My business plan to start my real estate journey

[Joab Kirk]

Hey I am Joab Kirk,

A new investor looking to start my real estate journey. I currently live in Adelaide South Australia. I have always wanted to invest in real estate as my day job and my passion, firefighting doesn't allow me to have the financial freedom that I want. I started my education journey listening to the early episodes of BP podcast and reading many books that have been recommended through the podcast. After nearly a year of education i have been able to come up with a business plan on what i think would be a good place to start. I would love any feedback anyone could give even just a thumbs up would help let me know I'm on the right path. 

Buy a house in Mt barker or in an Area that is showing good signs for investment. To buy an average house in MT barker it costs 700k and I can get a first home buyer grant for 5% deposit (35k). Then I want to house hack my house and rent out 1-2 rooms for tenants. I will try to find a good deal and get a house that I can confidently say will gain equity in the next 5 years. I will then try to find an investor to help me add to my deposit not sure how much but maybe 50k in exchange for a guaranteed return (e.g 50k investment and 25k return in 5 years). This will bring down the monthly mortgage payments and I will be able to sell the house in 5 years for a profit for me and the investor.

Financials:

Purchase price: $716,900 (Mt barker median)

Deposit of 5% from my personal funds and 50k from investor for a total deposit of 12%. $85,845
No lenders mortgage insurance with First home buyer government incentive

Loan amount: $631,000

Interest rate: 5.0% (owner-occupier, 30-year term)

Monthly repayments:

=$3,385/month

=$40,620/year

Rental income from House Hacking

2 roommates paying $280/week → $560/week

Total rental income = $29,120/year

Out of pocket (annual) = -40,620 + 29,120 = -11,500

Negative Cash flow but still cheaper than renting and building equity in my property

Assume 6.5% capital growth annually (conservative for Mt Barker):

$716,900 grows → $981,000 in 5 years

Equity gain = $264,000

House value after 5 years $981,000
Loan remaining –$562,000
Equity $419,000
Repay investor ($75k) –$75,000
Your profit ~$344,000

Private Investor (family or friend) will give me the 50k as a gift 3 months in advance so the bank considers it as genuine savings. 

Will need an atorney to structure my investors contract but looking at something like the offer below.
Offer 8–10% annual return (simple interest) = $20–25k over 5 years.
Structure: Gift
Security: Put a caveat on the property to secure their funds

Location research:
In Mount Barker, rental demand is strong, with a median house rent of $570 per week, reflecting a 4% increase over the past year. However, the rental vacancy rate is low, at 0.81%, indicating limited supply. This tight market can make finding rental properties more competitive. Mount Barker is experiencing significant growth, with a projected population increase to over 55,000 residents, positioning it as South Australia's second-largest city. This expansion is spurring substantial infrastructure and employment developments. For instance, the Mount Barker City Centre Project is a $100 million initiative aimed at revitalizing the town center, including new community facilities and business opportunities. Additionally, housing developer Cedar Woods has acquired a 64-hectare site to create a master-planned community with approximately 860 dwellings, contributing to local employment and economic growth. These developments are expected to enhance Mount Barker's infrastructure and job market, presenting promising investment opportunities.

I know this is very rough but would love some feedback before i put it all into a package. 

Kind Regards,

Joab Kirk