Are you planning on painting the front fence? It seems to be the last obviously ugly bit in the front yard. Since you've got the for sale sign up already it might pay to fix up that fence earlier than later if you're doing it at all.

Sounds like you are steaming ahead.  Keep up the posts and pictures.

Is it possible that you could turn this deal around by getting the current tenant to negotiate on a new 5 month lease at a lesser rent? Or could you push the settlement date back further to make their vacancy fall within a workable time frame such that you can avoid stamp duty? I don't know under what terms stamp duty applies so this might not make a difference. Are you applying under first home owners grant, which i guess means you'd have to occupy within 6 months?

It sounds like you've done some work getting this far and it would be a shame if there's no way to resurrect the deal.

You're not being charged the loan interest on that 20% but when it comes time to sell you're going to pay 40% of your capital gains to the lender (40% is the cut adelaide bank wants of any capital gains, according to some googling). That's what elka was illustrating a few posts back.

If you don't get any capital growth from your property then it essentially would be a free loan – you just pay back what they loaned. If your property increases in value by 100,000 then they get their principal plus 40,000

Using Elka's example of a $255k house, 20% is 51k. If i borrow on a "normal" loan, and picking an average interest rate of 9% over 15 years I would pay $84k of interest over that 15 years. Suppose instead of borrowing that 20% from a traditional lender i get a shared equity loan.

For the shared equity loan to work in my favour, 40% of my capital gains at the time i sell must be less than $84k – ie. in 15 years my property hasn't increased by more than $210k. If the property has increased by more than that then i would have been better off getting a normal loan rather than shared equity.

In Elka's case the property is now worth $920k. That's $455k more than the property would have been worth if it had only increased in value by $210k – the bank is getting 40% of that $455k! I'd rather keep that extra $182k (40% of 455k) in my pocket.

Someone pick me up if i've got my maths wrong here.

@wintertail: enlightening post – i'd wondered about doing something like this myself.  Seems like peril at every turn.  I rent at the moment and am thinking about looking for a 3 bed place (to buy) and renting out the remaining 2 rooms to offset repayments.  I haven't found a suitable place, but my eye's open.

Are you going to apply for a owner builder licence or a normal builder's licence? I did a quick search for the normal permit and came up with:
http://www.fairtrading.nsw.gov.au/building/builderstradespeople/building.html

In NSW, 2 years "relevant industry experience experience" plus a tafe certificate or advanced diploma is required. I think a certificate 4 is half the school year to do (not sure about that).

Isn't this where the "rule of threes" comes into play? eg. show them something a bit slummy, something a bit expensive, then something about what they're looking for in quality and price and they'll overlook the shortcomings.

I haven't worked in sales so I haven't got immediately applicable experience to draw from. I know from my days of working in a call centre doing tech support (thankfully long behind me) I was most inclined to help the customers who'd clearly tried to resolve things themselves and just explained the whole situation. Evasive or lazy customers were unlikely to find techs that would go out of their way to help them. I assume this is the case in a lot of industries.

Perhaps Jon would comment about this point: I suspect that you are more inclined to hold the hand of first buyers or go a bit further to push a deal through for an investor if they have clearly tried, within their means, to make the deal work. A first buyer might not know all the ins and outs of buying property but they can still demonstrate that they've sunk time into working out what they can afford to buy. If I were the agent i think i'd be inclined to help those who help themselves.

Relating to the original point, I think if you're dealing with an agent who is just trying to fulfill the role of intermediary they probably appreciate anything done that makes it easier for them to tie down a deal.  Naturally it all comes down to price in the end and a figure at least close to what you'll really pay probably helps.  (note my lack of expertise in this area – just some thoughts)

I'm in the IT industry and I enjoy the work i do more days than not. When I am financially free I will probably start an IT security consulting business and additionally spend more time indulging in my sport and computing-related hobbies.

I hadn't heard of those shows.  Just thought I'd chime in and mention that you can find clips of them on youtube.

http://www.youtube.com/results?search_query=property+ladder&search=
http://www.youtube.com/results?search_query=flip+this+house&search=