Someone asked me about colour: I have found that if you choose a colour that doesn't have black or blue in it, the room will look warmer. I go for coffee coloured browns. They hide the dirt and look good with the tenants furniture.

Hi Matt,

When do you live?

A real estate agent friend rang me yesterday asking if I knew anybody that would be suitable for a real estate junior/PA position with him in the Eastern Suburbs, Sydney. 

It could be a very interesting job to get started in the industry with.

On a new investment property build, Stepping Stone recommends clients install 300/300 (mm) ceramic tiles to the Kitchen, Dinning and Hall. Then Solution Dyed Nylon carpet to the Media, Lounge and Bedrooms. The upside of this layout method is the carpeted rooms are not connected to one another. This lets you change the carpet in one room with out having to change it all or have a mismatch area looking so obvious.

The best carpet I believe (having carpeted over 100 rental rooms) is "Solution Dyed Nylon". It stays cleaner, It stands up for years longer then Poly-prop and other fibers. Wool is the best for your own home if you look after it, but SDN is the best for rentals. 

A good foam underlay in important too. You wont need to change a foam underlay for 15 years and a SDN Twist Pile carpet will steam clean better then anything else and look like new every time. Rubber underlays flatten, fall apart and can cause your carpet to age much quicker. 

Most, if not all stains will come out of SDN Twist pile with a steam clean. I have carefully trimmed burn marks out of SND Twist Pile carpet with a pair of scissors and left the carpet in for another 5 years.

Don't install Loop Pile, Pattens or light colours. I have found loop piles damage far more easily and it's hard repair loop piles, aim for a Twist Pile and darker then a coffee stain is a good idea too. I make the carpet the darkest colour in the room with the walls a colour lighter and the ceilings always white.

Tenants LOVE carpet in bedrooms and it makes the house feel more live-able for them. After all they are your customer when you are a property investor.

Vinyl planks and ceramic vinyl tiles are great too in kitchens and hallways if you are retro fitting flooring. You will need to have the plank flooring stripped and re-coated every 3-5 years between tenants, this is no big deal. Try not to lay vinyl planks in the sun if you can help it, they can fade, but not badly. Vinyl planks and ceramic vinyl tiles are really, really durable. Even when they are old they look better then sheet vinyl flooring. Vinyl ceramic tiles are the  best, but can be a bit pricey. You keep a couple of spares and if one get badly damaged by a removalist or the tenant, it's just a case of warming it up with a heat gun and lifting the old one out and replacing it. 

I laid timber laminated in 10 units 7 years ago and I now know the hard way it is rubbish in a rental situation. Bamboo is very hard wearing, but it hates water, be warned! Timber floating, Bamboo and solid timber goes in the same category as quality wool pile carpet, all great but not in a rental. Just too hard to look after. They all last longer, look better and work out cheap over the life of the product, If you look after them.

You buy new to reduce risk.

When it is all said and done, new costs about 3% more. You will get 3 times more then that back in depreciation in the first 5 years. If you are paying more then 3% extra, you are paying too much.

Old/Reno property searching is just too hit and miss. To say nothing of time consuming, while you are looking for one old property that ticks all the boxes, I can find 10 new properties that tick all the boxes too. 

Reno = Risk.

You don't know what you don't know. The longer you have been doing Reno's the more you understand what that really means. I know because I have reno'd over 100 properties since 1992. Working up to four houses at a time, blocks of 10+ units, industrial buildings as well. I gave up doing Reno's in 2008, they are just too hard to make make money on "UNLESS YOU ARE IN A RISING MARKET". At least in a rising market if you don't get the numbers right, capital growth will bail you out. There is one street in Balmain, NSW where I have Reno'd 7 terrace houses and I still wouldn't do another Reno in that street even if it looked good on paper. The thing I hate the most about Reno's is you are spending money like there is no tomorrow and there's no rent coming in. If something happens while you have the place ripped apart, it just sits there burning a hole in your pocket. The bank still has to be paid whilst your profit it going down the drain.

A good investment is a balance between RISK and RETURN.

You want to spread your RETURN between Capital Growth, Yield and Tax Credits. If one goes soft then the other two are still working for you. 

You can reduce your RISK by buying new. New = less lost rent over the life of the investment. 

• Banks like new
• New re-values well when the subdivision is fully sold out (if you know what you are doing)
• New gets rented faster
• New needs less maintenance between tenants
• New needs less spent on repairs
• New often has better features for the tenant
• New has less Stamp Duty to pay 
• New can be found in areas with excellent capital growth potential
• New can be found in areas with growing rental demand (new rail links/ new stations, new roads, urban renewal projects, etc etc will see to that)

In 5 years they won't be worth the same amount of money, the old Reno'd house will be a older house that was Reno'd 5 years ago and the new house will be a 5 year old house that needs a coat of paint and the garden freshened up. 

Hi DennisLeung,

I think we need to know:

What is your investment strategy?

What are you trying to achieve as an investor and over what period of time?

How much risk you are you going take on to reach your investing targets? Debt levels? LVR's?

What level of capital you have to invest?

What your debt serviceability is as well?

The tell us how each of these properties fit into the answers from the above questions.

The mortgage will remain a liability to seller for the life of the installment contract and therefore effect the seller's ability to borrow accordingly.

What you really need is a properly structured property investment plan. But to start with, have you thought of using your Super via a SMSF to purchase your next investment property? 

We are paid ONLY when the client purchases a property.

It is our policy is to disclose all marketing commissions being paid from the developer and give those commissions directly to the client/purchaser. This gives our client a real discount to market before we negotiate further benefits for them.

We research across 8500 suburbs nationally and then short list to five suburb/areas. We then research in those suburb/areas to find which projects, developments, subdivisions, etc.. have the right mix of attributes to be a seriously good mid to long term investment. Simple really, if you have a few 100 hours each month to fly around the country visiting sites, speaking to builders and inspect completed developments, etc.

My best advice is simply: Don't build anything unless you’re are a builder and are in the industry on a daily basis.

Great post also. Creating your own rules is very important. I have a set of investing rules I never break. These rules have been developed in our family over two generations, between my late mother and me. We call them Coburn’s Rules and they have got us through a lot of transactions and saved our bacon a couple times as well. Here are a few of them.

Coburn's Rules on Risk:

1. Always protect your investment (only ever risk your return)

2. Investments must be balanced for Income (yield), growth (capital gain) and depreciation (tax credits)

3. Don't invest in "one employer” towns (i.e. mining)

4. Invest in liquid markets (don't buy where the average days on market to sell are over 90)

5. Choose one thing and get good at it. (Dabblers will always get burned.)

If you would like the rest of Coburn's Rules email me and I will send you them.

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