Updated: Oct 20, 2019
Thinking about utilizing your spare land or even backyard to generate some serious cash-flow? You're not alone.
We’re coming across a lot of clients who are looking to build small-mid-sized units in their backyard, or on a plot of land with the intention of starting up an Airbnb or long-term rental business. So, I’m going to run through some tips to make sure you’re on the right track!
You need to identify whether your council is comfortable with allowing an independent dwelling to be established on your land. In most vacant land situations this won’t be an issue whatsoever.
With clients that have an existing home and intend to subdivide, or build on a portion of their spare land and create two properties, there may be certain restrictions in regards to size, distance from neighbouring homes, and overlays that need to be addressed before moving forward.
We happily handle this process for any potential clients who are looking to develop their land to start up a business. [We support the entrepreneurs!] Take the feasibility study here and we’ll send you a FREE report on your plot.
2) Know your audience
Put yourself in the shoes of the tenants you are most likely to attract.
What would they like to rent? What age bracket are they? What kind of budget do they have per night or per month? What are their likes/dislikes? Do they require a certain amount of space?
Ask these questions and draw a canvas of the ideal living situation for your clientele.
The best way to absolutely nail your rental property and crush the competition is to create the best market fit for your business. This differs from place to place.
Example: A large scenic plot in Hepburn Springs VIC, will likely attract older, affluent couples looking to get away from the city life for a weekend. They would want something reasonably sized, an ensuite bathroom and higher end interior finishes.
The preferences of a millennial looking for an affordable 1-bedroom in an inner-city area, would be quite different.
3) Know your numbers
Business mathematics. What are similar properties on the market rental prices advertising for on real-estate websites? Gather data and crunch the numbers to work out how much your repayments are compared to rental income. One thing you have on your side is that the rental market is MASSIVE and finance is CHEAP.
House prices are high and this has caused a significant increase in long-term rentals, furthermore, bank rates are down to try and stimulate the economy – Great situation for investors.
If you’re looking at 2BR Smart-Home (The Woolwich) cost $150,000.00 Turnkey from Dwellie. This is a modern, spacious, open-plan design that is suitable for almost any clientele.
Let’s say you need to borrow $150,000.00 to fund the investment; you’ll be paying approximately 5% interest p/a on your money based on today’s rates. That’s $7500.00 in interest per year.
That means you’ll need to rent your property for around $145 per week to break even on the loan. Is this something you can achieve in your area?
4) What building solutions are out there for me?
You're reading this, you love us, you know about modular building. Investors who are put-off by going through the typical pitfalls with building an investment property are eliminated. This includes finding all the right contracts, project management, delays, tradesman disturbances, human error, inflated quotes, are something our services and products ensure you don’t have to deal with.
Touching on the earlier point, we have the perfect cost-effective range to kickstart your property business. Take a look at our 1-3BR Smart-Homes here.
These elegant designs, have a cantilevered roof which provides 3-metre tall ceilings on the sides, coupled with glass atrium sides to bring in the plenty of light and harness the surrounds and will in most cases comfortably get you above the $150 p/w watermark.
As I head home to my inner-city 2BR apartment, paying $500 p/w in Melbourne, I would happily be your tenant in an oversized unit such as The Sorrento (image above).
5) Free Consultation
If you want to work with us in establishing your investment portfolio, we are happy to have a chat about see if this opportunity is possible for you. We also have a system for larger-scale projects - mainly for property developers.
If you’re keen on the amazing possibilities and what they can do for your financial future, don’t hesitate – Book Call Here