Lex and Angela Severinsen have thrown out the property rulebook. They’ve been enormously successful forging their own path, ignoring the naysayers and letting the little things look after themselves. Over 25 years they’ve bought and sold between 60 and 70 properties and currently own 11 properties in New Zealand and three in the USA, all debt-free. Their combined portfolio provides the couple with an annual income of $200,000, which lets them live exactly the way they want to, “in the middle of nowhere,” on their rural property an hour from Hawke’s Bay.

Broke when they got married in 1986, the couple began farming, but after four years they had $200,000 worth of cattle and $100,000 in debt – then a drought struck, the cows lost weight and suddenly they had $100,000 in cattle and the same amount owed to the bank. They were understandably anxious. But some property investor friends told them about a block of eight rundown units in Hastings Central returning about 18% net. The Severinsens were able to get a government Drought Relief Loan at 12.5% interest, so they sold a couple of skinny cattle for the deposit and made their first foray into property.

❝A secret to success is a lack of attention to detail. Just do it! Quickly ❞ Lex Severinsen

At the time, more seasoned investors were sitting on their hands: interest rates had been as high as 24% and property prices had been consistently falling for many years. But the Severinsens weren’t daunted: “We’re always the odd ones out,” laughs Angela. “We’re quite individualistic.” They lived in the flats for three months while renovating them, Lex commuting to the farm and Angela to her nursing job. Helped by a rising market, the flats grew in value by 54% and the couple knew they were onto a winning investment.

Timing The Market

Over the years, they developed a strategy of buying affordable high-yielding properties, not only in Hawke’s Bay but also in Pahiatua, Rotorua, Palmerston North, Waipukurau and the United States. Timing is a vital part of their approach: they look for places which have recently seen a downturn or are under-rated. For instance, when a local milk factory closed in Pahiatua in the 1990s and 200 jobs were lost, the Severinsens decided to take a look at houses in the area. There were plenty for sale and all at rock-bottom prices. They bought a solid weatherboard family home for $23,000 (it had a council valuation of $65,000) in a good street and rented it out for $100 a week; more than a 20% yield.

“We forgot about it till the tenant died 15 years later,” says Lex. “We had only put the rent up to $110 a week. We’d missed the boom prices, but still sold for $117,000…When everything’s going wrong for a town is the time when you should hunt around.”

That’s not the only property where the tenant was left to their own devices. One Rotorua property was almost completely hands-off: prospective tenants were told to drive past, which eliminated most people because it was the “worst house on the worst street in the worst part of town”. Then when one family said they wanted to rent it, the Severinsens told them where to find the key (under a rock) and gave them a bank account number. They were excellent tenants and even repainted the house.

“We meant to inspect our house, we really did,” says Lex. “But when we were on holiday, I didn’t want to spoil a trip if the tenants had painted the place purple. Time went by and after nine years they gave notice, so I finally met them. The house was painted white, perfect, and worth three times what we’d paid. And we’d avoided 108 monthly inspections.”

❝ W e’re not going to let money burn a hole in our pockets! ❞ Angela Severinsen

Looking Ahead

Add that to the long list of ways the Severinsens do things differently: They buy sight unseen; they manage their US rentals from Hawke’s Bay; and they sell more often than they hold. They’ve intentionally sold below value many times, because they love to sell to their tenants. (Each new tenant gets given simple instructions on how to save up to buy a house, and 10 have taken them up on it.) The Severinsens like to move fast, think ahead, and not sweat the small stuff.

“A secret to success is a lack of attention to detail,” Lex insists. “Just do it! Quickly!”

Boldness, he says, is his main problem. He’s not one to overthink an investment. Angela acts as a counterbalance to his impetuousness, and Lex admits that her more cautious approach has saved his bacon many times. Angela still works as a nurse and teaches karate, while Lex continues to farm, adding that he’s “basically unemployable and so unreliable that I have to generate my own income”.

At 53 and 60, Angela and Lex are both enjoying life to the full – in addition to running a private museum of medieval war machines including working cannons and trebuchets (Lex says you should get in quickly if you want to visit because he suspects the council will close it down any day now for health and safety reasons). But that doesn’t mean they’re not thinking about their next move.

“We bought three student houses in Palmerston North when prices were right down because there was a student shortage, then the government policy changed, more students arrived and values shot up 50%,” Lex remembers. “Now is a good time to invest in student cities with the first-year education hand-out… I am glancing around at a few things. I’m half-pie waiting for a glitch – then you can jump in fearlessly. I think perhaps it will be higher interest rates, or perhaps it will be lower immigration.”

Going through three or four property cycles gives you a sense of perspective on the market, he adds. You need to remember that nothing lasts forever – not the bad times, and not the good times either. But their biggest assets have been constant: their happy 31-year marriage and their love of adventure. Even Angela, the more cautious of the two, says they’re quietly keeping an eye out for something exciting this year: “We’re not going to let money burn a hole in our pockets!”