20 Dec Property Developers Who Started With Nothing
Those who have seen or heard me previously would have heard me say “Property Development is the pinnacle of all property strategies”. I say this because no strategy makes anywhere as much money as property development. And anyone can learn how to do it regardless of age, gender, education, ethnic background and financial situation.
Hold on! Did I say regardless of financial situation? I certainly did. In fact, that’s how I got started in property development. Young, male, Australian, no formal education and very little money. If you’re up for a short story, I’d like to tell you how I got started.
In my early twenties I was having a great time. Three small cash businesses, having a good time with little thought for the future. That all came tumbling down when I fell asleep behind the where at 4:20am on my way home from a mate’s twenty first.
Twelve months on crutches, operation (pins, bone graft), out of work for eighteen months on sickness benefits. Not a great outcome for a short nap. But it’s the best thing that ever happened because it slowed me down and got me thinking about my future.
Being virtually broke, all I could think about was making money. I looked at everything and decided real estate had a long history of creating wealth and its tangible and finite. Then I looked at who made the most money from real estate. It wasn’t hard, and I decided to become a developer – somehow.
There were no courses or formal education to become a property developer and nobody wanted to hire a ‘nobody’. I knew I had to get a foothold in the property market, make a start and sort it out on the run. So, I got a job at a real estate agency which was selling land on four different estates. Here I got to meet developers, builders and land consultants such as surveyors and civil engineers. As I had hoped my life changing watershed moment wasn’t far away.
Tony oozed success. He was good-looking, with expensive clothes and an expensive car, and he was a genuinely friendly guy. I first met him when he purchased a parcel of land with subdivision potential from one of the other salesmen in the office.
Three months later Tony reappeared to list his land for sale. The difference is that it now had a development permit attached to subdivide into four lots.
Weekends were when we made most of our sales. It was a balmy Sunday morning, quieter than usual, and I was on the front desk, primed with my finger on the trigger for a sale.
Tony strolled in, looking cool as usual, and slid into the chair on the other side of my desk. “Any lookers at my land yet Bob?” he enquired. Unbeknown to me, the words I was about to utter would change my life forever. “Nothing solid yet Tony. I’d love to buy it myself, but I just don’t have enough money.” I went on to tell him that this sales job wasn’t a career but a stepping stone to my dream of becoming a property developer.
That seemed to resonate with Tony. He sat up straight and began to ask me — more like a friendly interrogation — about where my desire originated from, my background and my personal life. Then he responded. “Bob, I’m going to show you how you can buy my land using none of your own money and how to develop it”.
True to his word, Tony showed me what I’ve come to learn was a vendor finance deal. He introduced me to his bank manager to arrange the finance. They loaned me 80 per cent of the land purchase and development costs. I gave Tony 50 per cent of the land value upfront, leaving the balance to finance the development. When the land was sold on completion, I paid back the bank, paid Tony his remaining 50 per cent plus interest and the balance was my profit. I hadn’t used a dollar of my own money.
Why did Tony do this? I got to know him quite well. He was a successful operator who amalgamated prime development sites for developers using strategies such as options, vendor finance, joint ventures etc. What Tony saw in me was himself fifteen years earlier. Young, ten feet tall and bulletproof, chasing a dream. He had a ‘lift up’ from another developer when he started, and this was his opportunity to ‘pay it forward’.
The amazing thing is not just that it got me started on my dream but that my ‘pay it forward’ has been on a massive scale. I continue to pass on my knowledge to other aspiring property developers daily and feel continually blessed to be able to do that.