Calculate the return on investment from building a granny flat. See construction costs, rental income, and how long until it pays for itself.
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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.
§ Worked examples
Real-world scenarios
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.
§ FAQ
Questions Australians ask
§ Glossary
Plain-English definitions
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.