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Boost rental yields with a dual-income strategy

Monday, 2nd Feb 2015

normal houseWould you like to increase rental yields from your residential property to more than 7%? You might think this is impossible, but many investors are taking advantage of this opportunity already.

Ancillary dwellings, traditionally known as granny flats, have recently become a viable option for investors in Western Australia to increase rental yields.

Planning and development changes implemented in WA in 2013 mean an ancillary dwelling may be rented to anyone, not just to the property occupier’s relatives, as was previously the case.

The changes also saw an increase in the permissible size of ancillary dwellings to 70 square metres, up from 60sqm.

The changes created new housing choices for many, including students, singles, couples or renovators needing temporary accommodation, and have proven to be a great lower-priced housing alternative for many.

For investors, an ancillary dwelling provides a secondary source of rent from one property, or what’s known as a dual-income strategy.

Rent from an ancillary dwelling, combined with the primary dwelling, means investors can reap yields of more than 7% from one property.

Furthermore, the benefit of ancillary dwellings is that landlords don’t need to subdivide their land, saving thousands of dollars, and construction can take as little as 12 weeks.

While this means that an ancillary dwelling can’t be sold separately from the main dwelling because they share the same land title, it can be a good strategy for those who are planning to hold a property for the long run.

An ancillary dwelling won’t suit all property investors and their respective strategies but it’s worth considering given the great rental returns that can be secured.