Ep 272 – The People Skills Nobody Puts in the Feasibility

Introduction

Hilary: Hello and welcome to the Property Mastermind Podcast, episode 272. Property development is a people game: negotiation, conflict, getting people on site. Today we’re talking about people skills, and it’s more than the stuff that goes in the feasibility. The numbers matter, but how you have the conversations, and your ability to move forward when things get tough, matters just as much and often more. Bob Andersen, good morning.

Bob: Good morning. And good evening, because you might be watching this of an evening.

Hilary: Before we get into it, I’m going to frighten you with the same question I’ve asked you probably 250 times. What’s your tip for the day?

Bob: Tip for the day? I dislike the tips. No tips today.

Hilary: Here’s a tip: have your tips ready. The reason we do the same intro and the tips is that a lot of you listen regularly, and your brain likes the consistency. Then we jump into a pretty off-the-cuff conversation about a topic we want you to understand. That’s what we were told to do by the person who first helped us into podcasting, and we’ve done 272. In the early days it was stressful. Bob and I would sometimes argue beforehand because we couldn’t get the lighting right, then sit down and go, hello. These days it’s always set up. I say, Bob, today we’re talking about this, and he has a little panic, and I say, you can do this with your eyes shut.

Why this episode

Hilary: The reason for today is I talked to one of the mentoring students a couple of days ago. He’s new to the program, and he said, I listen to the podcast and get really excited, and then I lose the momentum. If you think about yourself, you might be the same. It’s really about confidence, but I’ve done a few on confidence, and I think people treat this as a soft skill they don’t have to worry about. It’s due diligence and feasibility. It’s not. If you don’t have the confidence to move forward with those numbers, you won’t.

Hilary: We’ve seen the procrastinator, who goes into so much detail so they never have to act on it. We’ve seen the person who dives in without enough due diligence, overconfident, and then loses confidence when they feel they’ve made a mistake. The people who get distracted, the people who overthink. I take it back to personalities because it’s an easy way to look at the people I know. So today we’re going to unpack five of the big ones, and you can look at where you might need to create an awareness and work on that thing.

Bob: I agree. There’s a lot more to it than the numbers, even though I keep saying property development is all about the numbers. It is. But we teach the process and we teach the numbers because competence creates confidence. It takes a bit more than that for people to take action, though. I’ve worked with enough people to know we just don’t take action. Me included.

Hilary: We’ve all got that thing we want to do that we don’t do. Yours is like the property development for some people. You think you’re doing it, you do little things toward it, but you won’t actually do it, because you have to commit to the investment in yourself. Time, knowledge, money for the development, money for the education. The easiest thing to do is nothing.

Bob: The easiest decision to make is not to make one. Which is a decision in itself.

Hilary: So if you’ve been sitting on the fence, this might be the one for you. And even if you are developing, these are skills you can implement in development and in life.

Skill 1: Communication and listening

Hilary: Why does communication and listening matter so much? Give me an idea of where a deal stacked up on the numbers, but people became the problem.

Bob: Communication is important because we’re dealing with a lot of people. Choosing the right development is about the numbers, but from there on it’s about people and interaction. Even in something as simple as a duplex there are probably about 12 different professionals we have to deal with: agents, finance brokers, architects, engineers, builders. Two-way communication. The other person might not be talking and you have to find some balance. I’ve seen it break down with joint venture partners, if you didn’t choose properly in the first place. And with consultants. Some are driven by ego. They might be a great architect, but they might not like you instilling your preferences, because of the level of education they’ve had versus yours. I’ve met some I wouldn’t use, and not just architects, agents too, because you can tell it’s not going to be a great two-way relationship.

Hilary: And from the developer’s side, if you already have imposter syndrome, which many new developers do, you believe that person should be able to tell you exactly what to do because of their education. If you’ve got something you want to tell them, how do you tell them when they have a big ego?

Bob: I guess they may need a bit of tough love. Try massaging first. Otherwise remind them who pays their bills. I’m making a big deal of it, I haven’t come across it too often. Structural engineers, hydraulic engineers, it’s all mathematics and making stuff work. On the more creative side, marketing or design, you can come across it a bit more.

Hilary: What about the listening side? Often one person isn’t actually hearing what’s being said, because they’ve been hijacked on a different part of the problem. I’ve seen you, especially over email, only talk about the problem at hand. You don’t let it get muddied by other problems, which is easy when somebody’s angry about a situation. How do you do that?

Bob: Being conscious, I think. You have to isolate issues. Compartmentalise. Sometimes it’s a complete dump by some people. The issue is really about one thing, but everything else comes out. It takes a bit to concentrate on the real issue and sort the other stuff out later. This design issue, we’ve got to get something redesigned. Don’t head off on a tangent. If a builder just wants to bag the architect, hang on, let’s concentrate on this. That comes with experience, but it’s one of the skills of communication.

Hilary: You can’t keep putting things off, either. A counsellor said to me years ago that when you don’t deal with something, you put it in a plastic rubbish bag you carry on your back. If you let that little thing go with a consultant, and that, and that, every time you don’t deal with something it goes in the bag. Eventually the bag breaks. I think that blurt, that muddying of the waters, is often because the other things have been let go. If the little things get dealt with on the way, you’re not throwing them in the bag, and the big thing never explodes.

Bob: For sure. Carrying too many garbage bags around becomes quite a burden.

Hilary: So communication is dealing with things, saying them out loud, then listening to what’s actually being said, whether that’s by email or with your ears, and compartmentalising if things get niggly. They won’t get niggly if you communicate all the way through. And I think that helps form a set of boundaries too.

Skill 2: Negotiation

Hilary: People think price is the lever of negotiation. How do you enter into a negotiation so it’s favourable?

Bob: Most of the negotiation happens at the front end. The big one is when you buy a development site, because that’s the expensive one. You’ll negotiate with consultants to a degree, fees or start dates.

Hilary: Hold on. Do you negotiate on consultant fees very often?

Bob: Not very often, because I know what the fee should be. We go to the consultants we like and know, get a fee proposal because we need one, but we know from experience what it should be. If they came in high it wouldn’t be a negotiation, it would be a question: why is it this number? There could be a reason. The biggest negotiations are the land and the builder. I was looking at a feasibility the other day on a duplex we finished recently. It produced the correct margin, everything was right. If you added up the land and the construction, it was 82 percent of all your costs, just those two items. A consultant might be 0.7 percent. So those two are worth negotiating on, particularly the build, which is normally the bigger. But you need to understand what the price should be anyway. With land, if there’s too big a gap between the asking price and reality, no amount of negotiation gets you there. If you’re close, then yes.

Hilary: It all comes down to how you negotiate. You don’t want to be the bully. Assertive is okay, but when it’s too much the other person backs off, puts their wall up, and there’s no negotiation. How do you deal with that?

Bob: It depends on the market at the time. It’s a builder’s market at the moment. Builders are busy and will be for a while, so you have less opportunity to put pressure on a builder for a good price, because they can move on. But recently we did a contract ourselves, a decent one, and negotiated it back to what we thought was the right number. It started a little high. We worked it over and got about four percent off. Much better in our pockets, or the investors’ pockets, than someone else’s. And the builder’s happy. We’ve used him before. He’s happy, we’re happy.

Skill 3: Relationships, trust and networking

Hilary: How do you become the person agents and builders actually want to work with? Development is a team sport. Agents bring sites, brokers find solutions, consultants solve problems, builders prioritise clients they trust. So credibility is everything. Return calls, pay on time, own mistakes. Which are the most important to you?

Bob: Just good, honest, open communication, where everybody understands their role. It often starts with agents when we’re looking for a site. Not all agents are created equal. We’re trying to find the best agent we can work with, and we could be in a new area where they don’t know us. Particularly when you’re starting out, you don’t have a track record to point to, and it can take a little while to be taken seriously as a developer. But it doesn’t take long. Stay in regular contact so they know you’re serious and not a flash in the pan. If they put an opportunity to you and it doesn’t stack up, don’t just move on. Get back to them, explain why it doesn’t stack up, and tell them you’re still keen. The agent appreciates that, and from their point of view, this person knows what they’re doing.

Hilary: I’ve got to stop there. That’s the first time I’ve heard you say that, and what a great point. That’s a takeaway and a half. Tell them it doesn’t work right now and tell them you’re still keen.

Bob: Explain why it doesn’t work, which can be a bit of an education for them, then reaffirm what does work and what you want. I helped somebody form a brief the other day. They’re moving into a new area to look for a deal and don’t know the agents, so we pulled a brief together to discuss with agents.

Hilary: Bob sat down with a mentoring student and put together a brief to go to an agent. People don’t realise that’s a good start to a relationship.

Bob: Most agents don’t like wasting time. If you’re specific about what you want and in regular communication, that respect will grow and the relationship will form. And it’s not just agents. It’s every consultant.

Hilary: The word I’ve got here is trust. Before this podcast you were talking to another student about buyer’s agents, and how they’re not all created equal. There’s a buyer’s agent we’ve used who I’ve recommended to numerous people, because he’s easy to work with and feels genuine and honest. That’s trust. I’m not going to waste somebody’s time recommending someone who isn’t worth talking to.

Bob: And the person you have the most time with during a development, unless it’s just a subdivision, is the builder. That could be nine, ten, twelve months.

Hilary: Longer than some people’s marriages.

Bob: So open, honest communication is a two-way street with the builder as well. You might deal with the architect for weeks, the town planner for weeks, the engineer for days. The builder, a long time.

Hilary: I think we’re quite good as a team, Bob, Aaron and myself. We’re respectful of them. I don’t really interact with the builder because he’s a busy man. I’ll text him if I need the code to get on site to take photos. Being respectful of their time, their business, their daily demands, that’s a form of communication too.

Bob: If you ask me the simple answer, it’s good, honest, open communication. Everything on the table. A two-way street.

The October workshop

Hilary: I need to plug the workshop right here, because it starts next Thursday online, and we’re live on the Gold Coast on the 9th, 10th and 11th of October. This year it’s property development and joint ventures. You’ve still got time to grab a ticket. There’s always a link below, or send us an email, especially if you’ve been before and want to know what you’d pay, because we have discounts for people who’ve already paid to come along. It’s a phenomenal event this year, the whole process plus joint ventures, because so many people are doing them. If your money’s tied up, or you can’t quite access equity, or you just don’t have enough, you’ve got other people in your world, a mate, a brother, a cousin, a workmate, who might like to do it with you. Head over to propertymastermind.com.au.

Networking

Hilary: We didn’t really cover networking. The workshop is fantastic for it, but networking is even in the staff room at lunchtime. If you’re looking for joint venture partners, what’s the biggest problem with networking?

Bob: Nothing wrong with networking itself. It’s people networking. If you’re too shy and stand back, that’s not good. But a lot of it, back to communication, is listening to the other person. Not blasting away about who you are and what you want. Be inquisitive. Show an interest in other people.

Hilary: I often walk out of a room knowing so much about people, and they know nothing about me, because they didn’t ask. Our favourite topic is ourselves, and when you’re networking it’s not about that. But I also believe networking is being upfront about what you’re after. I am looking for investors. If you’re keen, if you want to see what I’ve done and what I plan to do, if you want to see my information memorandum, then you’ve got to tell people you have an opportunity. Otherwise they don’t know you’re for sale.

Skill 4: Emotional intelligence and difficult conversations

Hilary: When someone is defensive or bluffing, how do you read it, and then how do we have those difficult conversations?

Bob: I don’t know about bluffing so much, but definitely holding back information. You meet it with agents sometimes, where you’re trying to get the right information and there’s a stone wall. They build a big wall between their client and you, the buyer, so they’re in control in the middle. I’ve seen agents who had an offer made to them by a potential purchaser and didn’t take it through to the vendor, which they’re obliged to do. They’ve stepped in and almost taken over the role of the seller.

Hilary: What about cost blowouts or time delays? That difficult conversation when there’s a delay and there shouldn’t have been.

Bob: It goes back to choosing the right builder in the first place, and open communication. But it comes back to having a really good building contract, maybe with some special conditions. Process, and documentation, because that leaves fewer things that are indecisive. You want everything objective, not subjective. I remember somebody who came to the completion date and the builder was still four weeks off. There’s a simple clause, liquidated damages, where the builder pays so much a day when they’re over time. That clause had been struck out along the way, and the developer didn’t realise. Some contracts don’t even have one, so you have to add it. If you’ve got detailed plans and the right documentation, there’s less opportunity for arguments about anything. When plans aren’t detailed enough, drawn by a draftsman rather than an accredited building designer, they’re vague, and that turns into variations, and variations are invariably on the upside. Lots of prime cost items without being specific about the taps, the cooktop, everything that goes in. You’re opening yourself up. That’s just an example of setting yourself up for arguments that don’t have to happen.

Hilary: Is that mostly naivety, or trust, not realising that even if someone’s a mate, it still needs to be compliant?

Bob: Everything needs to be documented. It’s probably people who are new to property development and building contracts, who don’t have somebody looking over their shoulder. I did a session the other day, two and a half hours just on building contracts with our Mastery students, pulling out the clauses you have to watch out for, change, or add. That’s an example of situations that create drama that could be avoided. A good builder is gold. Open, honest communication. Issues will come up. They can be solved, but solved the right way.

Recap

Hilary: So today we’ve looked at the soft skills around communication, negotiation, relationships, trust, networking, emotional intelligence and difficult conversations. There’s a difference between listening and hearing. And at a networking event, if somebody’s not for you, you’re welcome to say, I’m here to network, so I’m going to move on. We do that at the workshop. If you haven’t spoken to everybody, I stop the room and say, pick one person you haven’t spoken to and go and talk to them. And at the start of every day, don’t sit in the same spot. People get joined at the hip because it feels safe. But you’re at a networking event to network, and not everyone has the same emotional intelligence or confidence to do that. It’s a skill to be practised, and all of these are.

Hilary: So which one do you need to work on? Is it emotional intelligence? The conversations that feel a bit squishy? Relationships, trust, networking? Do I understand negotiation? Am I assertive but not aggressive? We can all work on something, and it will help your development journey, because all of these things grow confidence, and it’s confidence, paired with the process, that will really help you on your way.

Bob: Confidence with people is a game changer.

Hilary: Nothing builds it faster than being in a room. So, the 9th, 10th and 11th of October. If you’re keen, reach out now. We’ll catch you next week. Bye.