Paul and Pascale Averill are full-time property investors, parents and workers who’ve invested within Australia and overseas! Despite working in remedial massage and nutrition respectively, Paul and Pascale Averill have been able to create a life of flexibility that sees them tag teaming to work with clients, manage their properties and take care of their daughter.
Join us in this episode as we find out how they built their current eight property portfolio. how they are able to invest in New Zealand, the UK and Australia and why their childhood and upbringing inspired them to achieve financial freedom through property. We’ll also find out about their use of the HMO (house in multiple occupation) model in the UK and everything they’ve learnt on their journey so far!
Full time investors and full time employees, Paul & Pascale have backgrounds reaching far beyond property…
We do a variety of things and we’ll we’ll tag team on this I think my – we have our property investment portfolio. So I guess we’re property investors predominantly.
But we also have our side hustle or day job or whatever you might want to call that a mine is a remedial massage therapist and I’m also a podcaster as well like yourself.
Pascal Averill and I am a corporate sales job based on nutrition My background is I’m a dietitian and I also Tinker in a couple of other things as well.
With such an interesting side hustle in remedial massage, Paul’s daily schedule can vary quite a bit….
A few days a week I’m doing a remedial massage and then. So for me that’s just six seven clients per day. And we do it we do that sort of four ish times a week. The goal between us, Pascal and I, is to create as much flexibility in our life as possible. And so I my job is as a subcontractor so I have quite a lot of flexibility in that day job. And then the other times I mean they’re working on the podcast working on a couple of as you call it side hustles or on a property which ebbs and flows as you already know. So. So it’s a variety of things I do in one day but I’m always constantly trying to improve my time management keeps up or in check because there’s quite a lot happening in any one week.
And obviously our priority in all of us which we haven’t mentioned is are our daughter Audrey who’s five months at the moment as we record so she is the priority and we try and work things around her as much as possible.
We we actually have structured our what we do and when we do it consciously in order to create that flexibility for when Audrey came along it means that if I’m doing 9:00 to 5:00 in a corporate job post got the flexibility to take clients more or less clients and then we sort of tag team in and out of things and that’s what I think allows us to do as much as we do.
With their main objective being to work around a schedule suitable for both them and their daughter, Pascale’s daily activities also change quite a bit, most of her tasks however revolving around property….
Currently it’s a little bit different because I am on maternity leave so my most of my day is with Audrey but the things that I do in and around that is we run a property.
Facebook networking group I’m also involved in a property investment group called their property investors Council of Australia which is a recently formed network of like minded people around Australia. So we’re involved in getting meetings up and running for that.
What else. I also like I said have a skin care business and so create events and just meet with people and chat about that as well. So everything we have have to have a lot of discipline in our scheduling and our calendar usage which is getting better as we go. It’s taken a while just so that we can get all of these things in and around Audrey.
Going back to their childhood where it all began, Paul shares a little about his origin story…
I grew up in the middle of England so my father was born in Birmingham.
My mother in Hertfordshire they ended up in the Midlands somewhere and so I’m a UK Midland.
That’s where the funny accents come from.
And I left the UK in my early 20s and haven’t lived there again. But I go back quite often it’s my family. But yeah that’s that’s my pretty standard of living upbringing really but no good family supporting.
Having officially lived there for five and a half years, Paul explains how he and his wife ended up deciding to live in Australia..
When I left the UK that was a coming of age backpacking trip for my first part of call was Australia. So I did the whole backpacking round. I tried to stay off the tourist track and went out outbound a little bit but that was my first visit to Australia. But then when we got back here when Pascal got had a job here in Adelaide where we live now that was about five and a half years ago.
And what he did before making the big move from the UK…
Pretty standard upbringing nothing to sing about but a pretty good happy life up until my 20s when I then decided to leave the UK. But through school I found that I was probably an average student. And with potential I always said he’s got potential. What does that really mean. I don’t know. Somebody once said to me a friend of a family. That’s me. And I don’t remember what the context was but he said You seem to have.
You seem to be a bit of an entrepreneur or I seem to have entrepreneur type traits. And I didn’t really know what that meant at the time. And I think I’m still trying to work it out but that meant I tended to be a bit of the contrarian when it came to normal work. Let’s call it. I was never really happy in a nine to five Monday to Friday job. And so the last 10 years or so I’ve been trying to shape things so I can be more flexible around that. And then I left the U.K. with a mountain of debt. Oh no sorry I got in while I was in the U.K. up until my early 20s I got myself into a mountain of debt. I didn’t really know how to handle money. And it was through clearing that debt that was my decision to leave the U.K. and sort of start afresh and note I did clear the debt before I left the U.K. That’s for the Inland Revenue in the U.K. and looking for me.
While other investors aim to get university qualifications prior to starting their journey, Paul shares that he did things differently, studying for a short while before going straight into the workforce…
I’m not university qualified no. I studied my schooling was a standard study and I came out and I went into physical education first and I was looking at sports science and that was where that was where my interests lie.
And then I probably spent about four or five years sort of floating around. Not really sure what I was doing and which then led me to getting on my travels so there was only probably a two or three year gap between finishing school and going and starting travelling. So I spent all five plus five to seven years travelling and then settled. I mean in that time I settled in different countries I lived in Canada for two years and New Zealand for seven or eight years.
So from school I was kind of out straight into the workforce. I did a lot of management leadership and I got really involved in training in corporate. So I did a fair bit of a stint in corporate training which was really where my skill sets set. But again that was sort of a 9 to 5 thing. I still love the training I still love the shared knowledge aspect of that. But just the nine to five corporate world didn’t really flipped my switch.
While Paul did study to get a diploma, him and Pascale’s life commitments didn’t quite fit right with further education, and so the two found an in between…
Remedial massage is a diploma.
You start with the diploma or you start with a search for into deployment but then you really if you want to be really successful you need to continue your professional development. So I continue to train and educate in different modalities of remedial massage. So I think it was about four or five years ago that I decided it was time to leave the corporate world right.
Yeah. When you when you came over followed me here well came with me. For is that right. I’m going to Australia pls. Was it right. I’m coming to see. That worked out well.
I remember Paul was really really keen to get into something that really gave to people or helped people he was really really interested in physical healing and we looked at the options around physio and going back to uni and the massage therapy just looks like a really great in-between where he could really do that without having to really go back to being a student and head full of that commitment.
Yeah that’s right. And I even looked at nursing to radiology there was all sorts of aspects I was looking into and I was well into my thirties by this point and we had some property and we were enjoying the income that I was.
Both of us were getting from our corporate roles so to jump into a four or five year degree at that point didn’t really fit. And the massage option Pascal said it allowed me to do what I wanted to do it really was to help people with physical health. That part of the sport some physical health back from when my in my 20s was still there and so massages seemed like a really good option and now a good few years in I’m absolutely loving it. And I’ll always be doing that in some degree, even if it’s one day a week. I’ll always be doing it because it’s amazing to wear one on one with someone in custody.
But what about Pascale? While Paul grew up in the UK, Pascale shares where she actually grew up…
I grew up in an idyllic part of New Zealand with a reasonably idyllic childhood.
Most people I know of Queenstown in New Zealand it wasn’t Queenstown but about an hour out of Queenstown. At that time especially a sleepy sleepy little farming town on a lake but very much. Picture postcard like you would see from from Queenstown and look at rings kind of thing.
I mean this lake that we rented a house on a farm so we didn’t actually own the farm. My parents both left home when they were 18 and travelled the world for seven years and then met and settled down in New Zealand and I think they still were under the illusion that they could have a very kind of nomadic nomadic life ends and just had that way of thinking but I think that as children came along and as the family needed to be supported they did slip back into regular life as we would know it. But it was still an amazing experience from it from a relatively low income family in that time and place we were still able to go skiing because the school did ski school ski trips and in our school our local school there were 40 students total. I even remember actually sitting at a table and that table was for kids and it represented the whole year level and we didn’t have a boat but we had friends that had a boat and that was the lake there and there was because we were on a farm. We borrowed a pony from somebody that they weren’t using so we were able to ride ponies and all these amazing things that usually cost a lot of money.
But my dad always ever the adventurer and he still is at heart used to take us just hiking up the mountains at the back of our property. There were no tracks so we would just work our way up the stream and figure out how to get across the stream without getting our feet wet and go adventuring so it was really really amazing.
With such an adventurous childhood in New Zealand and the eventual move into another area, Pascale shares that in her household, education was always encouraged…
This the second chapter to that story is that my parents because of the low amount of employment in the area we did move away. When I was about 8 and went to I went to a regular school regular high school was a really good student and at that age I think my that time I think my parents realized that if they had gone to university things would be a lot easier for them and so they really really encouraged me to go to university and naturally I just did that straight out of out of high school and followed that path. I got a degree in a postgraduate diploma as a dietitian and went into a hospital and worked there for five years. So I didn’t really I think have the right to have the breadth of. Knowledge or awareness to know really what was available to me. It was the obvious path path but if I look back now I think perhaps not the absolute best thing that I could have chosen for me but that I think is the very very common experience for a lot of people.
Working as a dietitian, Pascale explains what exactly her job title and description entails…
It’s at Gib. There is a lot of misunderstanding around it. I think people don’t realize what the difference is between a dietician and a nutritionist and a dietician or a nutritionist they both are involved in food and what is good for the body and what makes up food.
But the major difference is that a dietician is very also trained in the medical background or the pathology. So a lot to do with diseases relating from nutrition diabetes cardiovascular disease and then also trained in nutrition therapies. So where somebody might need to be fed through a tube or through an I.V. line or where they might have a disease that causes metabolic imbalances and things like your blood electrolytes so your calcium and phosphorus and all those types of things that can happen from stuff like kidney disease. We specialize in balancing that out and keeping people as well as possible through nutrition therapies.
With her career path set, Pascale talks about her experience working in one of the major public hospitals in Christchurch and how she realised that she needed a change in her everyday work life…
I think I hit a turning point where I was getting a little bit. I felt a little bit institutionalised. I felt like. I was getting inspired to make things better and make changes. And I was getting met with a little bit of resistance and I just needed a fresh challenge something new to do. And I possibly could have found it there but I thought I probably need to either change hospitals which meant changing cities or I wasn’t sure about changing professions at that stage but I thought well if I’m changing I might as well what’s the difference. Moving to another city or moving to Australia. So I thought I’ve always wanted to live in Australia give it a go. And so I started looking for jobs there. One of the jobs that came up was a corporate job and I thought hey that would be a really interesting thing to see what else I’m capable of. So I took a job sight unseen in Adelaide. I’d never been to Adelaide but I thought that sounds alright. I can always leave if it doesn’t work out and it turns out it’s one of the most amazing places to live it’s it’s really. And I’ve actually resisted leaving for other opportunities because it is such a great place to live. So yeah jumped into the corporate world and got into something that I never thought that I would get into which is sales interesting.
From working as a dietitian to landing a job in accounts management, Pascale shares that while her job title has changed, her work in the health industry has not…
It is account management so I represent, I am a representative for a company that makes medical nutrition products and I work in two different states of South Australia and Tasmania which has been amazing to actually travel and see Tasmania and I can’t manage it really. I work with customers in hospitals and in private practice and support them and using our products.
And her previous knowledge and experience was actually beneficial in helping her excel in her current position…
What I really loved was that I’d still love the theory of the degree that I’d done and it enabled me to have those conversations with a dietician and one of the hospitals where they perhaps had a they were trying to find a solution for one of their patients. And we were able to nut through the condition that they had and what might be the best solution for them and one of our products. So that was really really great and kept my I guess intellectual for the academic side of my brain still ticking and one of the beautiful although the surprisingly great surprises that I got from sales though is actually realising how. How useful sales is or how much it applies to everything in our life. I think sales is a bit of a dirty word to a lot of people but you could just switch in a different word and you would realise that we have sales conversations with children with our partners with. Anybody really where we’re trying to share a perspective and have them join us in the positives of that perspective so that we can move forward in something.
So it actually ended up not being as difficult as I thought it would be given to.
Even with massage you know where I have conversations with my clients that out of sales conversations but the sale instead of sales it’s physical health you know we’re trying to sell them the benefits of living a more positive physical healthy life. And so yeah plus Coulson it’s in everything it’s sales isn’t just you know a retail thing yeah. Everything we talk about is everything.
It’s day in day in and day out I guess it’s just have a little bit of a different connotations regard to that over a period time and people have different perspectives about it all the way.
While this explains both Paul and Pascale’s story prior to meeting each other, how did the couple actually meet to create the tag team that they are today?
We met in Christchurch New Zealand. Actually this was after the Christchurch earthquake. So both of us lived there. We lived through the earthquake obviously and the we met probably within less than a year after the quake. Both in very different places than we expected to be a year before because we didn’t. We had to shift our lives quite dramatically but I’d spent many years through my thirties in dancing so I hadn’t I’d never danced a step up until about 30 and then I was invited to a salsa salsa.
It was like I was asked to go into the performance team and go to an audition. I asked her to an audition for Salazar and I’d never stepped a step Salsa but you know I was interested so I went and had a look and ended up. They invited me back in a couple of times and ended up in this performance team and learning from the baseline absolute basis of salsa dancing in my thirties which was super fun. Got to compete got to perform and so on and so forth. In the back in Pasco in her life was getting into jazz hip hop for contemporary all kinds of dances. Bollywood yet and cheerleading and also and this is before we met and I decided to go to a salsa lesson one day and I was in the lesson I wasn’t actually teaching at the time I was in there and we crossed paths because in salsa lessons generally change partners. I moved along the line and there’s this attractive young lady in front man and I said hi and then moved on and that was that.
And then it was probably a few weeks later that my housemate girlfriend Georgia he said I’ve got a new dance partner she’s awesome she’s gonna come to the performance team with us. And lo and behold it was Pascal and then threw through a few meetings and catch ups and so on I thought I need to ask this go out for lunch and so I didn’t hesitate to do so and and fortunately said yes which was great. And a quick story on the lunch I set it all up as you know it will be a casual but really lovely lunch. And off we went. Had a great time had a good laugh went really well. I thought it went really well. And then got to pay. Obviously I was gonna be the gentleman and pay for the lunch I went into my wallet and found I’d left my card at home and never had any money on me to pay for the lunch and Pascale fortunately laughed that off and paid and I gave me a great excuse to ask her out on a second date so I could redeem myself.
Jumping into their property investing journey, Paul and Pascale tell us how many properties they currently have and how and when they actually got started in investing…
We’ve got eight properties at the moment across three different countries so we can kind of build to that in a moment and give you more information. But it started for me it started in my early 20s. So back then that was 20 something years ago. Lending wasn’t like it is now. And in the UK you could probably borrow about 105 five percent against the asset. So I didn’t have any money. In fact I had like I said lots of death and I borrowed more and I got a mortgage on a property or two about two up two down property terraced house in the UK in the central of UK and lived in it. It was my primary residence. I didn’t know anything about property investing at this time at this point. I had rented rooms in a few different places from the same landlord. He owned a number of properties and I’d sort of seen a very very subtle glimpse of what it might look like to own property but it never really inspired anything in me at the time. And so but I did buy my own and I bought it very young, and had massive debt. In the end there was a bit of a boom back in those days early 2000s and I saw the boom happened and I thought Oh this is great I’ll sell my house pay off my debts and leave England. And so that’s what I did. In hindsight I’d probably look back now and say I could have easily refinanced it pulled the equity paid the that’s off rented the property out and gone on in on my travels anyway. But that’s hindsight for you an education. That was my first taste of it.
I didn’t really do anything more in property until I was growing into my early 30s when I bought a house in New Zealand and that was in the central of New Zealand a five bedroom property sorry four bedroom property with an outside garage area and that was with savings and I lived in that property and rented all the rooms out. So I sacrificed my privacy a little bit rented all the rooms out and that enabled me to then live free. So that was probably my first inspiration into being a landlord owning property in that capacity and using money in that way. So that was really where it started.
On the other side of the story, Pascale shares how she was actually hesitant to get into property and how it wasn’t until she met Paul that she actually looked at investing…
Despite actually being really good with money when I was young. I stayed away from property because I thought that it was financial shackles. The only stories I ever heard were all of it going wrong for people. My parents rented for a large part of their life and when they did buy they bought in a time that where the interest rates were around 9 per cent and the money was always a little bit stressful. And so I thought well why would I do that. So it wasn’t until I met Paul and I’d been spent a lot of my savings on overseas travel and had just come back from I think my third major trip to Europe and it was posted earthquake and I had been renting rooms the amazing house in the centre of Christchurch that I’d lived in with my friends had been destroyed and I had to find somewhere else but so many properties had been damaged that it was really hard to find a room to rent and really expensive. And Paul just said one day well why don’t you just buy an apartment or why don’t you just buy a property. And it was just such a thought out of left field but when he explained it to me and explained the numbers I started to see how it could really work.
As it turned out Paul was also looking for something new to invest in. He had a little bit of money and so we did what a lot of people would have thought was really shocking but very very early in our relationship. We bought a property together. However we did buy it under a business name and we thought look you know we’re both practical enough to be able to figure this out if it doesn’t work out. And we never had to do that. So we the first conscious investment property that we bought was a three bedroom townhouse in Christchurch just post earthquake which was really interesting navigating all of the different engineering reports the insurance the insurance which was going pear shaped at the time and it was really hard to get insurance and also assessments of the land. They they assessed land in 22 or 23 which we learned quickly meant that T1 was really good really stable land T3 could be dodgy may not be but it ended up affecting property prices as well. So but also cast a lot of doubt into a lot of people’s minds. And there was a lot of fear around buying property and what it might mean in the future. So we we navigated all of that and bought not one but actually two properties at that time because we had two that came up that were really good. So we put all of our poor things together, I got my parents in their first investing experience ever as well to help us out and I’m into that buying at the same time.
With such an amazing leadup to the start of a fantastic journey, both Paul and Pascale share whether their investments are primarily in New Zealand, UK or Australia…
We have four here in Adelaide four here and there three in New Zealand and then one in eight. I’m sorry. Four here. Yeah three in New Zealand and then one in the UK. Yeah of course that’s right. Yeah. So that sort of spread over three countries which is out with an interesting portfolio to manage when you I mean the one in the UK for example which maybe we can get into it at the moment we bought sight unseen we haven’t seen it and been there haven’t met the team who converted it. And so it has been that was a really interesting journey.
Wow. That is fascinating. So I guess the question then I’ve got for you is obviously you kept the ones in New Zealand because you’re living there initially the one in UK. What was the reason for jumping into that market.
Yeah good question because we the New Zealand and Australia markets had shifted a little bit. Both lenders in New Zealand and Australia obviously in Europe especially early on in the journey of property investment. A means test so they’re looking at your income and looking at your serviceability of a property. And that was for us because we were sort of getting to the latter end of our portfolio at this stage was getting difficult to get lending a bit more banks and lenders were a bit more hesitant to lend to us and the UK for me always appealed. We’d done by this time we’d done a fair bit of education around property and saw that the UK had huge potential for cash flow in certain areas. And so there’s a model that we use in the UK. It’s called HMO for those who are familiar. That’s houses of multiple occupants occupation and it’s essentially a house with four or five six rooms or more each rented out separately separately to a tenant on a separate tenancy agreement. Each room has an on suite and their shared facilities like kitchen and lounge and so that’s what we own in the UK and we chose that because the cash flow on just on that one property brings in almost much more than all of our other properties put together. So it’s it was a really good cash flow because it’s six six tenants in one property.
Ending on that note, Paul and Pascale shares how that’s affected their property investing direction so far and what they’ve been able to do with that property…
It’s very very successful and for us that’s going to be our focus moving forward at least to them for the next few. But yes it’s been fantastic and like I said it was sight unseen. We had a project team there that we grew our relationship with virtually online and by phone call and Skype and they converted a three bedroom terrorist into a six bed. We converted into the roof and put in a dormer and a bedroom and bathrooms in every single room and so it’s a massive project. And so yeah the cash flow is really worth it.
Successful in their previous investments, Pascale shares what their initial strategy was when it came to investing…
It’s because we were both complete rookies when we started.
It’s been a real journey of learning along the way so we’ve done pretty well. We always could have done better in the beginning and also our strategy and our endpoint. Our goals have developed along the way so in the beginning the first one that I bought was so that I could have a place to live. But as it followed on from that we we really like it and it wasn’t until that we we got to Australia actually that we came across the strategy of negative gearing because in New Zealand you can’t depreciate a property you used to be able to but you can’t do that so much so there’s less negative gearing that goes on in New Zealand. And we came to Australia and realised what a big strategy it is for a lot of people. But we weren’t quite on board with that it wasn’t really our comfort level we understood what was going on in Sydney and Melbourne at the time and that people were just buying properties refinancing within two years buying more buying more and really successfully growing their portfolios. But we also understood the downside of that which is what can happen in a recession with the drop in property prices and we didn’t have so much comfort around being tied to topping up properties and having to pay that difference no matter what happened.
So we went for the cash flow strategy.
And why due to market instability, they choose to refrain from having a negatively geared portfolio…
Our whole portfolio is positively geared so we’ve got nothing that’s negatively geared or in neutral is sort of break even neutral is probably the closest we’ve gotten to negative gearing. So yeah I see why. I mean both of us sort of agree on this.
We see why negative gearing can be a strategy for many but as all I would say probably one that does well from it as many who have found themselves in a difficult situation say you know maybe fell into the trap of buying in the mining town you know before that ended and so on. So while negative gearing is a strategy, it’s certainly not one that we adopt. We’re definitely on the positive gearing and definitely the cash flow and cash flow is important to us.
Thinking about their property experiences this far, Paul and Pascale recall of a time where their investing moments didn’t go quite as planned…
We haven’t had anything that’s really lost a whole lot of money or gone really really pear shaped. But what we have done is come close very, very uncomfortably close to losing a lot of money. A number of times. So it’s been a real discomfort and we’ve made decisions that we’ve really, really learned from and looked back and gone well we’re never gonna do that again.
But it’s around things like not being sure of getting the lending at one point but when the property actually comes through.
Times have changed, timelines have changed and there is a high probability that we just couldn’t get lending and may have to walk away and walk away from our deposits. And that came through literally with a day to spare. I think that if the bank hadn’t been slightly flexible on the timeframe because it was around the Christmas timeframe when everything came through we would have would have gone belly up. Some similar types of things with exit seems to be lending. Lending stories with lending on in the UK as well that we just ended up being a lot more difficult than we thought it would be. But it came through in the end because it was the UK I remember that just midnight phone calls or I remember sitting in bed and it was 1:00 AM or 3:00 a.m. and we were just waiting for a call I think from the bank saying what that valued the property at because we were waiting to make sure that it was gonna be enough to cover what we needed though we had gone through a period where there’d been some uncertainty about valuations in the UK and we were holding hands and just holding our breath for this number to come through and in the end it did come through.
It was what we needed but it was just very, very close.
With such changing conditions and the emotional strain property decisions can sometimes have on an individual, Paul expands on why property investing is an emotional process even though people say it shouldn’t be…
People say property shouldn’t be an emotional thing but yeah it is. Let’s face it it is.
But you know and we had we had Plan B’s and bad plan season Plan D in place but it doesn’t take away the angst anxiety that comes with getting things over the line that one with the UK for example was again it was it was like Harrods has breadth that we got it over the line.
With that in mind Paul takes us to another one of his and Pascale’s worst investing moments…
I mentioned I was living in the house in Christchurch for a while renting out all the rooms and so I was managing that myself. I didn’t have an agent or anything so that was just a self managed property and I had most for the most for the most part had really good tenants and I was quite good insight into people I think and I can say someone General I definitely didn’t have a really rigid process of vetting people before they came in.
I usually went on a hey this person seemed like a good person. Looks like they’re pretty secure and stable.
I’ve had a couple that didn’t quite do it I’m in one guy I got up one morning so I left out one morning about 7 a.m. walk into the kitchen and he’s he’s there in the kitchen I say How you doing.
Good morning. And he looks up at me and he’d obviously just got home and he was gone if you know the term office chops but he was so out of it that he couldn’t put together a sentence he couldn’t actually articulate what he was saying.
I don’t think it was alcohol but so yeah I literally literally kicked him out the next day and the other one Yeah this was all in the lead up to.
Funnily enough the earthquake because I had another guy who just made an absolute absolutely trashed the place his room and put it in the bathroom at the time not in an aggressive way just drunken idiocy at that point out again the day I kicked that guy out was the morning of the Christchurch earthquakes I walked home the earthquake happened, I walked home that afternoon, walked up my driveway to see the wall we had one brick wall one double brick wall on one side but pretty much mostly fallen down and I could see my bed through the wall wasn’t there anymore and so the feeling of walking up my drive and seeing house was devastated. That was probably a really really dark and low moment for in terms of investment and I was thinking Wow.
Now what you know that was really difficult but with that said if you learn from those things and you learn lessons and you know there’s a huge mindset shift in dealing with those commonsense strengthening.
Faced with such devastating outcomes, what exactly did Paul do to move on from that point in his investing career…
From the earthquake well I mean there’s a big psychological shift that happens when you go through a major event like that because there’s actually guilt. I quite a lot of guilt associated with going through the earthquake and actually living through the earthquake when not many people didn’t survive. And so that was one thing psychologically but in terms of sort of financially and everything we will. I was one of the people who had insurance and we made sure that I know I was I was when I first started buying property and buying that property I made sure I had the risk management sorted out.
So that was one of the massive things that got us through it was that we were able to use that risk management management strategy and put it into place. So we got our insurance actually sent a team out quite quickly and I think I was fortunate in getting hold of them before everybody started calling them insurance. So I was lucky in getting in quite early and they came out and made my house safe to live in uninhabitable within about three weeks of the earthquake so I could then start renting rooms again very quickly and live there.
It wasn’t perfect but certainly it was. It was in a state that could be lived in.
And just to let you know tenanting was quite common in Christchurch at the time people would have to move out of their property and would end up having to rent and they would be renting at a premium because properties where there was a shortage and they were also paying the mortgage still on their destroyed property. So it was a really, really tough financial time for a lot of people. And we were lucky in that sense.
With emotions running high and people still being affected by the Earthquake, Paul shares how grateful he is for the outcome he found himself in and why it was his exit strategy that allowed him to get back on his feet…
Even now we are where. How many years now? Eight nine years or over eight to nine years since the quake. There’s people who still haven’t really gotten everything sorted out their properties and insurances and so on and obviously the psychology. But yes there’s a lot of people actually are still really struggling and trying to survive over there albeit that they’ve gone through it with some particular property in the end it was habitable it was livable it was rentable but I didn’t want to be there anymore. And so what worked for me my strategy my exit strategy from that was at the time and they sort of proceeding to you the following two years there’s a lot of property that was safe to live in. It’s okay land but it wasn’t insurable anymore for a new purchase if you were a new buyer on an existing property and had been through the earthquake it was unlikely you’re going to get insurance. So there were many investors jumping in who were just buying at auctions some very low amounts so ice cream has coat as is where is. So at the time you go on to the real estate convergence in New Zealand and it says property for sale as is where is which means no insurance buy it at your own risk.
And so a lot of a lot of investors are coming by property at auction very cheap and then rent it out because they don’t care if the property isn’t insured later on they can knock down a builder builder or develop.
So I sold mine at an auction in the end and with that and insurance and everything I was able to walk away from the property with enough to be able to start again which is what we did when we got to Adelaide.
While these were certainly circumstances that no investor should ever have to go through, Paul and Pascale share that there have been times that made investing worth it…
I think Paul and I were discussing this recently and we don’t have a particular aha moment probably other than the aha moment that I had in the beginning and Paul had in the beginning when we realised that actually property would work and it was something that we could do other than that I think what’s happened along the way is we’ve developed a sort of calculated risk appetite and we have done a couple of things where we say look this is a good deal we don’t know how we were going to do it.
We did this on a piece of land in New Zealand. It’s going to be about a year before it. We have to settle on this. We know that we can figure out a way and there is doing that and this being silly and there’s you know you’ve got to try and find the middle ground in between. But we’ve found that we’ve been able to do this and that at the steadfastness I guess of our nerves and being able to do those types of things has really developed and that’s been really cool.
I think because you can’t move forward that much without having a little bit of the ability to do that.
Mentioning one of their UK investments, Paul and Pascale explain the details surrounding this particular property purchase and how they were able to purchase property overseas without actually being there…
We connected with a team over there and we knew that the UK was a really viable option and we already are in a few that they could buy to let. So we call here a standard rental investments even one tenant, one tenancy agreement.
And I’ll just add in there we also knew that non UK residents could buy property in the UK by setting up a company and that there would be not that many but there would be some lenders that would be open to lending. So we knew it was possible.
And so what we didn’t do- what we couldn’t for the time was move to the UK, pend time finding the property going through the purchase renovating. I don’t have specific skills in renovations so to say so really it is about leveraging the right team and getting a reliable and trustworthy team to do the work.
So we really have to try and build a good relationship with a reliable team. Difficult when you’ve never done it before and you’ve got a lot of trust into a team you’ve never met but we spent a good amount of time doing our due diligence, making sure that we had the right team in place.
That’s the team that we founded which is now a company that we are looking to work with. Moving forward did an amazing job of sourcing the right property based on what we wanted. We knew what cashflow we wanted. We knew what our budget was and they essentially offered a bespoke service to find a property offer and do the full conversion project manage it find the letting agent or rental agent who would then find tenants for us.
So we didn’t actually have to outlay our hands on the property itself. We just managed the managers. That’s right.
Having found a great company to work with, they share the process they went through to source a reliable company…
Word of mouth actually.
I mean we did do some property education which led us to having a conversation with someone which led us to looking there was a sort of something or just like a sourcing platform where you can find property sourcing agents by the platform that didn’t quite work out but through that we met the owner of this business and through that we decided to work with them. So it was actually sort of a number of different referrals that officer.
And there’s actually there’s a lot of sourcing agents in the UK a lot of people that perhaps are into investing but don’t have the capital yet gone source properties and sell the deals on. And then you’ve got companies like the guys that we work with who have been doing it for years and what they do is they can’t buy every single property that they find. So they’re also providing that service for other people. So there are a number of sourcing agents in the UK. And if you know that it’s just it’s just looking them up. The tricky thing is is finding which ones are trustworthy and which ones aren’t. And we actually got close to doing a couple of deals at one point but because of our due diligence we found some some suspicious details and were able to challenge them and quickly back out before we committed. So we sort of white eyebrows because of that. So there was a little bit of a process and I think it really did emphasize to us how much trust and the relationship is just so key. And it’s it’s crucial to the success of something like this.
With the potential to have lost money while working with these companies, Paul also shares what they had to learn in order to ensure the companies they worked with were legitimate and trustworthy…
So there’s an education there right. We had to do a lot of education personal education around the complaints of property what the legal system how the legal system works how the sort of property environment is I had a fair amount of an idea of what UK property was like but certainly not with the model we use HMO.
There’s a lot of compliance around because you got six tenants or more you’ve got to deal with their fire alarm systems and the risks safety and that kind of thing. So yeah lots to learn and we needed to know about that we couldn’t just let it let somebody go and do it because as soon as we got the keys handed over we then needed to manage a letting agent as well. So you need to understand the property itself and how it works.
Another factor Paul and Pascale had to consider was the difference between UK financing and Australian financing, and if deposits are still required…
There it depends on the lender really.
I mean there are the big banks lenders that’s in the interest rates are really good over there say between 2 and 3 per cent for somebody living there. Unfortunately we didn’t qualify for that kind of rate but there are a number of what they call them second tier lenders or nonbank lenders who have different levels of appetite. So the beautiful thing is often yes you have to put down a deposit. What we did in the beginning is we bought the property cash and then we got a bridging loan which was for six months at a higher interest rate but it meant that we didn’t need to show them a property that was in a rentable state because it wasn’t at that stage. And then when we’d bought it up to a rentable. So we were able to pull some money out from that to fund the conversion and then after that six month period we were able to show them some tenancy agreements and we were able to move onto a long term finance agreement onto a five year mortgage. So yes you do often need a deposit in a way I guess but there’s different ways that you can do it such as that way. The beautiful thing about the UK is that they don’t means test so they’re not asking us what our income is. It’s really based on the history of the company. That’s why it was so difficult for us in the beginning because our company was new and it didn’t have history. So actually we even got We boiled down to at the time just one Lynda that was willing to help us out. And as time goes on and we’re able to show our credit history and that we’ve been landlords for some time we will get better and better offers come through. So it was during the real hard yards in the beginning.
And what type of accounts and entities they needed in the UK in order for this to work…
The main thing was getting a bank account you needed to actually be in the bank to set up the bank accounts.
We went to the UK to do that and that’s that’s just the one visit we made with regards to this property. And at the same time or whether we set up the business the company name that company and so on. But the other main one thing is just the bank account and we set up a limited liability company on LCD which is managing the assets. And as Pascal said the lender doesn’t means test. They mean they just look at the asset you’re buying what the return is going to be or what the value of our asset is.
And the obviously history of the limited company as well.
And what that does mean for us is that we kind of maxed out a little bit in our current situation in Australia and in New Zealand as well because they do means tests. So they’ve said okay you have whereas seven properties that’s all we’re going to lend on an especially with the lending has become tighter both in Australia and New Zealand. So if we didn’t have the UK as an option we would be starting to scratch our heads and think how would we do it. And I’m sure there’s ways there are ways that we could be creative there. But the beauty is that we can push on with our investments in the UK uninhibited by the means testing.
Continuing on the subject of investing in the UK, Paul and Pascale share the criteria they had in mind when looking for a property to purchase…
We knew the budget and we knew the model. We knew what the model looked like and what was what was possible. So within the budget we sort of say to them Look this is what we’ve got available to invest. These guys have done hundreds of them. So they really know where to find them and how to find the other good ones. And then what kind of cash flow we’re looking at. Really. So we knew we wanted the HMO model and we knew we wanted good cash flow 15 percent plus.
And based on that they go and say Okay well look we’ve got these properties available they send us these sort of M.O. of the propositions and say Is this what kind of are you looking for. And we do. This is a game where the education is important because we did then do our own due diligence on the area the infrastructure local letting rates and trends and so on just to make sure that what we’re getting is actually fundamentally going to be a good property. These guys are really good but that doesn’t mean that we shouldn’t be putting our own effort in to do the due diligence as well. So yeah. So we give them as much information of what we want out of it and they go and find out it’s a very. So I guess some boutique service.
How did you also get a deal like this where you can actually put that means tenants in there too. Because was it because of the rate of return that you requested. That’s why they had to structure this work has six tenants is almost buying like a unit or unit bunch of units.
Yeah that the HMO model would be minimum for. But what they say is four bedrooms will cover your costs but just to give you a little bit of that explanation as well of the HMO model is the landlord pays for everything from the council taxes to the the TV licence Internet the power so everything is paid for. But they range that we get in is a premium level of rent as well. So we we know that in this model about four bedrooms will cover costs. And then they say that any bedroom on top of that is like the crane. So that’s where your profit comes from. So 5 6 is really good and it’s often manageable as well you can often get a three bedroom property and turn it into a six bed. But then you can get other types of properties. The really cool thing about the UK is that they’ve got things like old they’ve got old villas but they’ve got old churches they’ve got old office buildings they’ve got high street shops that aren’t being used anymore with the decrease in retail. They’ve got all these various types of buildings. And if you can get other bigger houses that can convert into seven eight nine bits as well then the cash flow just starts to really really escalate. So we went with the six bid because that was where our budget was. But there is a lot of scope somebody but I think there’s there’s eight memos that have sort of 19 bids and they’re almost run like a boarding house like a boarding house. Yes I’m sort of thinking some of them are also as the typical student model like student accommodation but a lot of these people actually living in the accommodation are young professionals and that’s who we have in our. Property. But yeah it is almost like the hostel type thing we have a big complex but it is it is being done over there. There’s this a lot of those styles of accommodation and it’s because of the demand. I mean there is definitely a huge demand for this type of accommodation.
With phenomenal returns greater than those in the Australian market and positive cash flow properties in their portfolio, Paul shares why they plan to continue investing in the UK market…
Like Pascal said it’s sort of almost capped here on this end.
So until that until the markets in Australia and New Zealand the shift of the London shifts a little bit more then becomes with the more comfortable for the lenders we’ll probably focus on the UK and we’re helping people who are also looking over there into Australia and into the UK from Australia to find them as well.
I’m just on just to sort of talk about numbers for a second, in the UK to probably HMO model is probably makes up about 18 to 20 percent of rentals in the UK. So single room lets and that’s because people can’t afford to buy property, they can’t afford to rent a whole house themselves. And for many people they’re working on contracts and not full time so it’s easier and it’s more convenient for them just to move into a room that’s private and it’s got a bathroom and it’s fully furnished and all the bills are paid they just need to pay their rent.
It’s very simple for them. So that’s why it’s a really strong model and I don’t think it’s going anywhere for a long time.
While the generally cheaper property prices have drawn Paul and Pascale to the UK property market they shared that a good bargain still has to be sought out…
In the UK the properties are quite a bit cheaper and that’s the amazing thing. Depends where you look. Yeah. Well like I guess it would be like comparing regional areas to Sydney perhaps if you buy in London it’s a completely different thing and you will end up being negatively geared per say there or even in the south a lot of people do capital strategies in the south with a wider property do it up sell it on for a great profit whereas it’s in the middle of England where the the prices are still really low I think I mean ours was eighty eight thousand pounds to purchase the property which is equivalent of about one hundred fifty thousand dollars and. Yeah. And yet the rent that we get in is about a thousand pounds per month. So that’s that’s after expenses after it’s after everything. So that’s up what’s that about. Eighteen hundred to be about eighteen hundred dollars at the moment. Yeah. So and even our return on investment based on that is about 17 per cent but that is because the we didn’t pull out as much. We had to leave a little bit more in the property than we’d expected. So if we had actually pulled out what we had estimated and what we probably will be able to do in a couple of years when the market and the valuations adjust again and we have heard from from our partners over there that they that it has adjusted back up now we would be able to pull out more and therefore our return on investment would be quite a bit higher than that as well and that’s expected. I mean guys over there that do these deals they don’t they don’t go for deals that provide any less really.
Jumping into the mindset side of things Paul and Pascale share why it was their past and vision for the future that pushed them to use property as a vehicle for financial freedom….
I think both of us sort of alluded to sort of our upbringings and our parents and generationally my parents as well as Pascal’s were quite reserved and with money and there was a lot of fear around money I think you know some of my family members lost a bit in bad investments not property but just putting money with the wrong person. And so as I was being brought up the language around money was quite negative. Money doesn’t grow on trees. Money is the root of all evil.
Those codes are common language. So I never really saw any of these opportunities. So I think for me it was about shifting my belief systems around money.
And how about how many works and what it means to me and how I’m going to use it. So really out of all of this we want freedom we want to be able to support our families and we want to be able to live a comfortable life. And it’s not about having a super fast cars and private jets for us.
It’s just about and this is the point of being financially free is not all about being financially free is literally just being able to pay all of your expenses and have a little bit left over without having to work if you don’t want it.
Yeah. Probably the optimal word to put underline and in capital letters with exclamation marks is freedom and it means for as we’ve seen our parents go through retirement and my my parents stayed in jobs where they weren’t being treated that well and they weren’t enjoying it and they had to stay in those jobs because they needed to get as much as they possibly could before they retired. And I would have really loved if they’d been in the position to free themselves of that or to just say hey screw it it’s not worth it five years before that and save a bit of extra hair loss and things like that. So we want to be able to do that and we understand as well the way that the world’s going in terms of jobs that there won’t be as many jobs in the future so if they’re finding it hard now trying to find a new job as a 61 year old is not easy now. So it’s not going to be easy in the future and the government is certainly not going to be able to support us with the growing populations and the decreasing amount of jobs. So we want to be able to create that freedom for ourselves both to protect ourselves and our children from that. But also I’d really love to be able to help out our parents when we get to the stage where we are able to do that.
With such inspiring goals to work towards, what types of educational resources did Paul and Pascale go through in order to know what they know today?
So we’ve done a couple of a number of property education or workshops mentorships and that kind of thing so.
But actually you know where a lot of our education comes from is a lot of reading a lot of podcasts or other workshops.
And one of the biggest things is networking and growing and growing around us like minded people who have similar passions similar values and learning from each other. That’s been massive.
And so as much as many courses as you can do I think the new courses until the cows come home but really the education comes from taking action and having the right team around you that you know you can learn from and trust and so they can lift you and you can lift them.
I’d probably like to add to that podcasts as well. We listen to a lot of podcasts there’s a lot of them UK podcasts as well about investing in the UK and other than that school of hard knocks. You know, I think so many of our lessons have come from almost really messing it up and that’s by the grace of God we sort of didn’t have to lose all that money. But there’s no better way to instill a lesson that you’ll never forget. Then coming really really close.
Speaking of lessons, both Paul and Pascale share some of the books they’ve read that they’d recommend aspiring or seasoned investors to learn and read from too…
I’ve got a couple Pascale’s what got a couple as well. Really good book I read which was around procrastination.
It was actually it was for creators. Initially it was written for creators a book by Stephen Press Fields called The War of Art.
And it was about the first half was about understanding what is procrastination and why do we not take action on things.
That was massive for makes I read it in my twenties and from reading that book and the other half of the book is then two then how to become a professional and it wasn’t in the traditional sense. It was more as if you’re living life making false promises and letting people down. Are you really a professional if you’re saying you will do something and then finding an excuse not to do it. Are you really a professional so it’s about stepping up into being the professional at life. And that was a big big book for me. It’s a very small book very easy book to read but it is a big lesson. That was a big one and there’s a couple more.
Yeah. One of the ones that really helped my mind set was the slight edge because that’s Jeff Olson because I can see a pattern. In my in my life leading up to this point where I would give something a go kind of get a guy on a roll with it but then give up before I had got anywhere near mastery of anything and it just really really highlighted illustrated how that and perceptible progress that you have daily adds up to huge things over time. If we just have faith and stick at it and know where we’re going. So that was huge for me I needed that book. But there’s another small book that’s called go for no. And it’s actually a book for salespeople about pushing through the rejection but the huge lesson from that was about failure and how instead of running from failure towards success we have to go through failure in order to get to success. And that was a real change in perception to me and has made me be a little bit more friends with failure in our life.
Expanding on this idea of seeing failure as your friend, Paul also shares his take on why it’s important to make mistakes as much as it is to succeed…
[There’s] Really not one business in the world that hasn’t had a fail.
And I think any success has to come about via failure. You learn from a failure therefore you adapt and pivot and you can therefore success and choose so.
So I mean failure is a part of it. You can’t avoid it. And that’s why you can’t run away.
With such reflective thoughts on mindset and failure as well as success, Paul and Pascale take a moment to tell us the best advice they’ve ever received…
I’ve been a few months ago been watching a favourite of Jordan Peterson Love him or not, he’s got some good insights. And he said he talked about judgment. And he said you know before when you meet someone when you’re talking to someone before you judge. Think about perhaps that is it possible that that person may have something I could learn from them. So if I actually listened to them there’s always something I could probably learn from that person and that for me was great just to not always jump to conclusions about a person and give them the opportunity for me to learn from them. That was a big lesson for me.
Perhaps one that sticks out for me is that sometimes you need to ask for forgiveness instead of permission. And it might not work in every situation but it just helps otherwise sometimes you can become just what’s the word stagnated or just you come to a halt you can’t move forward but sometimes just move forward anyway and if you have to say sorry or ask forgiveness later on then so be it.
And the advice they would have personally given themselves ten years ago…
Buy a property and then buy another one and another one because I didn’t start early enough. I was in my 30s really when I started investing properly and so I would probably say just get on board take action.
You know you’re young and you’ve got many years to make some mistakes and then recover from those mistakes. I think that’s one thing you know not enough people start young enough they could be easily able to pop out the top of their business or a richness they retire or get out of the rat race whatever you want to call it much earlier. If I start earlier and then I’d say also learn about compounding interest because that is a very simple way of getting started and using compounding to build in a mass a massive amount of money over the period of time.
Being patient over a period of time.
Right. And for your Pascale?
Mine would be on the practical side. It would be to put my money into index funds for that for the compounding because I was really geeky with money I still am really geeky with money.
When I was young and I could save really really well and with the power of time even if I had planned to invest in property even just putting that money and letting it compound for 10 years would have done great things. I had no I didn’t learn about index funds and compound interest and so I think my late 20s or early 30s. So. And then the other one on a personal note would be to learn how to laugh at myself. I was I think the family friend described to me as the most solemn child that they had ever seen. And I I don’t think that people that know me now would would think that is true. I’m not the I’m not the clown of the party but I can take things lightly. But I spent a lot of my early years in my teens just wrapped up wrapped in knots because I was taking everything so seriously. Most of all myself. So there is power and just being able to laugh something off and laugh yourself.
While the past is something they can’t change, both have been on a wonderful property journey so far and thus share what they’re most excited for looking five years into the future…
I’d say it would be the UK. I’m so excited about because we talked about the there’s the HMO that we did. And I think we only need a couple more of those to get ourselves to the kind of cash flow where we can stop working day jobs. And so that is super exciting to see that the light at the end of the tunnel. But like I said that’s just the small ones. There are these bigger ones these really say an old pub buying an old pub and converting that into a number of units or into a big HMO and just working with our partners over there to do some of those kinds of projects or partnering with people from Australia to do those kinds of projects or helping other people over the side of the world to do those kinds of projects as well.
It is from our network here and friends and so on online and from our Facebook groups asking what we’re up to. And so it is really cool to be able to share this journey with you and anyone listening so that’s exciting for us to share our information share our knowledge and show that it is actually possible to get into it and get out of it as well.
A little earlier than we think you know we don’t just need one property over 30 years you can do really well on a cash flow basis at least with different and slightly different models slightly out of the box models.
On a final note Paul and Pascal take a moment to reflect on whether they believe all the success they’ve had so far has occurred due to skill, intelligence and hard work, or luck…
Somebody said to me once they said Luck is built up of hard work and persistence. So. So any luck that we’ve had is I think built up as deciding to take action in a book.
Pascale mentioned slight edge is just taking action in incremental ways every single day and then the luck happens.
So I look I think there’s a lot of that there’s a certain amount of synchronicity that I think can happen when you’re working on a projects or anything like that.
I think the line really well and you like that was fortunate. And so you can call that luck. But I think sometimes it’s about taking action.
I have a personal philosophy on life that you do everything you can do within your power really well and that is by all means your responsibility. But there’s going to be a whole load out there that is out of your control. So I like to have faith that I believe in God so believes that things will turn out the way they’re supposed to. And just leave it up to that. So whether you want to call that luck or not. That’s probably the part of luck that’s. Yes some of that has happened and some of that has been a contributor to our success. And I think that there’s no one in the world that could say absolutely everything is under the absolute control. But there’s a book as well. Also the richest man in Babylon and there’s a really great section of that that’s about luck and debunking how people get lucky. I think it is quite interesting a lot of people in the UK say to Paul Oh you’re so lucky that you live in Australia and we’re kind of thinking well how much of that is luck really hard work.
With such wonderful advice, tips and stories shared, here are some of the ways you can get into contact with Paul and Pascale Averill….
We’d absolutely love if there’s an opportunity to mention it for anyone listening who wants to have a look at our Facebook group. It’s called PIN ANZ Property Investor Network Australia and New Zealand. It’s just a small growing group at the moment where it’s really about sharing knowledge sharing insights tips tricks and so on and there’s a thread in there for promoting your business which we kind of try and keep separate from the main feed. You want that to be about shared knowledge networking. So yeah that’s that’s on Facebook. We’re also both on Facebook. It’s not hard to find us. If you’re including my name and your show notes if you google me you’ll probably find my podcast which is called The Man bits podcast it’s straight up chat about men’s health which is a side side project pretty easy to find us.
This episode was produced by Ashlyne Ocampo with narrations and interviews conducted by Tyrone Shum.