‘Weekend warriors’ feel capital squeeze
THE screws are being tightened on mum and dad property investors around the country but Wynnum’s Ben and Emma William are confident they can ride out the tougher conditions.
Prompted by the banking regulator’s moves to cool a property bubble, financiers have hiked interest rates for investment lending.
Mr and Ms William, members of a growing band of socalled “weekend warrior” developers in Brisbane, said they would be paying an extra 0.27 — 0.3 per cent on their loans.
“This in itself doesn’t seem all that terrible but across a total lend in the millions it makes a big difference,” Mr William said.
“It doesn’t really affect small investors with one or two investment properties, but if you have a larger portfolio it will make quite a big difference to continue moving forward.”
He said it was an important reminder to have some flexibility built into your strategy, and also the importance of having a cash buffer, even if trying to aggressively grow.
Property Council of Australia executive director Chris Mountford (pictured) said tighter lending will have an impact on the smaller end of the market but much would depend on the individual circumstances of the developers.
According to the SouthEast Queensland Regional Plan, an additional 156,000 dwellings will be required in Brisbane by 2031. Of that, 138,000 will be so-called “in-fill development,” under- taken by small developers such as Mr and Ms William.
The couple’s success underscores that the big boys of the property sector are not the only winners from the city’s housing and property boom over the past few years. But it can be tough going personally and, given the tighter lending conditions, tough financially.
de- like Mr William, 35, and Ms William, 33, usually hold down day jobs while pursuing their property dreams in their spare time.
After dabbling in investment properties, the couple decided to try their hand at small-scale developing after acquiring a “splitter block” in a bayside suburb about three years ago. A splitter block is a suburban allotment on which two houses are built.
“We lived in the existing house on the block for just under 12 months while planning to demolish it and then built two new properties in its place,” Mr William recalled.
The couple have since gone on to develop eight similar projects around Wynnum and the western suburbs, mainly close to transport and good amenities.
Mr William works full time as an analyst with a mining company while Ms William, a former office manager, works on the developments at the same time as juggling her role as a young mum to baby Lola.
Harcourts Green Living principal David Green said mum and dad developers could do well as long as they did their research. However, people could easily get burnt if they over committed.
Mr Green said the most important thing for amateur developers is that they don’t pay too much for the land.
“It will not work if they build a million-dollar home and the homes next door are selling for only $500,000,” he said.