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An Unconventional Path To Homeownership In Heathcote!

Owning A Home

At 30 years of age, writer Nicole Haddow’s income was unstable, she had no financial plan, significant credit-card debt, and despite writing about homes for a living, no property of her own. 

Fast forward to just two years later, Nicole is now a proud homeowner, and she’s written a book to share how she did it! 

Smashed Avocado is a first home owner’s bible, featuring not just Nicole’s story, but numerous others who have purchased, constructed and funded homes via creative means such as rent-vesting, flipping and building tiny homes. Throughout the book she shares detailed, practical tips, and even debates with Bernard Salt, the man whose now infamous ‘smashed avocado’ quote inspired the book’s title!

Smashed Avocado is available in bookstores as of yesterday! In the meantime, today we share an excerpt, detailing Jacob Stammers’ story of purchasing and renovating The Barn in Heathcote. 

4th September, 2019

Photo – Amelia Stanwix.

Photo – Amelia Stanwix.

Photo – Amelia Stanwix.

Photo – Amelia Stanwix.

Photo – Amelia Stanwix.

Photo – Amelia Stanwix.

Photo – Amelia Stanwix.

Photo – Amelia Stanwix.

Photo – Amelia Stanwix.

Photo – Amelia Stanwix.

Photo – Amelia Stanwix.

Photo – Amelia Stanwix.

Photo – Amelia Stanwix.

Photo – Amelia Stanwix.

Nicole Haddow
Wednesday 4th September 2019

‘Pictures of the original property reveal exposed insulation and a dirt floor. It was unfit for human habitation.’

The Barn in Heathcote didn’t look like this when Jacob Stammers and his partner Brad laid eyes on it for the first time. Back in 2016, when they travelled from their East St Kilda rental to see the six-acre property with nothing but a barn on it, they weren’t even seriously shopping. The pair wanted to explore alternatives to buying in the city, having already ruled out moving to the outer ’burbs. ‘We were looking for a place with potential for rental income down the track, within a couple of hours of Melbourne,’ he explains. But then it happened . . . He grins, ‘We fell in love with the barn.’

It fitted the brief, except for the fact that it was little more than four walls and a roof on a massive patch of grass. ‘It was very much a shell. It had the mezzanine in place, but it was untouched. It needed a lot of work to make it what it is today,’ Jacob says. That’s an understatement. Pictures of the original property reveal exposed insulation and a dirt floor. It was unfit for human habitation. And the asking price was $220,000. Despite that, Jacob, now thirty-five and Brad, twenty-nine, saw the potential. They had some funds, but even if they somehow managed to get hold of the place, more money would be needed for a barnyard blitz. But buying something liveable in their Melbourne ‘hood was off the cards anyway. ‘The house next to our rental in East St Kilda went up for auction and went for just under $900,000. It needed hundreds of thousands of dollars spent on it,’ Jacob says. ‘That was the moment of our realisation that we wouldn’t be buying anywhere we wanted to live in a hurry.’ So, it was barn or bust.

Getting a loan was always going to be a challenge. Jacob owns Mr Tucker, a cafe in North Melbourne. Self-employment was a first strike on his application, even though his income was steady and Brad had a stable role as a designer in the fashion industry.

They consulted Jacob’s mum, who agreed to go guarantor. But they hit a roadblock four days out from settlement. Around that time, some banks were tightening their lending for suburbs identified as risky. Unsurprisingly, a block with an uninhabitable barn didn’t fill the folks at the bank with calm confidence. An approved loan would be limited to 70 percent of the property’s value, meaning Jacob and Brad needed a 30 percent deposit, even though their parents had offered to go guarantor. With the help of family they found the funds, but it came down to the wire. ‘It was a stressful four days, but we managed to pull it off,’ Jacob recalls. Victoria has generous incentives to buy regionally – a $20,000 first-homeowner’s grant if you’re buying something new. But this story is a reminder that not all regional properties are treated equally. Each lender has specific criteria. Jacob and Brad’s experience is a reminder to do your research into what banks think about your chosen area before you commit to it.

‘We went into it with a view that if we never rented it, we were happy if it was a recreational thing for us. Being a country property, it’s a pretty modest mortgage. It was manageable on our salaries,’ he says. In fact, Jacob and Brad found it relatively easy to manage a small mortgage and continue to rent where they wanted to live. It made them reassess their spending habits. ‘It just shows how much money you do waste.’

With that insight processed, they got their hands dirty. ‘It had water pumps, electricity and NBN, funnily enough,’ but that was about it. After overseeing the design of a couple of cafe interiors, Jacob had developed a strong eye, and Brad of course made a living surrounded by stylish design. A further plus: Jacob has a builder brother who was generous with his advice. ‘My brother had the tools and was available for phone support. He came out for a couple of days. It made it possible to do it ourselves.’

They spent a bit under $50,000 on the renovation. So, for a total of $270,000 they had a refitted barn that sleeps four on a beautiful property and it was ripe for rental. All that spending meant that a listing on Airbnb was a necessity – they hoped to recover at least some of their costs.

If you’re thinking about following in their regional footsteps, Jacob says ‘proceed with caution’. Turning their investment into a profitable venture took time. You need to be sure you can fund the mortgage repayments before it starts generating cashflow. Plus, it’s harder to get a loan for a regional block. ‘The banks have a different metric based on how long the properties sit on the market for,’ Jacob explains.

This is an edited extract from Smashed Avocado: How I Cracked The Property Market And You Can Too by Nicole Haddow, published by Black Inc Books. It’s now available to purchase at all good bookstores

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