Ep 271 – Are You Walking Away From Deals You Could Actually Do?

Introduction

Hilary: Hello and welcome to the Property Mastermind Podcast, episode 271. Are you walking away from deals you could actually do? How many of us have done that? Me included, Bob included, and I would guarantee you as well. Sometimes the problem isn’t the deal, it’s trying to get the deal done alone. We’re going to unpack that today and talk about some fabulous deals we’re doing, and joint ventures. We won’t be breaking down the structures and the nuts and bolts of how to. That’s for our three-day workshop on the 9th, 10th and 11th of October. Head over to our website or send us an email if you’d like to come along.

Hilary: We will be talking about the opportunities we know so many people walk past because they don’t know how they could do a property development. It’s an exciting time to be in property. The news is trying to scare us with all sorts of rubbish, but we don’t listen to that. Good morning, Bob.

Bob: Good morning, Hilary. I heard podcast number 271 and did a quick calculation. We should hit 300 around mid 2027.

Hilary: Crikey, that’s a lot of podcasting. I have another podcast that has over 100 episodes. If you’re into motivation, look up Bounce Back Better. It’s about believing in yourself and doing what you want to do in life. I’ve paused it for a while because property development is getting a bit all-consuming, and I’ve taken up golf. What’s your tip for the day?

Bob: Last night I was looking at cruises. My tip is you probably want to book early. If you want to go on a cruise in the next three weeks, I don’t think you’re going to make it, but I’ve seen a few pre-Christmas.

Hilary: We’re free from the 10th of December. We have two weddings in three days just before that. The great thing about our life is we’ve got a very large family. I have three brothers and three sisters and about 20 nieces and nephews, and they’re all starting to breed as well.

Bob: When I went to your first family Christmas it was like arriving at Suncorp Stadium for a State of Origin. People everywhere, and they’re all relatives.

Hilary: We’ve gone off track. This week’s copy of Property Millionaires goes to Jared Beckett, who is staying at my house tonight. I’ll hand it to you later over a glass of champers.

The October workshop

Hilary: Before we unpack joint ventures, our workshop is the 9th, 10th and 11th of October on the Gold Coast, and this year it’s a little different. It’s not just property development. It’s property development and joint ventures. So many people want to do property development, and you’ve got this barrier of, I can’t do it by myself. Usually there’s a knowledge issue, which is why we’re here, but there’s often a money issue, and that comes in so many different forms. So we’re covering that this year, and kicking it off online early because there’s so much to get through.

Bob’s first deal: vendor finance

Hilary: Bob, you’ve said so many times, my first two deals were joint ventures. I think we throw that away so quickly that people don’t know what it means. What did that mean for you? What was the confidence?

Bob: My first project ever, I wanted to be a developer and I wanted to do a project. I hadn’t worked out how I was going to do it. I had money. Not really enough. But I didn’t let that stop me. My first deal is what we call a vendor finance deal. Is it a joint venture? Almost everything is. If we call property development a venture, and joint means more than one person or entity, then it was. I did a deal with the landowner.

Bob: A person had this land and had a development permit to subdivide it into four lots, and that’s where I picked it up. The landowner showed me how to do a vendor finance deal. His name was Tony. I said, Tony, I would love to do that subdivision, I just don’t have enough money, meaning not enough to buy it and do the subdivision. And that’s when he said, money’s the easiest part. Then he showed me how. He allowed me to use his land as security to borrow the money to develop the four lots and sell them. Tony kept a second mortgage. At settlement I paid him half the value of the land, I owed him the other half at interest, and I paid that at the end after I’d sold the lots. That’s a type of joint venture. We call it vendor finance, vendor meaning the owner of the land. He financed me into doing the project.

Hilary: If we stop right there: you were new to property development, you hadn’t done one, and that was your first deal. People might think that’s way too hard. But it was a property development. None of that changes. There’s just some paperwork in the background. Your tripping point was you had some money but not enough. That’s most people.

Make your own luck

Hilary: He came to you with an answer. You were incredibly lucky, but you make your own luck. You went to work on a day nobody else did.

Bob: I was selling real estate at the time, and Tony became a client because he listed the property with us. But I put myself into selling real estate because I wanted to be a property developer. I couldn’t go from zero to there, because back then there was nobody to teach you like there is now. So I started by selling land subdivisions.

Hilary: It was less of a norm for everyday people to do property development. It was really just the actual developers.

Bob: This was early 80s Gold Coast. The developers were what they called the white shoe brigade. Mostly from down south, shirts unbuttoned, big pendants, white shoes. Not a young man like me, skinny as a rake.

Hilary: Think about that. Bob did that as a new person, and you listening now have an advantage, because you have people like us showing you how to do it. Bob was lucky to have met this gentleman. After that deal, other people thought, I want to do what you did. And that was the next joint venture.

Bob’s second deal: an equity partner

Bob: The second one was what we call a joint venture with an equity partner. Our partner puts up the equity, and then we jointly borrow the rest of the money and do the development.

Hilary: Did you put any equity in that one?

Bob: No. Second project, no money in, even though I had a little bit. I did it with my sister’s boyfriend. My oldest sister Lorraine had a boyfriend, Keith, who was an earthmover. Keith saw what happened with my first project and said, you made all that money and you didn’t even put any money in. I was now starting to act like I knew what I was doing, but in reality it was Tony who showed me. Keith said, I’ve got some money, I’d be happy to finance a project if you can find a good one and we’ll go halves. That’s a joint venture with an equity partner. I never called it that at the time. All I knew was Keith wants to do a deal with me and he’s going to put the money in.

Hilary: How often do we see that with students? Especially through the mentoring program, they’ve done one deal or got one underway, and people say, I want to do that with you. You can’t help but talk about it. You’re excited.

Bob: I made enough out of that first project to buy a good house for cash, after tax. That got Keith pretty excited. Almost immediately he wanted to be a part of it.

Hilary: You were green and you were young. If property development is for you, we’ve just proven it. Put Bob’s hat on at the time. He actually did that. And you have the advantage that we can make sure you don’t miss any of the steps, because often you’re learning from somebody who doesn’t know everything and things get missed.

Project one: North Harbour

Hilary: Let’s talk about our three projects, because they’re hot on our mind. On Saturday we had an open day at the 16 industrial units at North Harbour. Titles are out soon and we’re close to half sold. How did that joint venture come together?

Bob: We were looking for a commercial project to do. We decided we wanted to do an industrial one, and then we had to find land. Three simple steps. We sent Aaron out and came across an industrial land subdivision at North Harbour, near Morayfield between Brisbane and the Sunshine Coast. The developer of North Harbour did an industrial subdivision of about 24 lots. Ours is about 4,600 square metres with 16 high-tech industrial units on it. We call them sheds, but they’re not sheds. They’re very lovely.

Bob: We knew what we wanted to do and where, anywhere from the Sunshine Coast to the Gold Coast, because land was in short supply. When we found the subdivision, it wasn’t built. The developer had the approval but hadn’t started, and he’d sold every lot off the plan. Nothing for sale. A couple of weeks later Aaron got a call from the agent: a developer holding three lots was willing to let one go. We jumped on it. You could say we were lucky, but we tracked it down and kept annoying the agent for weeks in case anything came back.

Hilary: So what we did was follow up with the agent and create a relationship. Ultra Urban is myself, Bob and Aaron. We all have different roles, but we did exactly what we teach our students to do with residential. Know what you want to do, have a good idea where, and go tracking it.

Bob: We got it at the price the other developer paid, and the market lifted for industrial land during that whole process, so we made money on the purchase. We signed an option, which converted into a contract later. These are creative strategies. The land hadn’t been built. While the developer built the lots and got titles, all we had was a deposit, and we got the development permit before we owned the land. So we weren’t paying interest on the land while the approvals went through.

Bob: Then we put together a syndicate. A syndicated joint venture with a group of people who had contacted me wanting to be involved in one of our developments. A couple of the investors came to the open day and were pretty excited. A majority of the investors aren’t interested in becoming property developers. For them, they’re part of the development and they’ve seen it from the architects’ plans all the way through, because we keep them well informed.

Hilary: That’s your role within Ultra Urban, pulling investors into a project and getting them to sign so much paperwork.

Bob: That is what we call a syndicate. Remember, there are a thousand ways of cutting joint ventures. It’s jointly between a number of people and it’s a venture because it’s a property development. It’s all about the paperwork, really. You’re just doing a property development, and on the side people have signed things and agreed to things. That’s the difference between walking away from something because you can’t do it and choosing to make it happen.

Hilary: We went out knowing what we wanted to do, roughly where, and eventually found it. Then to do it we had to bring in investors. Hence the option, which gave us time to bring them in but locked us into the deal without a back door. We were strategic, and that’s what we teach. Have a plan, one step, next step.

Project two: the childcare refurb

Hilary: On Monday we drove out to the childcare. This is a different one for us. It was a renovation, believe it or not. We were looking to develop a childcare and couldn’t find one where the numbers worked with investors. The return is about 30 percent per annum, which is pretty blooming good.

Bob: Childcare, as we discovered, is great if you want to develop one and own it. They’re not a great product if you just want to develop and sell for a profit. Right now, anyway. But this opportunity came up where the numbers did work. We bought an existing childcare centre that hadn’t operated for about a year and was built about 32 years ago. It needed a massive refurb inside and out, to bring it up to current regulations and make it look lovely.

Hilary: You only have to say reno and you start dancing. We never got to see it beforehand. We just bought it and went ahead.

Bob: The reno is complete now. The key was getting a long-term tenant early, somebody who would take over as operator when we finished. That was the key to the finance, and it was bank finance. Have that lease in place right at the beginning. So that’s a syndicate again, a totally different product, and the interesting thing is I’m one of the investors as well, which you can do depending on how you structure it. Not because we ran out of investors. I wanted to. Walking through it the other day, it looks absolutely amazing.

Hilary: Like every development, it came with a few headaches. Druggos broke in, stole all the piping out of the ceiling and it flooded. That cost a lot more money. But two things happened. One, we found some mould, which was pre-existing, and had a childcare gone in there and found it later, that could have been a problem. And since then we went back to the people leasing it and asked if they would increase the amount they’d already agreed on, and they were absolutely happy to.

Bob: We put extra effort and money into it. Everybody’s happy. We’re doing what we love, the investors are making way more than they could anywhere else, the builder Bill did a great job, and the tenants, a not-for-profit, love the standard of work. Because of the increased rent, the value of the development goes up when we sell it. That recoups most of the excess. It’s only a minor increase, but it changes the cap rate.

Bob: A normal residential cosmetic reno, once you pay legals, stamps and commissions, you don’t really make money unless the market moves. But a reno of a childcare was a different kettle of fish. It stacked up, in spite of the damage.

Hilary: It had been empty for 12 months, and the vandals seem to have been angry they were losing their home. The people who live around that building will be grateful too.

Project three: Bundamba

Hilary: On the way home we called into the other industrial lots we’ve got at Bundamba, near Ipswich. Construction has just started.

Bob: Similar units to North Harbour, but 24 of them, 50 percent larger. We saw the concreters, the reo had arrived. When we bought that site it was one lot out of a three-lot subdivision, about 6,000 square metres, an acre and a half in the old parlance, and you couldn’t really pick it. Now the builder’s fence is up and you can see it’s a decent size. Shortly the tilt slabs will be manufactured on site.

Hilary: This one’s a syndicate as well. And one of the investors is also in the 16 units at North Harbour.

Top-ups are normal

Hilary: Both of those projects needed a financial top-up, and that can happen. One needed $120,000. What’s North Harbour worth?

Bob: Probably up around $19 million.

Hilary: So $120,000 is nothing. The easiest way to get it, without having to explain everything to a new party, is to go to the investors and say, anyone want this opportunity? So as well as being in the syndicate, he topped up $120,000, which he receives an interest rate return on. We don’t see that as a problem. We know what the profit is. It makes no dent.

Hilary: The same happened with the childcare. It was going smooth until it got damaged and we needed more money. We needed an extra 300 or 350 thousand to cover the damage, and the financier didn’t want to cover it because it was vandalism. So, who’s got the 350 and would like a decent interest return? Someone had emailed me a few weeks before asking if I had any projects. When Bob said we’re going to need another 300, I said, I’ve got just the guy. He’s getting a great interest rate return, and that’s added on to the side. You might hear that and think it’s scary. It’s so normal.

Bob: We bought the childcare late 2025 and it’s finished in under a year. It hits the market in March. There are no holding costs, because the lessee pays rent that more than covers the interest. The longer it takes to sell, the more money the investors make.

Why wait?

Hilary: They are three larger developments we’re doing using joint ventures. But we started with Bob’s first two, and how easy they are. So many of our students are doing joint ventures. That’s why this year’s workshop is development and joint ventures, because if you see money as a barrier, you’ll never go anywhere. You’ve said that if you had waited to build equity in your house, or save up, or sell a car, it would have taken another five or ten years. What does that cost you?

Bob: If you’re doing property development, even small ones, how much money are you going to make in five years? Why would you wait? It’s like trying to save up to pay cash for a house. You wouldn’t. You get enough equity and the financier tips in. The financier puts in at least four times as much as you do, and all they want is an interest rate return. They don’t even want to share the profits.

Hilary: They sound like the best joint venture partner you’ll ever get.

Bob: You’re always doing a joint venture with whoever’s funding it. The bank puts in 80 percent and just wants interest. So that 20 percent you have to put in, if you don’t have it, that’s okay. Somebody else comes in with that money and they do really well. You do well, the financier does well, the buyers are happy. Joint ventures, syndicates, vendor finance, equity partners, loan partners, landowners. There are so many ways of structuring deals if you don’t have enough money, and that’s why we’ve made it the focus of this workshop.

Wrap up

Hilary: Standing at the gate at Bundamba, the concreter looked at me like, what’s this woman doing here? I said, you’re making this for me. He was pretty excited too.

Bob: You’ll never lose the excitement. My first project, pretty exciting. The second with Keith, pretty exciting. The other day, number God knows what, pretty exciting.

Hilary: If you are thinking about property development and you’re waiting for the ducks to align, this is your first duck aligning. I’m not going to say it’s easy peasy. You’ve got to learn what you’re doing. But so many people are doing it. Everyday people. Average IQ, average finances. We have a massive opportunity with this workshop in October. We’ve never done it like this before. Come along, or at least have a chat to us about your situation. There’s a link below to book a call, or email admin at Property Mastermind, and we’ll make it happen. We hope we’ve inspired you. Any other words, Bob?

Bob: You said it all.

Hilary: Catch you next week. Bye.