Need help-what to do?

Hi,

My name is Connor, I am new to this site and have found it very helpful so far. Property investment / renovating has been an interest to me for many years. I always read API magazine, read property investment books and have done a number of courses over the years (the property school), to continue to further educate myself on property.   

I guess the main purpose for this interest, is to have money work for me and have my portfolio grow to create wealth to make life easier for now and for in the future. But I also love looking / searching for property and all aspects of building and renovating, if i could i would do it full time. 

I have a PPR (high set 3b, 2bath, pool – I was an owner builder) is on an acre of land 20min from Cairns QLD CBD. The property was recently valued between $680 – $690k, I owe the bank $520k on the mortgage.

I have also been recently left in a will $80k and a house on land in Port Pirie South Australia.  I expect the house in its current state would struggle to fetch $150k and the attaching half acre block would struggle to fetch between $70k-$100k (because of the over supply of vacant land in that area). The house and land are owned outright. The market in SA is flat, so i have been told by agents, because of the uncertainty of industry in the city (the smelters) and surrounding area (.Olympic Dam Project).

The house is a 3 bed, x 1 bath (brick) 1950s style house, in need of a renovation (big time).  The house is situated on 1 acre of land, which is sub divided into two half-acre lots.

I want to make the most out of what I have inherited to generate income to either 1) pay the remainder off my $520 mortgage  OR 2) allow me to purchase properties to increase my portfolio (either keep/hold/rent or renovate/sell).

1. I could renovate the house (add new bathroom/kitchen/paint/new floorings), there is the option to create a 4th bedroom with spare space and add on a car-port /entertaining area off the side of the house end value ($200K)? How much should I spend? I thought $20k?

2. With the remaining half-acre next door, I thought perhaps:

• Selling it with the house and push the house up to the $250k mark?

• Build a new home on it and then sell it? I have not done the figures on this yet and the tax issues.

• Subdivide the half-acre block and build x 2 new homes and sell them.

Obviously there are a lot of options and im doing my head in trying to decide which option is going to be the best method of creating the larger profit to pay off the above $520 loan, and then invest.   The house (not the attaching land) also has a sentimental attachment to me it’s the family home of 4 generations, and the land for some 6 generations. So one part of me wants to keep only the house and rent it out @ $200pw, but then I loose out on CGT down the track if I want to sell it.

The market is flat, there is nothing happening in the town. I have until April 2013 to decide what im going to do. I recently went to my accountant to get some advice and he effectively told me not to waste my time on property investing as he as seen too many people loose everything, this has really put me on a downer. 

I have a sore head and a lot to think about, any ones thoughts / experiences or a plan of attack, for me would be appreciated. 

I look forward to anyreplys.

Connor