The pros and cons of being a self-employed property investor

Jo Vadillo went into the business of creating wealth through property to achieve financial freedom and stability for herself and her family. Six properties later, both she and her husband are now enjoying the benefits of being self-employed—having more time for their children and their different hobbies and interests.

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"It's given me a lot of freedom to make a lot of changes in my life. It's enabled me to travel. It's enabled me to invest in other businesses as well. It really has been a huge catalyst for my decisions in life," according to the property investor and buyer's agent.

However, despite her positive experiences in property investment, Jo admits that being self-employed has also presented some problems for her as she goes down the road towards building a property portfolio with an impressive amount of equity.

She shares the roadblocks she has come face-to-face with on her journey, including issues on serviceability and lending eligibility, and how she overcame them to ultimately succeed as an investor:

Are there any negatives about being self-employed when trying to build a property portfolio?


Jo Vadillo: There certainly has been [negatives] for us, and one of those is the two properties that we hold in Sydney have got an enormous amount of equity sitting in them now. Obviously, lenders don't shine a light on self-employed people in terms of lending them money, given that both of us are actually self-employed—and you've got to have a good traction of high-income earning for a period of time to be able to get your hands on the money, and show that "Hey, I've got six properties, and I've got three dependents, and I run two companies, and we're both self-employed. Can you please lend us some more money?"—it's delayed things a little bit for us.

If you can change some things from the past few years, what would it be?

Jo Vadillo: If I [were] to replay my life in the last five years, I might have just set myself up with some pre-approvals whilst my husband was still in a pay as you go scenario. Fast forward five years, we've got a track record now. Our taxes are being done, so now I'm hoping that I'm on the other side of that, and I can show the bank that, yes, I can actually pay off what it is I want to borrow.

Do you have banks or non-banks as financiers for your properties? Are they all major banks?

Jo Vadillo: They're all banks... [There's] one I've got the superannuation property in. I've got two in the self-managed super fund. [There's] a kooky one in Victoria, but it's one of those scenarios whereby there was a very small handful of lenders that would lend at the time.

What other challenges do self-employed investors usually face?

Jo Vadillo: [The administration part]. That's why I'm sorting out my income tax returns for 2015 at the moment. Look... it took me six months to get our self-managed super fund set up just because they had asked for paperwork, and two weeks later, I would react to it, so it keeps you busy.

What would be your advice for self-employed people in terms of making this process easier?

Jo Vadillo: I think, before they leave a PAYG, or [if] they've got a partner and the idea is that the other partner [would later come] on board, I would certainly look at getting some pre-approvals in place, or having a plan. If you're thinking, "In a year's time, I might do this," my advice to them would be review what the situation is now and see if you can have access to the money or get a line of credit sorted out.

With being self-employed, the reason I was able to also acquire another company was because I did have equity. As I said, fast forward to five years, that enabled me to actually buy and invest into Property Women, which is another company I'm very passionate about, which educates women on how to invest. So while it hasn't closed doors, it's just slowed down the process. I've had to give away some fantastic property deals that have come to me, but I've been able to give them to clients.

Do you think you'd like to invest more if the banks were happy to give you some cash?

Jo Vadillo: To be honest, I think the next step for us will be to develop. I would like to go down that path because as a buyer's agent, I [would] like to live and breathe what we preach. If I say to a client, “Why don't you set up a self-managed super fund?” I've been there, I've done that now. I've renovated numerous properties now, so I'm happy to walk into a property and say “This is a money pit don't touch it,” or alternatively, “All you need here is just paint and carpet and you can add your value.”

I like to live and breathe, but I just see property developing being where I go down that path now, and that's what I would like to do with the existing properties we hold.

How will you go about achieving your investment goals for the next five years?

Jo Vadillo: I'm going to start small. I'm not going to go in and do a six townhouse development, because I already hold the land that I want to work on. I've got a house that's sitting there. It's neutrally geared. That will be where I start. I'll do that subdivision. I'll build the property, making sure that the cash flow is still there, it's still working for us. I'll just start small, and build on it. I'm not envisioning that I'm going to be doing skyscrapers at this point because I want to do small stuff.

I want to be involved. It is the game and I do love it and I do enjoy it, so I do want to be actively involved, and just before I launch into anything just ensuring that I've done all my due diligence as best as I can.

Tune in to Jo Vadillo's episode in The Smart Property Investment Show to know how she turned from a time-poor investor to an inspirational success story whose investment strategy is simply to look at property investment as a business—"it's all about the numbers."


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