Renae McGlashan and John Thomas were too young to even sign the paperwork when they started looking for their first house. Four years and five properties later, they have amassed a diverse $2m portfolio that really caught our judges’ attention.
Renae and John started young, invested smart and worked extremely hard, including late-night shifts at McDonald’s and some tough do-it-yourself renovation projects.
Renae says DIY was a motto for them from the very beginning.
“We wanted to get out of home and be on our own,” Renae remembers. “I think every 17 year old thinks that but instead of renting, we wanted to have our own place.
“In fact, I think we actually spent John’s 18th birthday at the bank applying for a loan.”
Big dreams
Renae was still 17 at the time, but says she doesn’t think they grew up too fast.
“We have a lot of friends that spend all their money on motorbikes and stuff, and you know we weren’t really interested in all that. It’s more that we wanted to have our own family. You know I guess we wanted that Australian dream right from the start.”
The young couple’s Australian dream now includes taking care of two young children in addition to their five high yielding investment properties.
But it all started when they were just 16 and both worked behind the counter at the local McDonald’s in Wauchope, NSW, near Port Macquarie. They flirted for a few months until Renae got tired of waiting for John to ask her out.
“I actually had to ask for his number because he was too shy,” Renae laughs.
They fell pretty hard for each other and soon started hatching a plan to start their lives together. They didn’t like the idea of paying someone else’s mortgage, so they set out to buy a house with a shed for John’s tools and room for the kids they hoped would be on the way.
As part of the plan, John left school to start a boilermaker apprenticeship, and Renae went full-time at McDonald’s, leaving school herself in the middle of year eleven.
“So he would go and work his job during the day and would come and work at Maccas at night,” Renae remembers. “And since we were both living at home, we were able to save up about $7000 towards the down payment and the rest was first homeowners grant.”
The only thing that could slow them down was the fact that John needed to turn 18 before he could sign the paperwork on the house.
“We drove past this house I think every day for the last two months before we bought it just to make sure it was still there,” John laughs.
They admit that their dream house wasn’t much to look at, recalling that it was easily the cheapest place in town. At $195,000, they just couldn’t afford anything more at the time.
But they certainly showed an early knack for spotting a diamond in the rough, because with some smart DIY renovations the house has grown steadily in value and helped them fuel their property investing career.
Young tycoons
Just a year after realising their dream of becoming property owners, Renae and John were ready to realise the even bigger dream of becoming property tycoons.
“By this time we had our daughter and we realised we don’t want to work all the time, but want to be able to stay home with our family,” Renae says. “But we didn’t want to downgrade our lifestyle either in order to do that.”
So, seeing that they had built up some equity in their residence by spotting potential in an ugly duckling and doing some smart renovations, they decided to try their hand again. They set their sights on a former housing commission property in town that gave them a huge opportunity to practice their renovation skills.
“It was literally an overgrown forest,” Renae recalls with a laugh. “People driving past it probably thought that it was a vacant plot of land. We were looking for anything with potential, meaning anything where people would go, ‘yuck!’”
Unfortunately, the banks didn’t like the look of the young couple’s loan applications either.
After shopping around quite a bit, Renae says they were able to work out a creative solution with their original lender. After some initial resistance, the bank let them use the equity they had built up in their first home by cross-collateralising, or combining both homes into one loan. This creative bit of financing essentially allowed Renae and John to pick up the investment property with no money down and use the little cash they had available to make the badly needed upgrades.
“We did renovations - that’s the only way they really went up [in value]. The market didn’t really do too much in Wauchope,” Renae admits.
Sweat equity
About a year later, they added yet another Wauchope fixer-upper to their roster and are proud of the fact that they completed all three of these renovations without once hiring a contractor. John has many of the building skills covered and access to a skilled contingent of family and friends willing to provide muscle and know-how.
“We’ve done everything from roofing to tiling,” Renae says. “There is normally someone around who will know what to do. Though we have even had to run into Bunnings a few times in order to sneak a look at their DIY pamphlets trying to figure something out.”
Renae laughs when she adds, “But you know, eventually you get there.”
Renae also pitched in with long hours, and the two of them would work together to do research on the market, determining what upgrades would give them the best returns. But Renae admits the process was usually not all that scientific.
“We would just throw ideas up in the air, and occasionally John would say, ‘how about we do this?’ And I would say, ‘Are you kidding me? That will look stupid.’ And then he’ll do the same thing back to me. So basically the things that we agree on are the things that we end up doing.
“But at the end of the day it comes back to what is going to increase the value rather than what looks pretty.” They seem to have found a winning formula, as all three of their renovations have helped them net at least a 25% return on their investment.
Lessons learned
Renae and John say they learned a lot through their DIY adventures, including the fact that it might be best if they avoided them for a while.
“Yeah, there have been a lot of fights,” John jokes.
“Yeah, definitely the first two renovations were the worst, “Renae adds. “You know, we blew our budget, and we didn’t manage our time properly. We just fought over time, and it would just really test a relationship when you’re doing renovations.”
“We are just always wanting to do too much in too little time,” John adds, laughing a bit as he realises how much of an understatement this is coming from a 22-year-old with five investment properties.
The partners found a definite way to avoid renovations by buying new. They did some research and saw good opportunities requiring a lot less sweat equity in the booming Queensland mining towns that John was visiting in his work as a boilermaker.
While scanning through Your Investment Property and other real estate magazines, they liked what they saw in an advertisement for a property investment group.
“So we jumped in the car and drove four and a half hours to Sydney to meet them with a newborn baby in the car,” Renae recalls.
Quickly after that fateful road trip, the partners used the group to line up a deal on a new construction in the booming port town of Gladstone up on the central coast of Queensland.
Creative financing
Again several banks turned them down, forcing Renae and John to get creative again.
“So what I finally did was I got my Dad to help us out by lending us his deed,” Renae recalls. “We did a little deal on the side, because since we saved $14,000 on LMI we agreed to give him half of it.”
The Gladstone house was in a whole new price range at $410,000, but it didn’t take long to get rid of any misgivings. “I think we made about $140,000 in 12 months build time,” Renae says with pride.
They were keen to repeat their success and soon started looking around for another property up there, but were surprised to find little available. Their persistence paid off when they ran across a sale that had fallen through, picking up another new construction for $520,000. The house is set to be completed early this year and due to ballooning land values, they say it already is worth more than 10% more than what they paid.
John has been living up in Gladstone for the past eight months for work, and the partners say they will likely be investing in the area long after he gets shipped off to the next boom town. “We are really confident with what’s going on up there,” he says. “I think we’re looking next at going into some units in order to spread out our risk a bit.”
Renae says she’s been busy researching a number of high growth areas driven by the mining boom, and she really likes the diversity she sees in Gladstone.
“We are looking for things like population growth, infrastructure, making sure that the town has more than one thing driving it. We don’t want to buy in a mining town just because they have got a big mine there. We always want to have a back-up.
“Gladstone has all the LNG ports going in there, but it is also the bottom of the Great Barrier Reef so there is also a lot of tourism there,” she adds.
Sydney-bound
While the partners are focusing their investments in Queensland, the moving van has the family heading down the coast to Sydney. Renae is set to start a whole new career in a field she knows a little something about: real estate. She’s taken a job as a sales consultant with a property investment group based in the Harbour City.
Moving their home base 350 kilometres down the NSW coast is unfortunately going to make John’s “fly in, fly out” trips a little longer. But, he says that thanks to their property portfolio he shouldn’t have to be making those trips for all that much longer.
“Our plan is that in five years or so we should at least be semi-retired,” John says, adding that by that time he aims to be travelling to vacation spots more often than dusty mining towns.
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