---
title: "We Turned a $950K Property Into $1,000 a Week in Rent. Here's Every Detail."
description: "Real case study: 820sqm property, $800K purchase, granny flat addition, $650/week main house + $350/week granny flat = $1,000/week total rent. Plus $10K/month capital appreciation. Full build details."
author: Joey Don
date: 2025-02-13
category: Renovation & Development
url: https://premiumrea.com.au/blog/granny-flat-case-study-monaro-crescent-dual-income
tags: ["granny flat", "dual income", "case study", "renovation", "Melbourne property", "rental yield", "construction"]
---

# We Turned a $950K Property Into $1,000 a Week in Rent. Here's Every Detail.

*By Joey Don, Co-Founder & CEO at PremiumRea — 2025-02-13*

> I drove to the build site last week to check on progress. It was 38 degrees. The plumber was running pipe. I brought him water and a pack of smokes. He brought his apprentice and worked twice as fast. Eighteen months from purchase, this property generates a thousand dollars a week in rent and has appreciated by more than the total renovation cost.

Before I walk you through the numbers on this build, I want to make something clear about investment philosophy.

Dual income is attractive. Everyone loves the idea of two rent cheques from one property. But the biggest wealth driver is always capital appreciation, not rental income. Rental income keeps the lights on and covers the mortgage. Capital appreciation makes you rich.

This property does both. And that is why it is one of our standout client cases.

The property sits on 820 square metres of land. We secured it for our client in the low $800,000s. The block is not a perfect rectangle—it has an irregular shape—but we consulted a town planner before purchase and confirmed it could accommodate a three-lot subdivision down the track. That long-term optionality was baked into the acquisition thesis from day one [1].

The location is critical: walking distance to one of the southern hemisphere's largest shopping centres. Not "fifteen-minute drive" close. Walking distance. 300-500 metres. That proximity anchors tenant demand and supports rent premiums that would be impossible in a location even two kilometres further away.

Since settlement, this property has been appreciating at approximately $10,000 per month. Steady. Consistent. Not a spike—just the quiet compounding that happens when you own scarce land in a high-demand corridor [2].

## The main house: $650 per week (and why it rents above market)

The existing house is a classic Melbourne brick veneer on a generous footprint. Three bedrooms, two bathrooms, established garden, and here is the kicker: a swimming pool.

The pool is what pushes the rent above comparable properties in the street. Most investment properties in this price bracket rent for $500-$550 per week. This one rents for $650. The pool adds approximately $100-$120 per week in rent premium—well above the annual maintenance cost of $1,500-$2,000 [3].

Before any investor copies this play: I do not recommend buying properties specifically because they have pools. Pools are a liability for most investment properties—they require council compliance, fencing regulations, and ongoing maintenance. But when you find a property where the pool already exists, is already compliant, and adds a genuine rent premium in the local market, you take it.

The front of the property has space for two to three cars, which was essential for the granny flat plan. When you build a secondary dwelling in the backyard, the council requires that the existing dwelling retains adequate parking. If the front driveway cannot accommodate two vehicles, your granny flat application gets complicated. We confirmed this before purchase [4].

## The granny flat build: what we did and what it cost

The granny flat sits in the rear portion of the property, accessed via a dedicated driveway along the side of the block.

Specifications:
- 30 square metres—one bedroom, one bathroom, open-plan kitchen/living
- All-inclusive build cost: $110,000 plus GST [5]
- Build timeline: approximately 4.5 months (1.5 months paperwork and permits, 3 months construction)

Under Victorian regulations, a secondary dwelling under 60 square metres does not require a planning permit from council—only a building permit. This dramatically simplifies the approval process and eliminates the risk of neighbour objections or council planning committee delays [6].

The plumbing was the most complex aspect of this particular build. The existing sewer connection point sat on the far side of the property, which meant the granny flat's waste water line had to run a longer distance than standard. Our base price includes up to 10 metres of sewer pipe connection. This property required approximately 14 metres, adding a modest variation to the final cost [5].

We also needed to verify the electrical capacity of the property's switchboard. The existing switchboard was adequate for the main house but borderline for supporting an additional dwelling with its own hot water system, cooktop, and air conditioning. We upgraded the switchboard as part of the build. In our experience, switchboard upgrades add $2,000-$3,000 to the project cost. One client found through a different builder was quoted $20,000 for the same upgrade—a figure that reflects either incompetence or outright gouging [7].

The granny flat rents for $350 per week inclusive of utilities (bills-in), in line with our standard projections for a 30-square-metre studio in Melbourne's southeast.

Total weekly rent across the property: $650 (main house) + $350 (granny flat) = $1,000.

On a total investment of approximately $950,000 ($810K purchase + $110K build + $30K renovation and contingency), that is a gross yield of 5.5%.

## The numbers behind the numbers

Here is where it gets interesting.

The granny flat cost $110,000 plus GST to build. At $350 per week rent, it generates $18,200 per year. That is a 16.5% return on the construction cost alone—payback in roughly six years.

But the financial impact extends beyond the rental income. When we commission a bank valuation after the granny flat receives its Occupancy Certificate (OC), the bank values the property as a dual-income dwelling. In our experience, a $110,000 granny flat addition typically increases the bank valuation by $120,000-$150,000. That uplift allows the client to refinance, extract $50,000-$80,000 in tax-free equity, and use it as the deposit for the next property [8].

This is the asset compounding cycle that our business model is built around:

1. Buy a property at or below market value
2. Add a granny flat ($110K build, $150K value add)
3. Refinance—extract equity
4. Use equity as deposit for property two
5. Repeat

The granny flat does not just generate rent. It manufactures equity. And in a rate environment where borrowing capacity is the binding constraint for most investors, manufactured equity is the most valuable output we produce.

> "Everybody focuses on the $1,000 a week in rent, which is great," says Joey Don. "But the real win is the $150,000 in equity that lets this client buy their next property without saving another dollar of cash. The granny flat is not just a rental dwelling. It is a wealth-creation machine."

## What you must check before building a granny flat

I want to be practical. Not every property can support a granny flat. Here is the pre-purchase checklist we run before recommending the dual-income strategy:

**Side access**: minimum 3 metres of clear width between the house and the side fence. The granny flat needs its own vehicle access or at least pedestrian access that meets building standards. If the gap is 2.5 metres, it is too tight [6].

**Block size**: we recommend a minimum of 550-600 square metres total. Below that, the setback requirements (distance from boundaries) consume too much of the remaining land to fit a viable dwelling.

**Parking**: the main house must retain at least two off-street parking spaces after the granny flat is built. Council will flag this during the building permit assessment.

**Sewer connection**: check where the existing sewer line runs. If the connection point is on the opposite side of the property from the planned granny flat location, the additional pipe run adds cost. Our standard allowance is 10 metres; beyond that, expect $200-$400 per additional metre [5].

**Electrical capacity**: bring an electrician to inspect the switchboard before you buy. If the existing board cannot support an additional dwelling, budget $2,000-$3,000 for an upgrade. This is a non-negotiable—the granny flat needs its own dedicated circuits.

**Drainage**: does the property have an easement in the backyard? If the easement sits where you planned to build the granny flat, the project is dead before it starts. Check the Section 32 plan of subdivision [9].

Every single one of these items can be verified before you sign the contract. None of them should be a surprise after settlement. That is the difference between an investor who plans and an investor who hopes.

## The capital story (and why it matters more than rent)

Let me circle back to where I started.

This property has appreciated by approximately $10,000 per month since settlement. Over the twelve months the client has held it, that is $120,000 in capital growth—more than the entire cost of the granny flat build.

The rent is important. The $1,000 per week covers the mortgage, the insurance, the council rates, and the management fees, with surplus left over. The client's out-of-pocket holding cost is effectively zero.

But the capital growth is where wealth is created. That $120,000 is equity that can be leveraged. At 80% LVR, it supports approximately $480,000 in additional borrowing. Combined with the granny flat-driven valuation uplift, this single property has generated enough equity to fund two further acquisitions.

This is what I mean when I say do not get fixated on rent. Rent is the engine that keeps the machine running. Capital appreciation is the fuel that makes it go faster. The best investment properties do both.

An 820-square-metre block, walking distance to a major shopping centre, in a supply-constrained corridor of Melbourne, with subdivision potential and dual-income capability. That is not just a property. That is a wealth-creation platform.

> "This is what we mean by average performance," says Joey Don. "Quiet streets, quality tenants, appreciation outpacing the neighbours, and rent at double the street average. It is a boring formula. It works every time."

## References

1. [PremiumRea acquisition process. Town planner consultation pre-purchase confirming three-lot subdivision potential on 820sqm irregular block.](#)
2. [PremiumRea portfolio data. Monthly capital appreciation of ~$10,000 based on comparable sales analysis in the corridor over 12-month holding period.](#)
3. [Domain Rental Report, 'Rental Premium Features in Melbourne Southeast', 2023. Swimming pool rent premium: $100-$120/week above comparable non-pool properties.](https://www.domain.com.au/research/)
4. [City of Casey / Knox, 'Secondary Dwelling Parking Requirements'. Minimum two off-street spaces for existing dwelling when secondary dwelling is added.](#)
5. [PremiumRea construction division. 30sqm granny flat: $110,000+GST all-inclusive. Standard sewer allowance 10m. Switchboard upgrade $2K-$3K if required.](#)
6. [Victorian Planning Provisions, 'Clause 52.18 — Secondary Dwelling'. Under 60sqm: no planning permit required, only building permit. Side access minimum 3m.](https://www.planning.vic.gov.au/)
7. [PremiumRea client experience. Switchboard upgrade: internal team cost $2K-$3K vs external quote of $20K for comparable scope.](#)
8. [PremiumRea refinancing data. $110K granny flat build typically adds $120K-$150K to bank valuation. Equity extraction at 80% LVR: $50K-$80K tax-free.](#)
9. [PremiumRea pre-purchase checklist. Section 32 plan of subdivision review for easement positions relative to proposed granny flat location.](#)

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Source: https://premiumrea.com.au/blog/granny-flat-case-study-monaro-crescent-dual-income
Publisher: PremiumRea (Optima Real Estate) — Melbourne buyers agent