Is a Granny Flat a Good Investment in 2026? What the Numbers Show

Is building a granny flat worth it purely as an investment? Let's look at the numbers for 2026.

The Investment Case

A granny flat costing $150,000 that generates $350/week in rent produces a gross yield of 12.1%. Even accounting for maintenance, insurance, and vacancy, the net return typically exceeds 8% — far above what most property investments deliver.

Capital Value Add

A quality granny flat typically adds 60–80% of its construction cost to the property's overall value. So a $150,000 build might add $90,000–$120,000 to your property value immediately.

The Caveats

These returns depend on being able to legally rent the granny flat (see our article on rental rules in Victoria). They also assume decent construction quality and a location with rental demand.