Kathy Madell: The Journey From A Career In Banking To Property Renovation And Investment

After becoming disillusioned with her career in banking, Kathy Madell dipped her toe into the exciting waters of property renovation and investing. And she is one of our Wonder Women presenting at She Renovates Live on the 30th of October 2022.

To whet your appetite for our annual event, Bernadette invited her to be a guest on our She Renovates podcast to talk about her transition from corporate Australia to property. Her journey is an inspiration for anyone still sitting on the fence, wondering if they, too, can make the move.

Kathy has made some pitstops and mistakes along the way, but she has persevered. And now the mother of two is an inspiring renovator and investor. This is the story of how she got there.

Kathy Madell Moved From A Career In Banking To Property Renovation And Investment

Banking changed a lot after the global financial crisis, so even though Kathy enjoyed her career and found it fascinating, it became much more standardised. More regulations were imposed, and lending procedures were streamlined. So although it was easier to manage, it made the work significantly less interesting. 

Kathy says she stayed in banking for too long, feeling trapped by her steady income. But she was no longer enjoying her job and started feeling desperate to try something new. She wanted to get into property, so she joined a mentoring program and began to learn about it. 

Her husband was still earning a good salary, but Kathy was making more than he was at the time. So stepping out of the corporate world meant losing their primary income. To create time to work in and learn about property, but still have an income, Kathy bought a small online furniture retailer.

As any small business owner knows, I worked longer hours in that small business than I ever did in the banking space.”

~ Kathy Madell

Kathy went into the business thinking she would be giving her customers advice on interior design. But instead, she was spending long hours online trying to drive traffic to her website, and the bulk of her work was not about interior design at all. 

She didn’t enjoy her venture into retail and found it hard, even before Covid hit. She had decided to call it a day, even before the beginning of the pandemic, and started winding down the business. Being primarily online, Kathy didn’t hold any stock, so it was easy for her to walk away.

Kathy’s First Property Investment Taught Her The Benefits Of Negative Gearing

When Kathy and her husband learned about negative gearing and how they could reduce their tax by buying a property, they made their first property investment. It was an off-the-plan apartment in the Central Park Development in Broadway, Sydney. And it was the most they could afford. 

Kathy researched the building and decided to buy an apartment on the ninth floor. It gave them good value for money at developer prices, and the apartment was high enough to have an outlook and not be built in at a later stage. And they managed to lease it straight away. 

When I joined the mentoring group shortly after that, the first thing they said was never buy off the plan. So I thought I’d better get rid of this investment pretty quickly.”

~ Kathy Madell

Kathy says the universe aligned when she approached their tenants and informed them that they were looking at selling the unit. She offered it to them, and they bought it for Kathy’s asking price. So, even though her strategy may not have been right, she did her homework and sold the property at the right time.

A House In Tuncurry

Kathy’s made her next property investment after listening to John Lindeman’s reports in which he forecasted growth along the north corridor, heading up to Queensland. So she looked at what she could afford and bought a standard three-bedroom, eighties-built house in Tuncurry. 

The idea was to flip it, but Kathy was still working full-time and living in Sydney. So they decided to rent it until she stopped working and had time to manage the renovation. 

The Tuncurry house was almost neutral in cash flow. However, the tenants they were attracting were hard on the property. So they had to do a little work, such as repainting and replacing carpets, every time someone left, which set them back.

When Kathy eventually had the time to focus on the renovation, the market was starting to take off. So, in November 2021, she completed the renovation and put the house on the market, selling for a nett profit of $90,000.

Kathy’s Venture Into Property Development

While Kathy was still working full-time, she was keen to build her capital and took on a small development. When a buyer pulled out of a project in Bangalore, Kathy decided to buy a block of land and subdivide it into two properties. The plans had already been drawn up and were at the council.

Kathy did her due diligence on the area and the builder and found that the area was forecast to grow, and the builder had a good reputation and communicated well with his clients. But unfortunately, things didn’t work out as planned.

They dealt with two builders who went broke because they had taken on too many projects and overextended themselves. Additionally, Kathy had pre-approved finance for the project. However, when APRA introduced the new rules for lending for investment purposes, their finance fell away. They had to get commercial finance with a 12% interest rate, which added $10,000 per month to their loan in compound interest.

To add fuel to the fire, the build was delayed by twelve months, and the second builder disappeared with one month to go on the project. Kathy and the other affected parties discovered that you can’t claim from iCare until they have determined that the builder is bankrupt. 

When a new panel of builders quoted on the work, they discovered numerous problems with the houses. So, finishing the properties almost cost more than the initial projected cost for the whole project.

When the properties were finally finished, the market was improving, and Kathy sold one of her properties almost off the plan. The second one was sold on auction for $130,000 more than they sold the first one for. So they ended up making a profit.

After this stressful experience, Kathy has decided that property development is not for the faint-hearted and is not her cup of tea. She says you must have deep pockets to weather the storms until you can get any money out of it. 

So I think, going forward, I’ll probably look at micro developments where you’ve got something existing, and you can get income by adding value to it and then do something at the back.”

~ Kathy Madell

 Kathy’s Passion Project And Move To The Lower Hunter Region

After working from home during the Covid lockdowns, and Kathy’s daughter and granddaughter moved to Newcastle, she realised they didn’t have to live in Sydney anymore. 

They decided to sell their apartment in Rushcutter’s Bay in Sydney and buy something around the lower Hunter Region. However, they couldn’t find the type of property they were looking for, and decided to rent while they continued their search.

Kathy bought a one-bedroom apartment in Potts Point to maintain a foothold in the Sydney market. The property was marketed as a renovator’s delight and needed a significant renovation. It’s a large one-bedroom unit with lovely city views and a central location. It doubles up as an investment Airbnb for some income and a place to stay when they are in Sydney. 

We were looking for a regional property on small acreage around the lower hunter and couldn’t find anything that worked that ticked all the boxes.”

~ Kathy Madell

Eventually, Kathy came across a bread factory, an opportunity she couldn’t resist. So she bought it at auction for $650,000. It’s a warehouse with 460 square meters of internal space, split over two levels. 

Kathy has gravitated towards her passion project in the lower Hunter Region. The plan to create a home for Kathy and her husband, with a section for Kathy’s sister upstairs and one or two Airbnb apartments downstairs, ticks off most of Kathy’s objectives. 

A Welcome Change In Pace

Kathy is enjoying the change in the pace of moving from Sydney to the Hunter Region. She says there is still enough happening around Maitland to keep her busy. They are close to the wineries and only half an hour away from the beaches in Newcastle.

The slow food movement in Maitland is a highlight for Kathy, and she visits the weekly farmer’s market, where she buys her produce from small and large local farms. She says it’s a great way to meet people.

The council in Maitland is very proactive, engaging with the community to understand what Maitland can be known for, and how to attract young people back to the region. And those who are still living in the area have a tremendous entrepreneurial spirit, taking advantage of lower rentals and no traffic to start businesses. 

She Renovates Live Feature Property: Kathy’s Bake House Project

Bernadette asked Kathy to give us a rundown of her bakehouse project to give you an idea of the inspiring presentations you can expect at She Renovates Live. Kathy has already ticked off some of her goals with the purchase of the property, but we wanted to know more about Kathy’s concept for the property and its feasibility.

Bake House Project Concept:

Kathy wants to tap into the property’s history as a bread factory and make it a destination on its own. She has been researching Parisian bakeries to give people a bakehouse experience and somewhere special for people to relax in. She will add features to create an opulent space, including chandeliers, mirrors, brass fittings and rich textures.

Bake House Project Feasibility:

Kathy didn’t determine the return on the Airbnb part of the building before purchasing the old bakery. Buying it made sense, even if it was just going to be their home. However, Kathy has now researched Airbnb in the area and determined that, with a 45% occupancy, they can earn $30,000 per year.

Bake House Project Timeline:

The builders anticipate it will take a couple of months for phase one to be complete, and Kathy can move into her new home. And Kathy’s estimate for completion of the entire project is twelve months. 

Kathy Madell’s Plans For The Future

Kathy is looking forward to the passive income from her Potts Point and Maitland properties, but she still wants to build on that. She wants to find a way to revive the bland, boring eighties houses that everyone knocks down and make them more appealing.

The houses are cheap and ugly, but Kathy hasn’t decided how she will renovate them yet. She’s considering removing the ceilings and doing something viable from a cost point of view to make them look a bit nicer. 

Kathy says the greatest triumph in her property journey is selling their first off-the-plan apartment so easily and making a $300,000 profit. 

Conclusion

While Kathy is enjoying her new-found freedom from the corporate world, she misses collaborating with other people. So she is considering drawing on her banking experience and people skills and doing a joint venture with someone in her new community in Maitland. 

Kathy has weathered some property storms and come out of them more robust and with more experience. Hers is a success story for everyone who has been knocked down by the unpredictability of property investment. 

If you can relate to Kathy’s tale, book your ticket for She Renovates Live, where we have a lineup of other Wonder Women who will be sharing their success stories with you. We can’t wait for Kathy’s inspirational talk and to see her plans for the Bake House Project.

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She Renovates Free Facebook Group

If you want to meet up with a group of savvy renovators. I would say come over and join She Renovates Facebook Group. It’s a completely FREE Facebook group and it is growing at the rate of knots. We hit over a thousand members just recently, and now it seems to have picked up momentum. They are all savvy renovating women and men working their little hearts out to live a better life through renovating.

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Bernadette Janson

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