Property Powerhouse- Kerrie Mercel
Over the past decade, Kerrie Mercel has become something of a property powerhouse in Australia. Even after cashing out most of her portfolio, Kerrie still has 14 cash-flow positive properties on the back of hard work, and a keen eye for a good deal. From transforming a former schizophrenic’s home into six units in south-eastern Queensland to a series of beachfront units in Hervey Bay that were once a motel, Kerrie’s creative thinking and strategic business partnerships have made her a savvy investor. But it was not always so easy.
When Kerrie first started her property journey aged just 18, the banks were not interested in getting to know her. “I was born in 1960 and I was living in another world,” Kerrie says, “I was a single woman, and single women did not get loans.” Despite having a full-time job as a qualified chef earning a good income, “the banks just said no.” Instead, Kerrie took matters into her own hands and used cash to buy her first property, a block of land on Russell Island for 10k. Though she had been bitten by the property bug, it was a tough environment for a single woman in 1980s Australia.
Kerrie soon learned what would become her golden rule of investing: build up collateral, invest, renovate, repeat. A few years later, she bought another block of land in Mudgeeraba on the Gold Coast. While she originally was after a house and land package, she baulked at the 100k price tag.
Instead, she and her then husband used a combination of cash and collateral to get a 56k loan and built the house themselves. It was not without some unique challenges, including getting the local mining company to use dynamite to get the footings in. After two years of sweat equity, they had a four bedroom, two bathroom property on ten acres. When she saw her DIY house and land package built for half the price, Kerrie was hooked.
“That was the time when I could see there was such value in property. If you were a little bit creative, thought out of the box, and did things a bit differently, you could get ahead leaps and bounds.”
Kerrie definitely had the vision, but paperwork was not her strong suit. She needed to find someone to help manage the bureaucracy while she did the legwork. That moment came in 2005 when she met her business partner. While their initial romance did not last, their business flourished, and Kerrie went into property investing full time.
Looking to maximise their profits, Kerrie and her business partner started thinking creatively about residential developments. Around ten years ago, Kerrie and her business partner secured an option on a one million dollar forsaken commercial property in Redbank, paying just 1k with 720k on settlement. The building was a former home for schizophrenics with a 3 bedroom, 2 bathroom manager’s unit upstairs, and 12 bedsits, each with their own bathroom, and communal kitchen downstairs. The development was hugely profitable, but it was not entirely smooth sailing.
An unpaid 80k rates bill by the former not-for-profit owners before settlement forced Kerrie to think outside the square. In the end, she secured a loan from a joint venture partner in exchange for decent interest and a share of the equity. The property settled with three units sold, and they got a loan for the remaining three to use for further investment. The best part of the deal, according to Kerrie, was its terms.
“There was no money in the deal. If we had borrowed the $720,000 on loan for the entire time it would have made a huge difference.”
Instead, Kerrie and her partner just had to pay for government and council expenses, plus the renovations. She then reinvested the profits into more property, the simple secret to her success.
“All we did was that every time we made a profit on a property, we used it as leverage to go invest in another one.”
Hervey Bay was another innovative winner. Kerrie turned a beachfront motel into seven cash-flow positive units, currently valued at 200,000 and returning 270 a week rent. “It’s a great investment,” she says, “both for me, and for whoever buys it.”
But potential investors don’t have to be so inventive, just patient. Kerrie recently took on a renovation project with her daughter in Kedron. Originally built in 1900, the mother-daughter team did the hard yards and are now using the profits for a cruise down the Suez Canal. Kerrie has made sure to teach her daughter, now in her mid-20s, the value of taking on renovations.
Resisting the temptation to buy new is the message Kerrie hopes anyone looking to get onto the property ladder hears loud and clear. While a house and land package is attractive, “you’ve got to do the hard yards. With a house and land package, all you can do is sit and wait, and it is almost impossible to get cash flow positive.” Her advice? Don’t go for “nice, shiny and new. Go buy old, crappy, and dolly it up!”