Case Study: Dapto Investment Property — From Negative Gearing to Positive Cashflow

This is an example case study illustrating a typical Granny Flats Illawarra project outcome.

The Situation

Mark and Julie had owned a 4-bedroom brick veneer home in Dapto for seven years. Originally purchased as their family home, the property had become an investment when they upsized — but it was costing them $580 per week in negative gearing after mortgage repayments, rates, insurance, and management fees.

With interest rates having risen significantly over the preceding two years, the cashflow pressure had become real. They were considering selling — but didn’t want to exit a market they believed in long-term.

A colleague mentioned granny flats. Mark did his research, found Granny Flats Illawarra, and booked a free site inspection.

The Property Assessment

The Dapto block was 680m² — comfortably above the 450m² CDC minimum — with a 15-metre frontage and a generous, flat backyard. The existing tenant occupied only the main house and had no use of the rear yard.

Our assessment confirmed:

✅ Full CDC eligibility — block size, width, zoning, and setbacks all compliant
✅ Rear access available via a side gate — construction could proceed without impacting the existing tenant’s access to the main house
✅ Services connections straightforward — existing sewer and water mains accessible from the rear
✅ 2-bedroom design fits comfortably with required setbacks

We walked Mark and Julie through a 2 bedroom, self-contained design at 58m² — private entrance from a new side path, open-plan kitchen and living, two bedrooms with built-in robes, and a private deck off the living area.

Protecting the Existing Tenancy

Mark and Julie’s first concern was protecting the rent on the main house during construction. Their current tenants were good long-term renters paying $720/week, and they couldn’t afford to lose that income.

We recommended a simple approach:

🔒 Install a colourbond fence to clearly split the main yard from the granny flat yard
🔒 Ensure the existing tenancy agreement was updated to formally exclude the rear yard (new granny flat area) from the tenancy
🔒 Schedule concrete and heavy deliveries for weekdays, outside school pickup hours

The existing tenants stayed throughout construction without complaint. Their rent — and GFI’s access to the rear — were never in conflict.

The Approval Process

Mark signed the Pre-Construction Contract and GFI immediately commenced the CDC approval process. This involved:

• 📐 Boundary survey and site plan
  • ⚙️ Structural engineering drawings
  • 🌿 BASIX energy compliance report
  • 🏗️ Full CDC application lodged with a private accredited certifier

CDC approval was granted in 30 business days. Mark and Julie were genuinely surprised — they’d expected months of council back-and-forth.

Construction

The Construction Contract was signed with a fixed price of $260,000 — inclusive of everything from site prep to final clean and occupation certificate. Build commenced straight after CDC approval.

Key milestones:

• Week 1–2: Site prep, slab
• Week 3–5: Frame, roof, external cladding
• Week 6–7: Lock-up, services rough-in
• Week 8–10: Internal fit-out, kitchen, bathroom
• Week 11–12: Fit-off, painting, flooring, landscaping
• Week 12: Final inspection, occupation certificate, handover

Total construction time: 12 weeks.

The Outcome

The completed 2-bedroom granny flat was leased within 10 days of listing at $600 per week, reflecting strong demand in the Dapto rental market.

The combined rental income from both dwellings is now $1,320 per week, generating $68,640 per year in gross rental income.

Against mortgage and holding costs, the property shifted from -$580/week to approximately +$20/week positive cashflow — a turnaround of $600 per week, or over $31,200 per year.

Key Takeaways

✅ A standard Dapto block easily met CDC eligibility requirements
✅ CDC approval took less than 4 weeks — not months
✅ Fixed-price contract meant no cost surprises
✅ Existing tenancy was protected throughout construction
✅ Property shifted from negative to positive cashflow within 6 months of first enquiry

Interested in a similar outcome on your Illawarra property? Explore our Dapto granny flat services, learn about CDC approvals, or view our 2 bedroom designs.