Based on current Melbourne market data for a modern 1-bedroom granny flat in a middle-ring suburb (e.g. Wantirna, Mitcham, Ringwood).
| metric | projection | notes |
|---|---|---|
| Total investment (incl GST) | $110,000 | design + building permit + construction + handover, at $100,000 + GST. land already owned. |
| Estimated weekly rent | $400 - $500 | long-term lease. modern 1br commands premium over older stock. |
| Annual gross rent | $20,800 - $26,000 | 52 weeks at $400-500/wk. this is where every "yield" figure on this site stops. |
| Vacancy (2.5 weeks) | $1,000 - $1,250 | long-term residential letting. |
| Property management (8%) | $1,664 - $2,080 | standard melbourne management fee. |
| Letting fee (annualised) | $268 - $335 | one week's rent per tenancy, averaged over 18 months. |
| Landlord insurance | $500 | landlord policy plus increased building sum insured. |
| Council rates increase | $150 | same title — no separate rate notice. |
| Land tax | $900 | from 2026, the part of the land the second dwelling occupies is no longer exempt. |
| Repairs & maintenance | $700 | new build — low in the early years. |
| Safety compliance | $250 | smoke alarm check plus electrical and gas safety checks. |
| Water service charge | $300 | where tenant usage cannot be separately metered. |
| Tax return preparation | $200 | additional rental schedule. |
| Total operating costs | $5,932 - $6,665 | about 29% of gross rent. |
| Net operating income | $14,868 - $19,335 | gross rent less all operating costs above. excludes any loan interest. |
| Gross rental yield | 19% - 24% | on $110,000 incl GST. vs 3.2% for melbourne houses. |
| Net operating yield (before finance) | 14% - 18% | excludes finance costs. if you borrow to build, this figure falls — we do not publish a net figure after interest because it depends on your LVR, your rate and your structure. |
| Property value uplift | +$50,000 - $70,000 | typical valuation increase after granny flat construction. |
| Tax depreciation (annual) | $3,000 - $5,000 | Div 40 + Div 43 deductions. non-cash, so it improves the tax position without reducing cash flow. |
| Breakeven on investment | ~6 years | from net rental income alone, before interest. equity gain is immediate. |
Yield One meets all Victorian 2026 requirements for Small Second Dwellings.
42.8sqm ≤ 60sqm → exempt under VIC law. Building permit only.
Exceeds 2026 energy efficiency standard. Lower bills for your tenant.
Flush entry, accessible bathroom, wider doorways. Mandatory from 2026.
No natural gas connection. Safer, cleaner, future-proof.
Victorian Building Authority registered practitioner.
Termite-proof, non-combustible, 50-year structural guarantee.
Compact footprint. High-end finishes. Perfect for short-stay guests. In a good location, expect $120-180/night at 70-80% occupancy = $30K-$47K/yr.
At 42.8sqm, this model delivers the highest rental yield per square metre of all three options. Lower absolute investment, same high demand.
Smallest footprint = fits on tighter blocks. Less backyard lost. Easier to position on challenging sites. Minimum 300sqm block applies.
At the $100K build price, this is the most accessible granny flat investment in Melbourne. Lower risk. Faster ROI. Test the granny flat investment waters.
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