LET YOUR HOME ADD TO YOUR INCOME
Category Landlord Advice
Increasingly, estate agents consider 'granny flats' as one of the items highest on the list of many prospective buyers. It's become a generic term for a home office, teen pad, grandparent's home, or a 'lettable' asset.
A granny flat not only provides a variety of potential income streams, but it can also add financial value to the property and make it more saleable. It's all about doing your maths when you're creating it.
Some properties lend themselves to an additional little dwelling, whether it's a renovation of an existing workshop, unused staff accommodation, an easily accessible end room of the house, or an entirely new dwelling.
WHAT RENTAL MODEL SUITS YOUR LIFESTYLE?
Does everybody work, so the property is unattended all day? Somebody works from home? Many factors affect the rental model.
A potentially lower rate achieved with a permanent tenant, but stability and a regular deposit into your bank? A higher daily rate for Air BnB/self-catering/B&B, but the risk of not letting it out as often, and the associated costs and work involved with laundry and cleaning.
FIRST THINGS FIRST
Once you're given extensive thought to the position, layout, costs and other factors, think legalities.
Your municipality will have bylaws, including ensuring that your neighbours are comfortable, and you'll need to familiarise yourself with them. Clearly, if you intend to build, you'll need a plan drawn up by a professional, and passed by the municipality. It's very unwise to go ahead without approvals, because apart from anything else, when you sell your property, this new addition must be on your plans.
DO YOUR MATHS WELL
Before you begin, it's critical to do your arithmetic. The truest urban legend goes that the cost of building is always higher than you envisage or are told...so ensure that you have a little fat in your budget. And you must have a budget, including the period of time in which you plan to have repaid what you outlaid.
- Your rental: It's very simple to find out the rentals/rates which other similar units are achieving, from the internet, local estate agents, websites, newspapers etc. This will be affected by, among other factors, the area of the suburb, parking, size of unit, furnished or not, pets or not, how many people it can hold, privacy, garden or patio, and what the rate includes, like water, lights, DSTV, Wi Fi?
- Costs: Create a detailed spreadsheet with all your proposed costs: designer, plans passed, builder, labour, materials, plumbing, additional security, and so on.
- Cash or raising funds? Do you have the finance available, will you be drawing on an access bond, or applying for an additional bond or loan? Factor in interest costs, and work out, with the rental you estimate, how long it will take to repay that debt.
- Building costs: For a freestanding building, if your cost estimate is R8 000 a square metre, and you build a 40 square metre studio apartment, you're looking at over R300 000, without finishes. Not inconsiderable. Ideally, use an existing wall of your home/garage or rather renovate a structure - your cost reduces considerably. And if you, or a relative, are handymen or in the trade, that's a major bonus. Don't underestimate the value of shopping around for materials/finishes.
- Creativity pays: Homework on inexpensive finishes is well worth doing. This doesn't mean poor quality, just less costly, more minimalist looks with less expensive materials like concrete. With on-line resources like Pinterest, there's no shortage of design and décor ideas to maximise the space, and minimise the cost. Whether it's using mirrors to visually expand the space, wooden screens (from highway vendors) to create a little private patio, or second-hand materials (Atomic Demolishers) and furniture (upcycled/painted).
WHAT DOES THE PUBLIC WANT?
There's a great shortage of small, relatively inexpensive accommodation, particularly in areas near business or transport hubs. Very few permanent, fairly priced lettable units remain vacant. There's also sometimes a preference for a quieter, more independent letting situation such as this, over the body corporate/people-centric block of flats.
Know your market. Whether a self-catering, BnB or permanent let situation, go on line and ask family or friends in a similar situation, their preferences, and lessons they've learned.
Remember, an international visitor (for AirBnB) might have different needs from a local. Research it.
Today, wi-fi is a big drawcard; off-street parking is essential; a walk-in shower rather than a bath; prepaid water/electricity meters. Spotless premises is a given. No matter whether it's snow-white walls, clean carpets, or a screed floor, this is a deal breaker.
Do your homework. Streamline the letting situation, so both parties minimise impact on, or contact with, the other. People value privacy.
IT'S THE SMALL THINGS WHICH COUNT
If you want top dollar, give your client those little niceties. Air-conditioning, quality linen, wi-fi, coffee machine, emergency lights and candles for black outs; and for foreign guests, a list of, and directions to, local restaurants/activities/taxi numbers and so on. Be available to solve any problems.
SCREENING A TENANT
Clearly, securing a tenant via a reputable rental or estate agency is absolutely first prize. They have many more tools at their disposal than you do, can do more in-depth credit and reference checks, and have, after decades of experience, drawn up the most watertight lease around.
If you feel you have the skills to go it alone, be strict about two months deposit upfront - you need to follow up on references (work and previous tenancy), and you need a strong lease agreement. Make absolutely sure, particularly for permanent tenants, that you have a list of rules to which they agree in writing: numbers of occupants; noise/parties; pets, and so on. Remember, you have allowed another person or two to be within your security circle, so close scrutiny and screening is imperative. You need to know they will treat your property and security with the same vigilance you do.
Author: Anne Schauffer
