Ep 274 – You Don’t Need to Be Ready to Start Property Development

Introduction

Hilary: Hello and welcome to the Property Mastermind Podcast, episode 274. Today we are talking about being ready. You don’t need to be ready to start property development. I say this because we know people keep waiting until they have enough money, enough knowledge, the right market, the right site, enough confidence. We’re going to unpack what ready really looks like, and you’ll be quite surprised how ready you already are. Bob, what’s your tip for the day?

Bob: I was talking about your father earlier today, and something he always used to say. In heaven there is no beer, that’s why we have to drink it here. And then he’d take the top off a beer.

Hilary: It cracks me up. I’ve never heard it before or since. He was a farmer and a very hard worker. He’d be outside all day, then come in and have a glass of beer, not a lot, and then they might have a sherry in those little wee sherry glasses. So if you’re feeling a bit hot on your way home and the other half looks at you as you pour one, you can say, in heaven there is no beer.

Why people wait

Hilary: Today we’re unpacking that whole idea that you need to be ready to get into property development. There are thousands of people listening to podcasts like this one who would like to do it, but they don’t feel ready and they’re waiting for something. It’s funny, because my speech at Toastmasters last night was all about getting off the fence. We wait for the right time. We wait for lots of things. I’ve got quite a few questions to walk through, and I think you’ll be surprised that once you make the decision, you just go.

Was Bob ready?

Hilary: When you started property development, were you ready?

Bob: I wanted to, but I wasn’t ready. Financially, I had some money, but not enough, and I could have waited years trying to save up. I didn’t have a lot of knowledge, and it was hard to get in those days. I could have used that as an excuse. I was watching other people and asking questions, but I was underdone on the knowledge, underdone on the money, and I didn’t really understand the market and how it worked. There was a lot I didn’t know. It didn’t stop me from having a go when the opportunity presented itself.

Hilary: You obviously had the confidence, because you were working toward it, and you put yourself in a position to be lucky. You decided the only way to learn was to get into real estate, because there was nowhere else to learn. Then that man came in and ended up doing a vendor finance deal with you, because he liked you and saw himself in you. You weren’t ready in some ways, but you were in others, and you didn’t shy away from the opportunity.

Bob: I was ready and willing, not necessarily able. But I was confident to give it a go, because that was my nature. When I look back at what I didn’t know and didn’t have, I was underdone. It didn’t stop me.

Finding your why

Hilary: The other thing for you was that year laid up with your smashed leg after the car accident. All that thinking time. I spoke to a mentoring student this week who was gung-ho and then life happened. He got promoted, and it took away the time he’d hoped to spend on property. Luckily with our mentoring program you never go away, we look after people. But it was similar to you. Your reason why was lying in that bed deciding your life wasn’t going to be like that. He thought his driver was money, but it wasn’t. He took a break from work, about a month or six weeks, went camping and travelling with his family, and now he has a why. Now he’s driven. His why hadn’t been big enough, and that was stopping him from being ready.

Bob: You’re right, I did have a big why. I was pretty much on rock bottom coming out of that accident, and I’d worked out I wanted to do property development. I’d looked at a lot of things, eliminated them and narrowed it down. I talked to a few people, including a builder friend of my dad’s who did some development and gave me a couple of clues. Then I realised I had to get into property somehow. Just make a move, make a start. I took a real estate salesman’s job, first time ever. But I chose the agency because it sold land subdivisions directly for developers. I didn’t want to sell apartments in Surfers Paradise. I knew that dealing with developers on land subdivisions would give me the chance to talk to them. So I had a plan, and there was some form to the plan. That created the situation where I met the person who really helped me do my first project.

Hilary: Where people are lucky now is they have the opportunity to learn. There was nobody for you to learn from.

Bob: There were no courses, no study. I didn’t have anybody to lean on. I had to make the move myself. If I didn’t do it, no one was going to do it for me.

What you don’t need

Hilary: What do people need to have in place before they start?

Bob: Not everything. Some people think they need everything in place. You don’t need a million dollars. You don’t need to know everything about property development. You need the desire to do it, and a good why. As we say, don’t wait for all the ducks to line up, because they probably won’t. You might be waiting a long time. My ducks never all lined up. I didn’t have the money, the knowledge or the track record. But you’ve got to make a move.

Is there a perfect market?

Hilary: We often hear people say they’ll wait until the market settles down. I had my hair done today, and my hairdresser was talking about not going into property right now because it’s not the right time. I say nothing in those conversations because I’ve got too much of an opinion. There is a slight slump in prices right now, but it’s so minor. Bob, does a perfect property market actually exist?

Bob: No. The property market is dynamic. It’s never perfectly good and never perfectly bad. It’s always a mix. Interest rates go up and down. Inflation goes up and down, and the RBA uses rates as a bit of a stick. Then there’s the availability of land, population growth, which differs by area, supply and undersupply. If you’re waiting for really low unemployment, really low inflation, really low interest rates, really high demand and really small supply all at once, you’re waiting a long time. It’ll probably never happen, because they all react to each other.

Hilary: So there is no perfect time. Is now a good time?

Bob: Now is a good time, because getting involved in property development isn’t buying a site today and finishing tomorrow. It takes time to learn and time to put everything into effect. Between buying a site and finishing could be 18 months to two years. Some people say prices are dropping a bit here and there. Maybe on the sales side it’s come back a bit, but on the purchase side at the front, that’s good. You can get a site cheaper.

Hilary: And it’s different everywhere. Different pockets.

Bob: It’s always been like that. Markets go up in one state and down in another. But as developers we don’t look at the Australian property market, or state by state, or even a whole city. You could say Melbourne or Sydney is up or down two percent, but some suburbs would have gone up five and others back three because of oversupply. That’s why we talk about choosing an area and really digging in deep. You’re developing a particular product in a particular area, not all over Australia at once. And basically we’re undersupplied nationally and have been for quite a while. You might get a little pocket oversupplied, but not for long.

Do you need to know the whole process?

Hilary: We teach a nine-step process, and each step breaks down into many more. Does somebody need to understand the whole process before they start?

Bob: Not in real detail. Understand the process, whether you call it six steps, nine or fifteen. That’s pretty quick. What you need to know is what you need to know now. If you’re starting out, that’s the first part: what can I afford to do, where should I do it, what sort of product should I develop. You don’t need to know how to choose a builder or how to market the product when it’s finished. You need to know you’ll do it at some time. So have the general knowledge, quickly, over the top of all the steps, and then concentrate on the first three.

Hilary: We always say that to the mentoring students. Rip through the course, then go back and do the first three parts properly, especially the first, and be ready to move once you’ve got that nailed.

The danger of educating yourself for years

Hilary: What’s the danger of educating yourself for years and not doing anything?

Bob: Exactly that. Not doing anything. I spoke at an event in Sydney at the convention centre, and afterwards a man came up and said he loved it. I said, great, are you going to be a property developer? He said he wasn’t sure. He told me he’d done so much research and so many courses, and started naming them. Everyone who had a course, he’d done it. I said, but tell me what you’re actually doing. He said, nothing at the moment, and went into all the reasons why he couldn’t. I think interest rates are going up, I think this, I think that. He’d over-educated himself. Analysis paralysis. He’d spent a very large amount on education, and that was more than ten years ago, and never done anything, because he kept coming up with reasons not to. He could have written books on property. Learn it, and then start taking action. You don’t wait until you know everything about everything.

Hilary: Somebody like that needs someone to teach them to stop the analysis paralysis, because if they’re doing it there, they’re probably doing it everywhere.

No site yet?

Hilary: For somebody who doesn’t have a site right now, what should they be doing?

Bob: That’s fine. You’ll need one in the near future. First make up your mind that property development is for you. Start to get educated. Think about how much money you need, and if you haven’t got enough, who can come in with you. Where am I going to do it, what am I going to do. Those initial things, before you jump in the car and tear around looking for a site. Education is critical. You can’t just wing it. But concentrate on those first few steps.

Why people stop after one project

Hilary: I often see people who say they want to develop full time get underway with their first project and then just sit. It baffles me. It feels like a cop-out. What’s holding them back from starting the next one?

Bob: I don’t know why people do that. Once you’ve started, you can look at your second project, even if you do it with an investor and make half the profit. I think some people get a start, look at the money they’re going to make, which could be many times their annual salary, and think, wow. And then they pull back. They snuggle in. It might be that you don’t have the capital for the next one, but there are plenty of people who would put in with you.

Hilary: Especially when you can talk about the one you’ve got underway. People are genuinely interested in property development. It’s such an Australian thing.

Build your team early

Hilary: How early should somebody build their team? Before or after they find a site?

Bob: Definitely before. It’s one of those early things. While we’re looking around an area and we’ve got an idea of the project we want to do, we should be researching what other people are doing there. Builders are building for other developers, and we need to talk to them. The initial team is people like lawyers and accountants, then building designers and architects.

Hilary: Town planner up front.

Bob: Most definitely, and a surveyor. We don’t need a marketer yet, although the person who helps you find a site could end up selling it for you. Very early in the piece, you start to talk to people. I always say you can’t know too many people. Think about the roles, make contact, and buying the site will come out of some of those contacts with agents and getting your structure right. Talk to the town planner even before you find your site, so you know what zoning or size to look for. If you wait until you find your site and then go looking for professionals, it’s a bit late.

Who does it and who doesn’t

Hilary: What separates the people who want to do it and do, from those who want to and don’t?

Bob: Some people just take action. It’s got to be balanced. Taking action doesn’t mean rushing in willy-nilly. It’s understanding, yes, I want to do this, and putting those early things into play: the education, working out what you want to do and what you can afford. But it’s people who make the decision, I am going to do it and I will. Once you start, other characteristics come in. A bit of determination, a bit of grit, because there will be detours. But at the beginning, the difference is people who are determined to achieve it and don’t wait for all the ducks to line up. That’s the biggest mistake I see.

Hilary: All of those are often a lack of confidence. There’s a need for real certainty before moving forward, and there is no certainty. Things become clearer as we move toward them. The ducks will line up as you go. But you have to take action, the next step and the next.

Hilary: So many people could be really good at this, but something holds them up. Maybe setting up a structure, or waiting on someone to get their tax done, and it derails everything. The energy that got you off the fence loses its momentum. They don’t connect back to their why, and the initial confidence is gone. We get derailed by something small. Signing mortgage documents, committing, buying sites, that’s scary for some people. To us it’s normal because it’s what we do. For people new to development, it’s not.

Confidence is built

Bob: Confidence is very important, and it comes off the back of action. You don’t go from zero confidence to lots. It’s incrementally attained. Every time you do an action that produces a result, it builds. Say you’re looking for real estate agents in an area. You make a couple of contacts, you meet them, you go to some open for inspections. Every new contact, every conversation toward your goal, is confidence building. You won’t get it sitting on the fence.

Hilary: I’m stoked you’re saying this, because you usually talk about the process. So often we’re on the phone with a mentoring student and they say, so what do I actually say? What questions do I ask? They do it that first time, and it’s, oh, okay, I can do it. Somebody buys an online course and doesn’t realise you have to take those small steps to let confidence grow naturally. You listening might think you’re waiting to feel ready, whatever your ready is. More people to tell you it’s right, more money, not sure where to start. It’s probably that you’re a little scared of taking those first actions.

Bob: It could be listening to the wrong people. But if you want to do it, you can. We’ve got a slide called baby steps, and it’s a baby taking baby steps, because that’s all it is. One step at a time, and your confidence grows as your competence grows. Action creates traction, and traction creates momentum. Once that’s going, it snowballs. Before you know it you’re standing in front of a sold development thinking, I just did that.

Hilary: Which reminds me of Dan King. He used to stand out the front and say, wow, I made that. I employed all those people. I created homes for people. He thought about the families who would live there and the kids who would grow up in them. It’s true, and we often don’t give ourselves time to appreciate what we do.

What to do on Monday morning

Hilary: For someone listening who says, enough excuses, what do I do Monday morning?

Bob: If they want to do it, they just have to do it. One thing is to contact us and have an obligation-free chat, which we’ve done plenty of times, just to understand what it’s about and the steps you’ll have to take. But you’ve got to take those first action steps. And we’ve got a masterclass coming up.

Hilary: We do. A free masterclass on Saturday the 21st of November, three and a half hours, where Bob goes right through the process and breaks it all down. There’ll be a link below to register.

Six things you don’t need

Hilary: These are the things you don’t need. You don’t need to quit your job. You don’t need to know everything. You don’t need to be a builder. You don’t need to have found a site. You don’t need a million dollars. And you don’t need to feel completely confident.

Bob: If you’re waiting for all of those, or even a number of them, you’re just wasting time.

Hilary: Another mentoring student I spoke to this week, I said I hadn’t heard from him for a bit, and he said, my development’s going so well, I’ve had no hassles. That’s great to hear, because I always say it’s never completely smooth sailing. There’s always something. Right now we’ve got a leaking water main on a finished project, and we’ve had to get someone in to find it.

Bob: And that student didn’t get there by accident. A lot of work led to that project going well.

Hilary: He’s looking to start another. That’s always my question. He’ll be at our three-day workshop this weekend, property development and joint ventures. By the time you hear this, it’ll be too late for that one.

Wrap up

Hilary: So, feeling ready. The ducks will line up as you take action, and your confidence grows at the same time. You’ll never feel ready if you’re that sort of person. If you’re giving yourself lots of reasons, look at them. Are they really valid? I’ve got a thousand reasons I shouldn’t be doing property development right now.

Bob: You’re either going to get in the game, or be a spectator on the sideline.

Hilary: We’ve had two grand finals in the last week, so footy’s on my mind. And the Bledisloe Cup is on Saturday, during the workshop. Eden Park is the graveyard. Australia has a really good team this year, but they cannot win at Eden Park.

Bob: The hoodoo is there to be broken.

Hilary: We hope you got something out of today’s podcast. The free masterclass is on Saturday the 21st of November, and there’s a link below to register. If you’re ready to have a chat, there’s always a link below to book a call. We’ll catch you next week. Bye.