Good debt v bad debt: How this property investor altered her debt-averse mindset

However, she admits that it took a “complete change of mind[set]” before she got to finally make a decision to invest in properties. According to her, growing up in Tasmania and seeing her mother working for welfare and housing has instilled in her the importance of shelter and the difficulty of acquiring it.

Bonnie shared: “We didn't have much [because] she didn't get paid much working in welfare. What that gave me was a real sense of how important shelter is. It's like, whatever you do, just make sure you've got somewhere to live.”

“She worked with … people that were in awful situations and [I thought], ‘You don't want to be like that if you can possibly avoid it.’

“I grew up with this mantra: ‘Just make sure you've got your own shelter,’ ” she added.

When she stayed in London, she was eventually able to borrow money and buy a principal place of residence. Since then, her goal has been to pay off the mortgage and be debt-free.

According to her: “My whole thing was like, ‘Debt is bad. I want to be debt-free.’ We were really trying to pay that off.”

Mindset shift

Bonnie said that realising the truth about debt was a “slow process” as it took her months of reading books and listening to different podcasts. She started listening to a property investment podcast every single day until she understood the basics of the venture.

One of the most important things she learned is that she would be better off consulting property professionals about big financial decisions that she’s planning to make. In September, she decided to engage a buyer’s agent for her first purchase.

She said: “There was no way that I could've done all the research, gone and inspected the properties, [and I was] probably wasn't confident enough in my own ability to research either—I'm still not.”

“I mean I know the theory and stuff like that, but I don't know if I'd have the confidence to … just pick an area based off my own knowledge,” the property investor added.

Bonnie chose an “interesting house” worth $880,000, which was built in 1999 in the heritage area of Brunswick in Melbourne. So far, with around 3.25 per cent yield, she’s more than happy with how the asset has been growing. Less than a year since she bought the property, it would already be valued at around $950,000 based on recent sales and comparable properties around the area.

Future plans

The first property was followed by two more real estate investments and Bonnie only wants to expand her portfolio even more in the coming years. She has since enlisted the help of a property investment advisor and other property professionals to guide her and help her make smart decisions.

According to Bonnie: “I actually had a plan done through them—set out four properties to buy. The first one is targeting high capital growth, lower yield, and that sort of high price point.”

The property investor knows enough to understand that she has to have good serviceability to carry the debt that entails these purchases. Fortunately, aside from earning well as a software professional, she also has the help of her husband, who’s working in the field of Information Technology.

She also plans to get high-growth assets in the future, which will not be negatively geared, in order to balance her property portfolio. If everything works out fine, Bonnie and her husband want to retire at 59.

The property investor said: “[Our advisors said], ‘What do you want, and when do you want it … ?’ And then [we’ll work] backward [from there].”

Tune in to Bonnie Cresswell’s episode on The Smart Property Investment Show to know more about how education and her choices allowed her to become an investor with three investments and a principal place of residence in her early 40’s, and how the restructuring of her finances and cash flow helped with her first investment.