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From DPB To Dream Home In Under 4 Years

A Hamilton teacher and mother of three boys turned to property investment to ensure a financially secure future, writes Joanna Jefferies.

By: Joanna Jefferies

1 July 2016

Less than four years ago rachel ward was dead broke and

unemployed. She had just entered her career as a property trader, yet the launch pad into a successful property investing career had turned out to be a dud: a property she couldn’t sell due to its poor plaster construction and unattractive cross-lease title.

Worse still, she had scrimped and saved hard not only for the deposit on the property, but for the expensive $28,000 fee charged by the property investor education course, which had set her up with the sale.

Sole carer to three young sons, she had worked full time as a secondary school Spanish teacher in Hamilton and had been instructed by the property course to quit her job in order to commit herself fully to property investing.

She was now forced to apply for the Domestic Purposes Benefit, or DPB. “It was a very humbling experience,” Ward says. “They said to go back to teaching – I said, ‘No! I’m going to do property investment; I’m going to be successful!’”

But while she does regret that initial purchase in late 2011, she remains thankful for the advice to leave steady employment. “That advice gave me the confidence to leave my job, when people were telling me it wasn’t a good idea.”

She hasn’t looked back. Ward (46), received the DPB for three months, enough time to pull herself together and formulate a new strategy. With mouths to feed and a future to think of, failure wasn’t an option.

Full Steam Ahead

Before this unfortunate attempt at trading, Ward had dabbled in property in Hamilton and enjoyed the experience. But she had wanted to take it to the next level.

“I was just desperate to get ahead. I didn’t want to be a poor, single mum.”

I was just Desperate to get Ahead. I didn’t Want to be a poor, Single mum. – Rachel Ward

In 2007 she had saved a small deposit and bought a small section to put a house on, with the intention of creating a home for her and the boys – but during the process she realised that the street was too rough and felt unsafe.

Two years later in September 2009, she secured a property which she spent the entire summer holiday period transforming.

The Glenview, property had a 220sqm dwelling on 1000sqm of land. She returned the two-storey house into two flats as it had originally been, which created a “10 or 11% yield”. She then subdivided it, added a relocatable house and garage on the new section and sold it off. She had paid $315,000 for the original property, and sold the new house and section for 256,000.

“The contractors were organised and ready to go on the day of settlement,” she says. Ward says the deal was significant simply because it helped get her started and created some equity.

The smart buy played straight into what in the future would become one of Ward’s key buying rules: “I never buy anything unless it’s got a ‘twist’ to it – sometimes it will have a ‘double twist’.”

Key Players

Fast forward to 2012 and Ward was able to use the equity created in those two initial purchases to move on from her failed attempt at trading. It was around this time when she met Geoff Green a registered valuer who would become a very significant key player in her future success.

He had the expertise and local knowledge necessary to know the difference between a dud and a deal and he was keen to see her succeed.

It wasn’t long before Ward was able to purchase again. And again. She rattles off a number of deals in Hamilton involving a similar formula to her 2009 purchase: multiple income properties with potential to add relocatable houses; renovations and updates; potential for subdivision; potential to add ancillary dwellings.

Among these, there are a few standouts. One property bought in January 2015 in Lewis St, Glenview, was so good Ward says “I feel like I stole this one.”

It was a big rambling red brick house, so Ward had a firewall installed to create a separate studio and second income stream. The house was purchased for $315,000 and cost her $370,000 including consents and renovation costs.

Rachel’s Buying Rules

▶ Everything has to be positively geared.
▶ Aim for 10% yiel on all properties.
▶ Spend time chasing the deals, not on the tools.
▶ Everything gets meth tested.
▶ Each deal must have a twist or two to create extra value and equity: subdividable, multiple income streams, room for ancillary or second dwelling.
▶ Be conservative in your offer never buy for capital growth potential alone.
▶ Know your values.
▶ Surround yourself with a trusted team of experts.
▶ Attend property investor association meetings, for support and contacts.
▶ Stay educated and read lots about property and the economy.
▶ Be aware of property cycles.
▶ Goal setting is key.

The Good And The Bad

All in all, she completed around 50 deals in less than four years – a mix of trades and holds, each fulfilling her brief of having a ‘twist’ – and sometimes a double ‘twist’. [See Rachel’s Buying Rules]

During this intense period of investing she would often have five or six deals on the go at a time – but this didn’t mean Ward was on the tools herself.

She says she prefers to spend her time chasing the deals and managing contractors and to let the experts do their job. Similarly, the property management of her portfolio is delegated to the professionals.

First Home

While Ward's role as a landlord was humming along nicely, at the end of 2012 she was still renting a property herself with her three primary school-aged sons. The kids were used to being dragged around open homes and seeing mum doing up places for others to rent, but the family, while living in a nice rental, weren’t living in luxury themselves. In fact, Ward says her tenants often had Sky TV and drove much fancier cars than her own.

But her goal of financial freedom was the driving factor for her conservative approach to spending. (Even now, she only pays herself a teacher’s salary each year.)

It was obvious that Ward and her boys should secure a place of their own, but naturally it needed to work as an investment too. The property she eventually bought is beside Hamilton Lake – the stomping ground of her childhood and with her parents’ place just across the lake, it was the perfect spot for family support and lakeside strolls with her beloved dog Georgie.

Ward saw the opportunity to land bank in this popular spot - the home sits on a 2100sqm section and she has recently purchased a small strip of land off her neighbour to widen the driveway, in order to make the property sub-dividable.

Like Winning Lotto

In the beginning of 2015, Ward’s hard graft appeared to be paying off. She had a sense the market was about to take off and she was right. She watched in delight as the Hamilton market boomed and all her hard-won properties increased significantly in value, virtually overnight. “It was like I’d won the Lotto!” she says.

Naturally, as a result, good deals have gradually become harder to come by – this year Ward has only completed six property transactions – virtually a trickle compared with a couple of years ago.

There is, however, one significant property on her books in 2016: a majestic white dream home overlooking Hamilton Lake. Ward says her friends and family tease her that given they call her the “renovation Queen” it’s ironic that she has purchased a home that is already done up.

But Rachel couldn’t be happier – or more surprised at her own success. This past summer she even treated herself and her boys, now aged 11, 14 and 17 to a two month trip to Asia on the back of a successful trade – a trip she couldn’t even dream of a few years earlier.

Market Outlook

Ward says she is keeping a careful eye on the property cycle and believes the market will soon reach its peak. Currently in the Hamilton market she is finding there is a lot of competition among buyers and a significantly low numbers of listings.

She also notes that ‘P’ testing has become compulsory in her due diligence, unlike only a few years earlier when she started. Correspondingly, she is buying less ‘holds’ in anticipation of the “lolly scramble” in a few years’ time when values may drop.

Goal Setting

It seems dreaming big and fulfilling goals is natural to Ward – her drive to succeed is matched only by her enthusiasm for property in all its guises.

“I used to feel bad,” she laughs, “that when I was a teacher all the books beside my bed were on property investment!”

So having secured the dream home, what’s next for this property maven? She currently has a portfolio of 16 properties with 20 income streams (three are soon to be sold) and her end goal is an early retirement in four years’ time – well, that is, the choice to retire if she so wishes!

She hopes to spend more time playing tennis and skiing in the future, and of course more trips and time spent with her sons. There are other properties on her ultimate wish list too, the big goal being the “waterfront property” at Whangamata. With her tenacity and passion for property, and the speed with which she has grown her portfolio, it certainly looks achievable.


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