Broke to $3.8m: ‘My comeback from disaster’


Recently divorced, Margaret Fort was heartbroken, cashless and in and out of hospital when she decided to turn her life around through property investing. Now she has her hands on an impressive portfolio that earns her a whopping $236k a year in rental income 

When Margaret Fort first arrived at 216 Leake Street its windows were boarded up, the electricity and water were cut off and a gaudy swimming pool was out back, slimy green and clogged up with leaves. Rumour had it that one of the then owners was in jail.

Into this environment she limped, braces across her wrists and in need of a knee replacement, and proudly proclaimed that she wanted to buy the house. Being broke and past retirement age, some might have said she was making a mistake. The way Margaret saw it, she was getting her life back on track.

After divorcing her husband of 33 years, she was coming out of a difficult time. She had experienced numerous health issues and could no longer operate the image consultancy business she had run for many years.

Her divorce had also left her penniless and without a means to support herself. Worse, her self-confidence had plummeted. She found herself directionless and depressed at 60, unsure of her future.

It was only when she decided to attend a 12-month property course in April 2005 that she got any sense of direction. “I had originally been looking at educating myself about shares,” she recalls. “I then found out about a property mentoring course and was convinced to join up. I paid the $8,000 course fee, but I couldn’t really afford it. I didn’t have super and I didn’t have savings. Still, it was worth it. Within three months of doing the course I was buying up property. I had a plan and I knew what to do.” 

Fast track to July 2005 and Margaret was at the Leake Street house negotiating her second property deal. Although her divorce had left her in a precarious financial situation, critically, she still had the house she lived in – worth $600,000. The house was fully paid off, and the banks at the time allowed her to borrow $450,000 off its value.

She used part of that to purchase her first investment property, a three bedroom house in Belmont, a suburb 7km east of the Perth CBD. The vendors had originally asked for $235,000, but Margaret was able to negotiate them down to $215,000.

Spurred on by this early success, she sought a similar property within the area. The Leake Street house was around the corner. What interested her about the property was its size. At 850m squared, she envisaged it as perfect for a subdivision, with a view to possibly developing the land herself.

She also thought, being boarded up and rough around the edges, it would be perfect for a renovation. She settled for $218,000.   

The art of the deal

As it turned out, 850m square meters wasn’t quite enough to leave sufficient extra space for the project Margaret had had in mind. Her town council suggested that she try asking her neighbours if they would be willing to sell off bits of their land in order to reach a size suitable for a new lot. She asked the neighbours to her left and right, but both refused. The only neighbour left was the property behind her.

“I asked them if they’d be willing to sell a bit of their property and they told me they’d think about it,” Margaret says. “They came back to me a few weeks later and asked me if I wanted to buy their entire house. I said, yes, definitely. I had to go into hospital before we could settle, but as soon as I was out it was a deal.” 

Margaret bought the property for $230,000, in November that year, accessing some of the equity in the homes she had just bought.

“I’d bought three properties, all in Belmont, and I was quite happy with that because it fit the rules I’d set for myself. I wanted to buy within 10km of the [Perth] CBD and buy properties that were selling under market.”

Achieving property success

Curiously, in Margaret’s purchases she deals with the vendors directly. “I don’t use real estate agents. I like to deal with people face to face and cut out the middle man. Maybe it’s because this is how I bought the house that I live in, but it’s something I promised myself I’d do, and so far it has worked.”

After acquiring her third property, the one at the rear of her Leake Street house, Margaret now had enough land to create a new lot, which she did in 2006. She’s yet to develop it, but she says that it is a pet project that she wants to begin soon.

She is certainly in a good position to get started. Following her Belmont purchases with buys in South Perth, Inglewood, Morley (all WA) and another Belmont property, she now has a property portfolio that is worth $3.8 million today.  

They certainly aren’t dud properties either. The cash flow she gets off the five of her properties that have dwellings on them is a cool $236,000 a year.

In less than seven years, all three of the initial properties she bought in Belmont have doubled in value. The first is now worth $400,000, the second has long lost its grim looking pool and is also worth $400,000, while the third, which she bought in order to get enough space to create the subdivision, is worth $380,000.

Margaret admits that it’s not bad going for someone who had never invested in property before. “I came from a family that had little exposure to finance and commercialism. My dad was a policeman, and though I had dreamed of owning property since I was about 11, I had thought the only way I’d be able to do it was by buying a block of land in the middle of a desert.

“Still, I haven’t quite reached my goal yet. When I started in property investing I told myself that I wanted 17 properties. I’m not quite there yet, but I’m looking for more opportunities.”

Increasing cash flow

One of the challenges that Margaret has had to constantly deal with is cash flow. Because she had used her residence and each new property purchase to leverage into the next deal, her mortgage obligations each month were high and rental income could only cover a portion of this.

As a solution, Margaret decided to think out of the box. “I had an idea to rent out my properties on a short-term basis. It would require more work, but I’d get much better returns and that was how Short Stay Perth was created. It’s a business I run where I provide accommodation for business travellers, international students and other visitors to Perth who are here for a temporary stay. I decided to expand that idea and now one of my properties I rent room by room.”

Her properties have now become names unto themselves. Her first purchase has been christened City Oasis, her second Belmont Beauty and the third, at the rear of the second, is now called Chic Shack. Despite the gimmicky sound of it all, Margaret says it has been a great success. All three of these properties outperform the Belmont weekly average rent of $380 (RP Data, Feb 2012) – City Oasis nets her $950 a week, Belmont Beauty $850 and Chic Shack scores $800.  

Chasing childhood dreams

Looking back on her property achievements, Margaret says that the key was getting motivation from the course she attended, a mentorship programme run by Property Women. “What it really was is that someone believed in me. After my divorce I was upset and had no confidence. I was told ‘Margaret, you can do it’ and that made all the difference.”

Ironically, another thing that helped was a learning disability. Margaret is dyslexic and has trouble absorbing information that she reads. “I learn by action. The only way I was going to learn how to invest in property was by going out and doing it. This probably helped because I was just in time. I made a lot of my purchases in 2005, right before there was a boom in Perth, which started around 2006. If I hadn’t taken action, I don’t know if I would have been in the position I am in now.”  

Into the future, Margaret is looking to fulfil one last dream she has had since a child. “I’ve always wanted to own my own street. I now own three properties that are all in the same street. I’d say that isn’t bad. Who knows? Maybe one day it might happen.”

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  • Rex Wood says on 09/10/2012 02:27:20 PM

    I think 'broke' is stretching things a bit. Albeit with need for cashflow, she had an unencumbered asset worth $600,000. That's hardly broke.

    That is not to detract from Margaret's great work. I too was on the way to a very healthy property portfolio, but the holding costs became too great and redundancy in the GFC, left suing for unpaid wages put paid to it all. It's a long way back and daunting cliff to climb, but climb it I will. Although it wasn't in the life plan. At least I have the capability to do so.

    Well done Margaret.

  • Yvonne says on 09/10/2012 05:58:22 PM

    Having a $600,000 property is not a precarious financial position for most people. Not to take it away from Margaret though, she's done well.

  • John says on 10/10/2012 10:05:03 AM

    Equity is not the same as money. If she was unemployed and had no cash, how did she support herself? Yes, I think it is fair to say she was broke.

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