I wouldn't be without an agent. It's not because you can't arrange for repairs, sure, you can do that. But there is a lot of complicated legislation that agents have to keep on top of to ensure that everything is done properly. For the 90% of the time when everything is straightforward, yes, it's "money for jam". For the other 10% of the time, you'll be very grateful that you paid them that other 90% of the time when you didn't need them, because they'll be worth their weight in gold.

I would never let rent fall below market value to retain tenants. If you're $20 behind market after this signing, in 6 months' time when you should be raising $50 again, do you raise only $30 to sign them again? Now you're $40 behind market. If your tenants can't afford your property, best to get a new tenant who can.

I may be wrong, but my understanding is that you can't require a tenant to do any garden work – either that, or it's unwise to do so in case they hurt themselves and decide to sue you. (Can't remember, the issue came up years ago.)

In any case, I wouldn't have thought that garden tidying was essential work, but probably a good idea to reduce risks of snakes and other vermin. I reckon with 2000 m2 that if you get somebody to rake it all into one corner out of the way, that would be more than reasonable. Let it compost; burning is very environmentally unfriendly. And I would have thought that it could all be raked up for well under $500.

Tangata, in this case I agree that $1K is too much, but for future reference do bear in mind that tradesmen are much more expensive in Australian than in the UK! Watching "Property Ladder" and similar I can't believe how cheap builders, electricians and plumbers are in the UK.

I got a reply from the "serial renovator" ; her position is that she's not doing building work because she's not doing structural work. I believe that the QBSA (here in QLD) would disagree with this interpretation and consider that she's renovating illegally. And yes, in QLD I think you're obliged to provide a 6 1/2 year warranty on all works.

Sure! I've negotiated with the vendor to lend me $150K of the purchase price; what that means is that this amount is not payable at settlement but at some later time; in my case I've negotiated 1 year. So I've borrowed 85% or $510K, but at settlement I only have to pay the vendor $450K ($600K less vendor finance $150K). This leaves $60K over to pay for stamp duty, legals, etc, which will leave about $15-20K cash left over.

So settlement happens, and at settlement I'm $15-20K cash richer than I was the day before – but I owe the bank $510K and the vendor $150K. Effectively I've borrowed 110% of purchase price, and yes, after purchase expenses I have negative equity for a while based on purchase price ($600K less $660K = – $60K), but given that I'm comfortable that the property's worth $800K as a warehouse, I actually feel that I have an immediate $140K in equity.

The property rolls along for a year, with me receiving the rental income and paying the bank the mortgage payment on $510K, and paying the vendor an interest-only payment on the $150K. The rent is high enough to cover both payments. And tenant pays outgoings, so I'm pretty much even or slightly ahead at the end of the year – let's say that I have $20K in the bank.

On the one-year anniversary of settlement, I have to pay the vendor their remaining $150K. (That's what a balloon payment is – a lump sum payment of principal at the end.) My plan is to refinance against the value as a warehouse, and increase my borrowings to $660K – the $510K I've already borrowed plus $150K to repay the vendor finance – which is 82.5% of the valuation as a warehouse ($800K – or hopefully a little more if I also get some market increase).

By "no money of my own in" I mean that I had no deposit, and no negative cashflow. The property entirely funds itself.

It's a thing of beauty, isn't it?

Bear in mind that doing works of this scale yourself is illegal in many states; it certainly would be in QLD. It may be ridiculous, but any works whose retail value (ie what a professional would charge to do it) is greater than $11K requires a builder's licence. That includes painting, landscaping, everything. You can get an owner builder's licence to manage it yourself, but that can only be done once every 6 years, and also if you only have an option then you're not the owner and wouldn't qualify for an OB licence.

http://www.somersoft.com/forums/showthread.php?t=36542

I have asked a lady that I know who frequently renovates in QLD how she gets around these laws – or whether, as I suspect many others do, she just renovates illegally and hopes for the best – and I'll get back to you if/when I hear any good answer. Just be aware that if you are renovating illegally, you'll need to be very sure that you have the best asset protection and insurances for if anything goes wrong.

Thank you all for your opinions, and for realising that despite my skepticism, I was sincere in my query. I don't think one of these courses is for me, mainly because like Kylie I feel motivated and focused enough already. But I now see that some of the more "cult-like" behaviour, and strange beliefs, that have concerned me are probably far more to do with the individuals involved than with the principles of NLP, which explains why some people that I respect have gotten a lot out of some of these courses.

As you say, Kylie, wherever you can get some benefit, all power to you.

I would buy a PPR that has substantial ability to manufacture equity, inexpensively. For example, buy a dated-looking house and gradually update the paint, window treatments, get the garden looking nice – basically buy something tired and make it look fresh and loved. Then get it revalued and draw the extra equity out as a deposit for your first IP.

From a purely financial perspective, you're better off continuing to rent and buying an IP, because of the tax benefits, but I recommend a PPR for these reasons:

* if cashflow gets tight, it can be tempting to sell an IP, whereas you'll tend to ride out the challenges in the home you're living in
* there's a feeling that comes from living in your own home that I consider worth a great deal
* whilst you can't claim the negative gearing benefits each year on your PPR, you do get CGT exemption. (Yes, I read the post about buyng a PPR and moving out and making it a CGT-free IP; I can't be bothered manipulating my affairs simply to try and defraud the Australian taxpayer. Whilst it may be difficult to prove, if your intent was always to move out, then it is fraud.)
* it's easier to continually improve and maintain a PPR – because you're living in it – and maximise its value

Best wishes!

* How long to run on the lease?
* How solid is the tenant (ie likely to remain in business)? What bond/guarantee do you have if the tenant disappears or goes bust?
* What are the lease conditions with respect to increases (percentage increases or market review, or combination)?
* How does the current lease amount compare to market? (Check with other real estate agents and valuers – the truth is probably somewhere in-between the optimism of agents and conservatism of valuers.)
* If this tenant went bust or the lease expired, how easy would it be to get a new tenant, and how much would a new tenant be likely to pay? (This is usually expressed in $ per square metre per year. So if you ring an agent and ask what office rents are in that area, and he answers "about $100", that means $100 x (square metres) per year.)
* What does the lease say with regard to outgoings. (Usually in commercial, tenant pays outgoings, but best to check.)
* Why is the property being sold?
* Any chance of some vendor finance?
* Any opportunities under current zoning to further develop the site?

Plenty more – but that's a good start!

There's absolutely no reason that I can think of why you can't have a successful investing business holding everything, renting it out and refinancing to access increasing equity. I do think that if you have a poor performer, you should sell, and tax shouldn't put you off doing so, but I'd like to know on what basis you can say that one "needs" to sell anything.

Unless you have a high income, you'll need to buy cashflow positive, or at least "not too negative". And yes, they are hard to find and you'll have to be creative.

I think the best strategy is to find a commercial property earning at least 8%, negotiate vendor finance (eg 30% for 5 years), then the bank pays the vendor 30% at settlement, and your 10% ($200K) is used to cover purchase costs and help with any possible negative cashflow. After 5 years, you should have obtained sufficient growth to refinance and continue.