We Built a Granny Flat for $80K. It Rents for $370 a Week. Here's Every Detail.

I just got back from one of our granny flat build sites and I genuinely think everyone needs to see what $80,000 builds in 2024.

This is a compact studio-style granny flat — approximately 30 square metres — in the backyard of a client's investment property in Narre Warren. It took 14 weeks from slab pour to occupancy certificate. It's now rented at $370 per week.

I walked through both granny flats we're currently constructing, and I want to show you every single component. Because the difference between a well-built granny flat and the horror stories you hear about is in the details.

Solar and energy: the $8K package that pays for itself

Every granny flat we build includes a solar package: 3kW solar panels, 10kW inverter, and a 30kW mid-range battery. Total installed cost: $8,000 to $10,000.

The maths on this is absurd. Paired with a time-of-use electricity plan that offers cheap rates during the 10am-2pm solar generation window, the battery stays fully charged at 30 kilowatt-hours essentially for free. The tenant's electricity cost drops to near-zero for most of the year 1.

We include electricity in the rent (bills-included model) so the landlord controls the energy setup. The solar panel output offsets the tenant's consumption, and the battery bridges the evening peak. The system pays for itself in under three years through avoided electricity costs.

More importantly, the "bills included" selling point is a massive competitive advantage when advertising to tenants. In a market where electricity bills run $250-$400 per quarter, offering a unit where power is effectively free moves the property to the front of every rental applicant's shortlist.

Foundation and structure: why we over-engineer

The granny flat sits on concrete stump footings — we excavate 400-800mm below grade depending on the soil classification. That sounds like overkill for a 30sqm structure, and it is — deliberately.

Cheap builders pour a surface slab and call it done. The problem shows up three to five years later when the slab cracks, doors stop closing properly, and the tenant starts complaining about uneven floors. The cost to remediate a failed slab under an occupied building is catastrophic — $25,000 to $40,000 2.

Our stumps are engineered for the specific site. We get a soil test ($1,200) and structural engineering report ($800) before we pour anything. The concrete is 32MPa — the same grade used for commercial construction, not the 20MPa residential minimum.

The frame is standard timber with cement fibre sheet (Scyon or Cemintel) external cladding. This is the same material used on luxury home builds — it's a premium external wall product that costs marginally more than weatherboard but lasts decades longer and requires zero maintenance. We always point out the brand name to clients because it matters: this is not cheap rendered foam 3.

Interior finishes: functional premium

The internal fitout is where the value equation gets interesting.

Flooring: 7mm SPC (Stone Polymer Composite). Not the 3mm or 4mm budget option you see in cheap builds. Our 7mm SPC is the thickest commercial-grade option available — it's waterproof, scratch-resistant, and the acoustic underlay means it doesn't echo like a warehouse. Cost: $62 per square metre installed. For a 30sqm unit, that's about $1,860 4.

Windows: double-glazed, aluminium frame. This is a non-negotiable upgrade from the standard single-glazed windows that come in budget granny flats. Double glazing provides genuine insulation (reducing heating/cooling costs by 20-30%) and significant noise reduction. The cost premium over single glazing is approximately $1,500 for a one-bedroom unit. Worth every dollar for tenant satisfaction and energy efficiency.

Front door: solid timber. Not a hollow-core door, not a security screen. A proper solid timber entry door that looks and feels like a real front door. Cost: about $800 installed. It's one of those details that makes the unit feel like a home rather than a shed.

Kitchen: compact but complete. Laminate benchtop, stainless steel sink, 600mm cooktop and rangehood, basic cabinetry. Nothing fancy — but everything works and everything is new. The entire kitchen package runs about $4,500 installed.

Bathroom: full wet area with proper waterproofing. We apply two additional coats of waterproofing membrane beyond the building code minimum. Why? Because a bathroom leak in a slab-on-ground building means ripping up the entire floor. The extra $800 in waterproofing saves $8,000 in remediation. The fixtures are standard white — toilet, vanity, shower screen, chrome tapware. Total bathroom cost: approximately $5,500 5.

Compliance and the bits you can't see

The unglamorous stuff that separates a legitimate granny flat from a backyard disaster:

Hardwired smoke alarms: interconnected, battery backup. Not the $12 units from Bunnings. Cost: $400 installed.

Hot water: electric heat pump. More energy efficient than gas (works with the solar system) and cheaper to install than a gas line extension. Cost: approximately $2,800.

Fencing: Colorbond at $130 per linear metre. Typically 15-20 metres to screen the granny flat from the main house. Cost: $1,950-$2,600.

Basic landscaping: included in our all-in price. Turf, a few garden beds, pathway to the entry. Not a magazine feature — but a tenant doesn't feel like they're living on a construction site.

Building permit and occupancy certificate: obtained through a private building surveyor. Cost: approximately $3,500 6.

Total all-in for a 30sqm studio granny flat with solar, double glazing, premium SPC, solid timber door, and full compliance: $75,000 to $85,000.

At $370 per week rent, that's a gross return of 22.6% to 25.6% on the construction cost alone. Even if you factor in the land opportunity cost (the backyard space you've given up), the yield contribution to the overall property is transformative — it lifts a standard 3.5% yield property into the 5.5-6.5% range.

This is what I mean when I say we build portfolios, not just buy properties. The granny flat isn't an afterthought. It's the core of the yield engineering strategy. And the quality of the build determines whether that $370 per week holds steady for ten years or starts deteriorating in year three.

We've built over 40 of these across Melbourne's southeast. Every single one is rented. The average vacancy between construction completion and first tenant: 11 days.