You eat what you kill - Quitting the day job to go it alone
Author:
Daisy Downes
by Daisy Downes
Their friends call them ‘Charlie's Angels’. If you need a mortgage, they're the women to call. Josephine Black, Martina Hennessy and Maureen Nolan, three thirty-something Chartered Accountants, left well-paid jobs in the insurance sector exactly two years ago. Their ambition was to own their own business, and with €5000 start up capital, they set about ‘living the dream'. In April 2004, their company, Mortgage Horizons, was born.
o date, Mortgage Horizons has underwritten over €120 million of business and business is going well.
Did they borrow? No they did not.
Did they take a salary? No they did not.
How did they live? With a little help from friends and family …
Sacrifices? “Shopping for clothes on Grafton Street”, says Maureen without hesitation.
Was it worth it? “Definitely”, they all agree.
They may not have had much in the way of start-up capital but Josephine, Martina and Maureen were well-resourced in other respects. Between them they have a lot of financial experience, great contacts, and the best business qualification money can buy.
After that, in Martina’s words: “You're selling all the time - when you're in the hair dresser, when you're in a taxi, when you're out with the girls - ‘buy a house, buy a house, buy a house!’"
HARD WORK - THE KEY TO SUCCESS
“It's hard work”, says Josephine. “We're only as good as our last email or phone call. 95% of our business is referrals. The reason we are good at what we do is that we strive for excellence. We get that from our training. When I was working in insurance I had to work extremely hard and very long hours. The market we were servicing was the USA - it’s a different time zone and the work itself was also was extremely demanding.”
A mother of four, the initial idea for the business was Josephine's. She explains that she had reached a point in her career when she needed to make a change.
“I came back to work from maternity leave absolutely exhausted. I was working in a very demanding market, very tight deadlines, very buzzy - but travel was coming in to it. I would have to go to New York on a monthly basis. It sounds lovely but it is exhausting. With four children I knew I wanted to work. I had studied hard and I really wanted to work but I needed to do something else.”
On maternity leave, Josephine had helped her brother set up a company. It gave her an appetite for her starting her own business. She was toying around with ideas, then her husband, a Chartered Accountant working in the banking sector, suggested that she should consider setting up a mortgage advisory service.
Josephine put the idea to Martina, and together they went about setting up some meetings.
“For me, it was an opportunity I was afraid to miss”, says Martina.
“When we spoke to people in the banks that the fact that we are Chartered Accountants was a major advantage.”
Nonetheless Josephine decided to augment her skills with a course in Mortgage Practice (through the Institute of Bankers), and a course in wealth management. At the same time, Martina enrolled for the QFA.
Maureen, meanwhile, was about to get married to a Carlow man and wasn't looking forward to the daily commute to Dublin. It was Martina who persuaded her to get on board and today she works 2 days a week in Dublin but is based in Carlow the rest of the time.
Up to the last minute, the women weren't sure if they were really going to start up the business. Looking back now, however, they say that for them the risks were actually minimal. They are young, and they had their qualification to fall back on and they knew that they could find jobs if things didn't pan out.
“Everything will work if you work hard enough at it. It's just like exams, if you put the effort in, it will pay off”, says Maureen.
For the first six months after they started up, they took no salary. Initial clients were referred by family and friends, and word spread quickly. By September 2004 money had begun to trickle in. They photocopied the first cheque.
From the very first client Mortgage Horizons has never looked back. The volume of business for a small brokerage has been 'phenomenal'. In December 2004 they got their first large cheque, and by January 2005 they were able to start paying themselves a salary.
Martina says: “We were so lucky. We were hungry for business. We had a lot of people who got behind us in terms of friends and family. We never looked back. We were always busy. So it wasn't a case of regrets - we just threw ourselves into it. Even on the very first day - when you're thinking 'Okay - I've just left my job - now what do I do?' - you still have the drive that got you qualified, that got you into a good job, the drive that got you going in the first place. We were like women on a mission. We couldn't afford not to be.”
Josephine explains: “Being Chartered Accountants, we're conservative … we have our profession to protect. We sat down on the first day and we had a strategy meeting. We got fliers printed, we set up a website, we contacted agents, we contacted companies, just trying to get in the door - going in and doing mortgage clinics. People are busy. They don't have time to go out and do their own research so we went out into their canteens and brought the information to them in their work place. We've done all the property shows as well.
“We never borrowed a penny. We lodged €5000 into a bank account. We organised a credit card each with a set limit and we got a guarantor for that because we were a company. We set up direct debits. For general expenses we used whatever we had ourselves. For our own personal expenses we were just careful. We went from earning a really decent salary to earning nothing”, she adds.
“It's the best lesson I've ever had”, says Maureen. “You just learn that you manage on what you have. It's good for anybody.”
Although they are tied agents of Hibernian on the life side, Mortgage Horizons offers independent mortgage advice and the women work with a panel of banks. The fact that they are Chartered Accountants has been a tremendous advantage. For their clients, they focus on finding the most suitable deal, which isn't necessarily always the cheapest.
“It’s amazing what people don’t tell you when they are applying for a mortgage”, says Martina. “A lot of people won’t mention that they have a professional qualification, for example. But that can be really relevant.”
Individually, each of the three women has her own portfolio of property, and they share a common view that property is the best investment. But, they are quick to warn against paying too much or buying in the wrong location.
WILL THE BUBBLE BURST?
Anyone keeping an eye on what commentators have to say about the prospects for the Irish property market could be forgiven for being confused. In the last couple of weeks, the Paris-based think-tank, OECD, has said the housing market in Ireland is not a bubble and predicted that prices will increase by up to 8% a year for the next two years. But as recently as last November the media was reporting that officials from the OECD and the Central Bank had accepted that the Irish property market is overvalued by 15%.
“Regardless of interest rate hikes, the property market will continue to perform strongly on the back of positive economic conditions and favourable demographic trends, including high levels of immigration, and falling household sizes. Existing homeowners should not struggle to repay as financial institutions stress test borrowers to take account of interest rate hikes”, Maureen says.
Asked for their own views, the women at Mortgage Horizons are optimistic. They say that if you are careful about location, you should see a good return on your investment.
Martina elaborates: “People always want a home. The rental market is still strong. Rents rose by 2.5% in 2005 against predictions. Immigration is a huge thing. There are so many people coming in from Eastern Europe at the moment that are renting. That is driving the rental market, and that is driving investors. The SSIAs are maturing. People want to get into property - either as a first time investor, or trading up on their houses.”
But on overseas property, all three women are more cautious. Martina talks about their experience at the property shows: “People are very interested in property. They are looking abroad because it's cheaper to gain entry to some of those markets. But in our experience, people often haven't researched it. They need to be asking: Where is the property? Who are you going to rent it to? What are the legal and tax implications? What about the language ?”
“You may be told that the market is going up by 40% or whatever, but it is vital that you do your own research. People are re-mortgaging homes and investment property - but mostly homes - to buy property abroad. If you're a first time investor you have to be quite savvy about what you're buying and where you're buying. It's hard to earn money and there's no point in giving it away. You have to know what you're doing. Sometimes you're guaranteed rental income for a period of time. What happens after that? All these properties are going to come back on the market. It's like anything. You have to do your research. Know where you're buying and be clever about it.”
Maureen agrees. “You have to be cautious now, more than ever. Look at the quality of the property. There are certain counties where prices are increasing at a more stable level. Look for normal growth. Those areas are generally safer. Be really careful of the area you choose”, she advises.
Although her husband favours Additional Voluntary Contributions (AVCs), Josephine is a firm believer in putting your money in bricks and mortar. But she says that young professionals who have just qualified and want to get on the property ladder should avoid the three bed semi.
“You don't want to be travelling to and from work and be isolated. You want to have a life as well. Buy a one bed apartment or a two bed apartment if you can. Buy in a good area and then you can hold on to it as investment property.”
For a lot of young professionals, incomes are rising. Parents are acting as guarantors but it is usually a short term thing - 18 months to three years.
OLDER INVESTORS
But what about older investors - aren't the risks greater if you want a return over a much shorter time frame?
Maureen says the returns can be good for older investors too. She takes as an example someone who takes out a mortgage of €300,000 with a view to selling the property in 5 year’s time. The interest only mortgage repayment at a rate of say 3.6% would be €900 which would be fully covered by rental income. Using OECD assumption of 5% growth per annum of Irish economy your return would be €75,000 over 5 years. Stamp Duty @ 5% would have cost you €15,000 so you’re showing a profit beofre tax of €60,000 on what was in effect an investment of €15,000. That’s a very good return.
And of course, location is everything.
“If you are going to be buying in Dublin, if you're buying in a good area, you're always going to have a market for that”, says Martina, adding that “most economists would say that in the next two years property prices are still going to go ahead.”
In conclusion, I asked if the women if they have any regrets about going it alone in business?
“None. For us it's very important to have a buzz, an adrenaline rush”, says Josephine. “And we compete with each other”.
She wasn’t joking. As I turned off the tape recorder, the ‘Sell, sell, sell’ got underway. Three business cards were simultaneously pressed into my hand and, if I hadn’t grabbed my coat and bag, I’d no doubt have an interest only mortgage by now.
One thing is for sure. If I do decide to buy anytime soon, I’ll certainly be giving the angels a call.
Mortgage Horizons can be contacted at 01 6624600 or email info@mortgagehorizons.ie