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 "Some very good advice from someone who is taking the first steps in building a property portfolio. Sometimes the best advice comes from someone who makes all the mistakes...and learns from them." - Mark |
| Property investment pays if you know how to leverage |
| by Anna Fenech |
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July 20, 2005 Property investor and developer Maggie Webber's first investment was a two-bedroom unit. What happened? It was my first home, a two-bedroom unit in Willoughby in Sydney's north. I bought it for $160,000 15 years ago and sold it a year later for $235,000. The difference in the price was due to a refurbishment I did. I asked a mate and his father to paint it and put up curtains. Knowing what I know now, I would not have sold it. I would have kept it and used the equity to borrow to buy other properties. What are your investment goals? To focus on one asset class - property - and to endeavour to be able to earn enough passive income to feel "financially free" in a few years' time. I own three investment properties on short-term leases in Sydney. I plan to buy one property every year and get involved in a property development project every 18 months or so. My goal is also to start my own company, which will concentrate on wealth creation strategies for women like me. I am a divorced single mother, so everything is a little bit harder. What's the best investment decision you have ever made? To get educated after my divorce. I married late at age 35 and we had five properties around the world. When we divorced, he kept a property we had in Sydney's eastern suburbs and I kept a farm in rural Victoria. I later decided to move to Sydney with the children but could not keep up the mortgage on the farm in Berwick and an investment property in Cooma, so was forced to sell up. I was able to buy a place with the proceeds to live in but I never ever want to be in that position again. I now rent a home and have freed up my capital to buy investment property. What about the worst? I lent money to a cousin to start a business and only got the money back many years later after a court case. More recently, I put $50,000 into a business as a venture capital project, helping a young person start a business. I got carried away by the emotion. But I gave him the money before I signed an agreement, which I would never do again. That said, in this case I will get my money back as he has done well and sold his business to another company. What's the best piece of investment advice you have ever received and who was it from? To not tie up all my capital in one asset like my home. In my case I sold my home and bought investment properties. That advice has come variously from Robert Kiyosaki and other wealth creation gurus. The other is to not take advice from people who do not invest themselves or do not share your enthusiasm for a particular investment asset. The third is to share the load. So, if you are going to make a big investment, consider a joint venture partner. I am involved in my first property development for 11 townhouses in Sydney's south. So far I have invested $80,000. I and my joint venture partner have an option over the land. We are attempting to get a development application through council. If we succeed, we will do extremely well whether we decide to go ahead with the development or sell it on to someone who would develop it. What advice would you give to an investor starting out? Get educated and learn the value of leverage to build an asset base. What do you do when markets get rocky? In the property world, it's a time of opportunity, to negotiate and do deals. Wise people do not buy at the top. I like it less in the share market as values change daily. There is a longer lead time in the property market. What's the biggest investment risk you have ever taken and did it pay off? The property development project is the biggest and I will find out soon enough whether or not it will pay off. Where do you source most of your investment information and research? Residex for property sales; newspaper-owned real estate websites for current rents and property prices; and also real estate contacts in certain areas. What, for you, are the most important attributes of a financial adviser? Someone who has been a successful investor in the same asset classes as you and can be a good mentor and guide. My former accountant was very anti-property as he had lost big money on a property deal, so he was not a good adviser for me. What are your views on socially responsible and ethical investment? I think if there's a win-win involved in the investment, then that's ethical. I have also noticed that many companies don't survive long term if they fail to act ethically - HIH comes to mind. Would you feel comfortable running a portfolio of direct shares? No, it's not my strength and I don't have the time to give it the attention it would need to be successful. I prefer property as I understand it better. How do you feel about investing overseas? I don't know enough to consider it. Reference: The Weekend Australian 
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