The Biggest Obstacle for Women Renovators

The podcast for women who want to create income and a life they love through renovating

Join serial renovator Bernadette Janson as she explores the ins and outs of renovating for profit!

Bernadette has over 30 years of experience in the renovating for profit business. She’s a registered nurse, a renovator, a mum, and a teacher.

75 – An Easy Way To Set Up Joint Ventures

On today’s episode,

In this session I have invited my regular co-host, Jo Vadillo and also the founder of a company called My Property Circles, Nicola Mills. This is the brainchild of Nicola and it’s an amazing concept.

Nicola and Jo are going to be sharing with you how My Property Circles work, how the structures are set up legally, the costs, and lots of other information about how they work. So if joint ventures are on your agenda, stay tuned.


Listen to Episode 75: An Easy Way To Set Up Joint Ventures


Episode Highlights

  1. [00:23Special event, “How to Adapt to a Changing Property Market”
  2. [01:48] Launch of Online Bootcamp
  3. [06:10] Nicola Mills and how My Property Circles started when planning for retirement
  4. [12:03] Nicola and Jo Vadillo having congruent view in women getting on the property ladder
  5. [14:10] Property Women’s role in sourcing the right properties for a property circle
  6. [15:42] The Bricks for Chicks program
  7. [22:23] Making sure a strong legal structure is in place
  8. [25:57] Flexibility, sharing the wins and risks
  9. [30:21] With a group of people coming together, there’s a way that funds could be structured
  10. [31:09] The third party circle manager is in charge of financing and legalities
  11. [33:43] How My Property Circles manages the risks in joint ventures
  12. [39:30] Borrowing from equity and making it easier to invest in properties
  13. [40:29] Getting 4 properties in 5 years



Well, hello, renovators. Today, we’re going to be talking about joint ventures and I have a couple of special guests. But before we get into that, I want to tell you about a special event we are running in the next week. It’s called “How to Adapt to a Changing Property Market”.

There’s a lot of doom and gloom around at the moment about the property market. A lot of the forecasters are making some pretty spectacular predictions about what’s going to happen and basically what I want to talk about is the silver lining.

Now we have renovators in our community that are really responding creatively to the current situation. And I have to tell you that renovating is the silver lining in terms of being able to make progress at a time when everyone else is standing still and treading water.

Basically, this is an event to help you make sense of what all the commentary is about in the media and to give you some practical ways to one, decipher it and two, to be able to make progress when you are feeling like the world is coming down around you. So, yes, we’re talking about the silver lining.

The other thing is we are about to launch our online Bootcamp, first fully Online Bootcamp. And I am offering some great benefits for people that want to come and participate in the bootcamp in the first run. So online programs are notoriously poorly completed, people tend not to complete them. You can’t have that when you’re talking about property and renovating because the stakes are high. And I want to make sure that what we do is effective and that you get the skills that you need to move forward safely and profitably.

If you would like to be able to be profitable and effective in these strange times, then come along and have a listen to what we’ve got to add to the conversation. I know that you’ll get great value out of it. So just go to the url and you can register there.

In this session I have invited my regular co-host, Jo Vadillo and also the founder of a company called My Property Circles, Nicola Mills. Now, this is the brainchild of Nicola’s and it’s an amazing concept. And I’m excited about it because it solves a quite a big problem for me.

Basically what they do is facilitate joint ventures. So what that means, well particularly for me, because I do find all the compliance and the set up, the legal structures and so on quite a headache to have to deal with and also quite expensive. And so Nicola’s got that down to a fine art so basically, that means that if you’re wanting to do a joint venture, a property joint venture, then you need to listen to this because it’s really an awesome company and product.

And of course, it’s going to become more amazing because I am going to be adding renovation to the mix up until this point they’ve not had renovating. And so I’m certainly going to be setting up some property circles with my community just because it’s fun and I think it’s quite an easy way to do a joint venture and very safe.

Now, Nicola and Jo are going to be sharing with you basically how My Property Circles work, how the structures are set up legally, the costs and lots of other information about how they work. So if joint ventures are on your agenda, stay tuned.

Bernadette: So today I have Nicola Mills and Jo Vadillo. So Jo, our occasional co-host, to come and talk about a really exciting business and the business is called Property Circles. So basically, I would call it facilitated JV’s in property. Well, that’s my understanding of it, but my understanding is quite blurred. And so I’ve asked Nicola and Jo to come on to really get into the nitty gritty of what it’s about and what it makes available, particularly for women. And so welcome to you both. And I’m just wondering if we could kick off maybe with you, Nicola, because this is your baby initially and your idea. And so just if you’d like to tell us a bit about it and what your role is in the organization at the moment.

Nicola: Yes. So let me let me go back to where it all began and how My Property Circles started. And it really started many years ago when I did a plan on where I wanted to retire my life and how much money I needed to retire. And it’s a great thing to do and you kind of work backwards from there. And I figured that I needed X amount of money to pay for my, and you’ve got a dream, right? You put the dream goals and my international flights business class that I didn’t go for first. I wanted to do my hair, my nails and I wanted this and these all, and domestic travel and these holidays. And I put all that in and I put a number down the bottom and I nearly fell off my chair because it was a lot of money without working.

Then I kind of work backwards from there. How can I get this much money every year without working? And how do I do that? And I kind of looked at all these and as I’m in business and I have different businesses. But the safest, surest way there over time was property. So I worked back how many properties I would need to have to earn all this cash I needed. And it came to that figure, worked it back and I basically needed to buy property a year at that point or cut down on all my international flights.

Stick with your big goals. Anyway, it came back to the point that I need to buy a property this year. I need to get started. But I didn’t have the big deposit at that point. How do I get around that? I called up a couple of friends and said, “Hey, do you want to come in and start buying some properties with me? We can buy properties over 10 years and buy a property in a year. And we’ll share the cost of doing that and we’ll have X number of properties. And then at the end we can sell all that and keep all the money”.

Now, My Property Circles, we don’t do that for 10 years, we kind of get to 5 years and decide to go on. But anyway, that was my 10 year plan so we did. So we worked out how much money we needed. And we know how much we’ve got. And we all put it in a pool and went to the bank and said, “Look at our money and can we have a loan? And this is the property we wanted to buy and the bank said, yes”.

The key to it, though, I went to a really good lawyer at the time, who is almost half an accountant and she worked at a really good structure for us and my friends. And mainly it was to protect us from each other. And I had actually been through a divorce at that point. So she was almost protecting them from me, I suppose. She set it up so that other people’s problems didn’t become my problems or their problems didn’t become my problems.

So we bought our first property, we called it the shack. It wasn’t worth a lot. And then we just steadily bought a property every year after that. That’s basically how it works. You kind of come together, you share your money. It can be different amounts of money doesn’t matter; some people have more than others at the time and we started like a unit trust. We all got our shares and that. So that first circle I started and we’re about to buy a sixth property in that. But I’ve since started all the property circles with other groups and other friends, so I’m well on the way to meeting those goals now that I’ve set all those years ago.

Bernadette: That’s awesome. Beautiful. And so your role in the company now is its founder?

Nicola: Yeah. So I just really go out now and talk to people about it. And I just use my own experience and my experience is different. The accountant that I went and spoke to, they’ve put me into a self-managed super fund. So I used the funds from my super and that was even better because that didn’t come out of my day to day savings. It was money that I could access, which I wouldn’t normally have. So that’s worked really, really well for me.

I talk to people about that “You need to talk to your accountant and I’m not a financial advisor to talk about your own personal situation.” And then we’ve had other people who’ve put cash in. And the key difference has been, and I’ve got a couple of friends and they have put they’re cash in and they’re laughing at me now because when they come out, you know, they’re going to get this nice, big fat check and they’ll go on a holiday. And I have to put my big fat check back into my super fund. The whole idea, it was a long term plan. That works and it kind of gives me full savings and makes sure I don’t spend it before I should.

Everyone has different ways of dealing with it. Now I just really talk to people about it and how it worked for me and how they can do it, too. And I have another passion that I’m working on, which is “Bricks for Chicks” which I can talk about too now, or we can come back to it.

Bernadette: I’ve definitely got that on the agenda. But we might just swing over to Jo and get her where she’s at first and then we’ll start getting into some of the workings of it because I think people are going to be really interested, because one of the most common questions that I get is around joint ventures. And I really love that you have smoothed out the way in some ways for people to do it. And I do want to ask you a bit more about that once we get into it. But next to you, Jo. So how did you get involved with My Property Circles and what’s your role?

Jo: I actually happened across a call out to be a board member of My Property Circles. And it was My Property Circles’ Bricks for Chicks program, which I know Nicola will disclose a bit more about how that operates. And it just spoke to me because like yourself, people are very, very interested in getting to joint venture scenarios. I know a number of people who have come up with these fantastic property deals and opportunities but not being in the position to complete that sale.

It’s such an amazing program for people to go forward in their property plans and build their portfolio and see out their dreams. So they’ve got a very good percentage, maybe not 100% but it’s better not to have 100% or nothing. I was really interested, I met with Nicola and I recognised that we’re so congruent in our views and our motivation behind this to see to it that we’re not only just helping people grow their net worth and doing it in this format but we’re also being able to have that a bit of a legacy there to be able to assist people in that Bricks for Chicks program as well.

So as a board member and also because obviously as a director of Property Women, I’m involved with so many women who are completely passionate about property. But there are a lot of them do come from a situation where their income has been subsidised or obviously part time employees that have been looking after elderly parents or they’ve been the primary caregiver in the home and therefore, their income isn’t what it needs to be for them to start to build a portfolio.

Bernadette: That’s wonderful. And so you’re actually on the board?

Jo: I am. Very proud to be, too. Because it really is something I see as a beautiful synergy with what I do in terms of assisting people with finding really good sound investment properties. But also I’ve been out to see people grow their personal wealth through property as well.

Bernadette: And so your role also is sourcing properties?

Jo: That’s right. Correct. So where it’s needed in a property circle to have that expert on the team, my company will be the people that will stand up and go and make sure that their property ticks all the boxes when it comes to a really good sound investment and provide good yield but also strong growth as well.

Bernadette: Beautiful. And I can’t wait until we add renovating to the mix.
Nicola, let’s say that I want to come into my property circles. I’ve got a little bit of money and I’m wanting to invest it but I don’t quite have enough money to put together. Let’s say I’ve got $20K, is that enough?

Nicola: Yeah. $20K is definitely enough. And I’ll go back to you on my original circle. Everyone had different amounts that they could put in. Some people can put in $40K, $50K, $60K and some people can only put in $10 or $20K. So you’ve just got to, I mean currently for a startup circle and not to matter for a renovation circle, but for a startup circle we have a $160K there that pays your deposit, your first year of working cap in a circle and just making sure that the circle is nice and safe. And then it gets kind of split up amongst everybody.

I will talk about the Bricks for Chicks program here. If you only have like $4K or $5K, the Bricks for Chicks program will do dollar for dollar match funding. So if you can only put down $5K, we’ll put down another $5K and we’ll double that. So if you can put down $10K, we’ll put in another $10K and that gives you $20K to go onto a property circle. That gives you a good chunk of the circle. And then you don’t have to pay that $10K back until the properties are sold in 5 years. So there is interest in it, it’s very low interest.

The Bricks and Chicks program is all about helping women. I’d like to get back and give a little bit of background on that, if that’s okay? I was a few years into My Property Circle and I had some friends over and say, “Can we come into your circle? Looks like it’s going great.” “No, we’re kind of happy but I’ll start another one with you.” And I’m quite interested in lifestyle circles or renovation circles. I haven’t really had an expert on the renovation circles yet until Bernadette, you came along so I’m very excited about picking off those renovation circles.

But I had a friend whose husband died unexpectedly, left her with two girls under 10, so her life changed dramatically and I think the girls were 9 and 7 at the time, so I was working with her a lot around. Well, first the grief and then secondly, I said to her one day, “Hey, we need to talk about money and wealth. And I said, why don’t you come into a property circle with me and we can start building some wealth up for either you or for the girls so that they end in 5 years, 10 years, you’ve got a deposit for them each or you’re well on the way to feeling safer about your situation.” Because at that time the banks won’t lend to her, she’s working part time. She’s got two dependents. The banks won’t lend to her. And I said, “You could use a self-managed super fund” Anyway, she came back to me a couple days later and said, “Nick, I can’t do it because well, one, I don’t have a self-managed super fund and I don’t have enough money in it because I don’t work enough. And secondly, I don’t have the savings and I’m worried about where I’m going.

How can I help her? What can I do here? And in that time that I was thinking about that, I really had a good look around at some of my other friends. And there are so many women in that situation who I call it the 4 D’s, death, divorce, domestic violence. And so that’s just life. Life is just given them a curveball and it’s often through no fault of their own and they’re stuck. And if they’re stuck, their kids are stuck. So how do you get out of this situation? So that’s where Bricks for Chicks was born where we do this dollar-for-dollar match funding. I called Holly back and said, “You know what can you do?” she said, “I can do about $4K or $5K. I would feel comfortable with it.” Okay, well, we’ll give you the other $4K or $5K and you’re in. And now she’s on her way and she owns now a piece of something. And she knows now that her wealth is starting to build and she’s not stuck.

So I’m really, really proud of the Bricks for Chicks program. It’s something we really want to develop and help more women with. It’s for any woman. It’s actually for any woman who’s just in a situation in her life right now and she just needs help. And there’s probably a lot more women now just being made redundant or lost jobs at this current point. And we can help them. It doesn’t mean that you should stop building that wealth or even if it’s little small steps, it’s something. So that’s the Bricks for Chicks program.

Bernadette: That’s great. Really great.

Jo: It’s an amazing program because it also gives women the opportunity to build their confidence up after a situation like they’d been made redundant or that they are fine themselves. All of a sudden single in their late forties and they’ve got two dependents still at home and it just gets them back to feeling good about themselves and a mother with a strong self-esteem. Obviously, the benefits of that are huge, especially in the home.

Nicola: One of the other women that we’re helping, she went to a private school. She came from a good family. She’s got a really good job, earning a good wage. But her dad got cancer and now she supports the family. So it can come from anywhere, right? So she’s entered the Bricks for Chicks program. She’s getting help. And when things improve in her life, she might then put extra money in or do different things. But at least she can keep moving and work towards her goals. So we’re really proud of it, aren’t we, Jo?

Jo: Yeah, absolutely.

Bernadette: Well, it just sounds perfect. And I think the thing that I think that’s great about property is that it’s an interest and it’s something to sort of monitor and I know and I’m sure you do, too. A lot of women with an addiction to the real estate pages, but often don’t actually own any property themselves. So actually being able to get in there on the court is amazing. So well done.

Nicola: Yeah, and I thought I would go in with my friends and we’d build these properties together and then we would sell out and then I’d use that money. But I’m actually going into more circles with more friends and doing it that way, because the more you do it with others, the more you can buy and it kind of multiplies and compounds and just gets bigger. So, I’m addicted to it myself.

Bernadette: So I wanted to ask you so we’ve done quite a few joint ventures. And basically how we’ve set them up is that we have one party to get the loan and the other party or parties put in the cash and we’ve separated them with legal structures. But when you are doing it as a unit trust, how do you deal with the getting of the finance?

Nicola: Look, you can do it in a number of ways, I think the key thing that you said there, Bernadette, is the legal structure. So the core of everything is there’s a couple of things we do with my property circles. 1, make sure you are protected from each other. I mean, you’re going it together, but making sure that you’re protected from each other and transparency. Which is everybody can see what’s happening on the financials and everything we’re doing. And that’s why we’re building a platform. It’s not up yet, but they will be able to go on and see their properties online. What’s happening online? Where are the finances? So transparency is really important, but it caters to those very words, legal structure.

And finance has been in the last 12 months, more banking commissions, mortgage brokers being put under pressure. There’s so many regulations and banks are jumping around and changing policies. And now obviously, they’ve had a bit of a scare with what’s happening with the Covid 19. So we just kind of move with them and what they need. But we always make sure there’s this really strong legal structure in place.

Bernadette: And so when we set up joint ventures, the person who is responsible for the loan, whose details go on on the balance sheet, that is a contribution to the joint venture. I gather that yours is different?

Nicola: We can do the same. So you can come into a property circle as a director and we actually pay directors per annum to bigger directors because you are taking more risk. It is your name. So you get paid. So in our regional property circle, I think the current directors only get about $1K per annum at the moment. We’re looking to pay our directors currently $2.5K – $5K per annum. They get that in units, so they get extra parts. But if you are willing to step up and be a director. Look, it’s fairly low risk. It’s in property and we don’t do any mortgages that are above the 80/20 leverage. So it’s always 20% deposit. We’re not taking any risks with 100% loans or anything like that.

So the key to it is keeping it safe, keeping it safe for you and keeping it safe for others. So a minimum of 20% deposit, you go on as a director. The risk is low, but you should still get something for putting it, putting your name forward. So we pay between $2.5K – $5K per annum for a director to step up.

Bernadette: That’s great. I’m asking these questions specifically because I’ve got a group that is warming up to putting a circle together. And that’s quite a common scenario where you have someone who’s got a great income. But through no fault of their own for some reason they don’t have the available cash to contribute but they can get a decent loan. And then on the other hand, we’ve got people who have got quite a decent amount of cash but aren’t working enough to have that serviceability to be able to get the loan.

Nicola: That’s right. And that’s, again, working together to find who’s got what and how you kind of come together. And one of my friends who bought that shack. She actually lost her job and she couldn’t put any money into the next two or three properties. So her percentage of the circle came down, but she came off the journey. And then in the last couple of years, her life has changed. She’s getting really good income and she’s poured a bit more back in and she’s building it back up again.

So the key to it is also flexibility. I mean, in a property circle there’s kind of an expectation that you will put money in each year to buy the next property, but it’s not an obligation. No one’s there to make you do it or force you. And if everybody can’t put money in that. Yeah, that’s okay. You just don’t buy property yet. Just don’t buy a property that no one’s come back with you. You still got the property you bought the year before that’s still doing well for you. So you go in with an expectation. But it’s okay if it doesn’t work out. It’s okay.

Bernadette: Beautiful. And the other thing that I have tried to well have sort of covered off pretty well is all those things, the death, the divorce, because if that does happen. But I’m guessing the unit trust takes care of that?

Nicola: Yeah. So what people used to do is all put their names on the mortgage or on the property. And then if someone went through a divorce, then their partner could attack that property and put a caveat on or do whatever. But if it’s in a unit trust, the property can’t be trusted. The property is owned by the unit trusts they can put a caveat on your units and when I say units, something like shares. Don’t get confused with apartments. They can put a caveat on your shares, but that’s okay, the properties are safe. You don’t have to sell the properties. Nothing’s been done. Those properties stay nice and safe and then they can battle it out about those shares. And that’s fine. They can battle a way about those, but you’re not having anything done to those properties.

The properties keep getting their income. Getting their rent, paying the bills and there’s nothing hanging over their heads. The banks don’t get scared because someone hasn’t put a caveat over the security. The banks have the security and they battle it out with no shares. And then the person who’s in there can either sell the shares to the other people in the circle. Get the cash out and give it to their partner or they can sell it to someone else or whatever it might be.

That structure has really stood the test of time. The things that we’ve changed where we have made mistakes. And that’s why Jo is sitting here today, is that we didn’t have a property buyer and so 4 of our properties are doing in that original circle, are doing great guns and we’ve got one that honestly barks at me every day. If we never had Jo on board we wouldn’t have bought that 5th one. But because we have 4 others that are doing so well, it kinda doesn’t really matter. They make up the difference. But if I’d bought that one on my own and if it’s the only property I had, that would be a massive problem for me. But because I’ve got it in, it’s one of 5 and the other 4 are doing well. The risk is much lower. We’re much happier.

And the other key thing someone was asking me about this today is because we started my property circles in New Zealand as well. I said, “You know, people not paying the rent, and I said, look, if there’s a $10K problem and there’s 5 of you in there, it now becomes a $2K problem. And dealing with a $2K problem is a lot easier than dealing with a $10K problem. So actually through this Covid 19 chaos, it’s actually been good for us. You know, if I was doing it on my own, it would put a lot more pressure on me, doing it with others, we’re all sharing it. It’s fine.

Bernadette: Yeah. And so, Jo, what sort of properties are you buying?

Jo: So what we are working on predominantly is, that startup circle where it’s somebody who’s got a circle budget sort of between, say, high fours or early six hundreds. So they’re just good residential properties that have got a strong yield, which is quite important. But also they are going to be delivering growth in the long term as well. And we’re sort of sticking to that investor formula where it’s in capital cities or major regional hubs where employment and growth is flush and it just ticks all those right boxes.

We’ve been really looking at properties that are just going to be a nice sort of set and forget the buy and hold formulas where this will work fantastically for renovation circles because you’re assigned a circle manager as well. So if you did have a group of people that were coming together, there’s a way that funds could be structured. So there’s a kitty that you can draw on for that renovation and things like that. So it’s a really good way to be getting the circle as a group. And make sure that the property that you are buying. What does it look like for your renovation budget? What’s the budget for the property that we’re securing? Perhaps somebody has already got a house in mind, in which case perhaps that my role is not necessarily needing that formula. But the formula of the structure being brought together and being managed by my property circles is there for you as well.

And what that means is that in terms of financing and legalities and in getting them that money in, it kind of removes everybody from being actively involved because you’ve got a third party circle manager helping you. And that’s one of the most difficult things with joint ventures. It can be that like Bob hasn’t tipped in his $20K yet. And he said he’s going to do it last Monday, it’s one of those scenarios that you’re not chasing. We are. We’re bringing this together on your behalf. And the business is sort of removing a bit of the emotion from when you’re doing business with others as well.

Bernadette: I have to say. So one of the things that I find with renovation joint ventures is that it is actually quite an emotional roller coaster. And because, so basically we split the jobs and there’ll be someone on site, there’ll be someone offsite, and the offsite person is doing all the offsite work. The on site person is doing all the onsite work. And so basically because we try and split the roles fairly evenly. So it works with everyone’s personal situation and they’re not having to pay someone to do those jobs. And I do find that creates management to that. So it will be interesting to see how adding renovation to my property circles, how that will evolve. I’m really quite curious about it.

Nicola: Yeah. Renovation circles a lot of people with a lot of interest. They just need some guidance along the way. I mean I know a lot about startup circles and obviously I love that structure. So I’m very, very comfortable with that. But actually personally I’ve never done a renovation myself.

Bernadette: So basically because this is my business. If I go into a joint venture, I have all the risk. And my husband is not happy with that. And so he’s basically said no more joint ventures because he doesn’t want to be that exposed. So I quite like the idea. So how do you manage the risk?

Nicola: Well, like I said, we don’t over commit on anything. We always make sure there’s working capital in the circle that you get all of that upfront. We make sure that everyone is clear on the mandate of the circle. What are we trying to achieve here? How much will that cost? What have we got to do? So everyone guys in very short from the beginning, what we’re all doing. I kind of took a risk on renovations, again, that’s not my expertise, but from a property circle point of view. Like I said, we’ve had people in our circle who have lost their jobs or have me and put money in. We had a tenant who had a mental health issue. We gave them free month’s free rent through that time. We’ve had one of those properties that, as you know, maybe broken even that hasn’t been great, but it’s been fine. While we had to replace a kitchen once and a deck, it was in the shack.

And I’ll go back to that $10K problem. When there’s 5 of you it becomes a $2K problem or if there’s 6 of you, it becomes a $16K problem. And you can’t hold onto the property as long as you don’t have to emergency sell it and you don’t have to emergency sell it if there’s 4, 5 or 6 of you because there’ll be someone in the circle who’ll be out of support. The benefit for them is they get more shares. So they’re willing to do it. We had something last year and we did a call out to our property circle and they were throwing the money at us because it meant they got a bigger share of the circle. And when you’ve got 5 or 6 properties, it runs at all. I want a bigger piece of this, so I can’t talk to renovations. I mean, you probably took more to the risk of renovating something or not, but that’s where we like our experts. That’s why we do have Jo. She’s my property buyer expert. We’ve got the accountants for legals, mortgage brokers. We put a lot of experts around these circles to make sure they’re safe.

Bernadette: That’s awesome. The other thing that I wanted to ask you, so let’s say I’m in my properly circle now. What is my input into this? It’s not a renovation circle, it’s just a property circle. What’s my input on a monthly basis?

Nicola: We have a circle manager who does most of the work. So they make sure your bookkeeping is done, your accounting’s done, that your legals are up to date, that annual statutory requirements are all done. The circle manager does a set of work. The circle itself pays at this point $1.5K per property per annum for that management of that circle. They pay bills up or authorized to pay bills up to $500 or the circle can lift it up as it goes.

The circle manager does most of the work and then your input really is Jo turns up with 3 or 4 or 5 properties and says, which one do you want? And you vote and you agree to do that. Or it might be if you decide at some point, which we are with one of our properties, we’re going to knock it down and put in a development you all agree on. Do we want to spend more money on it? Is this what we want to do? Do you want to hold? You have at least an annual meeting to discuss where we are going? What are we doing? Our circles obviously, most property circles run for 5 years out or past that. So we just catch up every year and say, “Do we want to keep going? Are we happy?” Everyone says, “Yes, we keep going.” We try and keep it as easy and as frictionless and seamless as possible. But at the end of the day, it’s still your circle and your properties. So you make the final decision.

Jo: You’re probably like Bernadette, is that when you make that just talking about your standard property circle and your contribution decides $25K, that’s it to get you into the property. I mean, within that is all the due costs when it comes to property buying. So your stamp duty, your conveyancing fees, property buyer if it’s source, the accountant, etc.. All of that’s underneath that umbrella. There’s none of that, now we all need to chip in $400 each. It just makes it a little bit cleaner.

And it’s a lot easier when there is a group by each scenario so that it’s done. And the properties we’re sourcing have so far have 5% yield and then plus up to 7% is one of the circles that we’re working on at the moment. Which means, we’ve already got the 20% deposit, we’re getting with equities almost even in the deal already. So unless you have got a scenario where a kitchen does need replacing and let’s be honest. Homes need ongoing maintenance requirements and everything. But as Nicola said, that’s a fee divided by ownership. And as those circles and the years go on. You’re gonna see that there is that pot, that kitty there underneath to buffer it up so you won’t be getting those sorts of requirements for the costs very frequently at all.

Bernadette: Amazing.

Nicola: The other thing, too with a unit trust is you do get paid dividends each year, too. So yeah, you get paid out each year. With what of the profit you’ve made in the circle. And I mean in our original circle, we have just reinvested that back into buying more properties. Yeah, but it does pay out a dividend each year if you’ve made a profit.

Bernadette: Can the circle borrow against the equity in the existing property?

Nicola: Yes. And so we have a third property, and we’re using the equity in the first two properties.

Bernadette: Wow. And even if you bought it with self-managed super fund money?

Nicola: Yeah. So our third property cost me $10K that year to buy off that property. I was very happy with that. But we used an offset account. We do principal and interest. A lot of our mortgages we have not 9, 10 years off the mortgage. So we had built up quite a bit of equity so that third property was a lot easier to buy and a lot cheaper.

Bernadette: Wow, that’s great. And where I’m seeing an application for renovating and Jo’s expertise is maybe getting that equity up early on, like buying something where you have the potential. Like that project we did in Brisbane last year. If you would choose, renovate that property and sell it off and build a pair of a duplex or something. I think that there’s definitely an argument for growing it quicker. And of course, if you buy something that over time you can. I think I was talking about this, Nicola, with something that’s got great value and could do with the renovation prior to selling it. Maybe that last, that fifth project?

Nicola: Yes. We talk about getting 4 properties in 5 years. So the time on that fourth property you’re only going to hang onto it for maybe a year. So you really need to factor in you’ve got your stamp duty back in all the costs. That’s a perfect one for finding something that you can renovate or do something with. So you build the value on it and then you can sell out with it. But if you’re doing a renovation circle and your mandate is to keep doing that with each property. You might not buy a property every year, you might buy every couple of years where the group decides on that upfront. What are we trying to achieve? How much do we want to add to the property? How much are we willing to put in each year to make that happen? You can move it and make it flexible for you.

Bernadette: Awesome. So are there any questions I should have asked you?

Nicola: I think we’ve talked about everything.

Jo: On top of my head. I think they’ve covered bases really thoroughly. I think it’s really important if this is of interest to somebody and then wondering how and what it will certainly suit what their plans are. That’s something that they can reach out to my property circles and contact our office, set up a schedule and a time. Nicola can actually speak about what we can do, how we can do it, how to move forward. Look, sometimes there are scenarios where they already have the house in mind, sometimes it is just being paid out or I’ve got my hands on inheritance. What can I do to make this work? I want to own 50% of a house. So there’s a lot of different formulas. So maybe it’s really, I guess some imperative that passionate conversation about their own personal journey and how to move forward. And that could be by talking to someone directly in my property circle team.

Bernadette: Definitely. So in the show notes I’ll be putting in the details of my property circles. And so it’s best if people email or ring you?

Nicola: You probably register and go to the website or Facebook or maybe email. We’ll send you the details.

Jo: Put that in the show notes and I know someone will definitely reach out and then schedule a one on one call just to say, “What it looks like? What are the next steps?” And I’m sure we’ve probably raised some questions here that might be personally aligned, in which case we can answer those for them.

Bernadette: I’ve got one more question. Have you ever had a circle go pear shaped?

Nicola; No. And going back to we are not interested in doing these 100% loans. It’s a minimum 20% deposit. We use experts like Jo, a property buyer. We’re not doing things that are risky. You’re in it for the long term. We’re keeping everybody safe and from each other, you’re in it together but we keep you safe within that. So no, it’s all been fine.

I have two questions that people ask me regularly, and probably Jo, which is “Can I live in one of the properties?” And the answer to that is yes. If you want to become a tenant in one of the properties, then as long as you pay market value rent, of course, and now you’re putting rent towards something that you partly own so that makes sense.

And the other one is, “Will it affect my first homeowner’s grant?” And the answer is no. It won’t affect your first homeowner’s grant because the trust is actually buying it’s taking out the mortgage, not you personally and with would patents checked. So you don’t lose your first homeowner’s grant. If you decide to buy a property, say about 5 or 6 properties in my property circles. You can still go out and get the first homeowner’s grant if you decide to go buy a property on your own. It doesn’t affect your first homeowner’s grant.

Bernadette: That’s amazing. Great. Well, listen, it’s certainly answered a lot of questions that I had racing around in my mind. And I’m sure it’s also raised more questions for people listening. So as I said, I’ll include your details in the show notes. And I’m sure that you will be contacted by some interested parties, which is so exciting. And also the Bricks For Chicks program, too, is a real credit to you. It’s very clear that you are committed to supporting women in their financial journey. Thank you.

Jo: Thanks, ladies.

Nicola: Thank you. Bye.

Bernadette: I’m really excited about what Nicola has put together, and I know that it’s going to make a huge difference to me in how I run my joint ventures. So if you want to have a conversation about it, just come over to our free Facebook group She Renovates and I’d love to chat more about it with you. If you’re enjoying this podcast and you would like to make a contribution to our success. I’d love it if you go over and leave a review in iTunes. I read them all and it just puts wind under my wings. So thank you.

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