Josh & Kara

With this unique strategy, Josh and Kara have shown that there’s good money to be made in every market.

Josh and Kara live in regional QLD, in a mining services town. They both had their own houses when they met, and then went and bought a parcel of land together.

However when the mining boom turned to bust, their local market fell 30% in three years. Vacancy rates rose to an eye-watering 8%. Their investment properties were costing them $64,000 a year in negative cash flow, and their properties were worth $200,000 less than what they owed.

They wanted out, but “you just couldn’t sell anything” in that market.

“Even in a terrible market you can achieve great things.”

With Josh working away at the mines 28 days on, 6 days off, Kara knew she had to turn things around. She moved the family back in with her parents to save money, and attended one of Dymphna’s 3-day boot camps on the Gold Coast.

With Josh’s income giving them decent serviceability, Kara knew their focus had to be on building equity and manufacturing their own growth.

Kara also realised that there was high demand for smaller, self-contained accommodation options in her market. Using a ‘House in Multiple Occupancy’ (HMO) strategy, she created a product that is in demand, even in a market with high vacancy rates.

“Kara was a harsh supervisor. She was always happy to crack the whip.”

Scrimping and saving, and working on the renovations themselves, Josh and Kara have managed to turn their situation around in a very short time. In just ten months they have improved their equity position by $90,000, and improved their cashflow by over $65,000. What’s more, as the deals in the pipeline come to fruition, there should be an extra $20,000 pa heading their way in 2017.

This is their journey:

The disgusting first deal

Josh and Kara’s first deal was an entry-level investment. They purchased a two-bedroom one-bathroom unit in regional Queensland for $90,000. It was mortgagee in possession and was in need of serious work. In fact, it was “gross”.

“It was disgusting. We wouldn’t even let Ash sit on the carpet. It was just gross.”

They took out a personal loan to fund the deposit and the renovation costs, working late nights and weekends doing everything they could themselves to keep costs down.

After renovations, Josh and Kara had the property revalued at $195,000, for an equity gain of $90,000. Kara then rented it out privately herself, to tenants paying $300 a week. The property is now positively geared to the tune of $4,500 pa.

HMO The way to go

Their education on how to use HMO’s as a strategy to boost income gave them the vision as to what they could do with their existing properties.

With the equity they’d freed up from the previous deal, they converted Kara’s PPR into a HMO. With separate tenants, they have turned this property around from losing $4,000 pa to being $8,000 pa positively geared.

Rinse & Repeat

The success of converting Kara’s PPR to a HMO identified the market demand for small, furnished living arrangements. The formula was down, all they needed was to copy and paste.

This time, the property belonged to Kara’s ex-boyfriend and was part owned with his father. The house was the same build and same floor plan as Kara’s. Josh and Kara did all the leg work on the deal, from sourcing furniture to arranging tenants. They now make $12,000 pa… off a property they don’t even own!

“We had tenants all ready to go. The flat-pack furniture arrived Friday. The tenants moved in on Saturday.”

More on the way

With the HMO strategy reaping dividends in their market, they have plans to develop more purpose-built HMO deals in the near future. They plan to convert Josh’s PPR to HMO in the next six months, which will take them from a negatively geared position of -$4,500 pa to a positively geared $6,000 pa. They also have plans to develop a HMO on a vacant block of land, which will deliver an estimated $19,000 pa.

Advice to Investors

Josh and Kara admit their starting position was daunting. However, their education and training showed them that there are always options, and they have found it extremely satisfying to take back control of their financial futures, and to be able to help others within their community.

Kara also says that you should never be afraid to lean on other people in the community. Opportunities will come to those people seeking win-win outcomes.

These stories and the results in them were captured at a specific point in time. The real estate market and the investing strategies used to succeed are constantly changing. The achievements and results of these investors may have changed since these stories were recorded. Each of these investors engaged in in-depth training, coaching and mentoring to be able to achieve these results. Their results are not typical and should not be taken as a guarantee of the results you may achieve. Your personal results will be in-line with the training, education and hard work that you personally conduct.

“Josh is now working just two hours down the road. Our life has turned around.”

Deals in the Pipeline 

Build on Vacant Land – Purpose Built HMO
Estimated $19k cashflow

Josh’s HMO conversion
6 months time (-$4.5K to +$6k)

 JV deals with other ILRE members

It took me just 18 months to replace my income and to take my portfolio from nothing to $3.5million. I’ve shown thousands of others to do the same and now I want to share my secrets with you.

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