JENNY FORDHAM- LEPPITSCH
- Occupation: Southern States Sales Manager, Custodian
- Age: 51 & 60
- Family: Married to Hans; two sons 13 and 10; two adult step-children and four grandchildren
- Began investing in residential property (year): 1993
- Property portfolio value (including principal place of residence): Approx $4.9 million
- Number of houses you own (including principal place of residence): 10
Jenny and her husband, Hans, own their own home and eight investment properties, one of which was purchased through their private superannuation fund. They aim to buy another 2–3 properties before retirement.
Before investing in property, Jenny and Hans were shareholders in a hotel in Richmond, inner Melbourne and had a small share portfolio, which they still have.
In 1993, they bought their first investment property. “I was in my early 30s and earning good money so we decided to buy an investment property and negatively gear it. Not that we actually knew what negative gearing was. We just knew that we would get a much better tax return,” explains Jenny. “We were so naive. I look back now and laugh – we didn’t even know what stamp duty was and we certainly used up every cent we had when we realised we had to pay that as well!”
A financial planner encouraged them to buy a townhouse off the plan in Mildura, in regional Victoria, telling them that Mildura was the growth capital of Australia. We put together the $30,000 we needed through our savings and I cashed in the non preserved part of my super, we didn’t even know about using equity.” says Jenny.
Unfortunately, their first foray into property was not a success. It took nine years for Jenny and Hans to sell that property for $5,000 less than they bought it for. In the meantime, they bought a unit in Cheltenham, Melbourne. This time the value of the property doubled in five years.
They also bought shares in a syndicate to build 30 Burger King fast food restaurants. “Unfortunately, that ended in tears,” reflects Jenny. “There were all sorts of hold ups with the developments, mainly due to Councils, and the funds dried up after just four restaurants were built.” Jenny and Hans were left with a debt of $130,000. They sought advice from both a reputable tax agent and tax lawyer but they both advised the only way out of it was to sell the unit in Cheltenham. Jenny says it was a decision that never seemed right.
It wasn’t until 2007 that Jenny and Hans started to build wealth as opposed to investing. A few years prior to joining Custodian, Jenny had walked away from a corporate career with Lions Nathan after she had her second child, James. When she returned to work, Jenny decided it was time to start pursuing the things she was passionate about and after being approached by the agent she bought her home in Mt Eliza through in 2003, she attained her Agent’s Representative licence and began working with a local real estate agent. Jenny then moved on to a role as General Manager of a property investment company that was a master agent for Devine Homes.
At the same time Jenny’s brother was involved with Custodian and encouraged her to go along to one of their seminars. Jenny says, “I thought I was an astute investor but after I heard John speak, three things really stuck in my mind. 1. Buying a property and hanging on to it. 2. It’s the land that appreciates and 3. There is a big difference between investing and building wealth. After the seminar, Jenny left the Custodian office in Bentleigh and went straight back to the company she worked for and bought a brand new home as an investment property, using the same principles that John had spoken about.
Within a matter of days of attending the seminar Simon Meehan, the then Custodian Victorian State Manager, invited Jenny to work for Custodian. She took her time to check into Custodian and joined the company four months later as a consultant.
From 1997 to 2011 Jenny and Hans bought nine investment properties.
Jenny and Hans’ first family home was in Patterson Lakes in the south eastern suburbs of Melbourne and its value tripled in thirteen years. They then bought their current home in Mt Eliza on the Mornington Peninsula at the same time buying an older property in the same suburb as an investment.
John Fitzgerald spent time with Jenny and Hans and advised them to sell an old investment property as in reality it was a money pit and not helping them build real wealth. They had good equity in their own home and were in a strong position to build a wealth portfolio with Custodian. Jenny explains, “Neither Hans nor I are fearful of debt. You have to have debt if you’re building a business and that’s what we’re doing. We contracted and built eight homes in four years and we’ve been able to do this by using the equity in our home to cover the deposits and costs of all the properties in our portfolio.”
Jenny says the worse moment for her is every time she has to apply for finance. She explains, “I absolutely hate having to chase up an endless ream of paperwork and documents. It can be daunting but I know it has to be done. John Fitzgerald always says to learn to love what you hate, but I’m not convinced I’ll ever learn to love the process! However, I do love what we are building and visualising the end result.”
As for the best moment, “It’s when Hans and I talk through getting our next property and then see the plans, order the contracts – and the icing on the cakes is when the finance is approved and I can breathe.”
Jenny and Hans like property as an investment class because it is not only ‘as safe as houses’ but because it is what Jenny knows and does best. “I am excited about the business I’m building. I want minimum input for maximum growth. If it wasn’t for our property investments we could never dream of achieving what we will over time with our portfolio,” enthuses Jenny.
MANAGING CASH FLOW AND INVESTMENT ADVICE
Jenny says that apart from getting an investment loan, managing your cash flow well is the most important thing you can do. Be aware of all the costs but don’t over commit – make sure you still enjoy life. To help, she advises others to get organised and make sure you know which loan is which and what property it belongs to as well as leaving enough money in your line of credit to act as a safety net. It provides a sense of security, knowing you could manage for a while if your financial circumstances change. If you have to use that safety net, it gives you breathing space so you can make informed decisions.
Jenny constantly monitors the property market to enable her to make informed decisions about her portfolio, admitting she ‘does figures all the time’. Over the past five years Jenny has been in the acquisition phase, buying property for growth. Her goal now is to consolidate and allow her portfolio time to grow.
As for investment advice, “Whether you’re young or old, do whatever you can whenever you can. Don’t be afraid of the ‘what ifs’. Stop waiting for the planets to align and for perfect conditions because every time youpurchase is the right time. Get your financial structure right and the portfolio will grow. I spend so much time with people who keep making excuses as to why they’re not quite ready.” Jenny adds, “We only have a limited amount of time while we’re working to build wealth. Apart from family and our health, the most important asset is time. You have to make it work for you, once it’s gone you can’t get it back.”
FINANCIAL AND PERSONAL GOALS
Jenny and Hans are well on their way to achieving their financial and personal goals but as Jenny points out, “…only because we were prepared to go for it.”
In fact they have already achieved more that they thought they would. When Jenny joined Custodian, they set their goal at four investment properties and thought if they achieved that, they would have done well. Once they reached four, they reset their goals to six over ten years and now they have nine. We moved quickly with our portfolio due to our age, knowing we had a limited timeframe to build wealth for our future. Not that we think we are old by any means – it’s just like a good bottle of wine that needs time to mature, our portfolio needs time to grow.”
Jenny says that their financial and personal goals are intertwined. “The financial allows us to pursue our personal goals. Hans works from home and we have more time for family.”
Jenny says that she is always learning. “Even when you think you know a lot, you can surprise yourself with something new,” she says. She also says that for her, it is easy to stay on track. “I’m extremely grateful to work for a company that offers me continual learning and coaching (by John). It’s great to be around like minded, positive people and the team of people I work with are second to none. I read a lot and also watch property and finance shows,” she explains. “I also remind myself every day that we’re building a passive business for our future. If I close my eyes I can see it, touch, and smell it. I know I’m not going to have to survive on a pension. That keeps me totally motivated. I can’t get enough of my calculator! I also thrive on working with my clients on creating their own personal model and can’t help but be enthusiastic at the projected outcome.
In five years time, then 10 years and even longer, it’s brilliant, it’s great to smile and know you are going to enjoy the next 30 years of your life.
Jenny also maintains her positive mindset by coaching clients and prospective clients every day and when she is not coaching, someone is asking her questions. She wants to help as many people as she can be all they can be.
Learning to build wealth has had a big influence on Jenny and Hans’s lives.
“It’s changed our lives dramatically as far as setting goals for the short and long term. I now know what it is we want and how we are going to get there and what the end looks like – and it looks good. Before Custodian, we really didn’t think much or talk much about retirement. We were more focused on the present as we have two young sons. I look back now and apart from owning one property in super I don’t know how we thought we were going to survive retirement.
I have watched my parents trying to make ends meet on an aged pension and they really struggle just with the day to day cost of living.” Jenny encourages her family to be bold enough to chase their dreams.
“I want my two sons to have a life rich with experience and choices so they can grow up to be good people and work in an area that they are passionate about. The legacy is inspiring them to be bold enough to chase their dreams. As long as they have a pay packet and will listen to me, I can teach them to build wealth.
I’d like them both to have three properties by the time they are 30 and six by the time they are 40. Then I will know I have been successful, and all this through property.
Before Custodian, we didn’t really think much or talk much about retirement.
We were more focused on the present as we have two young sons. I look back now and apart from owning one property in super, I don’t know how we thought we were going to survive retirement.
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*extract from Custodian Millionaire Case Studies magazine printed in 2012.