Dual Occupancy & Granny Flats in NSW: Are They Worth the Investment in 2025?

Investors in NSW are increasingly looking at dual occupancy properties and granny flats as a way to boost rental income and diversify property portfolios. With housing affordability pressures and high demand for rental accommodation, these options may seem like a smart strategy—but are they really worth it in 2025?

What is Dual Occupancy & a Granny Flat?

Dual occupancy refers to a single property with two separate dwellings on the same lot, while a granny flat is typically a secondary dwelling on a residential property, often with its own kitchen and bathroom facilities. Both can provide extra rental income without purchasing another block of land.

Benefits of Investing in Dual Occupancy & Granny Flats

Increased Rental Income
A granny flat or a second dwelling can provide a steady rental return on the same land you already own. In areas of high rental demand, the extra income can help offset mortgage repayments or even generate a positive cash flow.

Capital Growth Potential
Properties with dual occupancy potential are attractive to future buyers, often commanding higher resale value. In NSW, where land is scarce, this added flexibility can improve long-term capital growth.

Efficient Land Use
Adding a granny flat or creating a dual occupancy can maximise your land investment, particularly in suburbs where lot sizes allow for subdivision.

Flexibility
These properties can be used for family living, renting out, or even short-term accommodation, giving owners multiple income streams.

Considerations Before Investing

Council Regulations: Not all areas in NSW permit dual occupancy or granny flats. Always check local council zoning and development rules.

Construction Costs: Building a granny flat or converting a property for dual occupancy can be costly. Ensure projected rental income justifies the investment.

Maintenance: More dwellings mean higher maintenance and management responsibilities. Factor this into your investment strategy.

Market Saturation: Some areas have an abundance of secondary dwellings, which can impact rental yields if supply exceeds demand.

Rental Yield Comparison

While dual occupancy and granny flats can increase rental income, it’s important to compare them to other investment options. For example, see our insights in Rental Yield Comparison Across Sydney’s West to see how these properties perform against traditional investment strategies.

Dual Occupancy vs Established Homes

Another key factor is capital growth potential compared to traditional homes. Check out our comparison in House and Land Packages vs Established Homes to see which investment strategy may suit your long-term goals.

Are They Worth It in 2025?

For investors with a solid asset base and a strategic property plan, dual occupancy and granny flats can offer higher rental yields and flexible investment options. However, careful planning is essential, including council approvals, construction costs, and market research.

If executed well, these properties can be a powerful addition to your property portfolio, particularly in growth corridors of NSW.

Need Help Planning Your Investment?

At Truth Group, we help you structure your home loans and guide you through property investment strategies, including dual occupancy and granny flats. From research to purchase, we provide tailored solutions to maximise your rental income and long-term capital growth.

Internal Links:

House and Land Packages vs Established Homes

Rental Yield Comparison Across Sydney’s West