want to add. Now you can go for a base entry process design or you can pimp it out a little bit. It depends on the suburb in your long term intention. But you know, if you’re doing it in brisbane right now, you should not be paying more than about 115,000 to $120,000 turnkey for something beautiful in sydney right now. Again, you shouldn’t be paying more than about 120 $130,000 for these products.

So you know, a lot of people will look for the cheapest product and I’ve got a client I was speaking to recently, he’s from China. He bought a house with us on the beach in brisbane recently. He imported a container for $20,000 from joanna, put it in and the counselor came and said it’s not to australian standard. He had to completely gut the container. It’s costing me an extra $80,000 out of his own pocket to refurbish this container. Now he’s got to contain worth 100,000 bucks as opposed to a really beautiful home for 110,000 bucks. So just be careful. You do pay for what you get.

Yep. And so once you’ve got a fixed price, the next step is to then submit your design to council and get that approved. Now that will generally be done for you by the granny flat builder, is that correct?

Yeah. So the granny flat builders should definitely do that. And that should be one of the things that you ask them when you first go in and speak. Do They organize council approvals, certifications and the completion certificates at the end of the job as well?

Yeah. So you want them to do all of that. As you can see, this process is not that difficult because you’re doing this with the help of your builder. And so once you kind of get into it, they’re doing all the work for you, which is why ben still has such soft hands.

You don’t want that.

Um, okay. So once you’ve got it submitted to council, again, that should be a pretty simple process. If you’ve bought the right block, then submitting it through council shouldn’t be very difficult. The next step is then to go and do the build which takes. How long does it take? Three months or something. It’s not very long, right?

I’ve got a, um, I’ve agreed with a building that we use in brisbane on an eight week contract, eight weeks to build it from start to finish after approvals. Um, otherwise they’d pay your penalty rate, but the average would be somewhere between sort of 15 and 16 weeks maybe for the average buildup. Yeah. So it’s not,

it doesn’t take a huge amount of time to build. And that’s why in the previous video we also talked about fencing in the front house and so those people have private access while the builds going on as well can be a bad thing. And it’s important for people to know as well with the granny flats that you don’t need to pay for it all upfront. You don’t need to pay for it all out of your pocket. So do you want to talk through some of the payment strategies that people use?

Yeah. So different banks in Australia want different deposits, but as ryan said, you can actually get a lot of people think you’ve got to pay the whole 115,000 bucks out of your own pocket, which makes granny flats almost impossible for all of us to achieve. BuT what you can do is get a construction line where you put down 10 or 20 percent of the cost of the granny flat so you know, let’s say $24,000 is what you put down to build the product and then the bank gives you the rest of the money. Now what I’m going to go too much into the contract side of things, but you know, you put down your 20 percent deposit and pay the builder that and then the bank drip feeds in a series of payments, the rest of the money to the builder over the course of the job based on the building and delivering on certain things like putting a slab down, like putting a roof on etc.

Yeah. And so it’s important for you guys to know you don’t need to come up with this money completely yourself. Obviously need to speak to a mortgage broker about these construction loans and what you can do as well as work with your builder as to what payments need to be made. And so you work with your mortgage broker and the builder to get the loan to make the payments and stuff like that. But yeah, there are options out there as opposed to just having to come up with that money out of your own pocket, which a lot of people would find extremely difficult. Coming up with a 20 percent deposit on $115,000 is a lot easier than coming up with $115,000.

Especially if you think about it east way, like cash on cash or 10. I put down 20 grand in mind money if that granny flat rents for 300 bucks a week for the first year, that’s $15,000 back in my pocket. So I’ve almost got my original expenditure back in 12 months. There’s not too many assets in the world that return that type of money.

Yeah. And the rental yield on the granny flat can be enormous. You’re looking at 100 grand, 115 grand, renting for 300. Nearly what? Fifteen percent rental return on

15 percent rent return. Lakoff joked about this with you, but my dream would be to buy a big piece of land and just put heat to granny flats on. Unfortunately the cancer doesn’t want to say that.

Okay, so that’s the build process. Pretty simple process. Working with the builder. Once it is completed, you then need to do your final inspections to make sure that the builder has done everything correctly, which means ben were talking about before the video is a pain to do. It’s a really difficult and you often miss a lot of things and so ben has a tool that he wants to recommend that or service, which is amazing.

Yeah, just I was giggling like how do I outsource these personally because it is a pain in the ass to walk around with the build up and then you say do this and they don’t do it or sometimes they do. So there’s a company for this. Whether you built a brand new home or you’re building a granny flat or building unit, it’s called handovers.com. You can just jump on google and check them out. They basically go to the property. They’ve got a huge checklist which creates a report for you and the builder, which tells you everything that has been completed to standard and things that need to be rectified. This includes compliance related staff. This includes physical maintenance related things with the property or things that aren’t working. They give the report to the builder and the builder has 10 days to rectify the report. Then they go back out and they redo it and make sure all of those things have been fixed. So especially if you’re investing interstate, it can be a great way of outsourcing that service for a very small fee and they’re going to be so much more thorough than your right ever could be because that’s all they do every day.

Yeah. This is not one that I would scrimp on and try and do the inspection myself. Like I have soft hands as I would not know what to look for and would miss a lot of things. And so to be able to outsource that and to pay a small fee in order to get it done, I think it’s well worth the money. So that’s your final inspections. And then you’re done, then you can go ahead and get that property on the market and rent it out.

Yeah, and I like in a, in a suburb with a vacancy rate below two percent. I’ve never seen a granny flat sit on the market if it’s priced correctly for more than two weeks because it is affordable. And because there’s not many affordable options for people to move in in Australia, they seem to just get snapped up if that built right. Designed right. And then obviously in the right market at the right time.

Yeah. You’re looking at brand new property which people love. You’re looking at, not a unit, maybe some private backyard space as well. you’re looking at affordability kind of ticks all the boxes in terms of what renters want. So that’s when you get to a rented out and then that’s when you get to implement the two properties to financial freedom strategy and then, you know, focus on lowering your costs and paying off debt as quickly as possible or moving onto the next one and doing it all over again.

Yeah. so like, just wrapping up how simple this is, get it good design, get a fixed price contract, you know, get your certification, which the granny flat builder will organize, get the product built and then get ’em, you know, handovers.com to check it out and wear a lot of people. Make mistakes with this stuff with building is they try and micromanage somebody who is a professional event job. Just take your hands off it, allow them to do what they do if they’re taking longer than they should, then get your solicitor to have a look at the contract and pull them back into line. But the reality is the builder’s going to do what they’re gonna. Do you know if you’ve got the solicitor on your side handovers.com on your side and you’ve got a good fixed price contract with a good reputable builder, this process should be an absolute brace and you should be on your way to financial freedom over time.

Yup. And So that finishes this video. I hope this has given you guys a good overview of the granny flat building process is this is something that you want to do. Obviously you can follow these steps and go and do it yourself or if you want to invest using the two properties to financial freedom strategy, but want some help with that. Then ben and the team over at pumped on property are offering free strategy sessions to listen as avant property. So if that’s you and you’re like, yep, I want to invest using this method, but finding the right property and the right area that I can build a granny flat on and then managing and getting that build happening. If that feels too overwhelming for you or you want someone to help you, then go to on property.com, forward slash session and you can learn about that free strategy session over there.

You can book a time with a team that suits you and you can talk about your situation, where you’re at, what you want to do, and then obviously if you want a high up pumped on property, you can or you can then have your next steps to move forward and go and do it yourself. So that’s a great resource that ben and the team over there so far, so thanks so much for doing that. And again guys check it out on property condo. You forward sash session. So that finishes this video. Thanks so much for watching. Don’t forget to subscribe to the channel and as well if you haven’t checked out the previous video on how to find a property to build a granny flat is a must watch. So check that one out and until next time, stay positive.

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