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Granny Flat ROI Calculator

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Calculate the return on investment from building a granny flat. See construction costs, rental income, and how long until it pays for itself.

Free to useNo data storedAI insightsUpdated: February 2026

Granny flats are one of Australia's best-kept property investment secrets — for $120,000-$200,000, you can add $300-$600/week in rental income with payback periods of 5-8 years. In NSW, complying development allows approval in as little as 10 days (no DA required). A granny flat also adds $100,000-$200,000 to your property's resale value. The key is getting the numbers right: council fees ($5,000-$15,000), connection costs ($10,000-$20,000), and ongoing expenses can erode returns if not planned properly.

Enter Your Details

Enter Your Details

$

Total cost including construction, council, and connections

$

Weekly rent for the granny flat

$

Current market value of your main house (before granny flat)

Size affects build cost, rent, and council approval

State affects regulations, maximum size, and approval process

Primary reason for building the granny flat

Financing method affects your net return

Real-World Examples

2-Bed Granny Flat — Western Sydney

Build cost: $160K. Rent: $450/week. Main house value: $850K. Financed from home equity at 6.2%.

Annual rent: $23,400. Annual expenses (insurance, maintenance, rates): ~$3,000. Equity interest: ~$9,920. Net annual income: ~$10,480. Payback period: ~7.6 years (cash) or ~15.3 years (after interest). Property value increase: ~$120K-$160K, meaning instant equity gain even before rental returns.

Frequently Asked Questions

Glossary

Granny Flat / Secondary Dwelling
A self-contained dwelling built on the same lot as an existing house. Typically 1-2 bedrooms, up to 60sqm (NSW). Cannot be separately titled in most states.
Complying Development Certificate (CDC)
A fast-track approval process for developments that meet pre-set standards. In NSW, granny flat CDCs can be approved in 10 working days without a full DA.

Disclaimer: This calculator provides estimates only and should not be relied upon for financial decisions. Interest rates, fees, and policies change frequently. Always verify information with lenders directly. This is general information, not personal financial advice. Consider seeking advice from a licensed mortgage broker or financial advisor.

Last updated: February 2026

How to Use
  1. Enter the estimated total build cost (construction + council + connections).
  2. Set the expected weekly rent for the granny flat.
  3. Add your main property's current value.
  4. Choose the granny flat size and your state.
  5. Select the purpose and financing method.
  6. See payback period, ROI, and impact on total property value.
Key Information
  • Average granny flat build cost: $120K-$200K (1-2 bed, including council and connections).
  • Average granny flat rental income: $300-$600/week depending on location and size.
  • Typical payback period: 5-8 years for long-term rental, 3-5 years for Airbnb (where permitted).
  • NSW allows up to 60sqm complying development granny flats with 10-day CDC approval.
  • Granny flat rental income is taxable but expenses (construction depreciation, insurance, rates portion) are deductible.
Pro Tips
  • In NSW, use a Complying Development Certificate (CDC) instead of a DA — it's faster (10 days vs months) and more predictable.
  • Build to the maximum size allowed — the rental premium for a 2-bed over a 1-bed far exceeds the extra construction cost.
  • Fund from home equity (redraw) at your home loan rate — much cheaper than a separate construction loan.
  • If considering Airbnb, check your council's short-term rental rules — many LGAs now cap it at 180 days/year.
Avoid These Mistakes
  • Underestimating connection costs — sewer, water, electricity, and stormwater connections can add $10K-$20K.
  • Not checking council rules before committing — minimum lot sizes, setbacks, and parking requirements vary by council.
  • Building cheap to save money — poor quality builds cost more in maintenance and attract lower rents.
  • Forgetting that the granny flat can't be strata-titled in most states — you can't sell it separately from the main house.
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