Jenny and Nat - Aussiehome

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Jenny and Nat’s properties
Location Type Purchase date Renovations
Purchase
price
Current value
Rent per
week
Investor | profile
Yield
Profit
Clarkson, WA 3-bedroom house Nov 1992 $78,800 Sold for $125,000 in 2004
Osborne Park, WA 1-bedroom unit Apr 1994 $37,750 Sold for $58,000 in 2003
Chidlow, WA 3-bedroom house Oct 2001 $159,000 $200,000 $780,000 $421,000
South Hedland, WA 2-bedroom house Sep 2008 $30,000 $465,000 Sold for $630,000 in 2009 $135,000
Port Hedland, WA 1-bedroom unit May 2009 $405,000 $650,000 $850 10.91% $245,000
Hopetoun, WA 5 acres land Apr 2009 $78,800 $120,000 $41,200
Hopetoun, WA 3.75 acres land Apr 2009 $78,800 $120,000 $41,200
Port Hedland, WA 4-bedroom house Dec 2009 $895,000 $950,000 $1,700 9.80% $55,000
Newman, WA 2-bedroom unit Jun 2010 $420,000 $420,000 $1,400 17.30%
Newman, WA 1-bedroom unit Jun 2010 $320,000 $320,000 $1,100 17.85%
Newman, WA 1-bedroom unit Jun 2010 $320,000 $320,000 $1,100 18.85%
Geraldton, WA Land Jun 2010 $247,000 $247,500
Port Hedland, WA 3-bedroom house Jun 2010 $885,000 $885,000 $1,600 9.40%
TOTAL 13 $189,000 $4,431,150 $4,812,500 $7,750 $938,400
From bankruptcy to
$5m in under a decade
Jenny Bempasciuto and her partner Nat were declared
bankrupt in 2003, forcing them to sell their two
investment properties. Undeterred, the pair have now
recouped their losses and have another substantial
property portfolio in place
Growing up in a struggling
single-parent family, Jenny
was determined to start her
adult life off on the right foot. “I have
been interested in property for as long
as I can remember. Being raised in
Homeswest accommodation [state
housing] and coming from a singleparent
background, I recall muttering
under my breath and constantly telling
myself that I will never live and struggle
like this when I am an adult,” she says.
“Of course, I have the utmost respect
for my mum and extended family for
doing the best they could with their
resources, abilities and experience.”
Jenny purchased her first property in
1992, aged just 23, and a few years later
she purchased again, this time a onebedroom
unit in Osborne Park, located
8km from Perth’s CBD. By 2001, Jenny
and partner Nat had enough equity
in their investments to purchase a
modest three-bedroom Queenslander
on five acres of land in Chidlow, WA.
Renovating the property into their
dream home, life was looking good
for the couple who seemed to be doing
everything right.
However, in 2003 disaster struck.
Jenny left her job due to a knee injury
and the couple began to struggle
financially. By 2004, Jenny and Nat
were bankrupt and forced to sell their
two investment properties. Shocked and
disappointed, Jenny was not going to let
this setback determine her future.
Now, seven years on, the couple has
a $4.8m property portfolio and some
hard-learnt lessons behind them. Here
is how their story unfolded.
In the beginning
Jenny’s first purchase in 1992 was
a modest three-bedroom property
in Clarkson, located 43km north of
Perth, for $78,800. Using the state
government’s Keystart home loan
scheme, she was only required to front
up $2,000 for the property and gained
an additional $3,000 discount on the
price of the land by building a home on
it within a year.
Keystart is an initiative of the
Western Australian government, set
up to assist residents into affordable
housing. “I wanted to buy away from
the metropolitan area and thought
Clarkson was a good idea, as it was
near the coast, relatively cheap, not
overpopulated and close to my beloved
West Perth Falcons footy club,”
Jenny says.
Two years after purchasing there,
Jenny and Nat were able to use
the equity they had built up in the
property to buy again, this time in
Osborne Park, just outside of Perth,
for just $37,750. Their strategy was
solid and they were buying to hold,
finding well-priced properties in areas
that were set to grow. “We used hardly
any of our own money, just the initial
deposit to Keystart,” she says. “We just
utilised the equity within the properties
to build our portfolio.”
Their strategy seemed to be working,
and by 2000 the couple were able to
buy a three-bedroom Queenslander on
five acres in Chidlow, a suburb 42km
east of Perth, for $200,000. They spent
$159,000 on renovations and turned the
modest property into a three-storey,
four-bedroom dream home, now worth
$780,000. Property, it seemed, was
working for them.
Disaster strikes
After renovating their dream home
in 2003, Jenny sustained the knee
injury that would force her to quit her
job, leaving her partner Nat, a teacher,
struggling to pay their mortgages. At
that time Jenny had amassed $70,000
in personal loan and credit card debts.
“I tried to communicate with my
creditors but I was appalled at their
apparent lack of compassion and
impatience, and their non-preparedness
to implement a modified payment
“I had to stop
the instant
gratification and
impulsive spending
habits that I had”
plan, just until I could get on my feet
and establish a regular income again,”
explains Jenny.
The break that she needed to
get back onto her feet again wasn’t
forthcoming so Jenny decided to set
up a courier business – working as a
courier herself – to try and provide
the funds needed to pay the banks.
Yet despite her efforts, by 2004 Jenny
was forced down the bankruptcy
path. “I looked at all the options, but
they all impacted severely on my
credit rating,” she says. “I was much
better off mentally, financially and
psychologically to declare bankruptcy.”
Reluctantly, Jenny and Nat sold their
first two investment properties for a
modest profit, to pay back their debts.
Starting afresh
Although embarrassed and ashamed,
Jenny decided to focus on the positive
aspects of her bankruptcy. Luckily,
she and Nat managed to keep their
Chidlow property. “Despite a few
initial hiccups and much consumption
of two-minute noodles, Nat was able to
just manage the mortgage repayments
on our Chidlow home,” she says.
“However, we were prepared to let it
go if needed.”
Bankruptcy also prompted Jenny to
reevaluate her life and focus on what
was actually important.
“I had to stop falling for ‘buy-nowpay-later’
advertisements. I also had
to stop the instant gratification and
impulsive spending habits I’d developed
throughout my working life. It was a
blessing in disguise,” she explains.
Once discharged from bankruptcy
in October 2007, Jenny and Nat
decided to start reinvesting in property.
Realising that the road was going to
be tough, they started out by finding a
mortgage broker to help them secure
their loans. “All the information we
were getting was telling us we were in
the ‘no-go zone’ and that there would
be minimal chance of any lender
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Investor | profile
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Nat and Jenny
considering and approving any further
property investment loans, for at least
another two years,” Jenny explains.
“Even our mortgage broker was
sceptical and required convincing to
place an application for us.”
However, thanks to their stable
government jobs and consistent
mortgage repayments, the couple
were finally accepted by Bankwest
for a $515,000 loan in 2008. “We had
equity in our Chidlow property – due
to the boom, our house was valued
at $720,000 – and therefore we were
able to finance the purchase without
the injection of any further funds and
without any mortgage insurance,”
Jenny says.
Re-entering the market
The first property Jenny and Nat
purchased after being discharged from
bankruptcy was a three-bedroom
fibro ex-Homeswest residence in
South Hedland, WA, for $465,000.
“We completed extensive research on
various areas and decided that South
Hedland was the next little sleeper
town. It was predominantly a mining
area for large companies like BHP
and Woodside and was achieving an
excellent rental yield of around 11%,”
says Jenny.
Overall, the property was in a
dilapidated state and in need of
a complete refurbishment. Once
purchased, the couple gutted the
property, spending $30,000 on
renovations. “It was a mess, and at
times we questioned our decision
to renovate the property, especially
since South Hedland was a twohour
plane ride north of Perth,” says
Jenny. However, they ploughed on,
completing the project in a short
timeframe by using local tradespeople
where possible. Once completed, the
property was rented for $1,000 a week
– more than covering the interest-only
repayments and providing a positive
cash flow of almost $500 per week.
Then, using the equity from their
PPOR in Chidlow and their newlyrenovated
South Hedland property,
Jenny and Nat soon purchased a
one-bedroom unit in Port Hedland
for $405,000 which they rented out
immediately for $850 a week. With a
positive cash flow of $900 per week
from their two new investment
properties, the couple were able
to purchase two land packages in
Hopetoun, WA, for $78,800 each.
“We decided to seize this
opportunity and due to the unfortunate
mine closure by BHP, the acreage
was priced at rock-bottom. There was
considerable infrastructure already
invested in the small seaside town
and we were sure that some company
would realise its potential,” says Jenny.
Sure enough, Galaxy and Tectonics
bought the mine and have commenced
operations. The properties are now
worth $120,000 each and the couple
expect their value will continue to rise
when the mine is fully operational.
By the end of 2009, just two years
after their bankruptcy had cleared,
Jenny and Nat had an impressive five
investment properties in their portfolio,
including a property in Port Hedland
that they purchased in December
of that year for $895,000 using
the $90,000 profit they gained from
selling the South Hedland property.
“We were aware that property prices
within the Port Hedland region were
going to double within the next two
years, due to sewerage construction and
rezoning, so we were keen to purchase
near the ocean,” Jenny explains.
Securing a property located
50 metres from the ocean and
200 metres from the yacht club, the
property is currently tenanted at $1,700
a week by a government department on
a three-year lease and offers great scope
for development.
“The development opportunity was
too good to refuse. Once the land is
rezoned to R80 we can place up to six
dwellings at 125m 2 each on the block,
or sell it to another developer for a
sizeable profit,” says Jenny.
Gravy train
In a few months Jenny and Nat’s
property portfolio will be valued close
to $5m. Their own home in Chidlow
has been fully paid off and the couple
will soon be receiving a positive cash
flow bonus of close to $4,000 per
month, after interest-free mortgage
repayments are deducted. That’s not
bad – especially for a couple who have
only been discharged from bankruptcy
for three years.
Jenny’s strategy is based on
calculated risk. “Some people are not
comfortable with debt and believe
terrible things are going to happen
and that things will go wrong,”
says Jenny. “I can understand why;
however, if you change your thinking
patterns into a positive mindset and
focus on the future, I believe you can
achieve anything, no matter what your
background,” she says.
The couple’s recent success has
been based on a strategy of buying
properties that will yield at least a 10%
return using interest-only repayments.
“This will ensure you have positive
cash flow properties while maximising
your tax advantages,” says Jenny. By
using the extra money they gained
from rent payments to pay off extra on
their home loan, the couple managed
to unlock equity faster, helping
them towards purchasing even more
investment properties.
Jenny also likes to choose investment
properties near the coast that will
have strong demand, where there is
weak supply and good prospects for
future developments and growth.
“Most properties double [in value]
within seven to 10 years. As long as
the rental income more than meets the
repayment, you are in front,” she says.
In addition to using resources such
as RP Data, property investment
magazines and council websites, the
couple also build relationships with
local agents and agencies before they
buy. “Ryan Crawford from Crawford
Realty helped us get started in Hedland,
and I have bought all investment
properties in Hedland with his agency,”
explains Jenny.
“We like to buy in little sleeper areas
that may be set to boom, such as mining
or port areas which are due to open
in the future, or those that are already
established and have strong future
demand. Once we locate those areas we
make sure that they have at least a 10%
rental return and identify rezoning and
development opportunities that we can
take advantage of.”
Money matters
Despite facing some difficulties after
their bankruptcy, Jenny and Nat did
manage to borrow again – thanks to
their diligence in paying their mortgage
on time. They currently have split loans
with Westpac and Bankwest due to
differing valuations, and to date have
only used the equity in their properties
to increase their portfolio.
Due to their strategy of buying cashflow
positive properties with interestonly
loans, the couple find that rising
interest rates aren’t too troublesome for
them. “Interest rates would have to rise
to around 12–13% to break even with
the interest-only repayments for our
properties. Even then, if we do fall a
little behind, the extra rental funds that
we have placed against our residence
can be drawn on for that period,”
explains Jenny.
Riding out the financial crisis
relatively unscathed, the couple found
that the only major inconvenience was
having to wait to rent out their South
Hedland property. “After renovating
the South Hedland property we had
to wait a little to rent it out, but after
two months it was obtaining $1,000
per week in rent. Before the GFC, we
probably could have achieved $1,200 a
week – but aside from that there were
no other issues,” Jenny explains.
As for their most successful
transaction, the couple currently has a
unit for sale in Port Hedland that will
realise a profit of over $200,000 in little
under 12 months when it is sold. While
the proposed mining tax has slowed
business down for Jenny and Nat this
year, they are currently working on
strategies that will enable them both to
work part-time in 2011.
Bright future
It’s been a hard road for Jenny and
Nat, who have been together now for
16 years, yet their future looks bright.
The couple have three off-the-plan
apartments in Newman, WA, now
ready to be purchased, as well as a
beach block in Geraldton that they plan
to build on for their future retirement.
“We’d like to create a bed-andbreakfast
on the Chidlow property
for when we semi-retire. We’re also
planning to transport the home on the
development block in Port Hedland to
“We like to buy in little sleeper areas
that are set to boom, such as mining or
port areas which are due to open in the
future, or those that are already established”
Hopetoun to have a seaside retreat,”
Jenny says.
“Once the other properties
appreciate and obtain capital growth,
we can afford to build approximately
four to six townhouses or units on the
development blocks in Port Hedland
and live off the rental income that they
provide. This will allow us to have
the freedom to travel, assist family
members financially and pursue other
ventures that inspire and motivate us,”
she explains.
Yet while bankruptcy seems to
have provided the couple with a
happy ending, Jenny believes that an
alternative option would have been
better. “Although my circumstances
appeared dire, I probably would not
have sold my first house in Clarkson
and the unit in Osborne Park.
However, I am a firm believer in fate
and creating your own destiny and
believe that if I hadn’t gone bankrupt
I probably wouldn’t have learned
valuable lessons in life,” she says.
“You’ll always come across
roadblocks and cul de sacs; however,
if you maintain your focus and exhibit
genuine excitement and enthusiasm,
you’ll find an alternative route, no
matter how long it takes.”
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