If you look up any dictionary, it will likely tell you that lähedal is an adverb.
1. First, it is important to know that adverbs in Finnic languages may serve as postpositions.
Genitive noun + Postposition. - This is very important.
Istume mere ääres. (We sit by the sea.)
ääres = beside, by post.
meri = sea n. (gen. = mere)
2. Word order in Estonian is Subject - Verb - Object - Adverb of time - Adverb of place. The position of object may vary, depending on the context (Whether it is emphasized...).
Minu kodu (subject) on (verb) mere lähedal (adverb of place).
I am not native Estonian speaker, any correction from Estonians are welcomed.