Property owners also face the challenge of rapidly rising interest rates, but the challenging environment does create opportunity for investors.
While a lot of properties don’t meet the size or zoning requirements set by local governments for subdivision, many may suit the addition of a modular home or granny flat.
Typically, granny flats can accommodate a well-designed two-bedroom, one bathroom dwelling which, in the current climate, can generate up to $450 or $500 per week.
Realmark associate director of residential property management Emma Thorpe said it’s an exciting opportunity for many West Australian investors.
“We’ve noticed a large portion of rental properties have unused yard space which could be used to unlock potential and generate additional income for property investors,” she said.
“A granny flat could even turn a negatively geared property to a positively geared property, given you aren’t paying for additional land.
”From a community perspective, making the most of unused space can ease the squeeze we’re currently seeing in the WA rental market.”
Ms Thorpe also highlighted other benefits of investing in a modular home or granny flat include tax depreciation but no additional stamp duty costs, land tax or subdivision costs, while water and electricity can be sub-metered separate to the main dwelling.
Granny flats can be built on lots over 450sqm and usually take 10 to 12 weeks to build.
A dwelling still needs to comply with maximum site coverage for a particular lot and comply with parking requirements.
Realmark Urban residential sales consultant Nathan Whennen said a granny flat is also an attractive feature to investors when it comes time to sell.
“With increases to costs of living, we’re seeing a trend of multigenerational living, and adding an extra space to a property allows families to stay close together with an important layer of privacy,” he said.
“I’d encourage anyone interested in adding to their property reach out, and we can help get you started on your journey.”
To speak to Emma Thorpe or Nathan Whennen, contact Realmark Urban on 0388 3911.