Considering purchasing a house with a garage that could be converted into a granny flat. What should I be aware of?

I

Ingredients

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Hello,
I'm a single buyer looking to purchase my first home. I have my eye on a house in a decent location that has an attached garage (with no side entrance, in case relevant), which I think could make a nice granny flat in a good location very walkable to all amenities, hence would make for an attractive spot for renters and/or AirBNB.

The garage is approx 20sqm currently (at a guess, no measurements yet), I think it'd need to be approx 35sqm to be workable?

Does it make sense to purchase a property like this on the basis of converting the garage to a granny flat and benefiting from the subsequent rental income? The house itself would be a good bit under my AIP (I can borrow approx €340k, and I think the house could be bought for approx €250k).

I'm estimating the conversion could be anywhere around the €70k mark which I'd have to seek finance for separately.

Would I get a loan for this after having just entered into a mortgage? Or would there be a minimum wait time before I'd be eligible?

Building costs are obviously high these days, but I think I could do a bit of the internal works myself such as painting, laying floor, possibly tiling.

Would appreciate any input, thank you.
 
If its the right house, in the right area & you can add value; then as a FTB it sounds like a good option.

The first few years are always the tightest when you buy your first home.

Let out two of the bedrooms first & get your max 14k. Two years & you'll have half the cost of the garage conversion saved up.

Can the garage be incorporated into the house? Is there a downstairs room that could be configured to be included in the flat? Ideally you want a set up that could be reverted back into the home at a later time, either for yourself or when you come to sell.
 
Hey thanks. Renting out rooms in the main part of the house isn't an option unfortunately. The granny flat idea is to benefit from the tax-free rent without having to share the main dwelling.

I'd be looking to initiate the granny flat build asap rather than waiting a couple of years, do you think that's doable straight after getting a mortgage?

And yes I believe there'd be a way to connect the two parts (my understanding is that a granny flat has to have an adjoining internal door with the main part of the house anyway?)
 
If you believe the conversion will cost 70k - ask yourself how long will it take for you to get your money back.

750 per month rent is €9k per year. Allow for repairs / extra bills - say 1k just to make the sums easier.

So at 8k per year it will take you a little under 9 years just to get your money back - no income. And thats without accounting for the interest you will have to pay.

Unless there are serious obstacles to doing so, renting two rooms is a no-brainer for an FTB.
 
AndroidMan said:
If it is not sharing the main dwelling, it is not part of the house and you cannot avail of the 14k rent a room scheme. Its an independent dwelling and all income should be taxed.
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Well I mean in the conventional rented granny flat sense, where there would be an adjoining door but in practice the two parts of the house aren't shared on a day to day basis. I believe these conditions satisfy the tax free requirements?
 
Yes, with a connecting door to the main house, it will satisfy the conditions.
It should also not have its own gas/electric supply I believe.
 
Its a garage conversion, no need for planning, and it is covered by rent-a-room.

OPs proposal doesn't add up financially however.
 
DannyBoyD said:
As per post #4 and #10
- keep up McGibney ;)
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Based on a €750 a month figure that you appear to have plucked out of the sky!

I would have thought that a €70,000 outlay to acquire a tax-free annuity of up to €14,000 per year makes a lot of sense.

Particularly when the tenant lives in an adjoining ‘annex’ which can be locked rather than wandering around bedrooms in one’s home.

And €1,150 per month for a nice one bedroom granny-flat doesn’t sound unreasonable for ‘a decent location’.
 
Gordon Gekko said:
€750 a month figure that you appear to have plucked out of the sky
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Not at all.

House does not appear to be in Dublin given the purchase price; figures for Cork commuter zones (as an example) vary from 500 to 1000 per month.

From the OPs description of the size this is nearer to an ensuite bedroom with some cooking facilities than a fully sized one bed apartment.

So 750 is as good an estimate as any.

OP can do their own figures.

I don't see that borrowing €70k is a good plan here.
 
DannyBoyD said:
As per post #4 and #10
- keep up McGibney ;)
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I should of course have said that your figures were too optimistic, but I didn't want to. (If the OP expects a conversion cost of €70k, I'd be providing for 50% on top of that for contingencies and inflation.)

I'll know better next time.
 
T
DannyBoyD said:
Its a garage conversion, no need for planning, and it is covered by rent-a-room.
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That is not true, conversion for the purpose of creating a granny flat or self-contained unit does not fall under exempted development.

Most local authorities are pretty restrictive on granting permission for granny flats and in most cases will require proof of a family need and will explicitly prohibit letting in any form.
 
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