Hi again Karen and Kate.

Re tenant obligations to open for inspections, I realize this is the case, with appropriate notice.  However I have personally inspected places with dirty undies on the floor and old cat food out etc.  It can also be off-putting to have a sullen tenant sitting watching TV during an inspection, or an angry dog on a chain barking outside fit to bust.  So I guess the idea of reduced rent is to provide an incentive for cooperation, especially as some tenants will not actually want you to sell the house they are living in!

G

Hi James.

I think your original plan is pretty good, especially if you can live at home or with friends cheaply.  However
I also think you are on the right track looking at the positive cash flow concept, as it may allow you to buy properties with smaller deposits that are paying their own holding costs.  This means you can own more of them with less of a weekly financial commitment. The down side being they are often not as centrally located, may need some work from you or are in dodgier areas.  There are lots of discussions on this site re. the subject.  Margaret Lomas writes on it extensively.  Basically you need to target areas with potential economic and population growth that have not taken off yet..

Another tactic that I wish I had done earlier is to target properties with development potential.  This may be two incomes from a home and flat or subdivision of a corner block, etc .    This is more hands on, which not everyone wants, and also involves good research into council regulations,  plus keeping a finger on the prices and demand in different locations.

You sound in a great position and will do well with your relevant qualifications. 

G

Hi Sotiris.

Obviously I don't know where your home is, or how committed you are to living in that particular location, etc.  My initial thought is, however, that you could find a great house in numerous locations for less than half what your home is worth.  The remaining money could be used to buy, say 2 x $350,000 properties or 3 x $250,000 properties freehold.  This would be quite achievable in South Australia, for example.  This would provide you with a nice taxable income in the form of the rents to supplement your super with. If you did decide to do part time work you might be in a position to borrow against this equity to buy more properties. At the very least, the properties will hold their value with inflation and provide an inheritance for children, or lump sum funds by liquidating if you need to later.  I wish you good times ahead.

Regards,
G

Hi Tom.

Just a thought, but could you sell the home, then rent as cheaply as possible for the time it takes to build on the block?  As your block would be debt free, and you have equity and cash flow in your other investments, I think you might be able to borrow against it despite your less favorable business figures?

G

Hi Ouchiemama,

We had the same thing ages ago and it is very annoying, especially when you look back and think of the other potential tenants that you could have chosen.  However, it happens to everyone eventually and I think the advice to be accommodating is good.  I am sure they will be happy to let you show other people through and you probably won't even miss a day's rent.  When we had the experience we discovered that they could break the lease anyway, and only had to pay a day's rent for every month they were leaving early, which was six days rent for a six month period!!!  This was not WA though.

All the best,
G

Hi Maws.

While the council may approve of subdivision in their area, your particular development sounds as though it was 'protected' with certain restrictions by the original developer.  Sometimes these may be overturned, at least that is what I've been told in my area where we have been investigating the same thing. If the original developer no longer exists then I think your chances are better. You could get a local conveyancer/landbroker to advise you as to whether its been done before or may be possible.  Looking at what is in your vicinity currently being built will give you some idea of the chances!

Regarding what to build, the council will be able to tell you what is allowable regarding block sizes, types of dwellings etc.
Selling off some land to reduce your mortgage is a great idea, or you could use the land to build yourself and create investment property.

Tell us how you go.

G

Hi jmboy.

I'm sorry to hear about your situation, but you may not lose too much, as values have probably not dropped and may have even risen. It could be that the main road is something positive for another buyer.  Is it zoned for business, e.g. doctors' rooms?
If you need the money to buy somewhere else, making a bit of a loss may make it worth it.  Perhaps you could pick up a really good buy elsewhere to make up for it?  I don't think I'd want to gamble on things going up in the next little while, but that's a personal opinion. 

G

Hi.  We are in Adelaide also.

If it was me I would look at corner block (or two street frontage, hammerhead) properties that meet the requirements of the local council to cut a courtyard block from.  You can do this in either expensive or cheaper areas.  I notice people are even doing it in Elizabeth as the north has projected growth.  An example of one we were interested in last year was a 60's cream brick house in Kingston Park that had a 1000+ squ. metre block with two street frontages.  It sold around the $600,000+ mark.  The new owners subdivided off the vacant street frontage of 500 squ. and recently sold it for $450,000 +.  The house could have been updated or sold for the same as the land.  At the lower end of the scale, a modern 2 bedroom house on a large corner block in Aldinga Beach was on the market for around $250,000 recently.  You could have resold the house for possibly $220-230,000 on the smaller block, and also had a courtyard block to sell for about $130-$140.  Quite a lot of us are looking for these, but they are around.  Obviously tax is payable in the form of capital gains, etc. but you may be able to build up a property portfolio this way.  Alternatively, some people prefer to keep them until the prices rise, then subdivide.

Regards,
G

Hi.

I was discussing this very thing with a friend yesterday, who got her property manager and real estate agent to advise her.
Her problem is, apparently, that the current tenants don't have the property presented particularly well, with boxes of stuff in bedrooms, mismatching bits of furniture etc.  The agent said this would definately make it harder to sell, so that may be another issue you need to take into account (hopefully it won't apply to you, but thought it worth mentioning).

If you keep the tenants during the sale, why not offer them reduced rent as a 'thank you' incentive to open the house whenever needed and to keep it presented really well?  This could cover giving access for any repairs and gardening.

G

Hi Sonja.

In line with the aim being to target areas that have anticipated growth, not just numbers, look for Woolworths being built or enlarged.  Coles and Foodland too (or similar in your state).  They really do their research it appears.  From my experience they can even encourage growth as having a large supermarket draws other shops to the locality and can encourage further residential development as well as have a positive effect on values.

G