How we built our portfolio on incomes of just $40k

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Bianca and Matthew, in their mid-thirties, live in Spreyton in northern Tasmania. The king and queen of budgeting, the couple have built up a diverse property portfolio, despite being on an income of less than $40k each

It was love that first motivated Bianca and Matthew to learn to budget so they could afford property. They met at the tender age of 16, but, shortly after, Bianca’s parents decided to move back to Italy after stopping work due to illness and injury. 
“I had met Matthew and didn’t want to go,” says Bianca. “So they told me I had to get a full-time job and buy a house.
“We both got full-time jobs at 17 and had saved $9,000 by the age of 18 and bought our first home in Devonport for  $60,000 in 1995. We were only earning $200 per week each, and interest rates were 13%. It was pretty tough,and we went without a little, but we tried to pay as much off the mortgage as possible to save on interest. We got married in 1996, and my family all went to Italy to live.”
Bianca’s upbringing had a strong impact on her financial sensibilities. Brought up with the ‘pay your home off and have no debt’ attitude, she had to overcome a few concerns before taking the leap into property investment – namely, learning to live with debt.
In the past six months, since deciding to take investing a little more seriously and joining Positive Real Estate for guidance, Bianca and Matthew have purchased three investment properties. This brings their portfolio to four investment properties plus full ownership of their home in Tasmania.
“When I met them they owned their own home, had one investment property in Tasmania, had zero bad debt plus $30k cash in the bank,” says Carolyn Weston, property investment coach from Positive Real Estate, Tasmania.
“Bianca is an amazing lady,and her ability to be disciplined and save like that is a true inspiration to other clients,” Carolyn adds.
Bianca says her interest in property investment was sparked in 2000 when the couplebought a five-acre block  of land in Spreyton, just outside of Devonport,for $39,000. 
“We had paid the house off and got a loan for the land,” she explains. “In 2002 we sold our house for $86,000,just  before the property boom in 2004. The block that we had bought for $39,000 we could now sell for $170,000,but we  decided to keep it and build our home. That was a real eye-opener as to how money can be made in property.”
And it’s a good thing they held on to that land. In 2011, the bank valued their home at $430,000. In the same year, the mortgage was paid off and the couple began looking more seriously at investing.
Expanding the portfolio
“I read heaps of books and magazines and started looking around Devonport at suitable properties. We had $25,000 in  savings and bought a unit in Devonport for $213,000 and used the equity in our own home for the deposit.”
This is when Bianca really had to get comfortable with debt.
“I really hate debt,so it was really hard for me to start with, to get my head around it all,” she said. 
“When we bought the property we were given a 12-month subscription to Your Investment Property and started  reading all the stories about how everyone else was investing and making money. They all seemed to be using interest-only loans, which I found interesting and wanted to learn more,” she explains.
“I was paying all our savings off the unit,and the following year had the loan down to $180,000. We came across ads for different investing companies operating in Gladstone and, not long after, bought a property in Kirkwood just outside of Gladstone for $550,000.”
This was one investment Bianca couldn’t quite stomach. “I felt so sick I couldn’t sleep. This was just so much  money,and we are both on low incomes.
I thought that was a lot of money for one property,and the prices were already so high I didn’t think there was much more room for growth. I pulled out of the deal. It was stressing me out too much.”
Bianca soon came across another newspaper advertisement for a free property investment night in Devonport. “I got on the internet and booked myself in,” she says.
“It was awesome. I learnt so much in two hours. We got an invite to Launceston to a mentoring night and met all the other members,and it was great talking to people who were going through the same experiences. We signed up that night,” Bianca says.
“We sat down with our coach and worked out our goals and strategy. We talked to our broker and released $150,000 worth of equity in our home so we could buy two properties.
“Our main challenge was we had heaps of equity but not the servicing capacity, so we needed to find a property that would boost our income and help us to service our next property,” she explains.
In February 2013 Matthew and Bianca bought a property in Bunbury,WA. 
“It is a renovated three-bedroom unit for $225,000,and we are renting it out for $285 per week,” Bianca says.
“Bunbury has a lot of moneybeing allocated for planned infrastructure and redevelopment of the Bunbury  waterfront. We chose this property because it was a good cheap deal for us to boost our income for the next purchase.” 
The couple, now on a roll, bought their next property off the plan. 
“It’s a one-bedroom unit in Newcastle,NSW,for $315,950. Rent is about $370 per week. We used our equity for the  10% deposit and it is 12 months or more away from completion, which gives us a chance to buy another one. It is 300 metres from the beach. Newcastle has a great mix of parks, shopping restaurants and beaches. It has a great transport system and is easily accessible by train or major road from Sydney,” she explains.
Next up, Matthew and Bianca have decided to purchase a four-bedroom house-and-land package in Westbrook, just west of Toowoomba,for $399,750.
“Rent is expected to be $440 per week. We released more equity so we could borrow for all our properties at 80%. 
This property is about eight months from being completed. We chose it as there is high demand in the Toowoomba area – land isn’t being released fast enough to keep up with demand,” she says.
Lessons learnt
A big lesson the couple learnt was the value of buying in regional areas. 
“Before I started I wouldn’t have thought about buying in regional areas; I would have just tried to buy close to  the city. But not everyone can afford these areas,and regional areas can offer good growth,” she explains.
“And don’t buy in Tassie,”she laughs. “We learnt that it’s more about growth. 
You want an investment to have quick growth so you can pull out equity to buy again.”
Bianca says she can stomach being in debt by maintaining a buffer. “The most important thing about the whole property investing journey for us is to be good budgeters and always have a buffer of at least $15,000 to $20,000,” she says.
“You just don’t know when you may need it. It may be hard for some people to go without certain things, but it is normal for me so I don’t feel like I am going without. We have still had our holidays and bikes,and that is what we enjoy doing. We would love to go to Canada and Alaska later on, but our main focus at the moment is buying more property. If we went to Canada, my coach would say you could have bought a property with that money,” she laughs.
As for sharing budgeting tips, Bianca says: “It is more about buying what you need, not what you want. Credit cards can be a good tool, as long as you are paying it off. We no longer have to go without heaps,but we still need to budget. I write down everything I spend in a book, so I can be aware of spending and keep track. It has been really full on, buying three properties in three months, but I am enjoying it. It is a great experience,and you have your mentor and a whole team of experts to help you through the process.”
Future plans
The couple don’t plan to stop now. They are looking at purchasing another property through a self-managed super fund by the end of theyear,and yet another once their Westbrook property is built.
“The properties are neutrally geared, so I can still save money to put towards another one,” Bianca says. “We aim to buy at least one property a year for the next five years and would like to work part-time and retire in 10 years with property replacing our income. It isn’t really about  retiring, though; it is more about being able to choose what you want to do and having the time to do it.
“I would also love to help my family as they sacrificed a lot for us,” she adds.
“I have learnt to deal with debt, as it is just a part of it. I have also learnt the importance of setting goals as you have something to aim for, and once you achieve each goal you feel great and it gives you the confidence to go on.”

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  • Chris says on 18/11/2013 10:13:14 AM

    Westbrook not a good investment at the moment. In the flight path of the Brisbane West Wellcamp Airport that is under construction

  • Debbie says on 05/02/2015 09:01:20 AM

    Hi Bianca and Matthew,
    I would love to hear more from you as my husband and I were toying with the idea but hubby HATES debt. Well done.
    Debbie. Spreyton. (Ps. would be great to hear more)

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