25 properties in five years

25 properties in five years



Sonia Sheehan

Scared by the doomsday commentary in 2008, Sonia Sheehan and her husband delayed their property plans. They've now reassessed their investment tactics and have jumped right in the deep end to make up for lost time. 

“I started investing around 10 years ago – but by the time the GFC rolled around, we were down to our primary place of residence. 

Like a lot of people, we were scared by all the commentary surrounding the impact the GFC would have on domestic real estate markets, and so we put off investing again for another seven years.

In hindsight it was clearly the wrong decision, but there’s no point dwelling on past events. A couple of years ago we both decided that we wanted financial independence; we don’t want to have to rely on work for income.

We formed the goal to have 25 positively geared properties within five years. Obviously we needed a bigger strategy than simply buying individual properties to achieve that, so we turned to development as the answer.

So 19 months ago we bought a block of land in Brisbane. We went through the whole process of applying for a building approval and managing construction, and we’re due to reach completion this week.

We sold our primary place of residence, an old Queenslander that had cost us $200,000 to renovate, to fund the development. We’d purchased the house for $425,000 and sold it for $840,000 after holding it for 10 years.

That experience was enough to convince us of the need to develop new properties instead of renovating. Even though the place had come through with enough equity to fund our development plans, it was a money pit in regard to renovations.

Seemingly everything needed doing – they’re on stumps so you usually need to restump them and you need to put concrete underneath. Nothing’s easy – you’ve got to buy things that are fitted or get it custom made.

We bought the block because it came with preliminary development drawings for five townhouses, three of them with four bedrooms, two with three bedrooms.

We liked that it backs onto a sporting field and we liked the area – it’s near the biggest shopping centre in Brisbane, there are lots of schools around there, and the figures stacked up.

As it turns out, the preliminary figures weren’t anywhere near as good as what we actually did end up with. We had a valuation done last week, which indicated we’d made a 32 per cent equity gain before they were even fully finished.

It’s a big win, and we think it really justifies our investment decision, but it was tough work!

I’ve managed a subdivision before, and overseen projects in my previous mining industry role, but nothing could have prepared me for how much effort was required for this development.

There are so many more steps and processes and people that have to be involved. Doing a subdivision is like walking 100 metres and doing a development is like running a marathon. It’s so different!

We learnt plenty along the way too, things that we will remember for our future developments. The main thing being to maximise the cost benefits of floor plan sizes. Big floor plans cost more money, and you need to be really sure that the extra space is going to be worth it in terms of rental income and property value.

Having a great mentor is imperative when you are doing a project like I did.  I had a great mentor and I now mentor others through the development process.

The plan now is to keep these five townhouses as part of our portfolio. With a projected income of around $550 for each property; they make a strong contribution to the portfolio.

We learnt about property cycles the hard way when it came to the GFC. You need to read beyond the headlines in order to make strong investment decisions. But with these five properties completed, we hope that we’re well on the way to making up for lost time.”

Read more: 

'I will retire by 40' 

'I made $80,000 in 18 months' 

'The property that devastated my portfolio' 

 

25 properties in five years
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