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From Rags To Riches

Lucia Xiao went from living in a state house in South Auckland to helming a strategically crafted, high net worth property portfolio. Her journey makes for a classic – and inspiring - rags to riches tale, writes Miriam Bell. Photography by Ed Janwattana.

By: Miriam Bell

31 October 2020

Building a better life and, maybe, making a fortune along the way. That’s been the prime motivator for migrants daring to make the move to countries like New Zealand for centuries. But when Lucia Xiao first came to New Zealand her goal was to improve her English language skills to boost her career opportunities back in China. She didn’t plan to stay long term and property investment had never crossed her mind.

Life has a habit of getting in the way of other plans though. Not long after arriving, Lucia met her husband-to-be, Daniel. Just starting out, the young couple soon found themselves with a new baby and living on a single income in a one-bedroom house in Papatoetoe.

Times were tough and Lucia wanted a better life. So she decided to do something about it and while working to improve her lot, she realised the power of property as a tool to help. It took a few years but Lucia now has a cashflow positive property portfolio worth $18 million, and she also runs her own financial advice business.

It was property investment, she says, that has helped her secure financial freedom and allowed her to live the life that she’s always wanted.

Starting With Nothing

When Lucia arrived in New Zealand in March 1999, she spoke little English and knew nothing about the country’s structures and systems. Her first job was working in a poultry shop for eight dollars an hour. It was not what she had planned.

But after meeting Daniel she decided to stay. “At first, we were quite poor. We didn’t know there was assistance for people here. So, when we had our first son, we ended up on a single income and it was hard. We had to manage on $170 a week after rent.”

They struggled on until one day in 2001, Lucia was at Pak’nSave and realised she couldn’t afford a 99c pack of biscuits. “I started crying because it was not the life I wanted to live. That was a real turning point: it was my ‘lightbulb’ moment as I decided things needed to change. Even though my son was only a baby, I decided that I would get a job.”

While she had a degree in finance and banking, she was not confident in her English language skills and, initially, this impacted on her job search. But a pep talk from her first mentor, her husband’s grandmother, put Lucia on the right track and focused her on the banking industry. “I ended up getting a job at ASB and I stayed there for 15 years, eventually becoming a business manager,” she says.

“Shortly after starting at the bank, we were able to get a Housing New Zealand house and that allowed us financial breathing space to better manage our expenses.”


It also enabled them to start saving towards their first home. In 2001, they purchased their first home in Pakuranga for $233,000. “We used $9,600 of our savings and $37,000 borrowed from family. We managed to repay that money in 18 months. In that time, our property had increased in value by 25%.”

This triggered Lucia’s interest in property, which only grew over the years. However, her property interests first focused on creating the family’s dream home. She and Daniel bought a lifestyle block which they eventually built on. It was a lengthy, troubled process that taught her more than a few lessons about development.

Lucia’s Top Tips For Investors

1 Don’t focus on yields. Focus on capital gains.
2 Think about your property portfolio value overall. Not the number of properties that you have. And always consider what it is that your portfolio needs.
3 Go for quality not quantity. Think of the potential in each property and how you can add value in a way that is good. Potential can grow in the most unlikely of places.
4 Find a good mortgage adviser to work with. One who can lay out different solutions suited to your specific circumstances. There are no one-size-fits-all solutions and finding your way by yourself can cost you time and money.
5 Never sell if you can avoid it. The property market will always correct itself. If you don’t sell, you don’t realise the loss. Find a way to survive the winter. 6Be aware of free advice that tries to sell you new builds. Often you will find yourself unable to recycle the deposit and miss other investment opportunities during the wait. There’s also no value you can add to a new build. 7Be patient. The right property will always come.

In retrospect, it also delayed her move into property investing, she says. That’s something she regrets now. “I think it’s important to spend time investing and building a property portfolio before purchasing your dream home. The return and equity from the investments can be used to buy your dream home.”

It wasn’t until 2011 that she started to think about property investing as an option to build wealth. Even then, she didn’t act for another year – but, when she did, she went hard.

Climbing The Ladder

“My first property was purchased in October 2012. It was in Beachlands and it cost $520,000,” Lucia says. “Over the next few months, I bought four more properties: all in the same part of Auckland for between $550,000-655,000. “I only have one of those properties left now. Because they weren’t good quality properties and the location wasn’t great. I was buying in Beachlands because there was a big development going in there and it was on the coastline. I thought I was clever but I was naïve. It’s best to avoid new development areas where the land supply is endless: if there is no supply issue then prices will not rise.”

She did hold those early properties for a couple of years, but she soon realised that going for properties in more central Auckland suburbs, ideally within 10km of the CBD, was better value. Since 2013 she has focused on buying properties in suburbs like Glen Innes, Mt Wellington, Greenlane and Epsom. To start with, Lucia went for properties with a 5% return which did not require her to do any work on them.

“But I changed focus to properties where I could add value, as well as increase the rental returns,” she says. “I built a team, which included reno experts, who enable me to make use of minimal investments to provide the maximum capital growth and returns.”


Over the course of her investing journey, Auckland’s Unitary Plan came into being. Lucia quickly realised that properties which are zoned for “terraced house and apartment” have great promise. That’s because, under the Unitary Plan, it is possible to build terraced houses and apartments between five and seven storeys in such zones.

She now has several development projects underway. One that she is particularly excited about is on a Glen Innes property which she bought several years ago for $600,000. “The property is now worth $1.2 million. We have resource consent for 16 apartments over three storeys. The build cost should be about $3 million. And the end value will be around $8 million and it should return about $6,000 a week in rent.”

Learning & Growing

With her portfolio currently numbering 11 properties and incorporating 14 tenancies, Lucia says she hasn’t made too many mistakes along the way. There’s one misstep that does rankle though: early on she had to decide which one out of two Bucklands Beach properties to buy. One was $650,000, the other was $878,000.

“I purchased the cheaper one and that was a mistake. The property I passed up was the better-quality one as it was bigger and suited to development. In 2017 it had a government valuation of $2.33 million versus the property I bought which was worth $1.1 million. “But when you make a mistake you learn. In that case, I lost sight of the quality and potential of the property. I learnt that cheaper is not necessarily better. And also to look for houses with land and potential.”

Despite the odd hiccup, Lucia’s happy with the progression of her journey and most of her investments. She cites one property as a particularly good deal, though. It was a three-bedroom home and income in Penrose/Mt Wellington and, despite not being in great condition, had development potential. “The asking price was $1.075 million. I put an unconditional offer of $1 million in and got it for $1.025 million. We had to renovate the whole place anyway and it didn’t cost much more to convert it into a five-bedroom place. It’s worth about $2 million now and it’s rented out for $1,100 per week.”

‘You’re not buying the whole market, you’re just buying one property for you. So if it’s a quality property and the numbers add up for you, don’t wait – go for it’

Sticking To Strategy

To ensure success, Lucia sticks to a clear investing strategy. She only invests in Auckland and in its more central suburbs. She buys existing houses, rather than apartments, units or even new builds. And she focuses on capital gains rather than yields.

“Many investors juggle between capital gain and yields,”
she says. “But I think it’s best to focus on one target. You can always create better yields – of about 5-6% – in central Auckland. You just need to look for reasonably priced properties that are suitable for it. “I see lots of people looking for bargains and just waiting. That’s the wrong approach. Don’t wait for house prices to go down because they won’t. You’re not buying the whole market, you’re just buying one property for you. So if it’s a quality property and the numbers add up for you, don’t wait – go for it.”

Lucia also sees herself definitively as an investor, rather than a landlord. Property management requires a different set of skills to investing, she says. “Managing your own properties hinders your ability to grow your portfolio. That’s because you spend all your time running around after tenants 24/7.”

For that reason, she employs people to manage her properties for her. The same applies to renovation work. “My time and energy are better spent doing other things, such as assessing properties.

“You have to learn how to leverage your people and team. Some property investors stay small because they expend to much energy on renovations and property management. So find a good person you can rely on to do those things well and just leave it to them.”

Forging Ahead

These days Lucia is focused on developing her mortgage and property investment advice business. The advent of Covid-19 has not deterred clients, rather they are busier than ever and she has had to take on new staff to meet demand.

Meeting this demand for knowledge is something she is passionate about. “I see it as opportunity to pass on my knowledge and experience to others, and to help them achieve their financial goals and, hopefully, financial freedom.” However, she’s always on the alert and looking for a great new property to buy. “I’m currently on the lookout for a commercial property, which will be a first for me. I lease space for my business and would like to own a property for it – especially as the business is expanding. I do want one in a particular location so I’ll be patient till the right one comes along.”

Resolute and determined as ever, Lucia’s final message is that it’s important not to limit yourself. “My story is evidence that dreams do come true and property can help [you] along the way.”

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