Property Man

Reporter: Jonathan Creek

Steve Mc Knight ditched his job as an accountant ten years ago, in search of financial freedom through property investment. He wrote a book, revealing his secrets "0 to 130 Properties in Three and a Half Years" -- it was an instant best seller. Now he's re-written that guide to match today's "very" different market.

Steve and a business partner bought their first house for just $44,000 in 1999. Since then he's been involved in more than 560 deals - every one of them, he insists, a financial success. "To this date I've never lost money in a property deal. The message I've got for people is that if you miss out on the next price increase -- whether it be in Melbourne, Brisbane, Sydney, Adelaide, Perth, where ever -- the chances are you are going to be out of the real estate market forever and condemned to renting. This is why people need to understand this and take action now", Steve said.

Dean and Elise Jackson are McKnight converts. After five years following Steve's strategies, the pair, like him, gave up their day jobs and now live on the profits from property deals. "We'll make more money this year than we would have made in the last ten years - both our jobs combined. There is no comparison", the couple said.

They've renovated, sub divided and developed their way to millions of dollars, mainly by targeting cheap houses in Ballarat, about an hour and a half from Melbourne. "A lot of the things we do at the moment are terrible houses that no one would go near, that just don't look visually appealing and that we can make a quick cosmetic change to and make it a desirable place for someone to live", they added.

One example of how they make their money is an 8 unit block in Ballarat for $950,000. They spent $70,000 having it rendered and landscaped and by narrowing the driveway created courtyards for each unit.

They then removed the carpet, polished the existing floor boards and a new coat of paint, all for less than $4,000. Minus purchase costs, on average they made around $34,000 on each unit -- that's a total profit of $272,000.

"When you are buying a property, it's all those things that you can't see that don't give you any value. If you have to repair wiring or plumbing or those sorts of things, you are obviously spending money that is going to affect your bottom line. But if you can find a property in the out set that has all those sort of underlying things okay and you just have to tidy up the things that people can see, that's where you can maximise your profits", they advised.

Perth's Jenny Smith is a former doctor, who controls an investment property portfolio worth more than $11 million. "I think one of the deals that worked out best for us was a simple straight subdivision. We bought the house, we divided it, we made some money selling off the back block and then we sold the front house as well -- that made us a nice pocketed of cash", Jenny said.

"It teaches people about how to take a problem property and what they need to do to add value to it, to create a positive cash flow outcome", Steve said.

Some key points Steve encourages you to follow are:

ü Know who you are selling to and how much they can afford.

ü Get educated on the market, become a specialist in your area.

ü Know your end sales price.

ü Know how much the renovation will cost.

ü And to combat increasing prices, consider a joint venture.

"There is a danger of knowing I've lived in a house, I've made money in this house, let's go and buy some investment properties. It doesn't always convert being an owner/occupier into a residential investor", said Professor Richard Reed from Deakin University.

Professor Reed is an expert on investment and urges caution, since property deals come with added taxes and complications. "If you compare property to the share market there isn't the taxes in and out, there isn't taxes with term deposits, but with property there are some substantial taxes and it's something the property industry has been fighting for many years", he said.

"I love playing Monopoly in real life. The best strategy I can give people -- and it's outlined in the book -- start off with rental properties, move into developments when you have got some more money behind you and end up in commercial property. Four green houses one red hotel and become financially independent", Steve said.

And Steve McKnight won't be making any money from the sales of his latest book. All profits generated are donated to charity to help under privileged kids gain an education.

"0 to 130 Properties in 130 Days" is available at all good bookstores.