Money & Me: ‘I was 20 years old when I bought my first property’

Entrepreneur Kate Midttun says coming to terms with her father's death when she was nine was what shaped her financial attitude to life

Seeing her mother juggling finances, work and family gave Kate Midttun a perspective on the importance of money from a young age. Courtesy Acorn Strategy

Kate Midttun believes it is her risk-taking attitude that has helped her build and grow an independent communications agency to its 10th year. The Australian, who is founder and managing director of the Abu Dhabi-based Acorn Strategy, says her upbringing taught her to capitalise on opportunities that came her way. “Growing up, I learned it’s now or never,” she says. “The worst thing that can happen is that you’ve tried.”

Ms Midttun and her Norwegian husband moved to the UAE in 2009 after living in Canada and the UK. As a former hospitality professional, she helped launch the hotels on Yas Island before quitting to start Acorn Strategy two years later. The 38-year-old and her husband live with their three children – sons Anders, 9, and Oliver, 5, and daughter Lilly, 7 – in a home they bought in 2014 in Abu Dhabi’s Al Raha Beach.

How did your upbringing shape your attitude towards money?

I grew up in Brisbane, Australia. The event that shaped my attitude towards money, my outlook on life and perspective as an entrepreneur was my dad’s death. I was nine years old when he passed away after a six-week battle with cancer, leaving my mum as a 37-year-old widow to bring up four children under 12 years. My mum did an amazing job juggling finances, work and everything else. It gave me a perspective on the importance of money from a young age.

Did you start working early?

The legal age for starting work in Australia is 14 years, 9 months. I started working at a local fish and chip shop for three-hour shifts two or three nights a week. I earned A$7 (approximately Dh19) an hour taking dinner orders, frying food and cleaning the shop. I set up an investment account when I started and put away 50 per cent of my earnings every week.

How did your mum inspire you?

Immediately after my dad died, she put herself through financial training courses to learn how to manage and invest money, buy investment properties and manage her investment portfolio, all while working as a nurse and bringing up four kids.

Have you instilled that ethic in your kids?

Definitely. We use the RoosterMoney app to help them prioritise between saving and spending money. They can do chores to earn money and then save it or give it to charity, or whatever they want.

You moved to the UAE in 2009. What prompted you to set up a company?

After two years as marketing director for the hotels on Yas Island, I was looking to change jobs but there wasn’t much that inspired me. At the same time, a few people reached out to ask for support on developing marketing strategies and advice, so I decided to see if freelancing could be sustainable. I really enjoyed it and the projects quickly got bigger and more challenging.

You've got to have faith and take risks along the way. It's the way I grew up – it's now or never

How much money did you have in the bank before you quit?

I knew I could survive for six months without a regular salary without any problems, but I also knew it wasn’t too difficult to find another job if I needed to. I didn’t set out to start an agency, so my outlook now is quite different. But I’m glad to be sitting where we are.

What do you invest in?

Other than reinvesting in the business, it’s a pretty simplistic model of assets: properties, savings and a medium-risk share portfolio. The major factor in decisions is geography. My husband is Norwegian, I’m Australian; we’re living in our third country together as expats. We appreciate the need for flexibility, so investments need to consider the short term, medium term and long term.

Where did you buy that first property? How did you pay for it?

I was 20 years old and bought a tiny apartment in Brisbane that I still own. I’d previously saved to go backpacking in Europe and China for three months and did it on a much tighter budget than expected. I came home with cash in hand and with a government grant, I was able to make the down payment for a mortgage. It cost A$140,000 – by today’s standards, you can’t buy anything for that – and it’s now worth about A$340,000.

Do you rent it out?

I’ve put it on Airbnb. My mum runs the property for me and because of its location between universities and the city, it yields two-and-a-half times more than it would on rent. Even through Covid-19, there’s been a steady flow of bookings.

Kate Midttun says the lack of access to travel during the pandemic has been good for the family’s bank account and they had an opportunity to increase savings. Courtesy Acorn Strategy

Buying a property at 20 can be pretty risky.

I believe you’ve got to have faith and take risks along the way. It’s the way I grew up – it’s now or never. You don’t have 100 years to live your life. The worst thing that could happen is that you tried.

Does that attitude inform your business?

Certainly, but the risks must be justifiable. There was a moment a year ago when we bid for a government contract but would not have been able to afford the performance bond. We discussed not pitching for the project internally, but went ahead anyway. When we won, I had a call with some government entities through the Australian Business Group and explained the difficulties for small businesses. The result was that the bond was waived. I think people are quite receptive of those discussions and understanding – but you’ve got to believe in yourself that nothing is impossible. And then you create your own opportunities.

What was your weakest financial moment?

There were some very uncomfortable moments in 2019, where it was far too close to the wire. Being an entrepreneur is all about balancing risk and backing an instinct, teaming that with continuous movement and growth. On the one hand, we had to hire new people to win projects, but on the other, we weren’t being paid on time, which made things a lot more challenging. We ended up putting some people on part-time pay and leave without pay. But in the end, we were able to correct it and those hurdles prepared us for 2020, by allowing us to build some robust frameworks and structures.

What are some of the strategies you employed?

We moved our cash flow to a daily basis instead of fortnightly. We also did margin reports, so we had a clear awareness of the margin that we make per client. We also turned to the Beehive peer-to-peer lending network, which helped with specific issues, such as invoice financing and loans to smooth out operational cash flows. The P2P route helped us – we went to Beehive about 10 times or so – in a situation when banks were unable to do so, and there is limited access to loans and grants for small businesses.

How did Covid-19 impact your business?

Cashflow was the biggest issue. In 2020, we doubled the size of our agency across the UAE, Australia and the UK because of client demand and new business. The growth required investment, but we also needed to manage payments. 2020 was a challenging year financially, but it’s wonderful to have seen so much growth.

How has the pandemic affected your personal situation?

We were not too bad, thankfully. My husband and I battened down the hatches and made sure we were ready in case either of us were impacted on a work perspective. And the lack of access to travel has probably been good for our bank account; we had an opportunity to increase our savings.

Are you a spender or a saver?

I’m quite good at both!

What has been your best investment?

The first apartment I bought in Brisbane has been a really good investment.

What has been your worst investment?

I’m glad to say there hasn’t been anything that’s completely fallen over. We bought an off-plan property in Abu Dhabi while we were based in London. That was a bit hit-and-miss with delays in handover and so on. We came out of it pretty clean, but the biggest takeaway is being a lot more cautious about who I enter business with and doing a lot more pre-screening.