Property Hub - Investment Insights & Inspiration - Get Invested: Rob Flux on investing in your property development network

Starting point is 00:00:00 Property developers have this really bad reputation as being the, I guess, the evil people that just rape and pillage the earth. The reality is that if we do it well, we're actually the makers of community. And so a good property developer will actually look at the market demand and go, what is the market actually missing right now? Where is the population going? What do they actually need in that particular area? and by putting the opportunity in front of that person before they know that they even need it themselves that's the sign of a true good property developer we are problem solvers that that is fundamentally what we are we we make money by solving problems that other people either don't

Starting point is 00:00:45 want to take on or don't know how to take on and it really is referencing just the fact that you're manufacturing profit so anything that you can do with your knowledge your skills your sweat equity to force value onto the property. So that could be a renovation. A renovation is a property development. It could be as small as that. It could be as large as a master plan community where you're creating an entire city or an entire suburb.

Starting point is 00:01:10 So I guess it fits all the way in there. They could be residential. They could be commercial. But effectively what we're trying to do is get one something and turn it into many other something else's. And if we can do that well, then that's where we, I guess, manufacture our profit. in something. Some of us are investing consciously, some unconsciously, sometimes for good, sometimes for bad, sometimes for no impact. Get Invested will help you to start living by design,

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Starting point is 00:02:35 Thanks for listening, and now let's get invested. Hi, friend and fighters. have you ever thought about developing property or becoming a property developer and imagined all of the excitement, the glamour, the big rewards and lavish lifestyles that go with all the wheeling dealing like the Donald Trump of old? Well hopefully not because this is the absolute antithesis of what property development is all about. Or perhaps you're at the other end of the spectrum where you fear all of the perceived risks that you've heard about developing property. Now I know firsthand that property development is not for the faint-hearted after spending 17 years as an

Starting point is 00:03:13 architect and project manager working on projects across Australia and Asia for others as well as myself but like anything the devil's in the detail and anything done well and done properly has the potential to produce great results while simultaneously mitigating the risks and never has this been more relevant than the times we're entering into in property in Australia. You see the honeymoon is almost over for property investors who've been slip streaming on the back of emotionally driven FOMO home buyers created by the COVID catalyst that's resulted in the second biggest property boom in the 230 year history of our great nation with 20 to 30 percent growth in property values occurring against the 6.8 percent annual average over the last 25 years. In effect

Starting point is 00:03:59 COVID has accelerated and brought forward four to five years of growth in a third of this time and with property values already softening along the eastern seaboard and aggressive interest rate rises set to dampen demand and capacity further in the months ahead we're likely to see property values in many areas and for many properties stagnate and plateau for an extended period of time. So if you need to increase your nest egg or you're serious about continuing to grow equity in the medium term you're going to have to adopt a much more active approach to your wealth creation and one of the ways to create and manufacture equity is through carefully considered and well executed property development that's in alignment with your goals, your strategy, your capacity

Starting point is 00:04:38 and your risk profile. With over 4,000 property developers in Australia there must be something in this. So what's property development really about? What does it entail? What are the rewards and the risks? Where are the opportunities and is property developing something that you should be seriously considering and if so how? Well to paint out this picture so that you can make much better informed decisions on whether property development is for you we're joined by Rob Flux the owner and founder of the Property Developer Network that's now the largest national network of developers with a combined community of over 15,000 people. And Rob's on a mission to set 1,000 hard-working Aussies financially free by the year 2030, which is not far away. And he's doing this through his

Starting point is 00:05:22 combination of live networking events, Facebook communities, training events, and his 12-month education program to support property developers throughout their journey. I'm really excited about unpacking the world of property development, so welcome and let's get invested, Rob. Hey, Bushy, how are you, mate? Very good, mate. I'm very appreciative of you coming on the show. Thanks to our mutual friend, Scott Naggart, who's appeared on Get Invested in the past. So really interested to dive into this subject, which is very timely in the sort of mood that

Starting point is 00:05:53 we're coming into in the property arena generally. But mate, to kick things off, for those who don't know who you are, can you tell us what you do differently? And most importantly, of course, why you do what you do, mate? I guess what I do differently is manufacture profit. So I guess I went through a, I guess, a 20-year buy and hold type approach in the early days. Bought my first house at 18, first investment property at 21. Did relatively well before, I guess, unfortunately going through a divorce, giving a lot of things away and not wanting to wait 20 years to manufacture my profit again. So that's where I started a journey to learn the property development process. And

Starting point is 00:06:38 rather than waiting for the market to do the heavy lifting for me, work out what I could do to force equity onto a property. And that takes a lot of hard work, a lot of effort. And so I set out on a journey to try and learn that process. I paid for a lot of educators and mentors over the way, found a lot of them were, I guess, lining their own pockets as opposed to inspiring you to do stuff, but not actually giving you the actual tools and how to do that. So I set about getting five mates around my table to try and, I guess, help me on my journey. And that has then grown as each mate invited a mate. And as you said, it's now the largest property networking group in the country. So what we do is work as a community to try and get the community as a whole

Starting point is 00:07:25 to move forward as opposed to any one person, I guess, lining their own pockets. Yeah, I love it. And the synergies that come out of a group tackling a problem rather than trying to reinvent the wheel yourself would bring some massive benefits, I would have thought. It sure does. I guess the collective mind, I guess there's a really great book that started this whole journey for me, Napoleon Hill, Think and Grow Rich, and he talked about the power of the mastermind.

Starting point is 00:07:54 we started our process that kitchen table experience was that mastermind and we worked out very quickly that the collective knowledge is way uh way more uh important than the individual knowledge because we can only solve problems with our own worldly experience but when we combine that with i guess the knowledge of others we can not only get a different outcome but we can actually come up with an answer that that nobody would have come up with individually because each person inspires the next idea and the next person and you come out with an answer that you never would have come up with individually yeah totally agree let's dive into the second part of that question that the why what's why do you do what you do now mate what do i do uh i guess in the

Starting point is 00:08:35 early days it was very much uh selfish to be brutally honest bushy i uh was looking at how do i rebuild for myself um uh selfishly not really thinking about how this community process actually worked. And it was through the running of the network that I started to see, I guess, that you get a whole bunch of joy in actually seeing someone else succeed and that being at the top of the mountain is actually lonely. You get a great view, but you're the only one there. And if you come down the mountain just a little bit, there's a lot more room for a lot more people to fit and everyone gets to enjoy the view. And so I started to recognise that I'd rather do it with mates and I guess our group is kind of like a giant family yeah love it love it mate really

Starting point is 00:09:25 good approach and it's very difficult to find a safe environment where you're not being sold to these days Rob I find particularly in the property sphere there's always someone's got an agenda try and flog you something so having a collaborative safe environment where people can openly share their challenges and problems and issues and work through that together would be quite rare, I would have thought, in this space. It is. What I've found, Gushy, and there's definitely a business in this, I won't lie, but what I've found is that not everyone is ready to take that on.

Starting point is 00:10:01 And if you try to sell to people that aren't ready, you end up burning a lot of energy yourself. You end up wasting their time. You end up wasting their energy. and it's much better to, I guess, get people to a position where they're able to make their own mind up as to whether or not they actually want to go on that journey. You don't have to sell to them at that point

Starting point is 00:10:19 and they will actually get better success because at that point they're ready and they know what it's going to take to take the action. That's the kind of people that we're trying to, I guess, bring along on this journey is give them enough ammunition to work out is this a journey that they want to take on because it's definitely a bumpy ride and you've got to prepare them for what bumps are ahead.

Starting point is 00:10:42 Yeah, totally agree, mate. It's giving them enough information so they can make their own informed decision. That's definitely the art. Now, mate, I'm going to sort of change tracks quickly here. What's something unique or interesting about you that you've never actually shared publicly before, mate? I won't say never shared, but very rarely shared.

Starting point is 00:11:02 I'm a rugby tragic. I had delusions of grandeur of actually playing for the Wallabies way back in the day. I did play a little bit of rep rugby, grew up in the Northern Territory, so played rep rugby in the Northern Territory, did a few international tours. I'm technically a rugby international, although I guess wouldn't really call that, I guess, representing NT, I guess, a great claim to fame. and whilst I have retired a long, long time ago with some, I guess, many bumps and bruises and broken bits,

Starting point is 00:11:36 I re-established my rugby career back in February with a charity game playing with about 14 Wallabies against a Tongan international team at Suncorp Stadium, raising money for the Tongan relief fund, I guess, for the tsunami. So that was my one comeback glory that I was playing with George Smith, Drew Mitchell, James Horvold, Nathan Sharp, a whole bunch more.

Starting point is 00:12:00 Mate, that was me living the dream at that moment. But I very much realised that I'm a very old man now, 53 years of age. My ability and my ambition are no longer aligned. Mate, if you're like me, I'm a – well, we've got more things in common than I thought. I spent many years in the Territory as well, but I'm a field hockey player, mate. And I'm at that stage where my brain is still 25,

Starting point is 00:12:24 oh, but my body's considerably older and slower than what my mind thinks, mate. And I'm not sure this is ringing true with you, but I'm about a second behind where I need to be. I've just got to make up with cunning and wisdom, what I used to make up with speed and agility. Yeah, no, I hear you, mate. My knees are sadly six knee surgeries, two knee reconstructions. I've got a whole bunch of titanium in my back I've got electrical implants in my back I've got

Starting point is 00:12:57 all sorts of things going on so I guess just strapping on the boots and going out there in itself was an achievement just to uh to take on the challenge but I'll tell you facing a pack of tongans coming at you uh I guess that full noise is is daunting if you like trying to take on a freight train going at full speed mate so yeah but for anyone who uh who would would love a laugh uh stan sport you can sign up for a seven-day trial you can actually go and watch the uh vintage reds versus tonga uh and you will see me in all my glory mate uh and as a uh i guess a tongan takes my head off and cuts me in half um it is a joy to watch vintage red great name for the team love that but uh i'd like to now circle back if you if you don't mind and sort of take us on a

Starting point is 00:13:50 reader's digest journey of your uh life so far in terms of what you've invested your time your energy and your money in over the years and and why of course and how has this led you uh to where and what you're doing today as i touched on before bushy i i did 20 years of buy and hold i actually had a, I guess, quite a fortunate start to things. And the context is growing up in Northern Territory, Darwin in particular, when I was very, very young, my parents' house got destroyed by Cyclone Tracy. And mum and dad were not insured. They didn't have any money. It was a brand new house. It was only eight months of age. And so I grew up, I guess, in the wreck of a house, underneath the house having a shower with I guess with a garden hose uh with a corrugated iron

Starting point is 00:14:44 curtain uh and I guess didn't have much in growing up and saw my dad working his butt off to try and get me uh I guess to go to a good school and those sorts of things and it very much set me up to say I never want to be in that world again um when when I went to to do this I saved really really hard i i did letterbox deliveries i did worked at kmart i pushed trolleys for a living uh did everything i could to actually save money and at the age of 18 i'd saved up enough to say well i actually think i can move out uh and i think i want to go buy a house to start with and mum and dad looked at their personal um circumstances and went well we're still paying off the debt of a wrecked house from many many years ago and we've got this new house that we're struggling

Starting point is 00:15:34 to actually afford, the only way that they could help me was to actually sell me their house because that helps them get out of their money troubles. And mum and dad stayed living with me. They paid me rent. So I'm an 18-year-old with mum and dad as a boarder. Mum was still doing the cooking and the cleaning. I was, I guess, living the life of an 18-year-old, going out partying and doing the things that 18-year-olds do and so I guess I probably did it very differently to most at the start. Yeah, it's a very different dynamic, mate. Would have been a bit of fun around the kitchen table at times, I would have thought, or not? Well, up to a point, mate, up to a point. I guess when you are living that sort of lifestyle as an 18-year-old, you're not really

Starting point is 00:16:25 thinking about longevity at that point in time and, you know, I'd go out at seven o'clock at night, and I'd come home at 7am in the morning. And, you know, mum and dad still trying to give me good parenting advice. I distinctly remember a specific moment that changed my entire life. And that was when they sat me down and said, son, you're not leading a good lifestyle here. This is not going to set you up for the future. And the words that came out of my mouth are still resonating with me today, it's my house, it's my rules. How did that go down with mum and dad? That did not go down very well at all, Bushy. So they looked at each other and they looked at their watch and they went, it's time for us to go. And at that point in time, I was 19 and a half

Starting point is 00:17:17 and it was about six months before the recession that we had to have, where interest rates went up to 17 and 18 percent and here I was as a I guess a still an apprentice at this point in time I guess trying to pay off a mortgage and really really struggling with the actual repayments and that's where I started to get really creative with my thinking I started subleasing rooms so I guess rent by room type scenarios to subsidize that and I managed to crawl through that But at the same time was still very, very much in, hey, I want to take my life forward. I still had this resonating thing in my head saying I don't want to live in that wreck of a house anymore. So I was still investing.

Starting point is 00:18:07 I read a book, a lady by the name of Jan Summers, who I guess is one of the first educators at all in the property space going way, way back. I read a book of hers that was all about negative gearing. And I went, negative gearing is the answer. Went and bought my first investment property at the age of 21. And without any knowledge or any skill at all, I succeeded. And in hindsight, if I look back at how naive I was at the time, it was sheer luck that I succeeded. I managed to time the market perfectly well. I thought that I was, you know, top of the heap.

Starting point is 00:18:45 Um, but in reality it was just blind luck. Um, but that managed to get me to a position where, uh, I owned my house outright at the age of 24. Wow. So I was off to a, off to a cracking start, mate. Uh, but, uh, I guess with a little bit more education, it, I worked out that, uh, as I said, it was all about luck for the first time. So I had to actually educate myself to say, well, how did I succeed? What were the things that actually went right for me? I had a couple of things that didn't quite go to plan. And I slowly worked out that education is the way to actually fast track this. Now, in that buy and hold investing stage, I kept hitting these glass ceilings with regards to, hey, I don't have the deposit to buy the next place and I don't have

Starting point is 00:19:32 the serviceability to fund the next loan. And I kept hitting these glass ceilings and I still made my wealth. So it took me 20 years to make my wealth. And on paper, I should have retired at the age of 38. But I got divorced at 37. And so I had to, I guess, wind up most of the assets and, I guess, put it all into the kitty and divvy it up. And I just didn't want to do that the second time. So that's where I decided to do that manufacture the profit type approach and say, well, I don't want to wait the market. I don't want to hit these glass ceilings what can i do differently uh and that i think those couple of key turning points in my life the cyclone to set me up um that one moment with mum and dad uh i guess the divorce um they're all

Starting point is 00:20:19 pivotal moments that you look back on and say i wouldn't be where i am if those things didn't happen yeah it's but on it's often the biggest challenges that create our biggest learnings in that regard and there was two very uh quite probably quite timely uh learning events for you in that capacity yeah let's let's sort of jump forward to the future then for a second if we can i'd i'd love for you to uh paint us a quite vivid picture of what your ideal lifestyle and your life vision is if you could please mate uh i think i'm living my ideal lifestyle now bushy that um i'm in a uh a fantastic house with a fantastic view um i get to travel around the country um i'm i guess spending lots of social time with my mates um my mates are i guess my

Starting point is 00:21:12 my passion my property network has become my family um i'm very fortunate in that the passion that i'm following is i guess is both my lifestyle my my livelihood um if i stopped i don't need to work i've got passive income that will will bring it in but uh you know you do these things because you love to do them yeah absolutely and it's uh it's so great to be talking to someone who is in that position uh and has crafted that exercise i'm assuming that that sort of watershed moment at 37 when it was you know i had a similar event a few years earlier at 33 where it was a real ground zero exercise for me as well and and really needed to do things differently to reposition myself. I'm assuming that property development at that crucial time

Starting point is 00:22:07 was your mechanism for manufacturing that equity and then putting yourself in a position where you're now creating an income flow that doesn't rely on you to do it. Can you put a bit more shape around that for us? Yeah, absolutely. And I think property development's got a little bit of a stigma. So there's a few things here that sits in that. So firstly, we are manufacturing profit and, I guess, flipping projects, for want of a better word, I guess, to sell down and pay down the debt. And if you just do, I guess, a project that you build and then sell everything, you get lumpy cash that comes a long way apart. And when you do, you pay a bucket load of tax in doing so. And so then you start eating down the profits. And all of a sudden, I guess,

Starting point is 00:22:58 you've got nothing left in your nest egg and you've got to do it again. And so you can't just do property development. What you need to do is actually combine property development with property investment and actually have a blended approach. So the first few projects are probably you learning the skills, getting the ammunition and how to actually do the process. But then after a while, you want to start to scale your projects to a point where the size of the projects allows you to keep at least one as profit. And if you keep one as profit, then you will own it outright. It will be positively geared, I guess, for eternity.

Starting point is 00:23:39 It'll be giving you passive income as it goes. It'll be growing with the market as the market grows. And I guess the rhetoric is every seven to 10 years, you're double in value if you're in the right place. The rent keeps going up with it. And it gives you equity that allows you to then scale into your next project. uh and so that's the ultimate goal is to get to a project of that size and if you collect enough

Starting point is 00:24:01 of those then you've got enough passive income that you never need to work again and by not selling down you're not realizing your profit and if you don't realize your profit then you're effectively doing you're doing tax deferral you're not you're not i want to be very clear it's not tax avoidance it's tax deferral at some point in the future when you sell that you will pay the profit the tax uh but in the meantime you're getting a hundred percent of the profit to actually grow with the market yeah beautiful and if you're getting a uh a reasonable size income out of it and and some others that you add to it over over time then there's there's no real need to sell at any any point yeah there is a style anyway yeah there is a magic formula to make that

Starting point is 00:24:44 happen bushy that um uh is not as complicated as it sounds and if i ask the i guess the the the question uh to most people i get pretty much an identical answer and that is how much profit does a property developer try to make out of their projects and i get a universal answer that comes back which is 20 profit on cost so if we use that 20 profit on cost as the i guess the the calculator then if we do a project that is six dwellings then if we sell down five the five will actually pay the cost and then the sixth one is for free yeah so our ultimate goal is to to do a couple of small projects that give us the skills to step up in size to get to a point where we can actually start to to uh to keep them uh and if we can do six we keep one if we if we do uh 12 we keep two

Starting point is 00:25:38 uh and i guess that's that's where i see a lot of people fail is they just forget to keep them Yeah, exactly right. And getting to that point is the challenge because there's quite a cliff that you need to leap off in terms of equity and capacity from just the buy and hold to the develop and sell and then hold some, which I'll circle back to that a little bit later on if we can. Yeah, well, it's a very different funding model, and the linear thinking that goes into residential lending is very different in the commercial development space, and thinking differently lets you scale. Absolutely. Well, let's go there. I was going to sort of cover off that later in the exercise, but while we're hot on the topic,

Starting point is 00:26:26 because it is a mindset shift as well as a capacity and approach shift when it comes to funding effectively a commercial exercise versus a resi project, even if the property is a residential, it's still in the commercial lending arena. Just so that the listeners can get their head around the differences between the linear resi approach and the quite different approach when it comes

Starting point is 00:26:53 to the development sphere. Can you sort of just open our ears to the key elements that they need to be aware of in that regard? Yeah, there's probably two very distinct phases or parts to this problem. So then there's firstly, there's the way that the lenders themselves approach it. And then there's how you can actually acquire a site differently to potentially in some instances avoid the lenders altogether. So the first approach is the lenders, instead of looking at this as a 20-year loan, where you have to justify that the rent is going to pay the mortgage off and that you can actually afford to sustain the loan, those sorts of things, the lenders take an approach to say, look, if you're manufacturing the profit, you're going to be in and out of this

Starting point is 00:27:36 in a short period of time. And so we're going to look at the profitability of the deal rather than you, the individual, and the serviceability that you've got to pay this off over a long period of time. So, they look at the deal itself and less about how much income capacity you're actually generating, which means that if the deal's a cracking deal, then the lenders will actually come in and back you to actually do that. Now, they need equity in order to do that. I guess, so typically, the equity that they want is a little bit higher than 20% deposit in a residential world. You're typically looking at 30, sometimes even 40% equity in the commercial world. But in doing so, you no longer have to

Starting point is 00:28:20 service the loan because they look at putting what they call capitalising the interest. So you push the interest to the back of the loan when all the revenue comes in from the sale of the finished product. So your cash flow wise, you're much, much better off by going down this commercial approach. And you can basically go into bigger and bigger deals based on, hey, how good is the deal itself? So that's kind of stage one is how do I get the lender to do it? And then stage two is to say, well, if I acquire the deal in a really, really creative way, do I need the lender at all? So for example, if I do a joint venture with the existing landowner, then that landowner never actually sells it to me. Now, if they never sell it to me, then I don't have to come up with the

Starting point is 00:29:09 deposit and I don't have to, I guess, fund the actual construction side of things. And I'm not paying stamp duty and I'm not paying interest along the way. So the deal becomes more profitable. We can then do creative things where we pay the vendor a lot more money for that because they're actually going to share in the profit. They've quite often got enough equity in the property because they've owned it for so long that that can actually fund the construction loan, the security in the construction loan. And so it actually gets to the point where just by thinking differently, you can actually do things with little to no money in some instances. Money is absolutely needed, but it's really about whose money and how you actually

Starting point is 00:29:49 do that. And it's about controlling the property rather than owning the property. Yeah, I love it. And that's a fundamental shift. Control versus own, it's the outcome you're looking for not the not the ownership necessarily uh and if doing exactly what you're suggesting partnering with the existing owner and avoiding all of those change of ownership costs and then using the accumulated equity to be able to fund the deal is a very smart way to craft that mate so i know there'll be a lot of listeners that their ears will be pricking up as they as they listen to this uh you know a lot of the scaremongering and misinformation that's out there, you know, in relation to the property development sphere, particularly if you're

Starting point is 00:30:30 doing a number of residential properties, there's always this talk of, you know, you have to have X number of pre-sales. What you're suggesting there avoids all of that. What's your commentary when that gets thrown at you, which I'm sure it does over time? So pre-sales are one of those things where there's two different reasons why you'd want to do a pre-sale. Firstly, it's risk mitigation. So by having a pre-sale in place, you know categorically, hey, that cash is in the bank.

Starting point is 00:31:01 All I've got to do is follow a process to actually get it there. So I highly recommend that pre-sales is a good approach to minimize your risk in the process, especially when you're in a market at the moment which is falling and you want to know that you've got that money locked in because you don't know where the bottom is. the other thing from a pre-sales perspective is if you go for a big four bank they're going to mandate that you have a lot more pre-sales and that can actually slow down the project so you may want a blended approach where you have some pre-sales but not all the pre-sales so that you can actually get on and do the the project itself because you'll probably get more cash from a finished product than you will from a from a pre-sale pre-sales a lot harder because people can't touch it they can't feel it they can't smell it they can't imagine what their lifestyle is

Starting point is 00:31:53 going to look like living in it and so a pre-sale takes longer costs a little bit more whereas the finished product you know you can stage it you can make it look pretty people can imagine themselves living there so you want to have a blend of those two to say well I want to maximize the return but I also want to minimize my cost yeah I love it love it now while we're sort of talking in a sort of coming out of your personal experience. I'd love for you to share with us what's been both your best and worst investment to date then, if you can break that down for us. Well, I'm going to say the best one was the one that set me free. And it's not necessarily my best financial return, but it was the one that completely changed my mindset. And I think that

Starting point is 00:32:38 is because of that it resonates so much more there was a a project uh that i did where there were two existing uh old queenslanders so i'm based in brisbane that uh that i purchased where somebody had been doing a rent per room model in those properties and they were doing it very very poorly um and it was not well run it had really bad tenants um and it looked like on the surface of it a cash flow type project but I could see something that others couldn't and that was that the big backyard had the opportunity to put six townhouses in the back and so I bought it for the opportunity of the property development at the back and then worked out that hey if I did some really smart things using my old investment brain

Starting point is 00:33:31 I could actually turn around these poorly performing rent per room properties and actually turn those around to actually be highly generating cash flow positive, plus have the townhouses at the back. Now, that's the opportunity that I saw. But I had a challenge in that right now, they were technically a house. But because of the fact that they were rent per room, the bank didn't want to recognise the rent from them because they said, well, that's a commercial style opportunity. So we want you to deem that to be a commercial property. And I didn't have the deposit in order to do that because commercial properties need a higher deposit. But I did have the deposit if it was deemed residential and the bank said, well, we can

Starting point is 00:34:22 deem it residential, but if we do, then we're not going to recognise the rent. And when we didn't recognise the rent, then my day job didn't service the loan enough. And so I was in this chicken and egg scenario where I knew that if I went residential, they wouldn't give it to me. And if I went commercial, they wouldn't give it to me. But I could see the money sitting there, and I just didn't know how to unlock it. And it took quite a while for me to get over the the headspace to say, I don't have to do this by myself. I need to reach out to someone, to ask me to help because the deal is there it's just how do i unlock it and it i had to swallow my pride and go talk to my sister and she became a i guess a 10 shareholder in that first deal

Starting point is 00:35:10 to basically just be the guarantor for the rent so we went in with the lower deposit she became the guarantor for the for the rent because they would they were deeming the serviceability low she never had to tip in a cent ever but she just had to put her name on paper And it was by doing that and asking for help that I was able to unlock, I guess, the six townhouses at the back, about $210,000 worth of revenue out of the properties at the front, a million dollars in equity in the deal. and it was all because I swallowed my pride and that's probably the the thing where I think a lot of us let ourselves down from a mindset perspective that we have to do it with our own resources um and that I guess a journey shared is a journey halved spot on it's the key there is making sure that you trust and or enshrine the what-ifs in the relationship with

Starting point is 00:36:11 whoever it is that you are joining to make that happen uh it's a bit bit like a prenup in effect to make sure that each party's protected uh regardless of what the outcome of that is so no doubt you've worked through that uh considerably either personally and and through the the network that you developed any tips on on uh taking on partners effectively in that regard that that's going to protect them and still get the outcome that people are looking for? Yeah, there's a few tips there, Bushy. I guess the first one is you want to make sure that it's a very good personality fit. You touched on prenups. We go into marriages where we love people and 50% of them fail. So you want to make sure that you've got some sort of documentation in

Starting point is 00:36:58 place that says, well, if that relationship fails, what happens at the end? And so the same thing happens with any sort of joint venture. You want to have a formal legal document that actually identifies what happens in all the different scenarios. So what happens if one party gets sick? What happens if one party dies? What happens if one party doesn't perform their roles? So if you go and have the difficult chat up front, get it on paper, then when you actually get to those scenarios, there's no arguments, there's no fights. Everyone knows exactly what's going to happen. um you want to make sure that you've got the same goals and ambitions you want to make sure that your exit strategies are the same one person might want to get it da approved and flick it the other

Starting point is 00:37:43 person might want to construct it you don't want to be having fights halfway through to to work out where we're going to go um but if you get all of that in alignment and document it up front then you have check-in points along the way and as you go through the different stages of the project you have a meeting of minds and you say rightio what we said was we're going to take this all the way through the end we've just got our development approval let's do a sanity check are we all healthy are we all in a in a good spirits uh is the the market going in the direction we want to go does the is the feasibility still on track um and then it's like a go no-go decision to then take on the next phase uh and if you if you do that well then everyone's in alignment

Starting point is 00:38:24 the communication's great um and even if you have some slight differences of opinion uh they're aired everyone gets to have their their point of view said uh and things are able to be solved much easier love it love it and if people adopted the approach you just outlined to their own relationships that we'd probably have left the bosses as well mate it's uh it's a really good framework and approach to really make sure that uh all the bases are covered before you get into bed, which is a big part that people tend to gloss over. But mate, I want to flick now to your worst investment. Can you walk us through what your worst investment has been and what you've learned from that? Well, I've only ever lost money in one project. So I'm going to say

Starting point is 00:39:08 that's the one that's worst. And it was only meant to be a very quick in and out, one of the simplest deals that you can actually do. Um, one that I'd done many, many times before, uh, what is called a, a splitter block. So that's two lots on one title. Uh, the idea there was knock the house down, separate the two titles to put two brand new homes and, uh, and, and sell the property. And, and on paper, everything was perfect. Um, and then COVID hit, uh, and then the, the market shifted through nobody's fault, but I guess got to a position where I just did a risk mitigation approach, Bushy, where I went, look, I think I know that this is going to recover. I think I know that there's, you know, that all the drivers are pushing us in the right direction in

Starting point is 00:40:02 the market, except this one-off event has actually occurred. So I had to have a, I guess, a heart to heart with myself to say do i do i lock in the loss right now or do i do a risk mitigation sorry do i do i ride it through uh and you know whilst i was confident it was going to recover um do i do i take the punt and actually hold on and we have no idea how long covid was going to take to get out yeah um so i chose the i guess the strategic decision to uh chop off a finger rather than losing an arm. And it hurt a little bit, but I lost 50k in that project. So, you know, when you think about the worst project, that's not a bad one, but I guess it's still one that you learn from. If I had have done it again, I probably still would have exited early. I don't

Starting point is 00:40:55 think I made a bad decision. It was more from a holding cost perspective, I wanted to get out of the market where it was right there because of the fact that it was there was a lot of fear-mongering i know that uh i guess the market as a whole uh once the media hype gets hold of things yeah um the the market doesn't behave as it should yeah uh and you know you whilst the all the indicators and drivers were pointing in the right direction with regards to the the supply and the demand the hype was you know get out get out so I chose to strategically get out before everyone else did pretty smart unfortunately perception is reality and and mainstream media does drive people's mindsets expectations outlooks and attitudes whether we choose to ignore it or rather and

Starting point is 00:41:48 most people would probably dig their heels in thinking no I've committed to this I'll see it through and pay the price a much heavier price and as you say lost the arm rather than the finger you're clearly smart enough at least to go well if I get a blood nose on this it's not going to be the end of the earth I can I can still in a position to go on and do other things so now that's that's some good learnings there mate now sort of drilling into the whole property development arena and it's a subject that's very broad and encompasses a very wide spectrum of different approaches so I'd love for you to give us a bit of a rundown on the breadth and depth of the sort of strategies, approaches and types of developments that fall under the property

Starting point is 00:42:29 development banner so that listeners can start to get a sense of where they might fit? It's a very broad term, as you said, and it really is referencing just the fact that you're manufacturing profit. So anything that you can do with your knowledge, your skills, your sweat equity to force value onto the property. So that could be a renovation. A renovation is a property development could be as small as that. It could be as large as a master plan community where you're creating an entire city or an entire suburb. So I guess it fits all the way in there. They could be residential, they could be commercial, but effectively what we're trying to do is get one something and turn it into many other something else's. And if we can do that well, then that's

Starting point is 00:43:17 where that's where we uh i guess manufacture our profit the problem is that most people don't know how to do that well and they don't understand i guess the the entire purpose for property development it is not just to profit um property developers have this really bad reputation as being the i guess the the uh the evil evil people that just rape and pillage the earth The reality is that if we do it well, we're actually the makers of community. We are the people who build every single house, every single road, every single school, every single shopping centre. We are the people that make the community that we actually live in. And so a good property developer will actually look at the market demand and go, what is the market actually missing right now?

Starting point is 00:44:07 Where is the population going? What do they actually need in that particular area? And by putting the opportunity in front of that person before they know that they even need it themselves, that's the sign of a true good property developer. Yeah, I totally agree. They're future problem solvers. That's exactly what it's about and bringing that forward and making that tangible, which is awesome. So putting that in perspective then so that, again, the listeners can start to get a sense of whether this is something that fits within their wheelhouse or not, are there any basic attributes in people that are best suited to property development? And on the flip side, who's not and why?

Starting point is 00:44:50 Oh, mate. You need to have kahunas of steel. We are problem solvers. That is fundamentally what we are. We make money by solving problems that other people either don't want to take on or don't know how to take on, because in the end, the person who buys our finished product, GeoPublic, they're inherently either lazy or uneducated in how to do it themselves. And what they want is a finished product, which means that we have to have the ability to see the the opportunity. We have to see the problem that it takes to be solved to get to the opportunity and not be daunted by the fact that that is going to have some challenges and bumps along the way. And if we can do that in a commercial sense, then Joe Public will buy that finished product off us because they just want something that's turnkey. yeah yeah so and you've touched on a number of key traits there there's a creativity

Starting point is 00:45:51 piece there's a resilience to be able to see through and over overcome problems that are occur with it and on the flip side of that being lazy and just looking for a finished product you're not going to make a good property developer is there anything i've missed there no i i think i think they're the elements of what what comes in from a mindset perspective the The thing that I would add to that, they're the traits that you need to have. But what we'll find is that there's a lot of mindset that happens along the way. Because those problems keep popping up, you will inherently get knocked down many, many times. And so your tenacity to get back up again, the mindset that we put in front of us with regards to limiting beliefs and trip hazards that will actually stop us from taking the action.

Starting point is 00:46:43 And it's actually the skills is 50% of it, but the mindset is the other 50%. And we really need, I guess, someone on our shoulder to actually keep patting us on the back and lifting us up and dusting us off and pushing us back into the arena. Otherwise, what happens is we have all the right intentions. We hit the first obstacle, get knocked down, and we just don't get up again. Yeah, spot on, spot on. And they need to adopt the mind of a child, mate. If we didn't get up every time we fell over when we were trying to learn to walk, we'd still be crawling around on nappies. So, mate, let's dive into some of the biggest mistakes that you see people making when they get into property development, if you can, please.

Starting point is 00:47:29 The first mistake I would say is to treat it as a get-rich-quick scheme because there's nothing quick about it. It is effectively taking on a new career, Bushy. You have to treat it with the same respect you would in changing any career. You need to learn how to do that. You can't become CEO day one. You need to start as the janitor. You need to then work your way up through the process. And that takes time.

Starting point is 00:47:58 It takes effort. A lot of people don't give that enough due justice. and they think that just, you know, because there's some spruiker on stage that tells them that, you know, a million dollars can be made in a deal. The answer is it can, but the likelihood of that is pretty low. So you've got to put a lot of effort into the process to actually learn it. And then even when you know it, you might have the skills, but you don't necessarily have the confidence. So you've got to go out and practice it and fail a lot on paper. We want you to fail often fail safely and fail falling forward so that you actually learn from the process

Starting point is 00:48:36 the only time that you actually lose money is when you're in a dud deal so if you can if you can do all your failures on paper you're going to be I guess a lot better off in the pocket so it's going to take at least 12 months to actually get you to the point where you both have the I guess the competence and the confidence to actually take on a deal um because it takes that long what tends to happen is people get about the six month mark and they see somebody else doing a different strategy that suddenly got success and then whilst they were learning one skill in doing one kind of thing they then all of a sudden jump ship and try to do a different kind of strategy and they have to go back to ground zero again

Starting point is 00:49:21 and because they've not given enough due process to the to the path that they were actually on in order to get to the point of success and so they have a lot of false starts and then after two or three attempts at not getting anywhere they tend to give up but if they had have stayed on the original path in the first place they probably would have had success you know bright shiny objectitis absolutely creeping in yeah and that's spot on it's uh only as good as the next person you talk to which is always a recipe for disaster are there any other uh mistakes that you see people making around that then that we need to be aware of yeah i would say and we touched on before the breadth of property development as strategies actually sit out there um there's only

Starting point is 00:50:06 two that my encouragement to people would be to start to concentrate on and those two strategies are the only ones that that you can start small and then scale over time that is you can do a one into two of something so that might be a one into two subdivision it might be one into two duplex and then you can do a one into four one into six one into ten one into two hundred which means that you can build on the skills that you learned from the previous project so those two paths are the the subdivision path and i guess the the townhouse or or or apartment type approach which is what they call multi-res so you are either scaling up or scaling out your projects. If you do that, then you're going to be able to go into project number one, learn a lot

Starting point is 00:50:56 of skills, and then reapply those skills into deal number two. And it's going to be only a small growth to get to that next deal size. And then you can reapply those skills again into deal number three. If you do that, then you will scale to the point where you are doing that magic six that we were talking about before, and you can start to keep them. If you flip and flop between strategies, if you're doing, I guess, a subdivision today and a townhouse tomorrow and a commercial the day after, you're not getting the benefit of learning the skills from the previous project and reapplying that. And so you're going back to ground zero every time and you might be successful from a cash perspective, but you won't be successful from a passive income perspective and giving up your

Starting point is 00:51:44 day job yeah it's spot on and it's it's making sure that you and your personality your situation and your mindset uh is a good fit for the sort of strategy that you're going to adopt so that you are going to be able to see it through uh that that's that's the the biggest challenge i'll say because we we see a lot of people in this day and age who uh find it very difficult to be focused on anything for any extended period of time uh is there any framework uh that you can suggest that'll allow people to go okay well given this then then that is the appropriate approach i should start to take in relation to property development yeah so the first thing uh and i'll use that analogy like a gps okay so the first thing when you wanted to go somewhere you

Starting point is 00:52:34 typically don't put the name of the suburb what you do is you put the exact address of where you want to go. So it's really important to understand where you want to head to. So that means, and a GPS needs two things. It needs to know where you're going and it also needs to know where you are. And I think a lot of people don't put those two things into their own financial position. So they don't look at, hey, what's my budget today? What is my assets and my liabilities? Where am I actually sitting right here right now? And then planning, where do I want to be? And then once you know the differences, you can actually navigate a path to say, well, how do I get from here to there? And how do I keep checking in on myself along the way to actually get there? So, you know,

Starting point is 00:53:18 if you go off course, GPS will redirect you onto course. Similarly, I guess if you've got a roadmap that's actually mapped out, you can actually go, well, I've deviated from path, how do I bring myself back on? I think most people don't go to that effort. And you touch on it by saying you've got to design your life, it's the exact same thing. We've got to design that. So in our realm, I call that our five-year property action plan. We try to help people to actually build their own plan to say, well, how do we actually work out how many properties do I actually need to own outright? How do I actually get the skills to work out? How do I actually get there? And how do I pick a strategy that's going to, based on my current financial position, is a strategy that

Starting point is 00:54:01 i can start on right here right now and if we start to do that well then it's actually not hard to become financially free it's it's effort um but the the mechanism is easy mate uh we we must be uh some of these twins joined at the hip i think because uh what you've what you've just said then uh it's pretty much word for word what i say to people every time i catch up with them mate. Only different types of approach and outcomes, but still exactly the same approach to achieving the exercise, mate. So really appreciate you downloading that for us. Let's turn to risks because it doesn't matter what sort of investment you're getting into, people tend to focus on the rewards and don't spend much time really getting their head around

Starting point is 00:54:53 what the risks are. Are you able to give us a, given the sorts of, particularly the starter frameworks that you spoke about earlier in relation to subdivision or multi-res as places to really start building your skill levels, what are the biggest risks associated with those that we need to be aware of? Well, I'll give you a very famous quote from a very famous man, warren buffett um what he says is risk comes from not knowing what you're doing and so i think the biggest risk that people do is they don't spend enough time educating themselves up front to say what are the challenges in order to get there now you you touched on an example before about the mind of a child and i'll go back to a very similar one when we're when we are a child we're

Starting point is 00:55:44 told that to cross the road is dangerous. But if you look left and look right and look left again, then what you're effectively doing is putting a management plan in place in order to navigate the risk. So the first, once you do that, the risk hasn't changed, but we are able to navigate our way through. And so the first thing is educate yourself to know what the risks are. The second thing is put a management plan in front. And then the third thing is to not forget that the road is still bloody dangerous um and so you you don't want to ever forget your management plan because if you if you manage it right then the the risk never disappears but you minimize it so much it's not funny yeah absolutely spot on and a great way to approach that so we sort of summarize some of

Starting point is 00:56:32 those key elements then what do you think are the keys to being successful with property development then rob uh locking in one single development strategy uh so whether that be subdivisions that whether that be multi-res uh doesn't matter which one so lock in the one and start to become an expert at that one thing even when you lock that one strategy in there are 537 councils in australia which means that there's 537 different sets of rules in how to do that one thing So it's really important to lock in one council with one set of rules so you can actually get to the point where you know them backwards and you can actually get to the point where you can almost quote them verbatim, which means that when you start to assess your sites, you're assessing them in minutes, not hours or days, which then means that you can, I guess, start to eliminate sites in no time flat. Yeah. by then narrowing it down to one council, you're going to then start to go, well, within that

Starting point is 00:57:39 council, where are there, I guess, one, a lot of opportunities, two, evidence that other people have done what I've done before me, and three, proof that when they did it, they were actually profitable. If we do those things, then we can piggyback off someone else's success and not go in and be a pioneer into an area and hope that we're the ones that make the money. Instead, we'll just follow someone else in, make sure the demand is still there. I don't need to be the first in. I just don't want to be the last out. Yeah, I love it. And I always say to people, build something on paper first before you do it in reality. Never more important than in the property development sphere as far as the quality of the feasibility is concerned. Any tips or

Starting point is 00:58:29 suggestions around feasibility or places that people need to go to make sure that they're asking the right questions to get the right answers? Yeah, so I guess a feasibility is this mystical thing that people think, if somebody gives me a spreadsheet and the number says this is the profit, then it must be a great deal. And I would caution people to say, anyone who puts a feasibility in front of you is going to show you one that's profitable yeah um the the reality is that a feasibility is only as good as the the input that actually goes into it and so it's not the spreadsheet that's important there are only fundamentally two things that go into a feasibility bushy um the first one is being very good at your site analysis and being able to identify every

Starting point is 00:59:14 single one of the problems that need to be solved on that site if you can identify the problem then you can put that risk management plan in place and you can actually go and speak to the appropriate consultant and get that costed. And then that goes into your feasibility. If you're not good at the site analysis, then you'll never identify the problem. If you never identify it, it never makes it into the feasibility. And so the feasibility is going to look fantastic, but the problem is always going to be there. So that's problem number one. Problem number two is being able to read the market really well and actually understand what is an appropriate buy price and what's an appropriate sell price. And so when you plug those two elements in, you know, what are

Starting point is 00:59:57 the problems I'm solving and how much is it going to cost and what am I going to be selling the finished product for, then the feasibility is just the adding and subtracting of those two things. And I think a lot of people don't put enough due process into those two steps, which is the site analysis and the sales research and we get way too optimistic on on the sales price and uh you know the reality is that doesn't matter how well you run a project doesn't matter how well you identify the problem if you don't sell the finished product you never get paid um totally agree i've always said to people go in assuming you can't sell at the outcome and what's going to happen then if you're stuck with those properties and you have to hold them for a period are you going

Starting point is 01:00:39 to be able to do that and is that going to work because uh if you sort of plan for the worst and then then work for the get the best then uh you'd at least cover the bases and uh particularly in a rapidly changing environment and if you're doing a development that lasts you know probably at best one and and more likely uh two years ish then uh there's a lot that can happen in the marketplace as far as the sale of a particular opportunity is concerned that you need to accommodate there any any suggestions you've got around protecting yourself in that event yeah so the first thing is uh being able to read the market you you touched on it a little bit earlier but uh when we listen to market commentators in the investment world uh they're tending to look at a

Starting point is 01:01:29 thing called i guess a market indicator now an indicator is something that has already happened So days on market, median house price, auction clearance rates, it's already happened. And so people are giving you commentary on something that's already happened. Now, the reality is that the sale may have transacted today, but in reality, the decision point for that probably happened about four or five months ago where somebody had to think about the sale, had to prepare the property for sale, go talk to agents, put it on the market, do all the marketing, I guess get it under contract and settle. So when you're looking at an indicator, you're looking at somebody's mindset four or five months ago and seeing the results today. Yeah. A property developer needs to look at things very, very differently. We're looking at demand and, more importantly, future demand.

Starting point is 01:02:16 And so we need to look at what is called a market driver. So a market driver is what are the things that are stimulating the economy? What are the things that are making people move locations? What are those sorts of things? And there's about 16 different drivers that we need to start to look at to get a good feel of where the market is actually going. It's a little bit like a crystal ball. You know, it's a little foggy, but with practice, you start to read the market and where you think it's going. And then three months later, you review and have a look at the indicators and see whether or not you were right.

Starting point is 01:02:52 And if you do that enough times, then you'll actually start to build a really good, strong instinct on how to read the market really, really well. So I guess while there's 16 of those drivers at a very high level, there's government incentives and drivers, which is, I guess, stimulus money that forces people to, you know, major projects, roads and highways and, you know, Olympics and things like that, where there's billions of dollars being spent to stimulate jobs. You've got things like unemployment rates where we're actually looking at, well, are people actually being employed? What are the economics of the area? So can people actually afford it, housing affordability? There's supply and demand, which, you know,

Starting point is 01:03:40 how many development approvals are sitting in the area? How many people are actually taking up those approvals? How many of those approvals are actually getting constructed? and then there's population growth which is births deaths and marriages and international migrations and interstate migrations when you start to put all of those together you can see hey there's lots of jobs in the area i can see lots of people coming to the area i can see that people can actually afford to actually purchase there and i can see that you know that the number of approvals in that place is a little bit undersupplied that then starts to say well

Starting point is 01:04:13 there's an opportunity for me to actually put a solution in front of somebody there Yeah, I love it. It's putting that future jigsaw together. Now, sort of moving into that future uncertainty, I know there's going to be a lot listening and going, well, given we've got all this negative mainstream media fear-mongering around material supply issues and lead time delays and rising construction costs and rising interest rates and builder liquidity concerns along with, as you've already mentioned,

Starting point is 01:04:41 the variable and constantly changing council and state government approaches to planning and development. how how can we navigate all of this and still control the cost of time and quality constraints to produce profitable property development outcomes that's probably the the billion dollar question that everybody wants to know bushy and if i if my crystal ball was as clear as i would like um i guess the there's probably a couple of elements that sit in here that um um if we break it into two phases there's where we are right now is a result of an artificial set of events so covid came in which created a whole bunch of uh i guess depressive uh market

Starting point is 01:05:29 elements and then the government over stimulated the economy uh by throwing too much money at it too fast yeah and when you combine those two things together um people being uh i guess a herd pack once one or two people jumped in and said hey this is a good thing everybody jumped in and then the market took off uh i guess a little bit the the i guess the right drivers were there but they were over stimulated and so we've got an artificial boom that's actually sitting there that's created all sorts of things and then that's combined with the fact that we've got logistically the global pandemic caused all sorts of challenges in our logistics chain line so right now we've got a situation where if you got into a deal two years ago you're probably hurting right now yeah

Starting point is 01:06:19 that said if you get into a deal now those things have been exposed we can actually see that they're sitting there and so anyone getting into a deal right now can actually factor that in because it's already it's already been revealed yeah and so we can i guess take a much better view of the world today than we could have two years ago where we didn't know that those things were going to happen and so i think we can cost that in the reality is that our market is going to slow in most areas, other than where there are, I guess, billions of dollars being spent, such as, you know, Olympics in Queensland, I think the Queensland market is going to keep kicking for quite some time. I think Sydney and Melbourne are going to slow for a period of time. The biggest driver on

Starting point is 01:07:10 supply and demand is population growth. And because we've had our borders shut for two years, we just have not had population growth for a long period of time our borders are now open again so the population growth is coming back and i think with what tends to happen counter cyclically right now interest rates are going to go up and and things are going to start to slow down and the prices are going to drop but the demand is actually coming uh in a year or two as people get their approval visas and start to move back in and things like that. And so we're actually creating an opportunity in the not too distant future where you're going to be able to pick up a property for a bargain. And by the time you complete that project, the demand to take that

Starting point is 01:07:58 up is going to be there. And so we need to think counter-cyclically, I guess, when we're doing property development. When the market is depressed, that's a great time to buy. um when when the the market is uh booming that's a great time to sell uh and so you know again i like i like quoting warren buffett he's a very smart man um you want to you want to be uh fearful when others are greedy and greedy when others are fearful yeah it's spot on yeah it's a it's a timeless principle really and absolutely yeah on the money as far as that goes uh tell me As we sort of start to move forward, one of the big conundrums that a lot of people have is this challenge between getting into property development without creating a second job or sacrificing their lifestyle. What's your suggestions to people who have that fear or that concern?

Starting point is 01:09:01 oh the reality is you are creating a second job i'd like to say otherwise um it's going to it's going to take effort um my guidance would be it's very much an active strategy you need to be doing stuff uh my guidance is if you can't put at least 10 to 15 hours a week towards learning the new craft, then you're probably not doing it justice. Now, if you do that, if you put in that 15 hours a week, then about the six month mark, you should become competent, meaning know what you're doing. And about the nine month mark, you should become confident. Now, the difference between the two is practice and repetition, being able to fail on paper, learn the lessons that come from that where I didn't do a good job on analysing the site

Starting point is 01:09:53 and so my numbers didn't stack. Doing a negotiation where I fell over because I asked for a ridiculous price and the vendor laughed at me. Starting to work out that failure isn't fatal and it's certainly not final. And so long as we're failing on paper, then what we're doing is actually growing

Starting point is 01:10:14 from the experience and learning. Yeah, I love it. It's a bit like the property version of backtesting in the stock market where before you actually make a trade, you go back over history and you spend a lot of time reinventing trades from entries and exits and learning the lessons that go with that. It's not quite the same as putting your hard-earned cash on the dash and it's very similar with what we're talking about property here.

Starting point is 01:10:39 It's increasing your knowledge and going through the process before you actually pull the trigger. there is a halfway mark though bushy that that is probably worthy of of mention so there's the i guess a complete passive which is letting the market do the work there's a complete active which is what i do and then there's a semi-passive where you might have purchased a property a long time ago that has development potential so can you join forces with someone who already knows what they're doing and the two of you together do the deal um where you're providing the property and they're providing the skills. That's one way. Alternatively, you may have already built quite

Starting point is 01:11:18 a nest egg of equity and or cash in your property investing approach, and maybe you become a money partner in someone else's deal. So you're not doing all of the effort, but you're becoming, I guess, not quite a passenger, but you're becoming a partner with that developer. My guidance there is make sure that you actually put enough effort into learning the process that you at least know how to assess is it a good deal i don't want anyone to go into any deal with anyone blindly by by abdicating whether or not the deal is a deal instead you want to do you want to delegate so if you can delegate to someone then they will do the work but you have the ability to assess is it actually is the quality of their work good but if you abdicate you're basically

Starting point is 01:12:06 going in blind and you don't know if the decision they're making is a great one so educate even when you're doing that semi-passive. Yeah, I love it. Love it. Sort of shifting back into the strategy and the structure piece, how important is the strategy and the structure to being successful in property development then, Rob? It's the first decision that you need to make is what is the development strategy I'm going to follow. Every development strategy works, but they don't work everywhere. And so when you've locked in one development strategy, that then becomes the foundation piece to say, what are the rules I'm going to learn? Where does that particular development strategy start to make sense? Is there evidence that other people have actually

Starting point is 01:12:52 done this before? And so what you're trying to do is go through, I guess, a formula, which is following the evidence of success of others to say, I can see that the proof points that are actually there. And because I've done the work in knowing the rules and knowing the costs and becoming an area expert, your ability to assess sites becomes much, much quicker. But you have to start with locking in a strategy that will say, well, what's my first deal size? What's my second deal size? What's the size of the deal that's actually going to get me out? How many of those deals do I want to do to grow from absolute beginner to an expert and build your five-year property action plan to actually map out the journey of those deals. Yeah, I love that.

Starting point is 01:13:41 And while we're talking about it, for those that are listening and want to ensure that you're optimising the appropriate strategy, either as a first-time investor or as an existing investor who's struggling to make this all work, feel free to reach out to Rob and the team at the Property Development Network. Or if you want to have a chat with me directly and you've got a blockbuster that's stopping you from moving forward,

Starting point is 01:14:06 you can spend an hour of power with me personally where you can ask any questions, queries or issues that you'd like to discuss. Just jump on our website at knowhowproperty.com.au and click on the one hour option and for just 295 bucks, you can ask me anything you want. on property or finance for a full 60 minutes.

Starting point is 01:14:24 And I'm sure that Rob will do the same in relation to the property investment arena. So, mate, from a development perspective, as we move forward, and we've touched on this a little bit already, but it's a great way to sort of bring this to its fruition. What are the sort of threats and where are the opportunities

Starting point is 01:14:41 in the short to medium term as you see them? The opportunities are in understanding where the population is actually being pushed. Our state governments, our local governments, it's actually quite expensive for them to build infrastructure, expensive to build schools and hospitals and road networks and that sort of thing. And so they are herding the cats.

Starting point is 01:15:07 If you understand how and where to read their strategic documents as to where they're pushing people, you'll actually understand where the demand is actually going and that's going to then give you, I guess, the insights to say, well, that's the area that I want to start to become an expert in. I think a lot of people don't do that. What they tend to do is they listen to all of the market commentary on investing and say, where is the hotspot for investing? And the problem with investing is it's a very different set of drivers that actually make that work. And so if you're going into an investment hotspot, it's not necessarily

Starting point is 01:15:47 a development hotspot. So we need to look at different drivers, educate ourselves on those 16 elements that I was talking on before. That will tell me where the demand is about to go. Not necessarily is it there right now, but where is it about to go? And then if we can do that, we put the opportunity in front of somebody right at the point where they need it. yeah beautifully said mate beautifully said it's that it's switching from the rear view mirror again to the uh looking through the windscreen to what's about to happen which is the is both the art and the science uh because that's the that's the piece that a lot of people unless they've invested a lot of time energy in educating themselves around that are going to be flying

Starting point is 01:16:29 blind as far as that's concerned but it's been a great conversation on property development i i I want to switch now into what I affectionately refer to as the ambush round or the fast-forward questions that you get asked with a blindfold and a cigarette on just about every podcast. So to kick those off, what's your favourite quote and why? And you've mentioned some great Buffettisms already, but are there any others that are meaningful to you and why so? I'll repeat the one that I said earlier from Warren Buffett. Risk comes from not knowing what you're doing. and so yes this is a risky game but if you put the effort into educating yourself up front then you'll be able to navigate any of those issues yeah it's spot on yeah timeless uh there

Starting point is 01:17:12 now switching into the literary field for a minute you've you've already mentioned that you know not uh an avid reader for obvious reasons but uh let's let's take the audiobook track then what audiobook would you recommend people have a listen to and why there's probably two that are ones that you've probably heard a million times. So, Napoleon Hill, Think and Grow Rich, that one is a timeless classic. It's about 120 years old, but it teaches us the difference between how the rich do business and how the poor do business. The poor do business by trying to solve problems with their own knowledge and experience by keeping the problem to themselves. The rich tend to brainstorm that with their colleagues

Starting point is 01:17:59 and use that group learning type experience to say, well, what's the experience of the entire community? So don't be afraid to talk about your problems, guys, and just talk about it with people that can actually help you, not those that are going to hold you back. Yeah, that's really good advice there. And another great intro really to any of those that are resonating with this to reach out to you, Rob, with the Property Development Network.

Starting point is 01:18:26 The second book is Rich Dad, Poor Dad, Robert Kiyosaki, and that's really about turning this into a business and not just, I guess, keeping a job. Yeah, both of those books have been very revelational to me at critical points of my own learning, mate, and they're absolutely timeless and they're fundamental, so they've got to be both must-reads for anyone who's serious about doing anything in investment,

Starting point is 01:18:51 property. Let's switch back to the investment subject for a minute. What's both the worst and the best piece of investment advice that you've ever received today? I'm going to say work hard, go to university, get yourself a good job. That's probably the worst advice I've ever had. It is a great way for you to fit in with society. I guess that it was only at the moment where i worked out that hey you want to start to think differently so the best advice um came from a uh a previous employer that i had which was um you don't need to know everything um all you need to know is how to solve someone else's problem and if you can solve their problem there's an opportunity to make money in that yeah it's uh again mate uh

Starting point is 01:19:46 timeless in its approach uh it ain't rocket science but again many people want to conform they want to fit in so thinking differently and acting differently uh quite challenging to a lot of people in our current arena uh i think for people like you and i it comes naturally a little bit but i really uh motivate those that are listening to break the mold because if you keep on doing the same things you're going to keep on getting the same results but uh and you're talking about that uh what's a personal happy habit or a rewarding ritual or daily or daily discipline that's contributed most to your investment success today my my morning routine has evolved over time um but but fundamentally it involves a couple of very key elements so firstly uh having a whole

Starting point is 01:20:38 bunch of affirmations that you repeat consistently to yourself that that become the foundation piece and the core of how it is what it is that you're doing and why you're actually doing it so getting in touch with where you want to be in five years time and actually taking the time to actually make that part of your thinking for the day setting intentions for the day so that is what what is it that i want to achieve so what is the one thing that i'm going to do that's going to take me towards that goal. I want to make sure that at the end of the day, I've achieved that one thing. So take the time to review whether or not you achieved it. If you constantly do that, so if you're reviewing today, what you promised that you're going to do to yourself yesterday,

Starting point is 01:21:20 then you can learn from, well, what stopped me? And when I know what stopped me, then I can put something in place to make sure that that doesn't occur. So that little routine, I guess, doing something towards your goal every single day means that inevitably you have to achieve it. Yeah, I love it, mate. We're definitely Siamese twins, Rob. That's exactly the same approach that I adopt as well. Just to summarise our awesome conversation today, mate, what are the sort of key takeaways and immediate actions that aspiring and current property developers need to be taking? i think first thing is workout is property development for you uh i guess there's a lot of people with delusions of grandeur that would say that they want to become one and then they

Starting point is 01:22:07 see what effort is actually involved uh and then they work out that it's not for them don't go don't go blindly doing thousand dollar courses or 10 15 some of them are 40 000 courses out there and then work out that's not what you want to do instead take the time to hang out with communities like mine we run networking events all the way around the country it's 25 bucks to turn up to an event work out is this what you actually want to do and then when you work out what it is that you want to do choose your development strategy and get the educator that fits that right because you can go into any course and the course will be fantastic but two people sitting beside each other will get very different outcomes because one person that solves their

Starting point is 01:22:52 problem and the next person it doesn't so one person has a fantastic experience the other one the other one thinks that it was a complete waste of time but the content hasn't changed and it really comes down to one person didn't take the time to work out was it for them in the first place yeah that's extremely well said get get your head set right before you commit the cash uh really good advice mate uh sort of turning to where you're at and where you're heading what's what's new and next for you then right uh we run our events in three states brisbane sydney melbourne um the i guess what's in it for me next is for me is trying to make this a true national group uh i want to take this to adelaide to perth uh all the way around the country hobart etc

Starting point is 01:23:39 um so for me it's about putting the mechanisms in place so that the the the meetups that we're running already can actually be self-sufficient and I can then go and go into new markets and create new things. I want to do more to get those thousand people financially free that we touched on before, which means that I have to work a little bit harder to fit all those people around the top of that mountain. It's spot on. Very well said. Look, mate, it's been very enjoyable. We've had a great conversation. For those in the audience who really resonated with your message, How can listeners find out more and get more involved with you, Ben? We have a few different communities to be part of.

Starting point is 01:24:20 We've got Facebook community. We've also got our networking and meetup community. The best thing they can do is search for Property Developer Network. They will find the Facebook group that they can join. That's for free. They can come to one of our events for $25. We run those events almost every weekend all the way around the country. so if they go to developernetwork.com.au

Starting point is 01:24:42 and to the events page and because we run them all the way around the country we actually live stream them so whether you can turn up physically or not you could pretty much be turning up to one of these events every weekend and immerse yourself in the experience. Yeah, great suggestion. I know that to hear more from you Rob

Starting point is 01:25:02 I'm really going to encourage people to feel free to watch and listen to your very informative Sunday sessions as well where I think you've been brave enough to get me on it sometime soon. Am I right in saying that? Yeah, I want to return surf, mate. Yeah, exactly, which is awesome. And you can see those on YouTube on the Property Developer Network by clicking on the link that we'll have in the show notes.

Starting point is 01:25:24 So, look, mate, it's been an awesome exercise, very timely discussion given the sort of market that we're heading into. And I really do encourage the listeners to start just immersing yourself in an awareness of what the opportunities are in this sphere and then following your advice, Rob, and starting to rub shoulders with people and starting to increase your knowledge so that you can develop a strategy

Starting point is 01:25:48 that's going to be in alignment with what feels right to you. So thanks for your very generous time on the show today, mate. You're welcome, Bushy, and thank you for the time and thanks to your audience, mate. Thanks, mate. We'll talk again soon. Bye for now. Okay, bye. To get a summary of all this investment gold in the show notes, just email me on hello at khgroup.com.au.

Starting point is 01:26:12 That's H-E-L-L-O at khgroup.com.au. Or check us out at www.bushymartin.com.au forward slash getinvested. I look forward to joining you next week for another episode of the Get Invested podcast. so thanks for listening and as always dream as if you live forever and live as if you die tomorrow

Property Hub - Investment Insights & Inspiration - Get Invested: Rob Flux on investing in your property development network

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