Carrie’s property renovating experiences started when she was a child and spent more time with a paintbrush in hand than a skipping rope. Fast-forward 20 years and these skills would help her profit from a magpie-infested property that looked like a crime scene.
The property was a three-bedroom house in Mount Eliza in Victoria that had attracted significant interest from other investors. Carrie and her husband Marty were against the clock from the beginning.
“We were the first people to see the house in Mount Eliza that day,” Carrie says.
“The rooms were spacious and at $192,500, we just knew that the property wouldn’t last long.”
But the house was being sold at this value for good reason. Daylight came into the property not only through the broken windows, but through holes in the window frames and walls.
“Most of the work surfaces and furnishings were biodegrading,” she says.
“We had a look in the kitchen and found an entire chicken carcass in the oven.”
And the pair later discovered that a different species of bird had taken up residence in the property’s attic.
“Magpies had got through the holes in the ceiling and were nesting in one of the bedrooms.”
However, the property’s most shocking sign of neglect was to be found in the bathroom. Although the previous owner had long since vacated the property, they had clearly wanted to leave their own imprint on the interior design scheme.
“The plaque in the bathtub was in the shape of a human body,” Carrie says.
“My husband and I couldn’t agree if it looked more like a crime scene or modern art.”
Nevertheless, Carrie knew that with the estate agent on the phone to investors from overseas, and other prospective buyers pulling up on the driveway, the opportunity to invest would soon disappear. She explains that the decision to invest went right down to the wire.
“We were apprehensive because we weren’t in a financial position to use a renovation specialist,” she explains.
“We understood that we would have to carry out most of the work ourselves.”
Luckily, Carrie had been taught that hard work, commitment, and patience deliver just rewards.
Far from the Emerald Isle
Carrie emigrated from Northern Ireland in 1983 as a child and recalls her youth in Australia as one of “continuous moves and renovations”. Her first experience of property development came about when her father purchased a house in Frankston in Victoria and decided to subdivide the property. Although Carrie’s father was a lawyer by profession, he had come from a working-class family and understood the benefits of property investment.
“He wanted to invest in property so that he wouldn’t have to rely on his job for financial security,” Carrie says.
“We lived in the main property whilst the subdivision was prepared for tenants.”
No one in the family was spared involvement from the development process. After her father’s passing in 2013, Carrie is more reflective than ever about her upbringing.
“When I was only eight years old, my father paid my sister and me two cents for every brick we prepared for the subdivision,” she says.
“I would use a brush to clean off the mortar, and then my sister would stack them neatly for my father.”
While Carrie admits that at the time, she would have preferred to have been on the beach with her friends – she now believes that these experiences gave her invaluable life skills, as well as practical renovation knowledge.
“He showed us how to plaster walls, how to paint, even how to tile,” she says.
“When the time came to invest in my first property, I was well prepared as I knew both my limitations and my capabilities as a renovator.”
Twenty years later Carrie was faced with the decision of buying the Mount Eliza property. While rightly daunted by the sheer scale of the renovation before her, having a clear strategy in mind encouraged her to move forward with the purchase.
“My husband and I always planned to renovate the most dilapidated house in a desirable postcode and then sell it.”
The couple’s desire to manufacture equity quickly through DIY renovations meant they had to occupy the property during the process. They did their best to look past the property’s feathered tenants and its unique bathtub design.
“We could see that the property was structurally sound,” she says.
“We were also impressed with Mount Eliza’s capital growth forecasts,” she adds.
While signing for the house went smoothly, the renovation was a protracted and tough affair. Carrie explains that living in the property for the first few months was horrendous.
“Those romantic feelings that you get about buying your first property quickly disappear when you spend a winter with no internal walls, no carpets, no windows – let alone central heating,” she says.
“My husband and I would spend hours renovating before and after work as we were both continuing to work full time.”
The couple made the decision to renovate and furnish the property with high-quality finishes so that it would complement the aesthetic of the Mount Eliza area.
“Stretching our renovation budget to its fullest extent was the right move,” she says.
“There was a significant gap in the sale price between houses with outdated interiors and those that had been well renovated.”
After months of labouring and careful budgeting, the pair were able to almost double the capital value of the property from $192,000 to $370,000.
The Mount Eliza purchase taught Carrie the first rule of property investment – that every property requires a strategy.
Her next investment would teach her that strategies must change over time.
The need for evolution became apparent when Carrie and her husband bought a four-bedroom house in Somerville.
“Perhaps it was the property’s spare rooms that got us thinking about starting a family,” she says.
Though the pair enjoyed renovating the Somerville purchase, and increased the property’s value from $525,000 to $950,000, they began to consider how their buy-and-sell strategy might impact on the lives of their children.
“There are a lot of drawbacks with a ‘buy, occupy, renovate and sell’ strategy if you decide to have kids,” she explains.
“It means continually changing schools, directing spare cash towards renovation efforts, and forever worrying about health hazards within the pre-renovation properties.”
In seeking a balance between their passion for property renovations with their desire to start a family, the pair agreed to take a breather from investments after renovating the Somerville property.
“With hindsight, we see that period of inactivity as being very important,” she says.
“It gave us time to consolidate our finances, take a fresh look at market trends, and identify our next purchase.”
In 2012, six years after their Somerville purchase, the couple found a pair of two-bedroom properties in Frankston that presented good rental opportunities. Both properties were soon purchased for a total cost of $525,000 and were partially financed through the equity gained from the Somerville renovation. Their renovation budget was established through a combination of research and their experiences with the Mount Eliza sale.
“We learnt that the kind of tenants we wanted to attract appreciated high-quality renovations with good fixtures and fittings,” she says.
Carrie explains that the process of securing tenants has become very competitive because, she believes, tenants are better informed of their rights, and have a wider range of properties to choose from.
“Although it’s important to be aware of an area’s socio-economic conditions, you always want to attract the best tenants in that area,” she says.
“Moreover, we were keen to keep on the same tenants, as we knew that the property, and its furnishings, would have a better chance of being taken care of.”
Carrie explains that high-quality furnishings bring good financial returns because they are tax depreciable and have the added protection of their warranties.
“New furnishings also mean that a property would be market ready should we want to sell,” Carrie says.
Carrie’s inexperience with developing a property to let encouraged her to seek the advice of a property manager. This decision left her with no regrets. In fact, she says it played a major part in the success of her property renovation.
“Seemingly small features – like installing a bath or creating an open plan kitchen have a big impact on the type of tenant you attract.”
Carrie explains that she established a solid relationship with the property manager by including them in the renovation process.
“A lot of people simply use property managers to find and check up on tenants.
“Because our manager had a say in the development stage, they were encouraged to nurture our investment by properly screening tenants and conducting regular inspections.”
Carrie’s renovation efforts allowed her to extend the weekly rent of one of her Frankston properties from $185 to $310, and also increased its capital value by $100,000. Carrie’s second Frankston purchase proved to be an equally lucrative investment.
“Although we bought our second Frankston property for $5,000 less than the first, its rental yields are even better, at 6.1 per cent.”
Tried and tested teamwork
Since helping to subdivide her family’s property as a child Carrie has come a long way – she now has a four property strong portfolio. Moreover, she is enjoying a positive cash flow from the renovation results and an increase in the rent of her Frankston purchases.
“We’ve managed to keep the loan to-value ratio of the portfolio under 70 per cent,” she says.
“This has minimised our borrowing costs and helped us to avoid paying for lender’s mortgage insurance.”
Carrie attributes much of her success to working as part of a team.
“There’s too much weight given to autonomy these days.
“Although you’re not going to get far without self-belief, the best results are achieved through reaching out to and working with like minded people.”
Carrie has experienced the benefits of this concept throughout her investment journey – from polishing bricks with her sister, carrying out midnight renovations with her husband and working with the property manager to optimise her Frankston investments. She explains that focusing on investment opportunities within what is now her home city is a crucial part of maintaining effective working relationships.
“If you’re investing more widely then you risk losing that personal connection with people,” she says.
“We’ve now established a reliable team of tradespeople who we can trust and who understand the quality we expect.”
After the completion of her latest renovation, a one-bedroom boutique property located in Albert Park, she plans to have another break from the property game. The reasons behind this decision are somewhat different this time round.
“When you’re on a roll, it’s easy to get carried away and start spending manically,” Carrie says.
Although the couple are attracted to the idea of subdividing a smaller property sometime in the future, they say they are in no rush to pursue further investments.
“Smaller developments often make for good renovations because less structural changes are required.
“We’re taking our time to find the next one.”
One size doesn’t fit all
The nature of Carrie’s property investment strategy allows her to take breaks between purchases. She explains that her focus is on properties with renovation potential, as opposed to buying off-the-plan properties or pre-furbished homes.
“In Melbourne’s metro ring there are only a limited number of properties that have capital growth potential.
“Our focus is on properties that can be renovated quickly and occupied with long-term tenants.”
Carrie explains that a good investment strategy for one person might not necessarily be a good strategy for another person.
“Our approach is not for everyone – it has worked for us because we have the time to direct the developments and we still don’t mind getting our hands dirty.”
Dad would be proud.