Why Adding a Granny Flat to Your Melbourne Property Is a Smart Financial Move
Adding a rental-grade granny flat to your Melbourne property is more than just a smart lifestyle decision—it’s a strategic investment move. Whether you’re an investor, a homeowner looking to boost cash flow, or a developer planning for long-term capital growth, granny flats are becoming one of Melbourne’s most cost-effective property add-ons.
In this guide, we’ll break down the financial benefits, common considerations, design options, and how Radevo Living makes the process completely turnkey.
Why Granny Flats Are Booming in Melbourne
With Melbourne’s population continuing to grow and housing supply tightening, secondary dwellings like granny flats are rising in popularity. Recent changes to local council planning schemes and growing interest in “micro-living” make these compact homes a financially attractive solution for many.
For investors and homeowners alike, the appeal lies in:
- Rental income generation
- Increasing overall property value
- Flexible living arrangements for family, guests, or downsizers
- Low construction footprint compared to full extensions or subdivisions
The Financial Upside: What You Stand to Gain
- Rental Income: A Second Stream Without a Second Mortgage
A well-designed, rental-grade granny flat can deliver anywhere between $350 to $600 per week in additional income in Melbourne, depending on the suburb, amenities, and finishes.
That could equate to $18,000–$30,000+ per year in passive income—without needing to buy a second property.
- Improved Capital Value
A granny flat doesn’t just boost your cash flow—it increases your total property value. On average, a high-quality, council-approved granny flat can add up to 20–30% in resale value, especially in dual-living-friendly suburbs like Frankston, Dandenong, Werribee, and Sunbury.
- Attracting More Buyers or Tenants
Dual-income properties are highly sought after. When it’s time to sell or lease, your property stands out—especially in a market where affordability is a key concern.
Real Costs: What Does It Take to Build One?
Granny flat construction costs in Melbourne typically start from $120,000–$180,000 for a rental-grade finish, including full fit-out, appliances, council approvals, and utilities. At Radevo Living, we offer fixed, transparent pricing—no surprise bills, no hidden add-ons.
We manage:
Council permits and compliance
Certified construction and site prep
Smart, durable design tailored to rental use
All electrical, plumbing, heating and cooling
Keyless entry and smart locks (optional)
Landscaping and fencing
You don’t need to chase contractors, quotes, or timelines. We do it all—end to end
Time to ROI: When Will It Pay Off?
Let’s look at a rough scenario:
Build cost: $150,000
Weekly rental: $500
Annual income: $26,000
Payback period: ~5.7 years
After that, you’re generating passive income on a fully paid asset. And if property values rise (as they historically have in Melbourne), your equity increases too.
Strategic Use Cases: Who Should Consider a Granny Flat?
Investors
Boost your yield, create dual-income opportunities, or improve equity position for your next development.
Homeowners
Generate side income, prepare for retirement, or support multi-generational living.
Developers
Add rental-grade dwellings to existing blocks or projects to increase overall returns pre-sale or post-DA.
Design Tips: Building with Tenants in Mind
A rental-grade granny flat should be built with:
Durable, low-maintenance materials
Think hard-wearing floors, stain-resistant benchtops, easy-clean splashbacks.Functional layout
One or two bedrooms with built-in storage, open-plan living, and space-efficient bathrooms.Smart privacy planning
Separate access, soundproofing, and strategic landscaping help reduce tension between main house and granny flat occupants.Energy efficiency
Solar-ready, well-insulated, and compliant with 7-Star energy requirements for lower tenant bills.
At Radevo, we guide you through all these decisions—from orientation to tiles—so you’re not overwhelmed
Council Approval in Victoria: What You Need to Know
Yes, you need planning approval—but we take care of that for you. Most Melbourne councils allow granny flats (aka “secondary dwellings”) if you meet size, access, and setback rules.
We handle all the red tape:
Town planning documentation
Building permits
Utility connections
Bushfire overlays or heritage compliance if needed
Why Partner with Radevo for Your Granny Flat?
Most people are put off granny flat projects by:
Confusing permits and council approvals
Hidden build costs or scope creep
Managing unreliable contractors
Making design decisions without guidance
Not knowing who’s accountable if things go wrong
That’s where we come in.
At Radevo Living, we deliver fully managed, fixed-price builds that are designed to perform and built to last. We’re your single point of accountability—from the first site check to handover.
Here’s what makes us different:
Transparent pricing with no hidden costs
One team to manage it all—no juggling tradies
End-to-end project delivery
Smart, rental-grade design with premium, durable finishes
Built-in equity and income for years to come
FAQs
Unlock Passive Income Without the Hassle
Granny flats are one of the smartest ways to build wealth on your own land—and in a city like Melbourne, where space is at a premium, every square metre counts.
Whether you’re flipping, developing, or investing in your future, Radevo Living can help you plan, design, and build a high-performing rental-grade granny flat with zero stress.
Ready to get started?
Book your free site assessment today and let’s explore how a secondary dwelling can work for your property and goals.
