I have not invested in Defence housing myself. However, someone I know works for the Defence Force and had these warnings….
1. You may (will) have a long lease that sounds good now, but is there a clause prohibiting increase of rents over a period of eg 5 yrs! (Could leave you well behind.
2. Your buying price is often over-inflated ie you pay too much for the property!
3. You may only be able to sell back to the Defence force at their chosen price, during the term of the lease. Even if not, if your lease at time of sale is eg $100 pw behind local rates, then what investor will want to buy it? 

All of this info is as I remember him saying, not sure exactly. But a few things to look at very carefully, read all ypour fine print very carefully!

Quickchick.

Hi Futzy

I'm a bit unsure of your reason for this "investment".

I know nothing of investing in Tasmania. But I do know a bit about investing.
There are two common reasons to "invest".
1. To achieve a capital gain.
 2. For positive cashflow.
3. (Which is dubious in my opinion) to make a loss, ie to negatively gear and thus pay less tax.

From the info of others above,
1. May not happen in your 4 year time frame (ie only  a HOPE that it will increase over your entry costs (stamp duty and legals). Maybe you are a first home buyer, which saves the stamp duty. But then you have to live in the house for at least 6 months in the first year of ownership. Any price rise still speculative.
2. The above info assures me that you will not have a positive or even neutral cash flow.
3. You will negatively gear!

If you plan to live in this house, you will confuse the issue on selling it, as you will have to pay capital gains tax if it is an investment. If you plan to negatively gear it in the short term, that means you WILL have to pay CGT on at least a percentage of the (hoped for) profit.

On the other hand, if you sell in about 4 years and don't make any money, or lose it, then you can't call it an investment. The description in this case of your property in a liability. And an Investor should never buy on emotions, just on clod hard numbers.

If you are able to sub divide, this may be a good strategy. But check with the council FIRST! ie before buying!

If not too late.

Sorry to be negative, but just trying to help you see the range of possibilities! 

Quickchick.     

Getting back to your original question!

It is not currently easy to make money from a reno, but is possible. But you would have to buy (very) well, budget your renos tightly and stick to it, sell quickly etc. You mention your wife is an architect, to use her professional skills would mean you need a D.A. (ie structural changes), which means your holding time is longer, which saps up more  interest on your loan.

If you could live in the house while you reno'd it, would save your rent in the meantime. If you have young kids, this could be impractical/unsafe.

If I was you I'd be doing Dean and Elise Parker's seminar on Renovations. They've got a great system for counting all the costs.
Much cheaper than doing one, and blowing your budget and then not being able to sell easily.

Good luck!

Quickchick.  

Hey Matt

Can help with some of your questions..

I'm certain that the FHOG will never apply to you again… next house will not be your first. Unfortunate for you. New FHOG will not apply forever, but not sure how long for!

Re Wollongong, we live 40 mins away. Is there any possibility of improving your IP there, eg reno, add bedroom eg from second living area? Or even add granny flat (increase rent, more attractive to another investor to buy.)

My view on an IP is sometimes you need to get out of a poorly performing property, to get into a better investment.
In your case, it means realising a capital loss. Which may be worse than you think, ie may be vacant while on the market, agents fees, sell for less than you expect. (We have recently sold a local property which was  $279,000 18 months ago. For $225,000) So be realistic before you put it on the market, if you choose to. 

Another possibility (and my view for short term) is what if property values drop? I think that the FHOG will not make prices rise, but may stop them from falling more than a bit. Maybe new houses will sell a bit better with the new FHOG. If prices drop, would you then wish you had sold this year?
There's not too many buyers out there, which is why prices are not so good.

On the other hand, your rental has to be going up, ie improving the return from when you bought it.

If you do buy again, think thru your strategy as it's not easy to make money in real estate at the moment. (Having said so, I own I.P's too.)   

Good indication of next boom will be when prices start to rise. Very hard to pick the bottom of the market.

Quickchick. 
 

Just a suggestion, Tina….

From your armchair, google "Alinta" and see what you can find out about the proposed gas plant at Blackwater.

Works for listed companies, if you look up ASX to see what their more recent news is.

From your lounge room, you can gather lots of info and see lots of potential.

Quickchick.

Hi Jas

I applaud your sentiment, wanting to help your Mum out.

But if things don't work out, can she afford to lose even the $60K suggested, and still keep her house?
I'm not saying you won't succeed, but you have to be prepared to live with the risk.

And so does your Mum.

Not all property investors have success, we have done way better than if we had not invested.
But friends of ours who have done investing (including developing) are in trouble at the moment, with their "empire" at risk due to 2 not-so-good investments.

Part of investing has to be risk evaluation and management. Make sure you plan for every contingency, as something going wrong could break the family up….. which would cause your Mum more grief than having a thrify retirement, arguably.  

There is the opportunity to do it alone, or joint venture with them on an agreed basis, ie your time plus their expertise. Could start as joint ventue then when confidence builds, go it alone. I'd think that using their legal people would have to be an advantage, as not many solicitors would know their way around property options. (Would have to be in joint names, I'd suppose.

I do not recall him developing, I'm pretty sure that he is only in the options side, and on-sells.

Their concept is buying an option, value-add by having a DA done, then selling pre-settlement. ie option-buying entity pays the DA cost. So whether you also pay stamp duty (not sure of this myself) you have made a substantial investment even if you don't take up the option to buy. 

If I was to pursue the options idea, (in your shoes) I certainly would do his course, and JV at least to start……
Leverage from his experience! (I agree with Dr Robert on this.)

Are you JV'ing with Mark's group, Dr Robert? Love to hear when you've completed first option how it went!

I did a one day course a year or more ago with Mark Rolton.
it was very inspiring and exciting, but then we found we needed to join RPData (no provision for group joining at this stage). Cost when we investigated, would be about $600 per month. Ouch!
Some of the concepts were certainly worthwhile, but we decided that to put so much money (RPData) and time into it, JV with them (too difficult to do ourselves after one day's info), was not for us.
I'm not averse to paying for education, but not sure when (if) this info will benefit our investing….

Quickchick.  

We have family in Melbourne with evaporative air con (and use it properly, with windows ajar etc).
We're there after Christmas every year, sweating and stifling…… evaproative is OK if its NOT very hot or very humid.
When do you need air con?……. When its very hot or very humid!

Regarding property inprovements, I gather you're hoping to add perceived value, get it re-valued for future purpose of investing against. 
Easy to do in a rising property market, but not really now, in my opinion.
The best thing, if you're keen to invest, is to budget carefully, pay more off your mortgage, and NOT spend $$ on your PPOR.
That way, you can afford to get into the investing market earlier.
Floor coverings are unlikely to boost your house value, a deck may do. But like I said, better to invest in an investment, not in your PPOR which as Kiyosaki says, is a liability not an assett. (On the basis it costs you eg rates, bills, and does not give you income.)

The more of our income we spend on lifestyle (including home improvements), the less we have to invest with.
A bit of a delay now will be worth it in the long run! (It is, believe me!)

good luck with your investing.

Quickchick. 

Re Reddys' question: I strongly recommend some "boring" points:

Have an investment strategy. Reasons to invest in property include, 1. for cashflow, 2. for capital growth. (3. both, it is possible!)
4. as a tax write-off (negative gearing, write your losses off and hope for capital growth to make it worthwhile in the long run).

This way, you'll know if your property is performing according to your strategy. If not, probably time to sell! ie if its making a loss. 
As Steve would advise, its not that easy to buy positive cashflow, so what you buy needs to be able to have value added by you. ie choose carefully to buy something you can improve to meet your target.

As Scamp would love to say, property CAN drop in price eg Western Sydney, has dropped by about 25% over last few years. But what he (she?) won't tell you is that it is most unlikely to drop on a hurry. Whereas gold, or share prices, can drop much more quickly than it climbs (see sharemarket charts, and compare!).  Boring strategy no 2. is, have a stop loss (for shares) or cut off limit for property, eg if it drops by more than 7.5% in value, I'll sell.  By this time, your investment by definition would then be a LIABILITY! Value is a bit subjective, but even a valuation by 2 different real estate agents (free!) will give you a fair indication.  You also need to have a time-line in mind. (Few properties in suburbia will appreciate by much in 9 months, Reddy!)

The only 100% sure way to know which area will be good for capital growth is hindsight (applies to sharemarket too).
But you can increase your "luck" enormously by reading and learning. We have all made some mistakes along the way, but generally not disastrously, just enough to learn something! But cheaper to learn from someone else… read Steve's last book, and listen to CD. 

The worst investment choice is arguably NOT to invest.  Currently you may actually get better interest with money in  the bank, but this is quite uncommon! Mostly, bank interest is less than  inflation (before bank fees), so not a good investment.
The start of a good investment is to buy a property with good potential, at a bit below the market price.
 
All my opinion, (and learned from others), but it has worked, and is working for me!

quickchick.