Investor In Focus: Orsolya Bartalis
Getting a foot on the investment ladder is hard at the best of times but when you’re a single mother in part-time and contract employment, the barriers to entry can be insurmountable. Banks don’t want to know you - or if they do, the little you’re able to borrow doesn’t often go far in Australia’s competitive real estate market. Such was the case for Orsolya Bartalis, who realised if she wanted to invest effectively she’d have to use another key to open the door: joint venture partnerships. While that decision was fairly straightforward it took some tweaking to find the right partners, but Orsolya’s growing self-confidence is allowing her to make better investment decisions and therefore achieve better results.
Orsolya began her property journey as an 18-year-old, not long arrived in Australia from her homeland of Hungary. Finding it was cheaper to buy than rent, she purchased a house in Adelaide with her then partner. Without yet attaining temporary residency, Orsolya was unable to put her name on the title but the $65k buy-in price from the mortgagee and divorce settlement sale seemed too tempting to miss out on. When her own relationship eventually broke down, Orsolya discovered she had no legal claim to the property without proof of ownership.
“That was an interesting process,” she says.
Despite the initial devastation, Orsolya saw how much the property had grown in value over the past five years and knew that she wanted to use bricks and mortar as an investment vehicle again into the future. Shares didn’t make sense, no matter how hard she’d tried to understand them.
“They seem way too risky for me,” she says.
Moving on from her divorce - and without her name ever appearing on the title of the property in Adelaide - Orsolya learned she was eligible to receive the First Home Owners Grant. She used those funds as a deposit on a new home, then it took another four years of saving hard before she could afford to purchase again - soon learning the hard way about the realities of negative gearing.
“It’s not all as awesome as it’s cracked up to be,” she says.
Getting herself into a “pickle” having to meet rental payments herself in-between tenants, she was forced to sell her negatively-geared property at a loss. Instinctively, Orsolya knew that as a single mother it would be easier to invest again if she had partners - and perhaps could have held the previous property if she’d been able to find one in time - but it wasn’t yet to be. Instead, her first joint venture partnership was with her mother on a block of land bought site unseen. Another difficult lesson lay ahead.
“It was land I couldn’t do anything with because it was somewhere nobody wanted to live,” Orsolya says.
Chosen by her mother, the one-acre block was on such a steep slope that it would have cost almost as much to put down a building pad as the land itself. They bought it for $100k and sold it for $45k after seven years. Determined to never again invest with family, Orsolya found an outside joint venture partner who she’s now successfully worked with on a couple of projects, one of which was developing a deceased estate in Perth. They made a $200k profit by subdividing the 1000 square block, selling the front as-is (with the existing fibro- cement house in place), then building a four bedroom, two bathroom house on the back and selling it on completion.
Seeing the great returns she’d got from development projects such as this made Orsolya realise it was time to devise an investment strategy that was true to herself.
“It’s not so much about how many properties now but the income I want to produce,” she says.
Aiming to eventually earn $100k per annum from investment income, Orsolya is continuing with joint venture projects to raise capital which she plans to roll back into buy and hold properties - but only when the time is right. Currently, she’s working in a partnership of 10 investors in the Melbourne suburb of Fitzroy.
“We purchased two properties, then amalgamated them into one to build townhouses,” Orsolya says.
“The initial product had five units, but we had to take one level off, so now there will only be four. Although we had to scrap one unit, it allowed us to make the remaining units more spacious.”
Expected returns of about 35% and being part of a bigger development than your average splitter were what appealed to Orsolya - a huge leap from that initial tentative step with her mother. Over her time as an investor, Orsolya has now amassed her own portfolio with properties owned within and outside of superannuation (purchased through distressed sales, a strategy she returned to in order to best leverage capital growth), to now becoming involved as a finance partner with other development projects along the east coast.
Wise from her experiences, Orsolya says new investors must know your limitations, but understand how to move forward anyway. Learn as much as you can about investing and accept that there’s no such thing as a stupid question.
“Be a sponge,” Orsolya says.
“That’s the only way you’ll build confidence and know your way around property.”