Be VERY careful. I have seen families fall apart of inheritance money. Just because they said OK today doesn't mean they will be ok with it if the market shoots upwards and you end up pocketing a lazy $300K or something. They will get jealous and some may want some of that pie.

When you say "looking out for what is best for grandma" – If the property is already worth $1.5 mil and you could sell it for that and that is all she will get…what is the benefit to her of you doing it up?

Sure it might take a little bit longer to sell, but if youre spending time doing renos it might take longer to sell anyway.

Truthfully it sounds like you want to snap up this opportunity for yourself, not so you can help out grandma. Apologies if this is incorrect, but better to hear these arguments from some forum member than a family members with lawyers

Sounds like you have to do P+I on the guarantor loan so that it removes your family commitment eventually.

Generally speaking most accountants (of which I am NOT one) saying that interest only loans with offset accounts are a great way to go.

Being interest only it minimises your expenses, giving you more cash flow to continue investing. It also maximises your tax deductions because your interest isn't going down as the principle is paid off.

I know a lot of people who do interest only on all their investments and use the extra cash flow to pay off their home loan (which isn't tax deducible).

That way their home becomes secure (no loan) and they still have maximum tax deductions.

Obviously seek financial advice on this. There is a fine line between "tax reduction" (legal) and "tax evasion" (illegal)

Thanks Benny, good article!

For those who can't be bothered clicking the above link here is what it says

Overland flow flooding

Overland flow is excess rainfall runoff from homes, driveways and other surfaces.   Overland flow flooding is water that runs across the land after rain, either before it enters a creek or stream, after a creek or stream breaks its banks, or after rising to the surface naturally from underground.  Overland flow flooding tends to affect localised areas rather than the whole city at once.

What you can do to manage overland flow flooding

Overland flow flooding can be unpredictable and its severity will depend on the amount of rainfall.

You can understand overland flow flooding by looking at the natural overland flow path through your property and taking appropriate steps to prepare and protect yourself and your home.  Consider these natural flows when you are looking to renovate, build a fence or put in a shed.  Remember where water will flow.

On a more practical note:

Consider 95% loans – Stretch your deposit further by purchasing more properties with the one investment. You will likely have to pay Lender's Mortgage Insurance but it will possibly mean you can buy more properties sooner.

Get a good mortgage broker (who is also an investor) – A good broker will not only help you find and get approved for loans but they will help you structure your loans for the best chance of success

Buy under value or add value – You are probably going to need equity to continue expanding your portfolio. So if you buy under value (instant equity) or renovate to gain value you have a better chance of growing your portfolio faster

Positive cash flow – Properties that lose you money are dime a dozen and really easy to find. Spend the time to look for properties that generate a positive or neutral cash for if passive income is important to you.

Hey Joey,

I just want to say that 5 properties is a good goal. But a better goal is to understand why you want those 5 properties and what your short, mid and long term goals are.

Just "buying 5 properties" won't make you financially free just as "starting 5 businesses" isn't a guaranteed way to be financially successful.

Know exactly what you goals are helps you to look for properties that meet your EXACT goals and financial requirements.

Do you want to buy the 5 properties and have them negatively geared for 10 years and then sell them to access capital gains? This means you will be working your ass off for 10 more years for the hopes of a big payout.

Do you want positive cash flow straight away so your passive income goes up (maybe you achieve $500/month or more in passive income). Then you could take an extra couple of days of unpaid leave each month without noticing the strain to your cashflow.

Maybe you want a balance of negatively geared and positively geared.

Do you want to do work for renovations. If so what return are you hoping to get.

It sounds like a lot of work when all you want to do is "buy 5 properties" or "make money" or be "financially free".

But if you don't know where you are going is really hard to work out how to get there

It all depends on how big the house is.

Is a second toilet really a selling point for a 1 bedroom unit? I highly doubt it.

But it you only have the one bathroom with a single toilet and it's a 5 bedroom house then it may make sense to keen the separate toilet.

It is all about making the most of the space you have. If people won't need a second toilet I doubt it will add value, but a cramped crappy bathroom that doesn't work might take away value.

If the bathroom is roomy enough as is with the toilet already in it would there be value in converting the current toilet room into something more practical.

For example, would it work well as storage or a laundry?

If you are in a unit and there is only an external laundry then adding an internal one can definitely add value.

So my question to you is.

Please give us more details! House or unit? Size of the house, location, demographic of who lives in the area etc

The more info we have the more we can help

May I just ask…what difference does it make?

I thought you do't get control over who the valuer is anyway? It is up to the bank to choose their own valuer

Hey Gizzy,

I actually personally know some of the people who work for Positive Real Estate so let me indulge you a little bit.

Firstly – The company is legit. I have found the smaller real estate mentors and sales people to sometimes be cowboys taking loads of commissions and leaving the investor no growth in the property (one of my friends got screwed by a real estate cowboy). 

Positive Real Estate have their training nights but what I like is that after the training night they invite you to a members night where the members get together to learn more about property, network and meet new people. So their members do a lot of the selling for them…which means their members need to have positive experiences.

So I think that says a lot about them

Cost – It is pricey…a 1 time 'mentoring' fee up front is required but after that there are no ongoing costs (I don't think).

Investment Strategy – From what I have seen their primary investment strategy is buy land and build houses on it. As a large wholesaler they get access to some pretty rare opportunities in places like Stocklands estates and then onsell them.

Obviously there are some commissions along the way but from what I have heard they aren't too extravagent and the borrow often gains instant equity.

They get external valuations done on the properties so their whole system isn't rigged selling you on false appraisals.

Truthfully, if I wanted to simply work a full time job and be a semi-active investor I think it would be a great option. Probably one of the fastest ways to grow a sizeable portfolio if you're not acting as a super active investor.

I know people who work for the company go through the company to buy property…it always helps if the employees believe in the product.

I have also been to an investor night and found them to be lovely and friendly and not shady.

I wrote a review on them and sourced some prices and stuff through other forums. But this was before I met some of the employees so I probably need to adjust it – http://positivecashflowaustralia.com.au/positive-real-estate-review/

ps. I'm not affiliated with Positive Real Estate but as you can tell I do like what they do and think its valuable so I may be biased there.

Give Terry a call. 14,000 helpful posts later he has proven that he knows his stuff!

Come to think of it I don't think I have ever seen an incorrect comment from Terry

I don't know what everyone else's experience is but the Australian market seems to be a bit more "straighty-180" than foreign markets.

It would be hard to offer a standard vendor this "renovation JV" and have them say yes.

You would need to be able to prove your track record of success and make the deal very beneficial for them.

I am assuming you are only splitting the profits of the property, not the sale price? Meaning you would have to get valuations done at the beginning of the project.

What happens if the deal goes south and there are structural issues you weren't aware of and the property makes a loss? Then who forks up the cash.

What is the vendor decides not to sell after the renovation (as they probably have the power to do so).

Lots to think about. You would really need to understand the laws around it and be a good salesman to convince someone to do it.