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.
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.