One house for the first baby, one for the second. One for the dog, one for the guinea pig, one for the cockatiel. Then one for the third baby, and another for the cat. Pauline Beissel’s property investment journey is far removed from anything you’d read in advice books. But it’s stood her in good stead. With 40 years in the property investment game, she is Manawatu Property Investors’ Associations long standing president, is on the board of the New Zealand Property Investors’ Federation, and looking back on decades of success. Most investors have an overarching strategy underpinning all their buying decisions, but not Beissel. “It was like playing Monopoly, which I loved playing as a child.”

Property Fascination

Born in Lower Hutt in 1961, Beissel was always fascinated by property. Her family home came with its own mythology: “My dad told me that it was shipped up the Hutt river, and then Dad renovated it into a liveable home,” says Beissel. “Looking back it was such an incredible idea.”

She also remembers being her father’s “helper” around the house. Although he was a panelbeater, this was the age of DIY, and her father was forever adding on bedrooms and improving its value throughout her childhood.

She would trot after her dad, passing him nails and hammers, and helping him tidy up.

And it was her dad that built her first “home” — a “huge playhouse with a medicine cupboard (they were all the rage back then), a kitchen and a lockable front door”.

It was her job to keep the place clean and tidy. “All the neighbourhood kids would come over,” she says. “My first experience of home ownership dates back from then.”

High Interest Rates

Beissel married Craig in the early 1980s. He’s been a huge part of her property investment journey, but prefers to be behind the scenes. The young married couple purchased their first home (a brand new brick-and-tile shell house, with no carpet, paint, wallpaper or landscaping) for $97,500 in 1984. While this may seem (eye-wateringly) affordable now, it was an expensive purchase at the time, being only 22 years old.

“We had to save up for five years with the government’s home ownership account scheme to purchase this property,” she says. “And at the time banks would only lend you up to $30,000 for a first mortgage, so we had to beg and borrow for the rest.”

These were the days of huge interest rates: their rates went up from nine to 24 per cent. Although the couple had a decent salary (Beissel was working as a clerk for the then Social Welfare, now WINZ, and Craig worked in automotive sales) they decided to “live very humbly” to knock off the mortgage.

“We cut up the credit cards, bought each other slippers [the house had no carpet when they moved in], and paid it off in five years.”

With their home paid off, it was time for that much needed holiday. However, unknown at the time, their second (rather unconventional) real estate venture was to begin. Holidaying in a tent in the Bay of Islands they came across someone selling timeshare accommodation.

“They were offering rooms in a luxury resort: it only cost around $6,000 for a week’s accommodation a year for life, and it seemed much better than our tent,” laughs Beissel.

They decided to go for it: “We felt like we’d become investors,” she says. But an uncle and businessman, dashed those illusions.

“He laughed at me and said ‘that’s not property investment’,” she says.

“It was the first and last time I confided in anyone with property. It was a good investment and we still own it today. It’s taken us around the world.”

Nod To Strategy

It was a few years later, in the late 1980s, when the couple purchased their first real investment property. Another shell house, this one in Feilding, it cost them $69,000. They loved it because it overlooked the town lights; a good location would prove to be the couple’s only real nod to strategy.

“We would go and sleep on the balcony sometimes, watching the lights come on,” she says.

They had to do everything themselves: decorating, landscaping, with the aim of having a long-term investment that would eventually pay for itself (it was negatively geared initially, as were all their early investment properties). And they were fortunate with the tenants — an airline pilot and flight attendant couple were perfect for the freshly created home.

And so a property addiction began, but one without an underpinning ideology.

“We had no idea what we were doing,” says Beissel. “We weren’t looking at yields and we didn’t have any big strategy. We were just looking for reasons to buy.

“We bought a house for the first child and the second child. Then we ran out of children, so we bought a house for the dog, a house for the guinea pig, one for the cockatiel and a house for the cat. When I got pregnant again we bought another house. Then we started buying holiday homes: an apartment in Auckland to take in the shows, a house in Turangi for skiing, a beach house and a country house.”

‘At the time banks would only lend you up to $30,000 for a first mortgage, so we had to beg and borrow for the rest’ Pauline Beissel

It may have been unconventional, but in that real estate environment, and with low house prices, it worked. By 2001, when Beissel had her third child, the houses were all positively geared. She retired from paid work and concentrated on being a fulltime mum.

“The hardest job I ever had,” she laughs.

Their portfolio would peak at 26 houses (including their own) in and around the Manawatu, Rangitikei, and Horrowhenua regions. And she managed them all herself.

Self-Management

Over the course of her career Beissel qualified as a legal executive, manager at Social Welfare, police-trained criminal investigator for benefit fraud, real estate agent and was the general manager of a retirement village, managing 95 villas. She also worked as a volunteer Samaritan and taught religious education. She had an excellent grounding in people and property, so self-management was always part of the deal for her and led to her winning Landlord of the Year award in 2013. She admits it was far simpler then. There weren’t the legislatory requirements, or the strict Residential Tenancies Act (RTA) rules, and tenants were great.

She still self-manages. “I know my properties better than anyone and I have a passion for people and property, so I wouldn’t want anyone else doing the management.”

Humble Beginnings

In the early days the Beissels came from humble beginnings “We didn’t really tell anyone about our properties, so we were doing it without the support of other investors.”

But a trip to the Manawatu Property Investors’ Association in early 2000s would be the catalyst for a new direction. Her first impressions of the association was not great.

“It felt stand-offish and unfriendly”.

But when the AGM came along, even though she admits not knowing a great deal at the time, she put her hand up for the role of vice-president.

“I was elected. My motivation was to improve the association by making it more friendly, and to increase membership. It was not before long when I was elected president and have continued in the role for 12 years now.”

The success of this is based on her determination for Manawatu Property Investors’ Association to be the best in New Zealand and led to the winning of the Harry Lawson Cup (a NZPIF award for best property investors’ association) in 2014 and 2019. The award is made to the association that has had the greatest increase in membership prior to the annual conference, and is also judged the most popular by other associations.

Difficult Times

The Beissel’s portfolio has reduced over the years, with 13 homes being sold, including the holiday homes. The loss of interest deductibility, alongside the raft of other changes made by the present government, has been very difficult.

“Since 2016, the changes made to rules around property investment have been very onerous,” she says. “It started with the compulsory smoke alarms, which I fully supported. But since then, there’s been too much legislation.”

She has seen many association members move to commercial, selling up their entire portfolios of investment stock after the removal of interest deductibility.

But while her first reaction to the loss of interest deductibility was “to buy more residential stock”, she also purchased in an industrial complex being developed in Auckland.

She is also looking at infill subdivision of some of her existing homes in Palmerston North. “Two or three of our properties have big backyards, so we are looking at adding an extra dwelling to one of these.”

The subdivision process is time consuming and costly (costing upwards of $50,000 for the subdivision plan, survey of preparation of plans, local authority planning and fees et al) but the three or four-bedroom houses they are planning to build are fetching upwards of $1 million at the moment, so it’s a good investment.

Beissel is also busy preparing for two major events later in the year: the Manawatu Property Investors’ 50th anniversary and the upcoming NZPIF conference, being held in Palmerston North. “I have a fulltime job that I’m not paid for,” she laughs.

She says that while she never had an overriding strategy for property success, she always “bought houses in very good areas” and this has stood her in good stead, with tenants, rental yield, and capital gains (see box). She acknowledges this is no longer an option for those who are new to investing, but says people should not give up on their investment dreams.

“I have a saying that I like: ‘The secret to getting ahead is getting started’,” she says. “If you have a defeatist attitude you will fail before you begin. You need to be positive, and have a dream to aspire to.”