Will a granny flat add more value than an extra bedroom?

Paul Wilson

Renovating your home to add an extra bedroom or granny flat is often a good way to boost the value of your property – but it depends on how you do it.

Blogger: Paul Wilson, founder, We Find Houses Group

More rooms

If your property has a large footprint, you’ve got more leeway when it comes to adding an additional bedroom.

When done properly, an extra bedroom can mean a significantly higher profit when it comes time to sell.

But if you add another bedroom by taking from a normal-sized living room, you’re not going to increase the value of the property, and in some cases will even lower it.

You need to study your property layout to see where another room could go so as not to impact on your living space.

Look for a small area you can reclaim to make a larger space – such as consolidating a separate laundry and bathroom into a bathroom with a washer/dryer.

Do you really need a separate dining room? You could turn this into a bedroom and create an open plan living/dining area.

I changed a two-bedroom, one-bathroom property into a three-bedroom, two-bathroom property by simply reconfiguring a poor floor plan layout – with nothing structural changed in the process.

I moved the kitchen into the very large open plan dining/lounge area to make use of a lot of wasted space. The old kitchen was then turned into a bedroom.

The bathroom at this property was huge and incorporated the laundry. I was able to reconfigure the bathroom (which backed onto the master bedroom) and make it smaller in order to add an en suite to the master bedroom.

The total cost of these changes was only $25,000 but the value it added to the property was much more.

I assisted one of our clients to buy a two-bedroom duplex pair, each with an internal garage with internal access to the property.

In both duplexes, we changed the garages into bedrooms, then built new garages outside.

Both projects dramatically increased the rental return on these properties and the equity value – approximately $80,000 on bank valuation.

You need to think outside the box to create that additional room without compromising on space.

Adding a granny flat

When it comes to a granny flat, you need to weigh up the value you’ll be adding versus what you might sacrifice in space AND money.

Viability comes down to cost and final outcome.

Determine if it’s practical to have two separate tenancies. Some dual-living homes only lend themselves to an extended family situation.

But if a self-contained granny flat is practical, you will gain an additional income source and will be squeezing the maximum cash flow from one block of land.

Adding a granny flat should underpin a higher capital value than a single standard home because of the cash flow created by the additional dwelling.

Paul Wilson

Paul Wilson

Paul Wilson is an Independent Property Investing Expert who's been educating and coaching investors since 2001. Author of 7 Deadly Mistakes Property Investors Make and How to Avoid Them, he also manages Educating Property Investors, We Find Houses, and We Find Finance.

Through his books and websites, Paul provides valuable, independent guidance and support by teaching strategies on how you can invest successfully, while protecting yourself from the common mistakes that trap many investors from reaching their full potential.

Paul doesn’t promote cookie cutter strategies, instead he demonstrates how you can create wealth as a property investor regardless of your budget, location, strategy and risk profile. Paul makes his home on the Gold Coast and spends his leisure time enjoying adventures, surf and sun with his wife and five children. Protect and grow your portfolio with knowledge.

Will a granny flat add more value than an extra bedroom?
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