Has he tried negotiating with the vendor to reduce the rent or have it accredited to the sale?

Without knowing the details of the current property contract it’s a bit hard to comment – but it sounds to me that the vendor is in breach if the settlement is delayed because of his building works – which should leave your friend with the upper hand.

Maybe he should get another solicitor if his current one is of no use.

This is most likly true if you do your research and invest in the right areas/type of property. I wouldn’t say automatically though, as there are always exceptions.

Peace-Sunshine, you could consider “What is the alternative?”. If, like most people, you and your husband have normal jobs, are you putting enough money away each year in savings and investments to sustain you for both your current and future needs?

It’s expected that modern generations are likely to live into our 90s and 100s, barring accidents. Meanwhile most people retire by 65. That’s 30 to 40 years of living without a paypacket!

Most Superannuation funds are a joke, so when you retire you will at most have a half a dozen years before you’ll need to go on the pension… if there is one by the time we retire (aging population means less tax money for such things).

So, what are we going to do? We need to invest somewhere, so that “your money works for you” and multiplies to a level you need. Some people find shares are for them, but property provides more solid growth and is far easier to understand.

Obviously we think it’s a good idea, or we wouldn’t be here. Like any investment, research is crucial – and if you want to acquire a lot in a relatively short period of time (10 years) then you will need to apply yourself hard the sooner the better.

Good luck.

Rental prices are actually much more affordable than the cost of owning your own home.

At the moment you pay a total of $9,600 per annum to rent your residence.

If you get a $350,000 home loan it will cost you aprox $24,500 per annum in interest alone (before you even begin paying off principle). On top of this are the initial non refundable purchasing costs of $20-$30k (regardless of whether these are folded into the loan or not – they are an expense), council rates, water rates, home maintenance rates etc.

There are many good reasons for owning property, but in most areas of Australia “dead rent money” is a bit of a myth as home ownership is so much more expensive.

Why onsell quickly? There are many expenses buying and selling property – it is generally considered a mid to long term investment – so quick selling will probably leave you with a loss. The only exceptions are if you are buying in a hot market (most areas of Australia are pretty slow at the moment. It’s a good buyers’ market, but don’t expect fast capital growth), property renovation/development, or a flip.

$100,000 cash is a great starting place. Because of your low income, you will need to find a cash flow positive property – and a hefty down payment like this will certainly make it easier.

Once you’ve bought the first place, you can use the equity in it to purchase a second Investment Property without selling the first. The lender will consider the first property as security over the second. Because of your low income you will need to continue with a cash flow positive strategy, unless you are up to the task of renovating for sale.

You could also consider tapping in to the First Home Owners Scheme for your first property. This will give you an additional $7k to play with, but you are required to live in the property as your Principle Place Of Residence at some point within the first year.

You can then either leverage off the property to purchase an IP, or you can move out and turn your PPOR into an IP.

Agreed. Some mining towns are more stable than others – it depends on the ongoing life span of the mines near the town. Some still have 20 years of resources, others may die out in a couple.

Take a look at the mining companies involved, and how their investments are going around the world. Check for their stability and commitment to the area.

Also look at how close the town is to non-mining industries. If the mine does die, will people in the town be able to pick up other work nearby?

Risk is a matter of personal judgement. Some people would consider speculative investing for CG to be riskier, as it amounts to researched crystal ball gazing. You can never gaurentee that property prices will continue going up in an area, no matter what history has to say for itself.

Work out how many years it will take for the investment to pay for itself if there is minimal capital growth (look at the past 20 years growth). Then compare this to how long you expect the mining town to continue operating. If the mine is likely to remain healthy for this period of time, then it is probably worth investing in.

Life certainly can be expensive, but attitide is always the key to saving. Even as a student living away from home on under $7k per year I maintained a strict savings regime. This is obviously harder when it’s not just you, but also a partner and kids, but it can still be done (my parents raised 6 kids on one income! Also living in Sydney).

It means putting away a portion (usually 10%) into an untouchable savings account every pay day, and making do with what’s left over. Op- shop, buy fruit/veg/meat from a wholesaler or markets (such as Flemington markets at Homebush)be creative for school holidays – going to visit friends/relatives (no acomodation costs) or camping low budget, don’t buy brand name food or clothing… every time you reach for your wallet think: do we really need this? Is there a cheaper alternative?

You’d be surprised how often you buy a drink or a snack that you don’t really need (here’s a tip: keep a refillable bottle of water in your bag/car so you’re never tempted to buy a drink at high retail price.)

And only use your credit card as a money mangement tool – wiping it clear every month so that you’re never charged interest. Don’t spend more than you have in your spendings account.

Good idea to use a high interest savings account, such as provided by several online banks – ING, AMP, etc. You get about 5%interest pa (as opposed to regular banks that only offer this kind of rate on a long term deposit).

Personally I doubt it will go so high in such a short space of time – and don’t forget you can negotiate your rate with your lender. My interest rate is less than 7%.

If you hold off because you’re afraid it might go as high as 9% then you’ll probably never invest. Interest rates are always capable of going up or down, and even if it went down there’s no way it would stay down for the next 25 years in which your mortgage is valid.

So you started by wanting to set up a cafe, and decided to incorporate internet?

In my experience, most people using “internet cafes” are there primarily for the computer access – they don’t order much food or drink (if any), as are using their time on the computer.

Cafes on the other hand, are usually patronised by groups of people for food and conversation.

I.e. an “internet cafe” actually has a very different primary purpose than that of a normal cafe. If you are wanting to set up a cafe with a secondary income stream, I wouldn’t suggest an “internet cafe” as you will probably have a hard time selling enough food to keep you in business.

If, on the other hand, you are primarily interested in giving people computer access – consider the area you are putting it and your target market. There are two main groups of people who use internet cafes: travellers, and gamers.

Travellers – such as backpackers – generally cluster in central or name areas, such as the CBD, inner city, Bondi, Coogee, or Manly. They usually frequent an internet cafe alone or with only one or two other people. They will visit primarily to check their emails, opt for the cheapest/closest service available, and keep their visit as short as possible (say 1/2 an hour to an hour)- but may visit regularly.

They may order a drink or a small snack – usually a food and drink machine will suffice for their needs in this regard.

Gamers are more likely to visit with multiple friends, even in large groups. They will be using both hands for their games, and unlikely to eat or drink unless they take a break. They will spend hours playing against one another. Price per hour and quality of computer hardware are of primary concern. Computers will require a lot more memory and speed (can you tell I’m not very techie?) for the high tech games they like to play.

Private parties are a good idea for this group. My little brother sometimes goes to LAN parties where everyone has to lug their own computer along to someone’s residence – if you actively market your internet cafe to these people for booked parties then it will be of great use to them (and hopefully profit to you).

Lessons/tuition sounds like a good idea too. You would have to seriously consider the best location for this, though, as I don’t imagine CBD would be it. It would be most likely be seniors that you would be teaching – which I think is a small market.

I don’t think there’s any need for coloured printing etc. A basic b+w printer and fax machine are expected – but anything more and you’re competing for a whole other market. Companies such as Kinkos already have good presence as office providers, so anyone needing colour copying/printing, binding, computers for desktop publishing etc will go there.

Along the lines of a straight cafe rather than an “internet cafe” – there are some cafes that do unique things. In Leichardt there’s a cafe/bookshop that has philosophy nights. A person of some profile (usually published) is invited along to discuss a modern issue, and the audience is interactive.

There is a great cafe in Manly that gets a lot of backpackers. I think it’s called Cindy’s. Basically it’s a tiny little cafe that just feels really comfy, like at home. There are books and board games to encourage patrons to unwind, and people may spend a long time there – starting with breakfast, then lingering while they work out their travel plans, etc. It’s the perfect place for the travel worn traveller to relax and this sets it apart from any other cafe I know.

You can steal a lot of ideas from pubs. Trivia nights, bingo, stand up comedy, jazz, play readings, short films, author talks/readings, or align your cafe with a particular group of people so it becomes the place that lawyers/writers/students/etc hang out and network.

You are right in thinking that it would be difficult to find a place for anything less than 400k in this area. The medium house price in inner west sydney is about $680k. You can always get a unit or ‘renovators delight’ for cheaper, but it is a high entry point and unlikely to be cash flow positive.

(I have noticed a few places lately on the market at the relatively cheap price of mid 400s. They need renovation).

I would suggest that capital growth is not currently strong enough to recommend selling after only one year. Buying and selling costs are so high that you would most likely lose money in such a short period of time (especially with our beloved Vendor’s tax). Property is generally considered a mid to long term investment – the exceptions being when you get ‘creative’.

Creative practices can include renovation, rezoning of property use, subdivision, development, etc – but all generally require a higher entry point/cash component and are probably not suited to the innerwest area (except renovation).

Even when you employ the above tactics, you are often better off holding, and using the equity to secure more IPs, rather than selling up and paying large associated costs.

As the market is slower, you can afford to take your time and research. Put in some low ball bids on the offchance that the vendor accepts and you get a bargain. Still make sure you’ve done your figures and can afford it. It is very difficult to be cf+ in a major metro area, unless you have a big deposit or can better use the property in a creative manner.

Make sure you know who you intend to rent to and how much they will be willing to pay before you buy. The upper end of the rental market will not be content with a ‘quick reno’ – they rent properties that offer an aspirational lifestyle. Therefor you can only expect a mid to low range rent if you refrain from an uber-stylish (expensive) renovation.

On the one hand you’re in a weak position – needing to move asap. The question is, is he in a similar position – needing to rent the property out till settlement?

If he has mortgage repayments then he’s in just as weak a position as you are over the rental.

Was he doing you a good deal initially with the rental rate? Or is he now overcharging? If he’s overcharging, you might be able to find somewhere else cheaper and regain relationship gound. You could put your stuff in storage and rent a friends spare room or something…?

If he was offering a good deal, and has recindered it because of the rebuff – this may be your own fault for not considering the savings you were making (you could have hired a cleaner if you didn’t want to clean it yourself).

It’s difficult to know without the details.