Have done a bit a research recently and it seems that the Australian Government is very generous and have implemented many schemes to help make it more affordable for Australians to own their home:

First Home Saver Account

• Government making contribution equal to 17% of your personal contribution up to a maximum amount
• Earnings from this saving account is taxed at only 15%
• There is no need to report income from this account in your tax return
• Other people such as parents can also help contribute funds into this account

First Home Owner Grants:

If you have never bought a property in the past you may be entitled to one or more of the following (1 July 2010, to 30 June 2012):

• First Home Owner Grant $7,000
• First Home Bonus $13,000 (For newly constructed homes)
• First Home Owner Regional Bonus $6,500

i.e. Buying a newly constructed home in regional Victoria might mean you could access $26,500 worth of grant

Affordable Homes Program

In South Australia, they have an affordable homes program, to help those that earn less than $72,907 p.a. earn their own home. The houses they offer are around $250,000 and include former public and community housing block and new houses in the latest developments. These houses are available to eligible households for a fixed period of 30-90 days before they are offered for sale on the open market. Have done a brief analysis and it appears that the houses they offer are +20% below the price of many similar properties in the same suburb.

Hope that helps!

Very impressive

If you don't me asking…

How did you go about with your research to find such a gem?

It depends….

Are you buying the property as a lifestyle asset or as an investment?

What are you aiming for? Capital Growth?

What are your needs? or What are your tenant's needs?

What is the demographics of the area you are investing in?

Property prices are usually directly linked to demand and supply, which are largely determined by the population residing in the area.

The mantra of many highly successful investors is to 'Own nothing, but control everything'.

As Terry mentioned, a Discretionary Trust with Corporate Trustee is one of the best structures for not only asset protection, but also for tax minimization and estate planning

Yes.

If the IP was negatively geared that would change the calculations and could mean that you would be better off having your money in a savings account in order to claim more from the interest associated with your IP loan.

It all depends on the inputs.

Particularly your marginal tax rate, and how much you are negative gearing by.

Generally Offset accounts work quite well with PPR loans, but with IP loans it depends on your circumstances.

Rule of Thumb: Never invest in anything you don't understand

WJ Hooker has a good point

If you are going to be a passive growth investor that is just looking to buy and hold, you would want your property to appreciate faster than the amount of money you are out of pocket by

Simple calculation based on your numbers you provided above:

• $33,000 holding costs
• $13,000 rent
• $20,000 extra out of pocket expenses
• $540,000 purchase price

Means that you would need your property to appreciate by a minimum of 3.7% p.a. to break even

Also of note

• A property that is 80% below the median house price i.e. $450,000 as opposed to $540,000 has more room to the upside, especially if there are lots of buyers at that range and mortgage repayments are less than 30% of household income for the area you are investing in
• Depending on how you structure things, you might be able to claim depreciation and interest repayments, but whether this is in your best interest will depend on your goals and circumstances

As JacM mentioned, you could offer the retired couple the price they want, and negotiate terms that would allow the deal to go through i.e. asking them to leave some money in the deal (30-40k), and offering 10% interest on that money with the balance paid out in 5 years time.

Tim Ryder:

• Australia is not one property market, but is made up of thousands, which are all moving in different directions or at the same speed. At given point of time, there are markets that are going backwards, markets that are flat-lining, markets that are growing moderately and some that are growing strongly. That means there are always opportunities in Australia to create wealth.
• Instead of asking "Is this a good time to buy real estate?" a better question would be "Where is it a good time to buy real estate in Australia?"

Impressive Renovations