Retirement Through Real Estate

Everyone has their own motivation for investing in property, whether it’s to generate immediate cash flow, replace their job income, or build wealth for the future. For many, it’s all about funding a financially free future – something these investors are well on their way to achieving.

As an investor, have you ever sat down and really asked yourself: Why am I doing this? Why am I putting myself through the hassle of managing time-consuming tenants, researching the market, dealing with mountains of paperwork, and worrying about capital growth…?

The fact is, investing in property can be a highly stressful experience. But it can also be richly rewarding for those of us who can stay the course. With an eye on the bigger picture and a commitment to taking action towards our real estate goals,  we can all enjoy the long-term results of our property purchasing efforts – much like these investors.

The landlords profiled on the following pages may not be property millionaires just yet, but they’ve certainly created a solid foundation for a financially free future. Read on for their tips and tricks for creating a property portfolio that delivers the building blocks of a healthy financial retirement. 

From novice investors to financial freedom

Virginia and Gordon McDonald have recently joined the ranks of Australia’s retirement set, stepping down from their busy roles within the public service. And they’re doing so with some handsome real estate profits in their bank balance, making the transition from employment so much smoother

Virginia McDonald, aged in her early 60s, and her husband Gordon, who is in his late 60s, had always planned to retire from the workforce at around this stage of their lives. However, they had never thought they would retire completely debt-free and with a portfolio of residential investment properties. 

The couple became first-time property investors just over a decade ago, on the advice of their financial planner. 

“It was something we hadn’t even thought about doing, until we spoke to James Nihill at Patrick Leo and began looking to better utilise our tax,” 

Virginia explains. “We were both PAYG public servants, so we had no opportunity to really build our capital, until we looked at property investing.  

“Around a decade ago we were pretty close to finishing paying off our mortgage, which is when James gave us the idea of building a diversified portfolio that included property as an investment strategy.”

The Brisbane-based couple  were intrigued, after “basically [having] done nothing for 

30 years but put our money into our own mortgage”, Virginia says. 

Virginia and Gordon McDonald

Virginia and Gordon are renovating their investment property in Victoria prior to listing it for sale. It is set to deliver a six-figure profit

AT A GLANCE

Years investing - 11

Number of properties - 2

Strategy - Set and forget

VIRGINIA'S PORTFOLIO

“We had simply worked and paid our bills. We wanted to invest, but we didn’t have the knowledge or the confidence.” 

Their first property in 2007 was a three-bedroom house in Pakenham, Victoria, which they built with an investment of around $300,000.

“We decided that even though it was in another state, that would probably be better for me because I may have become a bit of a ‘drive by and check on the home’ type of landlord,” Virginia laughs. “It gave us a tax deductible trip when going to Melbourne, which we enjoyed, so we went ahead with that purchase.”

Testing tenants

Their Pakenham property was easily rented, though Virginia admits that their very first tenant presented immediate challenges. 

“She stopped paying rent and we had to take her to court a few times,” Virginia says, but ultimately “we weren’t out of pocket very much, and we got better tenants in – along with a new property manager! If you’re going to invest in property you need to find people to work with who are trustworthy, honest and above board.

“Apart from the odd rogue tenants, it’s been quite set and forget,” Virginia says of the couple’s interstate investments. In fact the process of becoming landlords was so stress-free that in 2009 they decided to acquire their second property investment – a townhouse in the Hunter Valley in NSW.

“It was smaller and cheaper than our first property, but it gave us another investment opportunity in real estate that wasn’t too onerous,” Virginia says.

They paid $240,000 for the three-bedroom home, which currently rents for $280 per week. 

“We’re happy to hold on to our other property for now as it tenants really well. We had a bit of a low when the mining boom seized up, because a lot of the properties [in the Hunter region] were being rented by people working in the mines. But now, that area has rebounded and eased off to being a thriving little town. It’s got a tourism focus rather than mining, so we’re not having any issues renting the property,” Virginia says.

“We were both PAYG public servants, so we had no opportunity to really build our capital – until we looked at property investing”

Having now retired from the workforce, the couple is currently overseeing some minor renovations to update their Pakenham property before placing it on the market, with an expected sale price of around $460,000. 

“The key to our retirement has been having a diversified profile. In regard to property, we have gone from [being] nervous first-time investors without a clue, to financially comfortable retirees with a lifestyle we have always wanted. And we’ve particularly enjoyed the freedom of being in a financial position to help our son as a guarantor for his property.”

Early exit from the rat race

Property investment has long been on Brodie Hurley’s radar. With a co-worker’s assistance and advice from a great property team, he is now on his way towards achieving his goals of early retirement as the proud owner of a property portfolio worth almost $2m 

Sometimes, an unexpected person can be the one to kickstart your dream, as Brodie Hurley found out.

After buying his personal home in his hometown of Bundaberg, Queensland, in 2012, Brodie had begun reading up on property investment.

Brodie Hurley

Brodie has only been investing since 2015 but already has four properties in his portfolio

“Most of these books had some really strong points about why investing in property was the way to go. I was starting to see how these people were building property portfolios that were replacing their current incomes,” he says.

However, Brodie still had to focus on handling the expenses of his Bundaberg home before he could make his foray into investment. 

As he broadened his property knowledge over the next few years, Brodie began chatting with a colleague who had started building a solid portfolio. This led him to get in touch with property coach Drew Evans from Caifu Property in 2015.

“It was just a matter of taking that first step, which was making the phone call to a property investment expert,” Brodie explains.

In December 2015, he purchased his first investment property – a house in Aston Grove Estate at Bridgeman Downs, just over 10km from the Brisbane CBD.

“It was only a couple of hours’ drive from Bundaberg, so I was able to drive down to inspect the estate and to see its potential for myself,” Brodie says. 

This house was in a suburb just 20 minutes from the Brisbane airport, which made it “very easy to rent”.

“The capital growth is already going up nicely,” Brodie says. Indeed, the property’s value has soared from a purchase price of $626,900 to almost $700,000 in a little over a year, translating to growth of around 10%.

“Property will give me the ability to enjoy retirement – not when I’m 65, but at an age where I’m still young enough to do whatever I like”

The follow-up investment

Brodie’s first foray into property proved to be a success. It was followed by the purchase of a house in Jimboomba, also in Queensland, in 2016 – and again the property’s value rose by almost 10% in just a year.

He paid $416,200 for the house, which was valued at $440,000 shortly after settlement. “Over the last 18 months I’ve learnt a lot when it comes to investing, especially when it comes to getting valuations done,” Brodie says. “I’ve learned that you’ve got no control over who does the valuation. I’ve had to see values come back with a $40,000 difference, which is pretty frustrating!” 

Yet he understands that such challenges are part and parcel of property investment. 

“Let’s face it – if it was easy, everyone would be doing it!”

A simple strategy

Brodie’s brief time in the investment world means that he hasn’t quite developed a clear plan for his portfolio yet, though he does have a clear goal: to finance an early retirement by investing in real estate.

Jimboomba property Purchased in 2016, this property’s value has risen by over $20,000 in just about a year

Bundaberg property Hurley’s personal property, this home is currently valued at $500,000

Bridgeman Downs property The value of this house has shot up by around 10% to almost $700,000

And while Brodie thinks he could be more aggressive in pursuing investment  opportunities, he’s happy with his current steady approach to buying property. 

“I’m fortunate to have had the guidance and the expert knowledge from my team of property professionals backing my investment decisions, so the chances of making any mistakes are minimal,” he says. 

At present, he leans towards deals that offer strong cash flow, which has him constantly considering house and land packages located near CBDs.

“I also wouldn’t mind getting into duplexes or even triplexes,” he says.

Brodie’s most recent purchase, a piece of land in Newport, Queensland, could help him facilitate these plans. He intends to build a house on the land as soon as it is registered, though it could lend itself to a multi-dwelling development. Depending on the development strategy he goes with, he believes this area could do just as well if not better than his Bridgeman Downs investment and add significantly to his portfolio, which is nearing $2m in value.

“My overall plan is have a property portfolio with enough cash flow to allow me to stop work and live life on my terms,” Brodie says.

“If everything goes according to plan, property will give me the ability to enjoy retirement – not when I’m 65 but at an age where I’m still young enough to do whatever I like, without having to worry about where the next dollar is coming from.”

BRODIE'S PORTFOLIO

Brodie doesn’t have any regrets, he adds, though he wishes he could have started investing five years earlier than he did.

“Indecision is one of the biggest destroyers of anyone’s hopes or dreams and even of the choices people make in life. If investing in property is something you really want to do, make the decision and do it,” he advises.

He suggests investors who are just starting out should treat the process like an apprenticeship.

“Read as many books and magazines as possible about investing, jump online, and do plenty of research. Don’t wait for the perfect time to buy, because in the meantime you’ll miss out on heaps of awesome opportunities!”

Brodie considers passion to be an important driving force in his property journey to date, and believes that with a strong enough desire you’ll achieve your goals, no matter how far off they seem right now. 

“Don’t worry about the naysayers,” he adds. “There will always be negative people around, so surround yourself with like-minded people that are doing what you’ve set out to achieve and seek every little bit of advice from them.”

“Don’t wait for the perfect time to buy, because in the meantime you’ll miss out on heaps of awesome opportunities!”

Driven by a desire to profit for purpose

Yola Bakker’s $3.5m property portfolio spanning the Top End, Queensland, Western Australia and South Australia has not only secured her a healthy retirement but is also giving her the financial freedom to invest in her biggest passion: giving back

Yola Bakker

Yola takes an active role in managing her properties, working in collaboration with trusted property managers

AT A GLANCE

Years investing - 10

Number of properties - 7

Portfolio value - $3.5m

As someone with a passion for helping the disadvantaged, Yola Bakker moved to Indonesia with a desire to get into community-based volunteer work.

“At the time, I was undertaking both paid work and volunteer work in the arts and culture industry, but that particular pathway wasn’t ideal in terms of long-term sustainability,” Yola says.

“I recognised very quickly that property investment was a no-brainer solution that could provide me with the freedom to do anything else I desired. From there on in, I was adamant that I should become a property investor, and profit-for-purpose became my underpinning.”

The transition from earning a living in the arts to construction and property resonated with Yola – it felt like “trying to reconcile two different worlds in one”. Nonetheless, it was a perfect way for her to still accomplish her goal of helping people.

“Essentially, I feel an underlying obligation to give back,” she says. 

And so, on her return to Australia in 2007, Yola became a woman on a mission.

“I secured full-time work, built on the savings I already had until they were enough for a deposit, and picked [my first] property because of its location.”

YOLA'S PORTFOLIO

That home was a four-bedroom property in a housing estate 3km from the Darwin CBD. Yola saw a lot of rental potential in the property due to its proximity to amenities, and it ticked the box of being a brand-new construction, which she believed would translate to fewer maintenance issues.

“It’s one thing to invest in property, but the ability to understand and enjoy it is another thing. The advice my father gave me was to ‘get your brain around property’,” she explains.

“That was many years ago, but it made me resolute in my property pursuit, around what that would look like and why.”

“Property investment was a no-brainer solution that could provide me with the freedom to do anything else I desired”

Wait and watch

As Yola’s resources increased, her advisory team grew and her mindset changed with newfound knowledge. This inflenced her subsequent purchases, dictating her path as an investor.

Yola is always on the watch for a good deal, which is how she stumbled onto her second investment, which is her most successful transaction yet – a duplex in Mount Gambier in South Australia.

After picking this up “at a steal”, Yola made some minor improvements that enabled a rental increase.

“I essentially picked up two homes for the price of one! With a purchase price of $225,000, it is returning $460 per week. I just love those figures: small outlay, great rental yield.”

A three-bedroom unit in Darwin that Yola had purchased with her husband for $385,000 is also dear to her heart (even though she generally chooses to avoid investing in units as a personal preference) – she was able to sell this apartment for $530,000, making a tidy profit.

However, her journey has not been without its problems.

“My biggest mistake without a doubt was sticking to what I knew, which meant I didn’t diversify soon enough,” Yola says.

“I’ve also made the mistake of overcapitalising in property. In making mistakes like this, not only did I fail to adequately manage my exposure to risk, but I also missed many key opportunities early on that, in hindsight, would have given me a portfolio of double the value.”

If she had a chance to start her journey over again, Yola says she would have gathered more experts around her, for example she would have used the services of a buyer’s agent.

“I would also have started doing improvements on established homes sooner, rather than sticking to new [properties],” she adds.

Golden Bay property This WA property has seen its value soar by $25,000 in the past two years since its acquisition

Yola tries to think outside the box and develop strategies that increase her rental returns. Her ideal strategy is 

a dual-income property

Mount Gambier property This duplex generates nearly $500 in rent each week

Shaping a strategy 

Despite the painful lessons, Yola chooses not to regret her failures.

“They proved effective in teaching me what was needed, both to drive me in the right direction and to shape me into the investor I am today. There is always more to learn, and we can never stop growing. As part of that process I find myself constantly resetting where my goals sit,” she says.

“I’ve also been privileged enough to meet some amazing and inspiring property investors along the way, both here in Australia and overseas – all with wonderful stories, which I find drive you that little further.”

“My current strategy is composed of acquisitions of properties that have the potential for manufactured growth”

One of the results of her growth has been the refining of her investment strategy.

“My current strategy is composed of acquisitions of properties that have the potential for manufactured growth, coupled with sequential purchasing – that is, alternating between cash positive and capital growth properties, and strategised selling,” Yola explains.

This has involved shifting her searches from new properties to established homes with upside, which in turn enable her to lease out affordable dwellings to tenants, in line with her desire to improve conditions for the disadvantaged.

“I have a strong passion for financial literacy and affordable housing, so I’m really looking at undertaking small development projects that align with this moving forward,” she says. 

Living the dream

To achieve this goal, Yola aims to expand her network base and establish more partnerships. 

“The satisfaction I personally get from the whole process is rewarding on so many levels,” she says. 

“I love property not only as an investment tool but as a vehicle to achieve other aspirations. 

To be honest, I don’t feel that I have achieved anything special in terms of property, as for me it was always going to be one aspect of what I needed to have in place to reach other long-term life goals.”

With the cash flow generated through strategic investment in rental properties, Yola has been able to create an adequate income for herself and her family. She is also now assured of a financially free retirement, with a healthy seven-figure equity position.

“When your mind is no longer tied up in continuing the relentless need to sell your time for a wage, more and more choices present themselves,” she explains. “You gain power to shape your lifestyle and enjoy the freedom to do what you enjoy when you want. I still work, but I do what I really enjoy and on a level that works for me.” 

Yola appreciates the time that a career in property investment gives her with her family and also how it makes her a good example for her kids.

“It teaches my children that work is not just about money, it’s about passion and so forth, creating for them a positive perspective and relationship with money.”