Am I right in thinking this is a bad deal?

[Richard Simms]

I'm getting started in RE investment. I don't have any properties yet, but I've been learning as much as I can.

I've just managed to get my wife as excited in RE investment too. She has attended this free online seminar with some free follow up chats. This is all in Chinese so I didn't attend, but she reported back to me. Alarm bells have started ringing but I'd like some pro advice if I'm on the right track.

Here's a spreadsheet of a "typical" deal from this investment company.

https://imgur.com/a/FwapN7t

A few things I've thought of from this spreadsheet and the information given to my wife that's set off a few red flags.

1. They are obsessed with new developments. Their speciality is "finding" developments that have potential growth in stead that don't have a large community yet. To me this is a pinky promise that there may or may not be more people and services coming to that area.

2. He recommends using an interest only loan for 5-7 years. My thoughts on RE is that a good deal is something that will make you money from the moment you purchase it. If you can't afford to pay the principal on the loan then you have a negative geared property. If you look at the spreadsheet it looks like he's going 20 years without paying interest. I've explained to my wife that this essentially goes from a 30 year $400k loan to a 10 year $400k loan and will screw you over quite badly.

3. There's a reliance on getting a tax return for the profitability of the profit. This tax return is also included in the "weekly income" for some reason. This enforces my idea these are negatively geared properties.

So am I right in thinking this isn't a good deal, even though it is a hypothetical one? I would much rather have five $100k properties than one $500k, especially if it looks like this.

1. Loan