A woman who made nearly £100,000 in profit flipping her first home, purchasing 18 properties of her own has shared her story – including the biggest mistakes to avoid.
Dionne Lee has nearly three decades of experience buying and selling homes, having purchased her first house when she was just 20 years old – working three jobs to pull together a deposit.
The property cost £66,100 ($83,500) but after doing some clever renovations, just seven years later, it was sold for £160,300 ($202,500).
Just one year after buying her first home, she purchased the second, and the third another year after.
Now 47, the financial coach and founder of A Woman Inspired has a vast portfolio and is using her expertise to give advice to others looking to secure their first bricks and mortar.
Starting with the biggest pitfalls to look out for.
“My first property purchase was one of the better buys,” the 47-year-old, from Queensland, Australia, told NeedToKnow.co.uk.
“I worked three jobs at the time and managed to save all of my money from my second and third jobs, and a good chunk of my main job.
“I was looking for lower priced, yet well-located property that would cover its own expenses.
“It felt like such an achievement to buy that first property as that was the hardest.
“On this particular property I spent minimal funds on the renovation, I only spent approximately £2,600 ($5,000).
“The biggest mistake I made on that property was to sell it, however, hind-sight is wonderful.
“I never intended to sell any of my properties, however circumstances and other opportunities have determined those sales.
“I had moved interstate with a new job opportunity but unfortunately the job fell through the day before I left.
“I had only just settled on the property I was going to live in interstate and without the income from the new job, I had to make a decision about which property had to be sold to manage the affordability.
“If I had kept it, the property would be freehold now with no debt remaining, the value would have increased substantially, and the rental income would have been completely passive.
“Since I started, I have purchased a total of 18 properties.”
Using the equity from her first property, Dionne was able to fund the next property, using that equity to buy the next house after that.
She said: “I have purchased properties all around Australia starting from as low as £33,400 ($63,500) to £733,900 ($1,395,000).
“I grew up in South Australia — that is where I started and purchased four properties about five years.
“I then moved to the Australian Capital Territories and purchased another two whilst living there for just over nine years.
“During that time, I purchase more property in Victoria and South Australia.
“When moving to Queensland in 2013, I purchased another five properties, whilst investing in Western Australia concurrently.”
Now Dionne shares the common pitfalls people experience when starting in the housing market, including letting their hearts lead the way.
While buying your first home can be a minefield, Dionne has six top tips that she lives by, crediting her success to this list.
SPEAK WITH PROFESSIONALS
She said: “Speak with an experienced mortgage broker who has multiple properties of their own and has personal experience on how to structure a loan the most cost-effective and tax-effective way”.
“Pay a little more for a Solicitor (rather than a conveyancer) to ensure you understand exactly what you are buying and receive the proper legal advice.
“A property is one of the largest monetary transactions you will make and you need to fully understand exactly what you are buying and problems that may come with it”
MAKE A LIST OF WHAT YOU ARE LOOKING FOR
She said: “Many people buy a property just to buy a property but have no checklist.
“This is the reason so many people eventually sell their only investment property and say how much of a disaster it was.
“Being clear includes how the numbers look, where the property is located, the level of infrastructure in the area, whether or not there is local and federal government spending happening in the area, and increasing of employment opportunities … the list goes on.
“Make a list of what the property must have, and the optional ‘nice to have’ items.
“Never make an emotional purchase without fully understanding the numbers first.”
“Although a ‘heart-purchase’ has its place for buying your owner-occupied home, it is the ‘head’ that needs to be kept in check when buying investment properties sticking to the facts and a strict checklist!”
BE THOROUGH TO AVOID ADDITIONAL COSTS
Dionne said: “Don’t buy a property without a building and pest inspection.
“You need to know exactly what you are buying and if you are about to pay into an endless money-pit in the property you have chosen.
“Understand if there are potential costly expenses with the property and how much they are likely to cost you if you proceed with the purchase.
“Ensure you allow for all government fees and purchase costs when buying the property – these costs are in addition to your deposit, and you need to be aware of how much they are before you proceed.”
SET SOME EXTRA MONEY ASIDE AND UNDERSTAND COSTS
“Ensure you understand your numbers and how much of your own money you will need to cover the deposit and the purchasing costs.
“Know your repayments based on the current interest rates and the repayments at an interest rate of 3% above the current interest rate as a minimum to prepare yourself for any increases.”
TALK TO THE BANK
She said: “Ensure you have a pre-approval and properly assessed loan application with a ‘conditional approval’ issued by the bank.
“A quick chat with a mortgage broker or banker in comparison to submitting a full loan application is vastly different, and you do not want to be caught out on signing a contract for a property you can’t obtain finance for.
“Make sure you understand how a bank offset account works and that your loan product has at least one offset account you can attach to your loan- when using an offset account, the interest savings in loan term and interest savings can be substantial).
NEGOTIATE
“Negotiate well, or have an experienced property investor negotiate for you.”
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