Rental Income by Granny Flat Size
These are real rental figures from our portfolio of 87+ investment properties across Melbourne:
30m² Standard Studio (1-bed, 1-living):
- Base rent: $340–$360/week
- Bills-included rent: $370–$390/week
- Best for: Singles, students, young professionals
- Vacancy rate: <2% (high demand for affordable studios)
60m² Two-Bedroom Unit:
- Base rent: $480–$500/week
- Bills: Case-by-case (typically $40–$60/week additional)
- Best for: Couples, small families
- Higher per-unit income but lower ROI percentage than 30m²
Dual Living (2 × 30m² Studios):
- Combined rent: $650–$700/week
- This is the maximum yield strategy — two independent tenants on one lot
- Requires slightly larger block (650m²+)
- Combined annual income: $33,800–$36,400
Pro tip: 30m² studios offer the best ROI because construction cost is lowest ($110K) while rent is proportionally higher. Two 30m² studios earn more than one 60m² unit.
How a Granny Flat Transforms Your Property Yield
The value of a granny flat is less the standalone rent than what it does to the yield on the whole holding. Below is the arithmetic, with every input stated. ⚠️ An earlier version of this section contained figures that did not reconcile with our own build costs and rents (a "$170K" 30m² build against a "$640/week" granny rent, when the 30m² product is $110,000 + GST and lets at $340–$390). Those have been corrected.
Before granny flat:
- Property value: $689,000
- Weekly rent (main house): $600 → $31,200 a year
- Gross yield: 4.53%
After a 30m² addition ($110,000 + GST = $121,000, plus approx. $10,000 permits and service connections):
- Total capital deployed: $820,000
- Combined weekly rent: $980 ($600 house + $380 granny flat, bills included)
- Annual rental income: $50,960
- Gross yield: 6.21%
After dual living, 2 × 30m² ($200,000 + GST = $220,000, plus approx. $15,000):
- Total capital deployed: $924,000
- Combined weekly rent: $1,275 ($600 house + $675 combined for the two studios)
- Annual rental income: $66,300
- Gross yield: 7.18%
Gross means before land tax, management fees, insurance, maintenance, vacancy and interest. Every one of those reduces the number, some of them materially.
What actually happened, on our own completed builds: across the 212 granny-flat additions in our published dataset (n=345, settled Jan 2023 – Sep 2025, DOI 10.5281/zenodo.20095886) the median realised gross yield was 5.79%, on a median purchase of $649,730 and a median build spend of $105,000. The worked examples above are arithmetic on stated assumptions; the 5.79% is what the portfolio actually recorded. Where they differ, believe the 5.79%.
Refinance & Equity Recovery Strategy
PremiumRea holds no Australian Credit Licence and is not a credit assistance provider. We do not recommend lenders, loan products or LVRs, and we cannot tell you what a valuer will decide. The mechanism below is described so you can ask a licensed mortgage broker informed questions. Whether it is available to you depends entirely on your lender, your servicing position and the valuer's opinion.
The mechanism. Once the Occupancy Certificate issues, some owners seek a revaluation and release equity against any uplift the valuer recognises.
What we can and cannot tell you. We have seen completed granny flats valued above the build cost and below it, on comparable builds in the same corridor within the same year. Valuation is the valuer's opinion, not an arithmetic consequence of what you spent. We have withdrawn an earlier version of this section which stated a ~$150,000 valuation uplift, an $120,000 extraction at 80% LVR and a "net cost effectively $0" outcome. We cannot substantiate any of those as a general expectation, and stating them as one was misleading.
The assumptions any such illustration depends on — all of which are yours, not ours: the valuer's assessed uplift; your lender's LVR policy for the loan purpose; your servicing capacity assessed at the lender's buffer rate, not the headline rate; whether the lender treats the second dwelling's rent as assessable income and at what shading; and the cost of the additional interest on the released funds. Change any one of them and the outcome changes.
If a builder, agent or anyone else promises you a specific valuation, a specific releasable amount, or that a build is "effectively free", treat it as a warning sign. Nobody in that chain controls the valuer.