From luxury to baked beans and back again: One investor's rollercoaster ride

When it comes to money, property investor Nichole Lewis has experienced dizzy highs and devastating lows. The global financial crisis of 2008 saw her go from making international property sales to selling bags of horse manure at the end of her (rented) driveway. Now at 54, with a lucrative portfolio, she works just ten hours a week, writing books, buying property and mentoring others on how to build wealth and avoid her mistakes.

I was raised by my grandparents who I called Mum and Dad. My mother died when I was one – we were living in South Africa when she had a car crash. After that I got sent to New Zealand to live with my grandparents, while my dad stayed in South Africa.

My grandparents were just typical middle class, and also very risk averse, having been teenagers in the 1930s. Therefore as a young adult I sort of thought, ‘debt’s cool!’ I look back on all my friends at the time – we lived beyond our means. Debt, debt, debt. Borrow some money to buy a fancy car. We liked the luxurious things. We couldn't really afford them, but we bought them anyway.

I got married to my high school boyfriend at the grand old age of 18. Now I understand why my parents were against it, but at the time I was like, ‘what are you talking about? I'm 18!’ Then, at the age of 25, he decided to find greener pastures and took off and left me. I remember saying to my mum at the time, ‘Oh well, I've had a good life’. Luckily we didn’t have children, but we had bought our own house and our first rental property – he took one and I took the other.

My husband Kelvin and I met a few years later and had our kids, Jakob and Jessika. I was working in property and earning a lot of money but, still, we were typical consumers: let's buy the latest this, that, and the other, let's have a credit card. I didn’t spoil my kids but they had music lessons, swimming lessons, singing lessons, whatever they wanted. We travelled business class. If I look back now, we really lived beyond our means. We did not prepare for the rainy day.

I met an Australian property developer and started a job doing international sales for them in New Zealand, South Africa, and the UK. I was getting paid AU$180,000 a year, commuting between countries and putting all my expenses on my personal credit card. I owned 12 properties in New Zealand, and eight more, which I'd bought off the plans, were being built in Australia. Except for one, they were all ‘negatively geared’ and I was very vulnerable.

I wish I’d known the people I know now; people to tell me, ‘No, no, no, it’s bad debt if your property is negatively geared. You've got to have your properties positively geared’. That means that if you buy a property and rent it out, you should be able to pay the mortgage, rates, insurance, maintenance, and the property management fee, and still have money left over at the end. If you can’t cover all those costs from your rental income, and you’re topping up the mortgage payments yourself, that’s a negatively geared property. You’re maxing yourself out and banking on keeping your job, nothing going wrong with the house, and interest rates not shooting up.

I remember the exact moment when my accountant rang me and said, ‘Oh, your mortgage payment has bounced’. I was in South Africa for work, staying with my dad and my stepmother, and I was like, 'Ah, the company I work for must have put the money into the wrong account’. So I rang them, and they said, 'Oh, no, we're not paying you until all the sales you've signed up are final’.

I got off the phone and I burst into tears. And I am not an emotional person, I do not cry. But I knew everything was going to come crashing down. It was 2008, so everything was already collapsing. The job had gone belly up and I knew I couldn’t replace that kind of salary. The $120,000 I owed on my personal credit card was not going to be reimbursed. And if you’re negatively geared, as I was, with no money coming in – it spells disaster.

My husband had a corporate role at Vodafone, so he had a good salary, but six months later Vodafone restructured and he lost his job, so that was very unfortunate. He got another job at Spark, but it was $60,000 less per annum. So that was a massive thing for us, because I'd just gone from earning over $200,000 to zero. And now he’d taken a $60K pay cut.

We sold all our houses – some we managed to sell ourselves, others went to mortgagee sale. We lost our family home and ended up renting for the first time in our lives. I applied for this job that sounded really interesting at BNZ, and they were about to send me the contract but then they rang me and said, ‘Oh no we've done a credit check, and you've got three defaults’ and I thought, ‘Oh, only three?’. But anyway, that was three too many, and they rescinded the job offer. I felt unemployable.

We just had to carry on. You just do your best, which is why we lived off baked beans on toast or scones, because that's what we could afford. The kids were little, and my grandmother (Mum) was living with us, and she was in her 90s. So, it was a case of, well, I can't let them know everything is falling around our ears.

I didn't open any mail, because it was always a bill or a final notice or a debt collector or something. I bought St John's Wort at the supermarket. And, because we've got a Christian background, I read the Bible, and there was this one verse that said, ‘no matter what you get into, again and again I'll send you aid’. And I remember underlining that and going, ‘OK, I'm going to be alright’.

I started hanging with a group of people who were in a similar situation to me. We had all lost our businesses and suffered. We didn't whinge, we just tried to think: what should we do? What can we do? What's our next move? And, between us, we sort of all then came up with plans.

We were renting a property in Coatesville that came with a horse. So I started picking up horse poo and selling bags of it at the top of the driveway for $2 and hanging with the horse. I enjoyed it – I loved picking up poo! I had time out and I could think about things. And then I thought, 'hang on, what if I got a grazer to share the paddock? Oh my gosh, I could make 5800 bucks a year!' Then I thought about property, and how I now knew what not to do, so how did I start again with nothing? And I started doing contemporaneous deals with no money.

Things started to turn around in 2013. Now I only have seven properties, and I'm not planning to buy any more. Hang on, I’ve got eight. But I'm not planning to buy any more. I only work ten hours a week. I like to ride my horse, spend time with family. We've got less than $20 million in terms of equity. So I'm certainly not the biggest investor you'll find out there, but we're happy. We just want to reduce our debt – we’ve got good debt as opposed to bad debt now – but now I'm over 50, I want to reduce it, so that the next time the world goes nuts, we're not as exposed,

I certainly spend money. I've got expensive taste. I will spend $1000 going out for dinner and I won't blink an eye. All my heels are Jimmy Choos, I love them. But I have a sleep-on-it policy. I didn’t have a nice pair of flats so I thought, you know what? I’ll get Louis Vuitton. They’re just like sneakers, but those and a scarf came to about four grand. But I didn’t get them right away, I slept on it and then decided. I wore them last weekend and no one noticed them – it’s just for me, it’s a mindset.

I believe you can have everything you want, but not right now. And that's hard, because I am not a patient person. And where did I go wrong in the GFC? I wanted it all now. I think how you handle your money is the number one key. If you're bad at handling money, you could win Lotto and you'll lose the whole lot.

Nichole Lewis is the CEO of The Property Lifestyle and author of Property Quadrants and No Money Deals.

This interview was edited for clarity and length. The views expressed should not be read as personal financial advice.