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Hi Joe,
To make the most out of this, you would need to do a lot of work yourself. Be careful about the romantic lure of renovating though – you get over it really quickly!! The extent of the rennovation really does depend on the state of things. Go ahead a take photos, I can't see why the agent should mind? Then post them, get some ideas and if you are still keen, spend a few hundread dollars to get a builder to go through the place to give you an idea about the cost (even just a rough one) and possibility of doing what you want to do. Given you haven't really done this before, this is probably a good idea.
depending on how far you go, Luke is probably right about 35K being light on. Tiles are expensive, they often cost more to lay than they do to buy! Kitchen and bathrooms are also the most expensive rooms to ronovate. Carpet isn't too bad on price, but wall to wall carpet doesn't impress me. You could consider a foating floor, which is probably middle of the road. Those IKEA kitchens can be alright, but all the bits and pieces can add up. It also depends on the finish you are looking for to get your target price.
Good luck, I hope it goes well.
Luke is pretty spot on here.
Don't pay down the property if you plan to use it as an investment as you will then have very little to claim and the rent will increase your taxable income – this may or may not be a problem. Interest only is the way to go with this one, then focus on paying down your new PPOR. An offset account is a great idea as it will give you access to the money in case you want to use it for further investments or improvements to your new PPOR. Only do this if you have the discipline to use it wisely though!
Good luck
