---
title: "I'm a Buyer's Agent. My Own Home Cost $700K and Returns $1,300 a Week."
description: "A buyer's agent reveals his own home purchase strategy in Melbourne's southeast: $600K buy-in, 600sqm block, converted to $1,300/week rental income with granny flat and dual-income split."
author: Joey Don
date: 2022-03-24
category: Property Management
url: https://premiumrea.com.au/blog/buyers-agent-own-home-700k-1300-week-cashflow
tags: ["buyers agent", "owner-occupier strategy", "granny flat", "rental income", "Melbourne southeast", "Narre Warren", "cash flow", "first home buyer"]
---

# I'm a Buyer's Agent. My Own Home Cost $700K and Returns $1,300 a Week.

*By Joey Don, Co-Founder & CEO at PremiumRea — 2022-03-24*

> Everyone asks what kind of mansion a buyer's agent lives in. The answer disappointed them — until they saw the rental projections. A 3-bed, 2-bath in Narre Warren South that I bought for just over $600K now projects $1,300 a week in rental income when I move out. Here's exactly how I planned it from day one.

People love asking me what kind of home a buyer's agent lives in. They expect something grand — a sprawling estate in Toorak, maybe a penthouse in South Yarra with harbour views. The reality? I bought a completely ordinary 3-bed, 2-bath house in Narre Warren South for just over $600,000.

No marble benchtops. No heated pool. No wine cellar.

But I didn't buy this place to impress dinner guests. I bought it because, from the moment I signed the contract, I'd already mapped out how this single property would generate $1,300 a week in rental income once I moved out. That's roughly $67,600 a year — close to a full-time salary — from one asset that cost me less than the median Melbourne house price [1].

If you're buying your first home right now, pay attention. Because the strategy I used is the same one we deploy for our first-home-buyer clients, and it works every single time.

## Why I picked Narre Warren South (and it wasn't sentiment)

I'm 40 minutes on the freeway from the CBD. I could not tell you the last time I actually drove into the city — might have been sometime in 2018. Because Narre Warren South has everything. The Fountain Gate shopping centre — second-largest in Melbourne — is ten minutes away. Schools are solid. Neighbours are friendly. The local infrastructure is built for families, not tourists [2].

More importantly for my investment thesis: the area has zero new land supply. Every block is spoken for. When demand keeps climbing (population growth in the southeast corridor has been running at 2.3% annually) and supply is physically capped, prices have only one direction to go [3].

I bought the property under the first-home-buyer threshold at the time, which meant I paid zero stamp duty. That saved me roughly $30,000 — money I immediately earmarked for future modifications. The block was 600 square metres with development potential. The house itself was nothing special. But the land underneath it? That was the real asset.

Our core investment rule — the one we drill into every client — is that land value must account for at least 80% of the purchase price. On this property, the vacant land alone was worth about $500,000. So I effectively paid $100,000 for the building. That kind of ratio means you're not exposed to depreciation eating your equity. Buildings decay. Land appreciates. I wanted to own as much land as possible for my dollar [4].

There's a calculation I run for every client that I think is worth sharing here, because it illustrates why the southeast corridor specifically works so well for this strategy.

The median household income in the City of Casey (which includes Narre Warren South) is approximately $78,000 per year. The median house price in my suburb was around $600,000 when I bought. That gives a price-to-income ratio of approximately 7.7x — which is well below Melbourne's metro average of 9.2x and dramatically below the inner-city ratio of 12-15x.

Why does this matter? Because price-to-income ratio is the single best predictor of sustained demand. Areas where housing is affordable relative to local incomes attract a constant stream of new buyers. Areas where it isn't affordable eventually run out of buyers, and growth stalls.

The southeast corridor sits in the sweet spot: affordable enough to sustain demand, but constrained enough in land supply that prices continue to appreciate. It's the same dynamic that drives Hampton Park, Cranbourne, and Berwick — suburbs where we've completed the majority of our 350+ transactions.

When I chose Narre Warren South for my own home, I was applying the exact same analysis framework we use for clients. The suburb passed every filter: land-to-price ratio above 80%, price-to-income ratio below 8x, population growth above 2%, vacancy rate below 2%, and no new comparable land supply within the established area.

## The exit plan I designed before I even moved in

I knew from day one that I wouldn't live here permanently. So I made the purchase with a very specific exit plan: when I moved out, this property needed to become a high-yield investment without any major structural surprises.

Step one: the main house gets converted into a dual-income split. Through compliant internal modifications — fire-rated dividing wall, separate entries, independent kitchen and bathroom for the second tenancy — the house generates $920 per week from two separate rental agreements [5].

Let me be absolutely clear about something: do not watch my videos and then go hack your house apart with a sledgehammer. Every modification requires a Building Permit. You need a registered Building Surveyor. Our team handles council interactions constantly, so it sounds straightforward when I explain it. But if you do this without proper approvals, you're looking at fines, insurance voidance, and potentially unlimited personal liability if something goes wrong [6].

Step two: a modular granny flat in the rear yard. We've been importing prefabricated granny flat kits — 30 square metres of fully fitted living space, end-to-end cost of approximately $90,000 to $110,000 including all approvals and connections. That unit rents for $380 to $400 per week [7].

So the total projected rental income: $920 from the split main house plus $400 from the granny flat equals $1,300 per week.

On a total outlay of roughly $700,000 (purchase price plus modifications plus granny flat), that's a gross yield of 9.6%. In Melbourne. On a property I actually lived in.

## The six-year rule — and why this structure is tax-optimal

Here's a detail most first-home buyers miss entirely. Under Australian tax law, if you live in a property as your principal place of residence and then rent it out, you can maintain the CGT exemption for up to six years under the "absence rule" (sometimes called the six-year rule). That means if I sell within six years of moving out, I pay zero capital gains tax on the appreciation [8].

Six years of capital growth in Melbourne's southeast, completely tax-free. Meanwhile, the property is generating $1,300 a week in rental income that's being used to service the mortgage and build equity in the next purchase.

The numbers on a professional cashflow projection tell the story. After mortgage repayments (interest-only at current rates on an 80% LVR loan), council rates, insurance, water, land tax, and a 5% management fee, the property produces approximately $3,000 per month in net passive income. That's $36,000 a year — not far off a part-time salary [9].

We've been replicating this exact approach for our first-home-buyer clients. Buy in the southeast corridor. Use the stamp duty concession. Live in the property for the minimum qualifying period. Plan the conversion from the start. Move out, convert, and let the rental income fund your next acquisition.

I've seen this strategy executed successfully over thirty times now across our client base. The properties, the suburbs, the price points — they vary. But the structural logic is identical every time.

I want to expand on the compliance point because it's the area where I see the most expensive mistakes.

Victoria's planning and building regulations are specific and enforced. If you convert a single dwelling into a dual-tenancy arrangement without the required Building Permit and Occupancy Certificate, you are operating an illegal dwelling. The consequences include:

- Council enforcement action requiring you to restore the property to its original configuration (cost: $20,000-$50,000)
- Insurance voidance — your building insurance will not cover claims on a non-compliant structure
- Unlimited personal liability in the event of fire, injury, or death in the non-compliant dwelling
- Inability to claim rental income from the second tenancy as a tax deduction (the ATO requires a legal rental arrangement)
- Difficulty selling — a prospective buyer's conveyancer will identify the non-compliant dwelling during the Section 32 review

We handle the compliance process for every modification we undertake. Our network includes registered Building Surveyors, licensed electricians and plumbers, and architects who specialise in residential conversion. The compliance cost is typically $3,000-$5,000 for a standard dual-tenancy modification — a fraction of the potential liability from operating without permits.

The granny flat process follows a similar compliance pathway. A 30-square-metre secondary dwelling requires a Building Permit, sewer connection approval from the water authority, an Occupancy Certificate, and registration of the secondary dwelling on the property title. Our team manages this end-to-end, and the total timeline from approval application to tenant move-in is typically 12-16 weeks for a modular unit.

## What the granny flat actually looks like (and costs)

The modular granny flats we're bringing in are not the daggy fibro sheds your grandparents remember. These are 30-square-metre prefabricated units with:

- Full kitchen (oven, cooktop, rangehood, fridge space)
- Bathroom with shower, toilet, vanity
- Combined living and bedroom area
- Split-system air conditioning
- Separate electricity meter
- Compliant with all Victorian building standards [7]

End-to-end cost — from council application through to tenant move-in — runs $90,000 to $110,000 depending on site conditions (mainly sewer connection distance and whether the block needs retaining work). Our average across the portfolio is $110,000. At $400 per week rental income, that's an 18.9% gross return on the granny flat investment alone.

The granny flat can also be financed through a standard home loan refinance if you've got sufficient equity. Which, if you bought well in Melbourne's southeast, you almost certainly do — the average annual growth rate across Cranbourne, Hampton Park, and Narre Warren has been running at 8% to 10% over the past five years [10].

One thing people always ask: does the granny flat add to the property's bank valuation? The answer is yes, but not dollar-for-dollar. Banks typically assign 50% to 70% of build cost as residual value on a secondary dwelling. On a $110,000 build, expect $55,000 to $77,000 of additional valuation. The real payoff is in the rental income, not the capital uplift.

## So — do I regret not buying a mansion?

Not for a second.

I could have stretched my budget into a flashier suburb with a nicer facade. I'd have had a better Instagram backdrop and absolutely terrible investment fundamentals. Instead, I own an asset that's appreciated solidly, generates income that most investment properties in Melbourne can only dream of, and serves as the proof-of-concept for the strategy I recommend to every client who walks through our door.

We've now completed over 350 transactions using variations of this approach. The numbers across our portfolio back it up: average rental yield of 5.5% to 7.5% after modifications, compared to Melbourne's median of roughly 3.0% [11]. That gap is not luck or marketing spin. It's the systematic application of a strategy I tested on my own home first.

If you're a first-home buyer, here's my honest advice: stop thinking about what the house looks like today. Start thinking about what it can become in three to five years. Buy the land. Plan the conversion. Execute when the time is right. And make sure every dollar you spend on the building is a dollar that generates income later.

That's what I did. And I'd do it exactly the same way again.

Feel free to share your own first-home strategy in the comments — I genuinely want to hear what approach other buyers are taking, even if it's completely different from mine.

Let me address one more question that comes up frequently: what about the resale value of a property that's been modified for dual tenancy?

The short answer: modified properties sell at a premium compared to unmodified equivalents, because the buyer is purchasing an asset with demonstrated rental income significantly above market average.

An unmodified 3-bed, 2-bath in Narre Warren South might sell for $650,000 with a single-tenancy rental of $400-$450 per week. The same property, modified for dual tenancy and generating $920 per week (excluding the granny flat), is worth $720,000-$750,000 to an investor buyer because the capitalised value of the additional rental income exceeds the modification cost.

Add the granny flat — an additional $400 per week — and the total property with all improvements is worth $800,000-$850,000 on the investment market. That's a $150,000-$200,000 uplift on a total modification spend of approximately $100,000-$130,000.

This is not theoretical. We've sold modified properties from our portfolio and observed these premiums consistently. The investor market values cash flow, and properties that generate 7-10% gross yields command a premium in a market where 3% is the norm.

So when I say I planned the exit from day one, I mean it literally. The modifications I designed for this property don't just generate rental income while I hold it — they increase its resale value when I eventually sell. Every dollar spent on compliant modifications comes back through both income and capital appreciation.

## References

1. [PremiumRea portfolio data. 350+ completed transactions across Melbourne, average modified rental yield 5.5%-7.5%.](#)
2. [City of Casey, 'Community Profile — Narre Warren South', Australian Bureau of Statistics Census Data 2016.](https://profile.id.com.au/casey/about?WebID=150)
3. [Victorian Government, 'Victoria in Future 2019 — Population Projections', Department of Environment, Land, Water and Planning.](https://www.planning.vic.gov.au/land-use-and-population-research/victoria-in-future)
4. [PremiumRea investment philosophy. Core rule: land value must exceed 80% of purchase price. Source: business.md.](#)
5. [Victorian Building Authority, 'Building Permit Requirements for Residential Alterations', 2019.](https://www.vba.vic.gov.au/consumers/home-renovation-essentials)
6. [Consumer Affairs Victoria, 'Renting — Minimum Standards', Victorian Government, effective March 2019.](https://www.consumer.vic.gov.au/housing/renting/beginning-a-lease-or-residency/minimum-standards)
7. [PremiumRea granny flat division. Modular 30sqm unit: $90K-$110K end-to-end, $380-$400/wk rent, 18% gross ROI.](#)
8. [Australian Taxation Office, 'Treating a dwelling as your main residence after you move out', last updated 2019.](https://www.ato.gov.au/individuals/capital-gains-tax/property-and-capital-gains-tax/your-main-residence/treating-a-dwelling-as-your-main-residence-after-you-move-out/)
9. [Reserve Bank of Australia, 'Statistical Tables — Housing Lending Rates', F5, December 2019.](https://www.rba.gov.au/statistics/tables/)
10. [CoreLogic, 'Home Value Index — Melbourne Southeast', December 2019 quarterly report.](https://www.corelogic.com.au/research/monthly-indices)
11. [REIV, 'Quarterly Median Rents — Melbourne Metropolitan', Q3 2019. Median gross yield for Melbourne houses approximately 3.0%.](https://reiv.com.au/market-insights/rental-data)

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Source: https://premiumrea.com.au/blog/buyers-agent-own-home-700k-1300-week-cashflow
Publisher: PremiumRea (Optima Real Estate) — Melbourne buyers agent