By ANGELA YOUNG
In the June 2015 edition of Australian Property Investor magazine, we spoke to three formidable ladies involved in the world of property development. Here we meet another, Louise Fitzgerald-Baker, whose property investing background was a foreteller of an exciting career.
“I’ve always been surrounded by property people,” Louise explains. “My mum was a passive investor and as a single mother raising five kids, she modelled the benefits of having property work for you.
“I think property gets in your blood.”
Louise’s husband’s a soldier in the army reserves and, when the children were little, he’d sometimes be deployed as a way for him to make a valid contribution and enable the family to get financially ahead, she says.
“I thought there must be an easier way to stay united and still advance financially, so I gave it [property developing] a shot and never looked back.”
So far, Louise has done about 12 developments all up.
“I specialise in boutique projects within six kilometres of Brisbane CBD. Anything from four to 15 and now 30 units,” she says.
“Being a small business, I’ve been a lone operator for some time. I pretty much handle everything from sourcing the site, the feasibility, due diligence, DA, securing finance, BA, project management throughout the build, sales and rental strategy.”
Thankfully, she now has two staff – a PA and book-keeper – who take care of the administration side of things.
Despite her love for the industry, Louise is quick to point out that it’s by no means an easy ride.
“Some spruikers promote property development quite recklessly, I think, with claims of ‘no money down’ implying it’s very easy money. Regardless of where and how you source your finances, it’s always someone’s money on the line, and that’s a responsibility not to be taken lightly,” she says. “While the rewards can be disproportionately good compared to working for a wage, it’s not without sometimes significant risk.
“Small projects of four packs or less mean that there’s a very small margin for error. If you’re not careful it can mean a lot of work for no or little return. Frequently in Queensland you can get to the end of the project and buyers will offer what the project cost you to get there.
“The average buyer thinks a property is simply worth the land value and build price, forgetting the six layers of taxes and costs to bring that product to market. Furthermore, developers are often held to ransom by valuers. Despite buying a property at auction recently, the bank valued the purchase at $80,000 less than I purchased it for and I had to work desperately to make up the difference! If that happens with your development, it makes it quite complex to navigate your way through.”
Louise nevertheless believes it’s a more effective way of making money than simply investing alone – as long as you’ve got the stomach for it.
“I was once bidding at auction for a friend of mine who lived interstate. While I was talking to his wife on the phone providing the update, he was literally vomiting in the background with nerves. I’ve since joked that while I think the world of them, I could never partner them in a development as they could never bear the debt involved.
“You have to be able to think clearly, beyond the money invested. It’s simply business at the end of the day.”
It seems that there’s still room for plenty of heart in Louise’s developments, however.
“My projects are like my children, I love and am proud of all of them,” she says.
“One that comes to mind immediately is in Camp Hill. We had a massive Poinciana tree to the front, which could be removed. Despite the fact that I could have squeezed a couple more units on by removing the tree I decided instead to embrace it.
“We called the building ‘Villas of Poinciana’ and the 12 units envelope the tree. When it flowers bright orange, it contrasts beautifully with the external colours of the building.”
A beautiful feminine touch to a property, so how does the industry stack up when it comes to welcoming women?
“When people find out I’m in this industry they often assume my husband works with me – is a builder or tradie,” Louise says, pointing that in actual fact, he doesn’t get involved at all.
“One time on the way to the launch of one of our buildings, he asked me the address and when I replied, he then asked which suburb! While he’s hands off, he is a great sounding board and incredibly supportive of me,” she adds.
“While there is some gender bias in this industry, I choose to work among people for whom I’m just another operator. My gender really doesn’t come into it. The women I meet in this industry are very savvy and frequently more conservative and detailed than our male counterparts. My observation is that they typically take on smaller projects but enjoy stronger profit margins.
“I think we’re typically less about ego, more about efficiencies and typically more detailed. This comes through in the end result.
“I’ve met some terrific male role models in this industry and also some incredibly ruthless people, who’ll cut corners and do almost anything for a profit. That trait’s probably more character than gender-based, though,” she adds.
Louise has some advice for those trying to decide whether or not property development is for them.
“Surround yourself with a team that you have similar values to and you can communicate easily with.
“I once was recommended to a builder who was a brilliant builder but I couldn’t continue to work with him because our communication
styles were too different and it made the job more stressful than it needed to be.
“You need to take on projects you know you’ll enjoy, have a vision and back yourself. You need to have good cash flow or cash reserves as well, just in case there are unforseen delays or problems,” she adds.
Louise also points out something that many people forget.
“This sounds really obvious, but if you build a place and sell it for $500,000 then you’ll have to pay between $35,000 and $50,000 GST,” she says.
“I’ve met first timers that literally did not bank on the taxes involved. Going into property development you have to factor in stamp duty, land tax, contributions, compliance fees, BASs and finally income tax.
“Seriously, the bank and taxman make more from my developments than I do.”