Finance advice

Making the leap from the first property to the second one: How this investor did it

By Bianca Dabu
Making the leap, first property, investing, investment, property development

Jacqui Zielinski’s first investment property did not work out as well as she had expected, but that did not stop her from seeking a second investment and, eventually, building an impressive 10-property portfolio worth $3 million.

At the age of 19, she has bought a two-bedroom apartment worth $185,000 in the central business district of Wagga Wagga, a place she knew well. According to the property investor, there was instant equity from the property, but that was as far as the positive side of it went.

She shared: “Long-term-wise, it wasn't really the best-performing property that we've had in our portfolio. Rents started off strong and then there became quite an oversupply in that area for the types of properties."

Jacqui knew for quite a while that it was not a very good investment because she was not getting as much cash flow as she expected and there was not a considerable growth in its value as well, even over a period of time. She held onto it for some time before finally admitting to herself that her money is better off once put for another investment opportunity.

“That was the one property we ended up selling, my first property … I just thought, ‘Let's pull out the money now. We can use that cash for either our own home down the track or for another investment property,’ I just preferred to get rid of [it]”, the property investor said.

Getting to the second property

An acquaintance once approached Jacqui and told her about a property that he would like to get rid of, and despite an unfortunate experience on her first investment venture, she saw this as an opportunity to continue her journey. She went to the property in Lake Albert—the suburb where her parents live—saw a half-renovated property, and bought it for $200,000.

Many property investors will advise against purchasing an “ugly duckling” property for obvious reasons, but Jacqui believed in the potential of the asset.

“He'd had an attempt on the bathroom, and the kitchen had somewhat been half-ripped out and it looked like he'd just given up and he just wanted out … [My parents] backed me and ... I quickly used their line of credit, did a renovation, finish it up, got it rented out, and then got it re-valued,” Jacqui shared.

The property was revalued at around $290,000 and she immediately used the equity to propel her onto her next properties.

Aside from learning that “the best gifts come badly wrapped”, Jacqui was also able to prove to herself that there’s no effective way towards success other than working hard and playing smart.

According to Smart Property Investment’s Phil Tarrant, a bad experience should not frame your opinion about the venture. Instead, use it as an inspiration to move forward and try harder.

He said: “A lot of people get sucked into other people's misery and it shapes the way they think about properties … but there are good stories about property there.”

“I had that one property that, it wasn't anything bad but it wasn't anything great [as well]. It didn't give me the kind of returns I wanted. But at the same time, if I had just stopped there, I would not have got the other ones that have been amazing deals,” Jacqui added.

Their final advice to budding property investors: Make sure to really want success in property investment and go all in.

Jacqui said: “Some people might say [I’m] obsessed with it [because] I would be in forums, I'd be learning, I'd be doing anything I could, [talking to people] ... [In] different events … that I go to, you would not know in the room who's a property investor, and then you start talking to them [and you realise] anyone can do it.”

“It's just … they have to want it, too … You need to be pulled to do it, as opposed to [being pushed] to do it,” the property investor added.

“It's really the mindset … Understand it, get educated, get confident and comfortable with it and start slowly … [You have to] actually want to take control of [your] financial future and have a good retirement or a good life after work,” Phil concluded.

Tune in to Jacqui Zielenski’s episode on The Smart Property Investment Show to know more about the impact of educating yourself, how to find a balance between business work and investment, and the simple but effective ways to improve your current portfolio.

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Katie Koo’s property journey began completely by chance.  While waiting to meet her mum in Hurstville at age 18 on what was a rainy day, Katie sought shelter in a nearby home - which just happened to be open for inspection. She fell in love and bought it.

In this episode of the Smart Property Investment Show Katie joins host Phil Tarrant to talk through her portfolio more than ten years on, which now boasts 5 properties and a minimal amount of outstanding debt.  Katie will discuss how she has grown her portfolio, why she no longer self manages and shares her future portfolio plans.  

Katie will also share how her first renovation cost her just $500 thanks to her drive to learn the art of DIY, as well as how her work as a financial adviser is helping others to achieve their property goals.

If you like this episode, show your support by rating us or leaving a review on iTunes (The Smart Property Investment Show) and by following Smart Property Investment on social media: FacebookTwitter and LinkedIn.

If you have any questions about what you heard today, any topics of interest you have in mind, or if you’d like to lend your voice to the show, email [email protected] for more insights!

RELATED AREAS OF INTEREST:

What makes a good investment suburb?
Entering the property market as a millennial
Why Sydney unit investors should be targeting families

AREAS MENTIONED:

Hurstville
Riverwood
Baulkham Hills
Wentworth Point
Rhodes

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Tune in to the latest episode of Property Showcase, the podcast with the inside track on the products and businesses that will help turbocharge your portfolio, maximise returns and make your overall investment experience seamless and stress-free!

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To hear more about these services, make sure to tune in to this episode of Property Showcase!

 Make sure you never miss an episode by subscribing to us now on iTunes!

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Son Pham is the accredited Head of Mortgages at Rethink Financing\/Rethink Investing. He has over 6 years\u2019 experience writing loans, over 12 years in the wealth management industry working for the likes of CBA, AMP and private practice and he is also a licenced financial planner (AFSL 326450). He has multiple investment properties that are cash flow positive which help pay his mortgage on his home and fund his lifestyle.<\/p>\r\n

Son is able to write all types of residential and commercial property loans.<\/p>\r\n

In this episode of Property Showcase, head of mortgages at Rethink investing Son Pham joins host Tim Neary to unpack how an investor should approach getting a mortgage in place with banks tightening down on serviceability.<\/p>\r\n

Hear from\u00a0Son\u00a0about:\u00a0<\/p>\r\n

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    In this episode of Property Showcase, director of investment services for Open Corp Michael Beresford,\u00a0joins\u00a0editor of Real Estate, Tim Neary to share why he disagrees that the cooling market means that the best times are behind us.<\/p>\r\n

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Mortgages in a tighter lending economy and why Brisbane is a good option
object(stdClass)#1200 (52) {
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  ["title"]=>
  string(82) "Stories of success: The migrants that became Australia’s renowned Property Twins"
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Sana and Mona Ali moved to Australia from Pakistan at the age of 15. Years later, the once-struggling migrants successfully turned their $40,000 savings into a $5 million-portfolio, earning the moniker “The Property Twins” — all before the age of 30. How did these millennials make their way to the top?

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The Ali sisters lived in low socioeconomic conditions for years since arriving in Australia in 2000, but instead of accepting their fate, they used their circumstance as motivation to work hard and achieve financial security.

According to Sana: “Moving countries was a huge personal challenge. We were living in a low socioeconomic area of Sydney and we just saw people around us living really good lives. It really pushed us and made us wonder, ‘What if we could buy more than one house?’”

They initially wanted just a strong financial foundation for themselves and their family and the sense of security brought about by owning a home. In less than a decade, they got all of it and more.

Aside from being able to build a 10-property portfolio, the Ali sisters were also successful in establishing a mortgage business that aims to help investors make the best decisions for their own wealth-creation journeys.

“We just want to feel that Australia is really home and to have our roots here,” Mona highlighted.

How it all started

What they lacked in funds, the Ali sisters made up for continuous education, training and mentorship.

In 2009, they have both spent years in the Information Technology and Project Management fields before progressing through finance roles. The high-net worth individuals that they constantly work made them realise that there’s more they can aspire for than corporate jobs.

They started doing research and eventually bought their first property in Parramatta through their combined savings of $40,000 and the aid of the First Home Owners Grant. Seven months later, they bought their second property in Blacktown.

Mona shared: “I personally wasn’t a good saver, because I loved shopping and shoes. Nothing wrong with that, but looking back, it's like a ‘need it versus want it’ question. Obviously, I did buy a lot of shoes but we didn’t go travelling and all of that. So, we did have some savings.”

The Ali sisters opted for cheap properties in the lower end of the market to jumpstart their investment journey for low-entry prices.

“The cash flow meant when we did rent the properties out, they could look after themselves,” Mona highlighted.

Sana and Mona advise investors to avoid being afraid of starting small. Being realistic instead of aiming for a dream home on their first shot at investing helped them enter the market sooner than later.

After all, property investment is a long-term commitment and, essentially, a kind of “delayed gratification”.

The twin’s property portfolio grew to consist of eight more properties spread across Western Sydney and Brisbane, including units, villas and townhouses.

Strategies

Not long after they started investing in properties, the Ali sisters sold their first two properties in Sydney to take advantage of the property boom that happened in the city. Prior to selling, they did cosmetic renovations on these properties to add value and eventually extracted equity from them.

The first property returned around $330,000 while the second property returned around $190,000.

Mona and Sana used the extracted equity to make their third and fourth property purchase, which are strata properties located in Blacktown. Less than 10 years later, the same properties have increased in value by 90 to 100 per cent.

As the market went more stagnant, Mona and Sana continued increasing their savings to improve the buffer for their portfolio. They saved 20 to 30 per cent of their salary, sacrificed travels, minimised eating out and drove a Kia Rio for years to save as much as they could.

For years, they carefully weighed their needs and wants to determine the things they could live without as they are building their portfolio.

Where to buy

The Ali sisters deliberately chose to buy most of their properties in the Western Sydney region, between Parramatta and Penrith.

According to them, having properties in such good locations, as in close to transport and other valuable infrastructure and establishments, helped them maintain good cash flow and minimise the impact of property investment on their finances and lifestyle.

While they have implemented different strategies throughout their investment journey, good location is one of their non-negotiables.

Sana explained: “We wanted to make sure the properties were well-located. That’s formed the foundation of our property strategy, where we make sure that properties are close to the train station, or a big shopping centre, because that’s what’s going to drive the demand down the track.”

Who to work with

Unlike many investors, the Ali sisters didn’t recognise the value added by property professionals to their portfolio in the beginning. In fact, it took them four purchases to seek the guidance of experts. Needless to say, it turned out to be among their more costly decisions.

According to Sana: “You don’t know what you don’t know, and we didn’t know any better. In hindsight, it would have been good to work with a broker for our initial couple of purchases.” 

Through online forums, they found out about the benefits of working with a mortgage broker and has since worked with a few throughout their investment journey. They taught them not only what they needed to know about mortgage broking, but also what they want to be done differently.

Eventually, Mona and Sana grew to love the “numbers side of property” and went on to establish their own mortgage business, The Property Twins. The business aims to empower investors by offering different services, including building portfolio roadmaps and finding better loans.

According to them, their personal experiences as investors consistently help them provide the best customer service and most effective advice even amidst changing broking spaces.

Mona said: “We really look at building road maps for our clients upfront. On paper, we really put the options down — lender A, B, C, D, in that order — so you continue maximising what's really possible for you."

“Whilst you have no control over the lending policies or where your interest rates go, if you’re making that strategic choice, you’re keeping a lot of doors open for later investment," she added.

Helping investors

As investors-turned-mortgage brokers, Mona and Sana seek to improve the knowledge of Australian investors and ultimately help them achieve their financial goals. Their experiences as investors who, quite literally, started from the bottom allow them to provide realistic and well-rounded advice to different types of investors.

Instead of acting as mere intermediaries who bring borrowers and lenders together, they take on a holistic approach and help budding investors establish a good foundation for their investment journey.

The most important advice they give to their clients is to always implement long-term strategies, but also be flexible enough to alter plans accordingly along the way.

Sana explained: “You need to look at the big picture rather than just one product or one rate focus, because it's a long-term strategy for you.” 

“We are taking our clients on a journey. It’s not about one transaction at a time, it’s about the big picture and really educating them through the process, through the decisions that they are going to be making — just talking through the pros and cons, the rates and how it's impacting them and what their plans are in the next six to 12 months," Mona highlighted.

Finding the right mentors is critical to success in property investment, according to them. Finding the ones who will be willing to understand your goals, capabilities and limitations as an investor and give you tailored advice will certainly help you fast track your wealth-creation journey.

In fact, Mona and Sana themselves have made it a point to stay in contact with their mentors even after they have successfully crossed the $5 million-line.

As mortgage brokers, the Ali sisters go above and beyond their responsibilities to serve as lessons and inspirations to budding investors.

Mona said: “It’s been really rewarding to see the changes that people have had or the smart decisions our clients have made over the last couple of months. Whilst we’re not property coaches or mentors, that naturally comes to us.

“We pretty much hold their hand and say, ‘Look, this is what we would buy, this is what would make a good property and this is what you should be looking for, and where you should be looking.’ When you’re working with someone who’s been there, where you want to go, you cut down 10 years’ worth of effort,” she concluded.

 

The information has been sourced from propertytwins.com.au, realestate.com.au, Daily Mail and the Smart Property Investment website.

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Stories of success: The migrants that became Australia’s renowned Property Twins

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