Here’s something most property investors don’t realise about Melbourne granny flats: it’s not the extra bedroom or fancy fixtures that make the difference to your rental returns. It’s where you build that matters most.

We’ve seen countless investors get caught up in square metres and forget the golden rule of property investment. Melbourne City units achieve some of the highest rental yields in Victoria at 8.6%, demonstrating that strategic positioning often matters more than property size. A smaller granny flat in the right spot will outperform a mansion in the wrong location every single time.

Why Melbourne’s Smart Investors Think Location First

Let’s be honest – when you’re looking at Melbourne granny flats as an investment, you want results. The investors who consistently achieve 10%+ rental yields aren’t the ones chasing the biggest floor plans. They’re the ones who understand that location drives tenant demand more than extra bedrooms ever will.

Think about it from a tenant’s perspective. Would you rather live in a cosy 60m² granny flat that’s 15 minutes from your work, or spend two hours commuting from a spacious property in the outer suburbs? The answer is pretty clear, and it’s exactly why location strategy should drive every investment decision you make.

The Sweet Spot: Melbourne’s 50km Investment Zone

We’ve discovered that the magic happens within 50km of Melbourne’s CBD. This isn’t just a number we’ve plucked from thin air – it’s based on real rental demand and tenant behaviour patterns we see year after year.

Within this zone, you’ll find consistent tenant demand because people want to live where life happens. They want to be close to employment hubs, quality schools, healthcare, and all the amenities that make Melbourne such a liveable city. A well-positioned granny flat in this area will rarely sit empty for long.

What Makes Location Strategy Actually Work

Transport Links Are Everything

Melbourne’s public transport network is your best friend when it comes to granny flat investments. Properties near train stations, tram stops, and major bus routes consistently command higher rents because convenience translates directly into tenant willingness to pay premium prices.

Employment Accessibility

Your tenants need to get to work without the stress of long commutes. Areas within easy reach of Melbourne’s business districts, hospitals, and educational institutions will always have strong rental demand. This consistency means fewer vacancy periods and more reliable income for you.

Future Growth Potential

We always look at what’s happening in an area over the next 5-10 years. New infrastructure, shopping centres, or transport improvements can significantly boost property values. It’s about seeing the potential before everyone else catches on.

The Real Numbers Behind Smart Location Choices

Here’s why location trumps size every time. Melbourne’s rental vacancy rates remain extremely tight at around 1-1.4%, with inner-city properties consistently achieving faster tenancy turnovers than outer suburban alternatives. The smaller, better-located property consistently achieves higher rental yields because:

• More people can easily access it for work
• Tenants are willing to pay premium rents for convenience
• Vacancy periods are shorter
• Capital growth is stronger over time

It’s not about having the most space – it’s about being in the right place.

How We Help You Get Location Right

Our property selection process isn’t just about finding any available block. We evaluate each potential site against strict investment criteria because we know that getting the location right is what separates successful investments from disappointing ones.

Our site assessment service looks at local rental demand, planning permissions, soil conditions, and proximity to essential services. We want to make sure your location strategy actually works in the real world, not just on paper.

Multi-Generational Living Changes Everything

Melbourne families are changing, and smart investors are paying attention. More households are choosing multi-generational living arrangements, which creates strong demand for Melbourne granny flats in established family suburbs.

These families aren’t just looking for any granny flat – they want properties near good schools, healthcare services, and community facilities. They’re willing to pay premium rents for the right location because it makes family life work better for everyone.

Our Approach to High-Yield Locations

At Innovista Group, we focus entirely on locations that deliver consistent 10%+ rental yields. Our signature package starts at $208k (including everything), and we only recommend properties in Melbourne’s proven high-yield zones.

Our luxe package at $240k provides enhanced inclusions, but we never lose sight of the location fundamentals. Whether you choose our signature or luxe package, you’re investing in strategic positioning that maximises your returns without compromising on quality.

The Bottom Line on Melbourne Granny Flats

The most successful granny flat investors understand that location strategy beats size every time. A well-positioned property will deliver stronger rental yields, attract quality tenants, and appreciate faster than an oversized dwelling in the wrong spot.

Melbourne’s growth patterns consistently favour convenient, well-located smaller properties over poorly positioned larger ones. With Melbourne adding over 76,000 residents annually and housing supply struggling to keep pace, strategic positioning becomes even more critical. This trend isn’t going anywhere – if anything, it’s accelerating as housing supply constraints intensify.

Don’t let another month pass watching property prices rise whilst you’re stuck in analysis paralysis. Contact Innovista Group today for expert site assessment – because the best locations won’t wait for you to make up your mind, and neither should your investment strategy.