Walking the Talk and Creating Choices

This month the Reno Kings have had the pleasure of meeting humble property investor, Steve Mitchell.  Married for 32 years with 3 adult children, Steve and his wife Glenys captured our attention with their successful property portfolio and diverse experience.  Over the years Steve and Glenys have purchased 15 investment properties, completed 7 renovations, 1 subdivision and 3 new developments.  This couple are walking the talk and finding the freedom to do what they like along the way.

The Beginning
Like so many investors before him, Steve discovered property after being in a job he hated.  After he began to attend various seminars, he became aware of the financial benefits such as tax incentives and capital growth that property investing could have for his family.  So in 1994, with the help of a buyers agent, Steve purchased his first investment property.  "We used a buyers agent as he was a mate of our then accountant who sourced properties for his clients," Steve tells us.  "We purchased 2 units in a six pack in Geebung and really for the tax incentives.  They cost us $100K each and they are now worth about $300K each.  They were pretty much brand new at the time - bought from the builder and dripping with depreciation.  Not that we knew about depreciation at the time," he adds.

In fact it was not until Steve ran into Geoff at a homeshow in 1995 that Steve's learning took off.  "Geoff convinced me to do his workshop, which was two Tuesday evenings at that time.  The one big thing I took away from it was the concept of depreciation.  That year I got a $4000 tax return based on the two units.  This was something my accountant hadn't known about.  I was a bit disappointed about that and now he is no longer my accountant!  Now I always get a depreciation schedule and the units, well they have been pretty much cash positive since then".

The Equity
Steve and Glenys have continued to increase their property portfolio.  Steve advised, "By using the increased equity over time we have managed to purchase more properties in South East Queensland - 4 in Home Hill and Ayr and the remainder in Brighton, Bethania and Carseldine.  In total we have 16 properties including our own home and 4 commercial sites.  We use 3 of the commercial properties as our business headquarters and we lease one out," he explains.  "Glenys and I are both pharmacists and we bought the commercial investments by purchasing the business and property from a previous employer.  In 1988 we bought the pizza shop next door, knocked down the wall in between and extended the pharmacy business into it.  Since then we have also completed a subdivision and a few developments".

The Subdivision
According to Steve, Geoff's seminars also taught him that some properties have more opportunity in them than others and it was important to look for properties with 'a twist'.  As a result in 2001, Steve and Glenys included a subdivision into their portfolio. 
Steve tells us, "We knew this particular property was on the market, but thought we couldn't afford it. We were just about to sign a contract with an agent on another property, when I suddenly made the connection that the name of the agent was the same as the name of the owner of the house we couldn't afford. I asked and found out that her property was in fact under contract, but the fellow had a couple of extensions of finance and it wasn't unconditional. I told her I would really rather buy that property. The agent then rang the buyer of the ‘unaffordable’ property, crashed the contract, and offered the property to us right there and then! I did ask if I could see it first but the deal was done. I had bought it! She then asked me about a deposit.  I said “how much do you want?” She said “ how much do you have?” I had $50 and so that was the deposit on a $300K property in Brighton!!"

The block was 1796sqm and according the Steve they could have made 3 blocks from it, but they would have had to demolish the house. However, Steve is a self confessed “Big Softie” and thought it was a nice house and it had been someones family home for a long time...  So they did a battleaxe. They subdivided the property, renovated the front house and built another house on the back.  "The old property in the front had a pool – now the new house in the back has the pool" he told us.  The project cost them approx $550K.  Today the properties have been valued at $600k each.

The Development
Steve and Glenys' property portfolio also boasts a development site. "When we had the DA (Development Approval) for the sub division on the Brighton property, we came across another property we were interested in. I went to the bank with the DA to see if it was worth anything and they were happy to increase my loan so that I could purchase this property also". 

The new property was an old house, with a flat tacked on the front, on a double block - so two flats. The flats were actually for sale by auction and were passed in.  Steve was the highest bidder and purchased the property for $238K.  This was purchased while still renovating the Brighton property. "I then just left the flats to do nothing for a couple of years. In fact, there was an old ‘dero’ in the back one who used to pay me about $110 per week rent.  But that's when he paid me!!  When he didn't pay me, he paid NOTHING!!".  By the end of the tenancy, Steve reckons he must’ve been owed some money which he never received! But when he looked at the numbers of the ensuing development project, he was not too worried... This project cost Steve $40K to remove the flats and $400K to rebuild two houses.  Today the value of the two houses is approx $500k each.

"Just BUY", he says.  "I don't think that there is ever really a bad time to buy.  I feel positive about the near term future of property prices in the local area. With migration into SEQ and a high likelihood that interest rates will come down, I think there will be healthy price increases". 

The Freedom
Today Steve and Glenys believe that property is one of the best ways of creating wealth.  "More importantly for us it is lifestyle," he adds.  "We have more free time and are able to help our family and others far more.  We still run the pharmacy but enjoy the flexibility of having excellent staff who can take care of the business when we choose to go away".  The couple have already spent 8 weeks away this year, including several weeks in Europe. "We are about to go away again for a few days and will be back on Wednesday.  Well that's if we feel like coming back!” he says with a laugh. "I love it! It's mostly fun and very rewarding". 

The Reno Kings run a series of dynamic and educational workshops to suit the needs of most people.  For further information on these workshops click here.