I Walked Through My $660K Property on Camera. It Rents for $1,200 a Week.

$1,200 a week.

That's what my $660,000 house pulls in, every single week, after a $150,000 conversion. I'm standing in the driveway right now wearing the landlord uniform — shorts and thongs — because one of my tenants is home and I can't get into their unit to film. That's fine. The rent hits my account regardless of what I'm wearing.

I bought this place on a 700-square-metre block in Melbourne's southeast. The land alone is worth more than what I paid for the whole property, which is exactly the kind of deal we hunt for every client. But the magic isn't in the purchase. It's in what happened after settlement.

Let me walk you through every dollar of the $150K conversion and show you exactly what each tenancy earns.

The property before I touched it

Standard 1980s brick veneer. Three bedrooms, one bathroom, single garage, flat backyard with side access wider than 3 metres. The kind of house that gets scrolled past on realestate.com.au because it photographs terribly.

I paid $660,000. At the time, similar houses on the same street were trading between $650K and $700K. Nothing special about the price. The special part was the 700-square-metre block with development potential — push it down and you could subdivide into two or even three lots. That future optionality is baked into the land value 1.

But I wasn't planning to subdivide. Not yet. I wanted cash flow first. The renovation plan was designed to maximise rental income while preserving the land's future development value.

Where the $150,000 went (every dollar)

Here's the breakdown. No rounding, no hiding costs.

Front dwelling conversion: ~$75,000-$80,000 The main house was split into two separate tenancies using a certified firewall. Not a plasterboard partition — a proper fire-rated dividing wall that meets BCA requirements. I cannot stress this enough: if you just slap up a gyprock wall and call it a day, you are personally liable if there's a fire. Unlimited personal liability if the property is in your name 2.

One side became a 3-bedroom unit. The other side got a new kitchen, new bathroom, and its own entrance. Combined rent for these two: $800 per week.

Rear unit conversions: ~$50,000-$55,000 There were two small structures in the backyard — about 8-10 square metres each. Previously unusable. We added a kitchenette and bathroom to each, connected to the existing sewer line (which was, mercifully, at the rear boundary and not cutting through the middle of the block). Each unit now rents for $200 per week.

Paperwork and compliance: ~$20,000 Building permits, surveyor fees, fire safety certification, electrical compliance, plumbing sign-offs. This is the cost nobody talks about but you can't skip. We engaged a Building Surveyor to ensure everything was above board — one title, three leases, which is the legal maximum in Victoria before you trigger Rooming House registration requirements 2.

Total invested: approximately $150,000. Total rental income: $1,200 per week ($800 front + $200 + $200 rear units).

"I spent $150K to create $1,200 a week in rental income on a $660K base," says Joey Don, Co-Founder of PremiumRea. "The renovation pays for itself in under three years. After that, it's pure cash flow — roughly $62,400 a year gross."

The yield calculation that makes accountants smile

Total investment: $660,000 purchase + $150,000 conversion = $810,000. Annual rent: $1,200/week x 52 = $62,400. Gross yield: 7.7%.

At 7.7% gross yield with interest rates around 6.4% on an IO loan 3, I'm positively geared before I even think about tax deductions. The holding costs — land tax ($2,000), council rates ($2,000), water ($650), insurance ($1,500), maintenance (~$1,500) — total around $7,650 per year 4. Net operating income after holding costs is approximately $54,750.

With an 80% LVR loan on the original purchase ($528,000 at 6.49% IO), annual interest is $34,267. That leaves roughly $20,483 in my pocket each year. Positive cash flow. On an investment property. In Melbourne.

Now contrast that with the house directly across the road. Same era, same approximate purchase price, traditional single-tenancy rental. Their rent: $600 per week. Their gross yield on an $810K total investment (assuming they did some basic cosmetic work): maybe 3.9%.

Same street. Same looking house. Double the rent. The difference is the conversion.

What I deliberately did not do

I didn't apply for separate water and electricity meters from the utility companies. That would have cost $20,000-$30,000 and triggered a second set of council rates 5. Instead, I installed internal sub-meters (readers) for about $2,000 total and ran a "bills included" rental model. The tenants pay a slightly higher rent that factors in average utility costs. Simple, legal, and far more profitable.

I didn't change the external footprint of the main building. No extensions, no second storey, no structural changes to the front facade. This keeps the conversion under the radar and avoids triggering a Planning Permit — only Building Permits were needed 2.

I didn't over-capitalise on finishes. The kitchens are functional IKEA-grade, not stone benchtops. SPC flooring at $62 per square metre, not engineered hardwood 6. Dulux paint in Builder's White. Tenants paying $200 a week for a studio don't expect marble. They expect clean, functional, and warm. That's what they got.

And here's a detail that surprises people: I priced my units below market. The studio units could probably fetch $250 each if I pushed it. But my strategy has always been the same — rent fast, rent low, and let the tenant never leave because they can't find anything cheaper. Low vacancy beats high rent. Every time.

The compliance reality (don't skip this part)

Victoria allows a maximum of three leases on a single residential title without requiring Rooming House registration 2. My property has exactly three leases: one for the front 3-bed unit ($400/wk each side of the firewall counted under one arrangement), one for each rear studio. Any more and I'd need to register as a Class 1b building, which brings DDA accessibility requirements, fire exits, disabled toilets, and council inspections.

The firewall between the two front tenancies is the most important structural element. It must be fire-rated and certified by a Building Surveyor. The Building Surveyor also issued the Occupancy Certificate for the rear units. Without OC, you cannot legally rent 7.

Safety checks are non-negotiable. Electrical safety check every 2 years. Gas safety check every 2 years. Smoke alarm check annually. Total cost: about $500-$650 per round 7. We pre-authorise $300-$500 for any minor fixes the tradies find during inspection so they can sort it on the spot rather than scheduling a return visit at $150 re-inspection fee.

Every renovation under $10,000 per trade doesn't require formal declaration under VBA rules 2. We use separate contractors — electrician, plumber, cabinetmaker — each invoicing under that threshold. Completely legal, completely compliant.

"The gap between legal rooming house conversion and illegal subdivision is about $20K in compliance costs and a Building Surveyor," says Joey Don. "Skip that step and you're carrying unlimited liability. Not worth it for any amount of rent."

Would I do it again?

Already have. Three times.

The formula works when you start with the right property: 600+ square metres, flat block, side access over 3 metres, sewer at the boundary not through the middle, and a house layout that naturally lends itself to internal division. Not every property qualifies — maybe one in fifteen that we inspect has the right bones for this type of conversion.

The neighbour across the road is collecting $600 a week on a property that looks identical to mine from the street. I collect double. The only difference is $150K in strategic renovation and the willingness to manage multiple tenancies.

Is it more work than a single tenancy? Yes. Do things break more often with four households using one sewer line? Occasionally. Is it worth an extra $31,200 per year in rental income?

Not even close to a fair question. Of course it is.

If you've got a property on 600+ square metres with the right layout and you're only running a single-tenant rental, you're leaving money on the table. Not a little bit. A lot. Drive past your investment on a Saturday, look at the backyard, and ask yourself: what could that space earn?

The answer might change everything.