Based on current Melbourne market data for a modern 2-bedroom granny flat in a middle-ring suburb (e.g. Box Hill, Wantirna, Blackburn).
| metric | projection | notes |
|---|---|---|
| Total investment (incl GST) | $176,000 | design + building permit + construction + handover, at $160,000 + GST. land already owned. |
| Estimated weekly rent | $500 - $650 | long-term lease. 2br commands significant premium over 1br. |
| Annual gross rent | $26,000 - $33,800 | 52 weeks at $500-650/wk. this is where every "yield" figure on this site stops. |
| Vacancy (2.5 weeks) | $1,250 - $1,625 | long-term residential letting. |
| Property management (8%) | $2,080 - $2,704 | standard melbourne management fee. |
| Letting fee (annualised) | $335 - $436 | 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 | $6,665 - $7,764 | about 26% of gross rent. |
| Net operating income | $19,335 - $26,036 | gross rent less all operating costs above. excludes any loan interest. |
| Gross rental yield | 15% - 19% | on $176,000 incl GST. vs 3.2% for melbourne houses. |
| Net operating yield (before finance) | 11% - 15% | 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 if you borrow to build, this figure falls — we do not publish a net figure after interest because it depends on your LVR, your rate and your structure.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 | +$70,000 - $90,000 | 2br adds more value than 1br. family buyers willing to pay more. |
| Tax depreciation (annual) | $4,000 - $6,000 | Div 40 + Div 43 deductions. non-cash, so it improves the tax position without reducing cash flow. |
| Breakeven on investment | ~8 years | from net rental income alone, before interest. equity gain is immediate. |
Yield Two meets all Victorian 2026 requirements — and at 58.8sqm, it's the maximum size allowed without a planning permit.
58.8sqm ≤ 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.
At 58.8sqm, this model is precision-sized to the legal limit. Every square metre is maximised for rental return — without triggering a planning permit requirement.
Two bedrooms open the door to family tenants, higher income thresholds, and significantly better rent-per-sqm than any 1br. $500-650/wk vs $400-500/wk for 1br.
Valuers consistently assign $70K-$90K in added property value for a well-built 2br granny flat. That's 40-51% of your investment returned as instant equity.
Ideal for aging parents or young adults who need independence. If the rental market shifts, this model converts easily to family accommodation. Built-in flexibility.
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