I have a number of +ve cashflow properties in regional areas and since I live in Melbourne, all of them are in Victoria.

They've all done very well and look after themselves (actually by ppty mgrs) with little or no effort from me. There's even been a little capital growth but not as much as in the cities. But I don't mind as income is what I am after. 

Best thing is that they were +ve from day one without any work needed to be done. I'm a big fan of buying solutions as I value my time a lot. If I can get 10% – 15% nett COCR without doing anything (other than making the purchase!), then I am contented.

The ATO actually has a very good template that comes with the Tax Pack.

Yes, Deer Park is historically "lower class". But being sandwiched in between the new "upper class" suburbs like Caroline Springs and Cairnlea, there has been significant improvement in the area – e.g. new buildings and new shops popping in the Deer Park shopping area, redevelopment of parks, etc.

So don't write off Deer Park too soon.

Good to know Qld. I once went to Westpac to query on their loan to purchase a block of 4 units for me to subdivide and sell individually. However, they said because it was 4 (i.e. more than 3 units), I needed to come up with 30% deposit. Guess from your post, it indicates there are alternatives available.

Well, firstly, I would never buy a property unless I am earning income from it from day 1 (i.e. positive gearing strategy). That's the key principle that I strictly adhere to and its worked well for me.

However, it looks like you are following a negative gearing strategy with the hope of making money through capital gains. If that is indeed your strategy, 3 years is way too short a time to expect significant increase in capital value (unless you are EXTREMELY lucky).

So the answer to your question depends on what your investment strategy is.

The problem with these sort of deals is that after the lease back period, the actual market rent is way lower than $535 pw.

I have a number of friends who love display home deals, but its pretty much betting that they can sell it after the leaseback is up and make some capital gains. Or at least not to lose any money. This way, the rental income is their profit and any capital gain is a bonus.

Proceed at your own risk !

I think you will find that the 11 sec formula is pretty much useless these days. Read Steve's subsequent books on his change in strategy.

However, if you lower your expectations to about 10% COCR, you will find that there are still many out-of-the-box solutions out there. Frankly this is my strategy right now. Sure I can get better returns if I try to be more creative and put in a bit more effort and running around.

But I value my time a lot, so I don't mind compromising and getting decent returns (as opposed to mind blowing returns) if it means that I can save time and spend it with my family.

I see many houses like that in the new estates .. but whatever you do don't build an underground garage .. VERY BAD feng shui ..

All good suggestions above but if all else fails, don't be afraid to SELL …

Part of good investing is to know when to let go, as well as when to buy …

Tough luck mate !

I get about 6% – 7% (in VIC).

I would shop around if you get quoted more than that though.