A developing duo

“Al was working in sales for a building company and we started to see the financial benefits of building and developing,” Tina says.

“Other sales consultants were doing [property-related] things; the owners were doing things; and clients were doing all these things and it all made sense to us,” she recalls. “We always believed there was money in property.”

Tina traces her interest back to her childhood. She watched her older brothers buy and sell property and knew at an early age that she wanted to do the same.

In 1990, at age 24, she purchased her first property – a unit in Nailsworth – for which she paid $70,000.

About 12 months later she met Al, and they realised they had a shared interest.

Investment number one

In 2001, the couple embarked on their first investment together. Tina’s parents were planning to move into a retirement home and they sold their house in Evanston Park, northeast of Adelaide, to Tina and Al.

By this time the couple were married and living in Al’s home, which he had purchased before he and Tina had met.

They had spent the previous few years paying down the debt on their own home and putting plenty of time and energy into building up Tina’s mortgage broking business. They wanted to be in a solid financial position before purchasing another property.

Fortunately, Tina’s parents sold them the house for the favourable sum of $120,000 and in 2005 they sold it for $200,000, netting around $80,000 in about four years.

Moving it up a notch

Tina and Al’s interest in property development was already well established, and in 2002 they made the decision to work with Al’s building company to build their own home in the suburb of Morphettville.

They embarked on the project – their first development – the following year, purchasing a block of land and constructing the house under a South Australian Housing Trust program.

“It cost us $290,000 and we sold it for $350,000,” says Tina. “We thought, that’s not too bad – it’s extra money we weren’t making in our own jobs.”

By 2009, after buying and renovating a new family home that would also incorporate Tina’s business, they were ready for something bigger and embarked on their first subdivision project, an old house which belonged to Al’s parents in Melrose Park.

“It was a little old house less than 10km from the CBD, down the road from a shopping centre, close to a primary school, a high school and a day care centre,” says Tina. “It ticked all the boxes.”

The couple purchased the property for $300,000, subdivided the block and built two new houses at a cost of $400,000.

In July 2010, they sold one of the properties for the princely sum of $535,000 and decided to hold the other. It is now worth more than $550,000, according to Tina.

Diversifying their strategy

Much of Tina and Al’s property strategy consists of selling properties for profit, but they are also holding on to some of them, such as that second property in Melrose Park.

“Being self-employed, we’ve never really put a lot into super,” Tina says. “We’ve always believed that property is our superfund. It’s as good an investment as super, if not better. I’ve seen a lot of people’s super crash.”

“We’re in our mid- to late-40s now and in 10 years’ time that property on Al’s parents’ block, with any luck, will be worth about double what it is today, so we’re talking one million dollars plus – and it only owes about $200,000, so by that time it should hopefully be debt free.”

Tina and Al’s plan is to do a new project every 12 to 18 months as they move into retirement.

“We’re not pushing ourselves any more than that,” she says. “If you can make anywhere between $50,000 and $100,000 on each project, then that’s another income.”

While much of their profit goes towards their retirement fund, the fruits of their investments have also helped Tina and Al pay down their home loan and other debts. “We’re almost debt free on our home and we’ve nearly paid off all of our ‘bad’ debt,” she says.

Tina emphasises that for them, property investment supplements their existing incomes – a strategy they hope will allow them to require more quickly.

“I don’t want to be working much beyond 50 if I can help it,” she says. “Mortgage broking provides us with a good income and a good lifestyle. The property is just helping us get to where we want to be quicker.”

Using property as a wealth building strategy has also enhanced Tina’s ability to advise her brokerage clients: “Investing in and developing property gives me firsthand experience that I can freely and openly pass on to my clients,” she says. –We can say, ‘been there, done that’.”

Conversely, her broker role as helped the couple in the property endeavours. “As a broker, you know what the banks like and what they will lend on,” she says.

Tricks of the trade

Property development is not a straightforward exercise, but for Tina and Al it’s a labour of a love at which, over time, they’ve got better and better.

“We actually love construction,” she laughs. “People say you’ve got to be joking! But we do.”

The couple drew up plans for their first construction project and have used the original design for all their properties since. “We’ve worked on variations of that plan ever since,” Tina explains. “We always tweak it and each time we want to improve it.

“Whether it’s how we present the property, how we finish it off or even how we market it, it’s always the next level up.”

While some property investors hedge their risk by investing in diverse markets, Tina and Al have chosen to specialise in their local market instead. “We have tended to stick to Adelaide because it’s easier to keep an eye on things that way,” Tina says.

“Al spends a lot of time on the properties, getting the tradies in, organising the landscaping and painting. We’ve developed good contacts, we can negotiate harder with them and we have better control over the projects.”

The couple also attribute much of their success to doing solid research and due diligence before committing to a new project.

“Research is so important,” she says. “We’ll go to the suburb we’re looking at, we’ll go to open inspections, see what’s on the market and get a real feel for it.”

The couple also speak to estate agents to find out what people are looking for in a property as well as feel them out as potential agents for their properties upon completion.

Before Tina and Al even proceed with a project they go back to the local agents with their final plans. “We can see who we can work with in the area. We’ll ask them what they think [the proposed property] will sell for and are there any potential issues they can spot?” Tina says

Getting the seal of approval

One of the toughest aspects of property development is researching the local council’s rules and restrictions and then getting approval for a proposal. This is an area of property development that requires a bit of hard work at the front end any project, Tina says.

“Al spends a lot of time beforehand on the phone with councils and real estate agents looking at what can be done to a property,” she explains. “He’ll go to the planning department, go online and find out what the rules are.”

Understanding the restrictions and requirements is made a little easier, however, because their projects are located within the same council areas and jurisdictions.

What’s next?

Tina and Al are currently working with another couple on a new knock down/rebuild project in which they plan to demolish an old home and build two new properties in its place.

They estimate it will cost them $440,000, but they hope to achieve a sale price of at least $600,000 for each property.

“There is money to be made from day one when you buy one block and know it can be divided into two,” Tina says. “You can make extra profit by finishing it off completely and presenting a property that is ready for immediate use.”