We Turned a $800K House Into Three Units at $1,200 a Week. Here's Every Detail.

I want to show you something that'll change how you think about property investment.

This house — and I use the word loosely, because from the outside it looked completely unremarkable — sat on a corner block in Melbourne's southeast. About 700 square metres. Standard brick veneer, probably 1980s build. The kind of property you'd scroll past on realestate.com.au without stopping.

Six months after purchase, it had gained $92,000 in bank valuation. That's a 10% jump in half a year, without touching the kitchen or repainting a single wall.

And the rent? $1,200 a week. From three separate households living independently under the same roof.

Yield north of 6% in a metropolitan Melbourne market where the average sits around 3%. Before you say "that's not possible" — let me walk you through exactly how we did it, what it cost, and what you absolutely must not try to copy without professional help.

Why we bought this particular property

Let me be clear about the buying thesis first. The rent came second. Development potential came first.

This was a corner block. 700 square metres. In Melbourne's planning system, corner blocks are gold because they allow dual vehicle access — you can create separate entrances from two different streets. For any future subdivision or development, that's the difference between needing a 19-metre frontage and making it work with 14 1.

The property was in a General Residential Zone (GRZ), not a Neighbourhood Residential Zone (NRZ). GRZ allows higher density development and is significantly more flexible for future applications 2.

We actually paid $30,000 above the agent's guide price. Sounds counterintuitive. But the local agent we'd been working with — we've bought over a dozen properties through this particular office — went to bat for us when a higher offer came in. Relationships matter. When you've bought 15 properties through the same agent and never failed to settle, they'll fight to keep you as a buyer.

"In property investment, you secure your capital gain first, then optimise the rental income," says Joey Don, Co-Founder of PremiumRea. "This corner block's subdivision potential was worth more than any short-term rent premium. The rent is the cherry on top."

That corner block's development potential is why the bank revalued it $92,000 higher within six months. Not because of what we built. Because of what COULD be built.

The conversion: three independent households for under $100K

Now the fun part.

We converted this single-family home into three separate living spaces. Each with its own entrance, kitchen, bathroom, and living area. Three independent households, three separate leases.

Here's the layout.

Unit 1 (front, main entrance): Three bedrooms, one kitchen, one bathroom. The largest unit, retaining most of the original house footprint. We kept the existing bathroom and kitchen — they were functional. New flooring through the living areas. Fresh paint. New locks. Total spend on this unit: under $10,000. Market rent: $450 per week.

Unit 2 (middle section): Two bedrooms, one large living area, new kitchen, existing bathroom repurposed. This unit required more work — we built a partition wall to create the separation from Unit 1, installed a small kitchenette, and ran new plumbing for the kitchen sink. The existing bathroom sat perfectly between the two bedrooms. Market rent: $400 per week.

Unit 3 (rear, separate entrance via side gate): One bedroom, one bathroom (newly constructed), small kitchen, and a sunroom that functions as a living area. This was the most complex unit — new bathroom, new kitchen connection, new entry from the side of the property. But we used prefabricated components and kept the design minimal. Market rent: $350 per week.

Total conversion cost: under $100,000 including all labour, materials, plumbing, electrical, and compliance 3.

Total weekly rent: $1,200. Annual rental income: $62,400.

On a total investment of approximately $900,000 (purchase + conversion), that's a gross yield of 6.9%.

How did we keep it under $100K? Three principles we follow on every conversion.

The three rules that keep conversion costs low

Rule 1: Don't move water or structure.

Every dollar spent relocating plumbing or moving load-bearing walls is a dollar wasted. Our design team — who visits the property before we even make an offer — maps the existing water points, drainage runs, and structural walls. Then we design around them 4.

In this property, the existing bathroom was positioned between what became Unit 1 and Unit 2. We didn't move it. We just changed which side the door opened from. The kitchen in Unit 1 stayed where it was. Unit 2's kitchenette was placed against the same wet wall, sharing the drainage.

Unit 3's new bathroom was positioned directly above the existing sewer connection point, minimising pipe runs.

Rule 2: Use sliding doors and partitions, not demolition.

We use a lot of cavity sliders — those doors that disappear into the wall. They're cheap ($300-$400 installed), they don't require structural modification, and they physically separate spaces while maintaining the "single dwelling" classification that avoids triggering a full Planning Permit application 5.

The partition between Unit 1 and Unit 2 was a standard stud wall with plasterboard either side. Cost: about $2,000-$4,000 including plastering, painting, and a cavity slider door. Compare that to knocking out a wall and rebuilding: $8,000-$12,000 minimum.

Rule 3: Never apply for independent water or electricity metres.

This is a mistake I see DIY investors make constantly. They contact the water authority and the electricity distributor to get separate metres installed. Cost? $20,000 to $30,000. And you end up with two council rate notices instead of one 6.

Our approach: install a sub-metre reader (cost: $500-$1,000) to track usage per unit. Then rent each unit with bills included. We estimate the bill cost based on household size and add it into the weekly rent. A one-person unit might add $30 per week. A family of three, $50.

The landlord pays the master bill. The tenants pay inclusive rent. Everyone's happy. And you've saved $25,000 that would have been pure waste.

Compliance — the part you can't skip

Here's where I need to be dead serious.

What we do is legal. But it requires proper process. If you try to copy this from a YouTube video without professional guidance, you WILL get in trouble with council.

In Victoria, a single title can have a maximum of three separate leases renting to three unrelated households. This is classified as a 1a building under the Building Code 7. You need a Building Permit from a registered Building Surveyor, but you do NOT need a Planning Permit from council — as long as you stay within three leases.

The moment you go to four households, you're in Rooming House territory. That's a 1b classification. Council registration required. DDA compliance required — disabled access ramps, specific toilet configurations, fire safety equipment. The cost jumps from $100K to $150K-$200K.

We stay at three. Deliberately.

The other non-negotiable: you must get an Occupancy Certificate (OC) after any significant conversion work. No OC means you're renting illegally. If a tenant is injured and you don't have proper certification, your insurance is void and your personal liability is unlimited 8.

We engage our Building Surveyor before we buy. They walk the property, confirm the conversion is feasible within code, and give us a preliminary cost estimate. By the time we settle, the design is done and the builders can start the next day.

"Don't try this yourself. I'm saying that sincerely. We've done dozens of these conversions and we still discover things on site that change the plan. The difference between a profitable conversion and a council nightmare comes down to whether your Building Surveyor signed off before you started swinging hammers," says Joey Don, Co-Founder of PremiumRea.

The parking problem (and how to solve it before you buy)

The single biggest tenant complaint across all our multi-household properties isn't noise, or shared walls, or bill splitting.

It's parking.

Three households means three cars minimum — probably four or five in practice. If the property doesn't have enough parking, you'll lose applicants and the ones you get will be constantly annoyed.

This corner block solved it neatly. Unit 1 gets the existing garage. Unit 3 can park behind the side gate (we confirmed the gate opening was wider than 2.5 metres before we bought). Unit 2 parks on the street.

We think about parking before we make an offer. If a property can't accommodate at least one dedicated spot per household, it's not a conversion candidate. Full stop.

Other design details that came from field experience: aircon placement (don't put the outdoor unit where it faces a bedroom window of the adjacent unit), separate mailbox access, separate bins storage, and — critically — separate clothesline areas or indoor drying solutions.

The numbers that matter

Let me lay it all out.

| Item | Amount | |------|--------| | Purchase price | ~$800,000 | | Conversion cost | ~$100,000 | | Total investment | ~$900,000 | | Unit 1 rent (3 bed) | $450/wk | | Unit 2 rent (2 bed) | $400/wk | | Unit 3 rent (1 bed) | $350/wk | | Total weekly rent | $1,200/wk | | Annual rent | $62,400 | | Gross yield | 6.9% | | Bank revaluation (6 months) | +$92,000 | | Capital growth (6 months) | ~10% |

Annual holding costs on this property: mortgage interest (covered by rent), council rates ($2,000), water service ($650), insurance ($1,500), property management at 8.9% of rent ($5,554). Total outgoings roughly $9,700 per year — against $62,400 in annual rent 9.

That's positive cash flow from day one. Not after five years of waiting for rents to catch up. Day one.

And the conversion cost? At current rental premiums compared to a single-household rental of maybe $550 per week, the extra $650 per week pays back the $100,000 conversion in roughly 3 years. After that, it's pure profit on top of the capital growth.

If you're interested in this kind of conversion, watch my other videos for more examples. But please — and I genuinely mean this — consult a qualified Building Surveyor and an experienced buyer's agent before you touch anything. The gap between doing this right and doing it wrong is the difference between $1,200 a week and a $50,000 council fine.