Nhan Nguyen grew up in Brisbane to Vietnamese parents who fled from the war. Nguyen refers to himself as a ‘property entrepreneur’ who spends most of his time juggling multiple investment-related businesses and projects. Nguyen also specialises in deals that minimise the investment of his own money and educates others on how to do the same.
Learn about the life and story of Nhan Nguyen, how he bought his first 3 properties by 21 years old, and his strategies that allowed him to quit his full time job to focus on property by 23.
Born to Vietnamese parents, Nguyen identifies himself as being a property entrepreneur who specialises in deals that minimise the investment of his own money.
I’m Vietnamese, my parents came over from Vietnam in 1975 and I’m a property entrepreneur. I do a handful of things related to property development, property education, from time to time I’ll do land subdivisions as well as renovations but my preference is definitely land subdivisions; I’m working on four projects at this point in time, a childcare centre site, a large land subdivision or 30 odd lots, and two small land subdivisions.
So the majority of my deals are done using my own money; just settled the childcare center site in Melbourne, I think purchase price was around $840,000. I put less than 20 thousand dollars in myself to settle the site and if I need to we can capital raise the rest. So a lot of these are the sites that I do are using only a little of my own money and that’s my specialty, being able to do deals with a little of my own cash, and being able to teach that to others as well.
While there is no typical day for Nguyen, he often spends his time juggling his various businesses, investment projects, meetings and events.
I manage a couple of businesses, one is a property development business and like I mentioned before being a property developer I juggle a handful of projects. At the moment I’m doing a large land subdivision as well as a childcare center and then two small land subdivisions, so I’m managing the process of acquisitions, the process of development and sales of those various projects as well as running a proper education seminar business, so I juggle those two and we’ve teams working on various projects and basically bring those projects out of the ground into fruition and make them profitable. So it’s a very, very busy day. Sometimes I’m in meetings with town planners, engineers. Other times I’m talking to potential other guest speakers to speak at my events.
Nguyen is able to handle all of these tasks by leading groups of trustworthy teams that assist in all his ventures.
It’s a lot to juggle and I know for people, especially if you’re working a job, it’s hard to fathom what capacity a person has but it’s taken me a while to be able to manage and lead people. So for example in my education business I’ll have, let’s say, a half a dozen teams about half a dozen, some people are local, some people are overseas, to be able to organise copyright, organise websites, organise speakers, organise my schedule and at the same time I’ve got a property team, full-time acquisitions guy, part-time virtual assistant, engineers, town planners and surveyors and things like that which are outsourced, so I think the main thing is to be able to keep things on track while moving forward. Most of the time they’re not on track because it’s delayed due to council more than anything else with development. It’s about being able to manage teams, being able to communicate to teams, ask for what you want and being able to train them as well. That’s the key distinction: you know what you want but how do you communicate it in a way that other people can give it to you and be happy about it as well is what matters. Sometimes you can throw a tantrum and ask for what you want but not necessarily get it.
Nguyen learned leadership skills and the importance of a team early on.
When I was younger in my late teens and early 20s I had found myself a mentor – and I’d do mentoring and training for others – but when I started out I had my own “rich dad” and he coached me, and one of early things he told me to do was go do some multi-level marketing. At that point in time I was young and basically followed his instructions, and through that training of multi-level marketing, I learned sales skills and communication skills and personality types and how to lead people and how to do sales and things like that. I believe that a lot of fundamental training came from the early years of my life and as I pushed forward with goals and dreams and things I realised he was right. A lot of the leadership skills and interpersonal skills with people are so critical and can get you what you want because you’re going to have to basically find out what they want, because if you can give people what they want you can get what you want. It’s a balancing act of all time, energy, participation and being able to diligently pursue your dreams.
Growing up to refugee parents in Brisbane, Nguyen was originally set to go down a very different career path.
I grew up in an area called Ipswitch which is on the west side of Brisbane. We grew up in housing commission. My parents were refugees. They met in Australia actually and they came over in 1975 after the fall of Saigon there. And yes I grew up in a suburb called Carroll Park which anyone in Brisbane will know is a very industrial and rundown area. Yeah, you definitely wouldn’t want to raise your kids there in the 80s. It was okay, it wasn’t too bad but definitely low or bottom socioeconomic part of town and that’s all my parents could afford being Housing Commission refugees. So that’s how I grew up and they encouraged me to study hard because obviously if I could get good grades it meant I could get a good job and get some financial security. So that was really much where I grew up, and the unfortunate part of all that was that even though I did get good grades and I wanted to become a doctor as per their advice for a few years, I realised that wasn’t really what I wanted to do, and that was where the fork in the road at roundabout the age of 19. At the same time I began to go to a few seminars, not necessarily property seminars, but business seminars, multilevel seminars, share seminars, offshore managed funds seminars, anything I could go to. It was very much that I didn’t wanted to become a doctor, it was a path that really conflicted with the theory of Robert Kiyosaki’s “Rich Dad Poor Dad” cash flow quadrant, make money with money, don’t work for money, and then I’d really had to choose a path and reinvent myself though.
Despite finishing a science degree, he didn’t end up going on to study medicine.
I actually did go to university and I studied Bachelor of Science and I found that the more houses and seminars I looked at, the more my grades started to drop and drop and drop. I remember even my third year of my science degree – which I eventually received because I think the University of Queensland felt sorry for me – because I felt I failed one of the subjects, biochemistry, I was out looking at houses the day before that I should have been studying, my interest just wasn’t there and it was really, really tough. I remember talking my parents halfway through the degree and this is not what I want to do and crying. For me to cry it took a lot, I was so upset about the path and I just persisted to finish it off because I’m not one of those people who quit halfway through. So one of the subjects I failed was biochemistry and they still gave me my degree. But while I was going through the seminar-phase I applied to become a doctor through what’s called the GAMSAT which is a test you had to take to become a doctor and I failed that not once, but twice. So they talk about it wasn’t meant to be, I don’t think it was not meant to be as such as more so that I was basically sabotaging myself from performing and killing off the opportunity and closing that door subconsciously anyway. So even if I wanted to I couldn’t become a doctor. That door was shut down, and then I started to request and apply for the jobs at some of the seminar businesses that I went to, so I applied for one job and I ended up becoming one of the employees.
So much to his parent’s dismay, he pursued what he was really interested in.
Initially I was a customer for a year or so, and then I ended up becoming an employee of theirs and started to learn about property on the inside because they were teaching it, and then I started to learn it. And that’s pretty much my progression from going to university, leaving university and working for a property education company, and leaving there and going to a property marketing company, and learning the ins and outs of put and call options, small developments, construction, bill contracts and within that two to three year time frame I’d learnt enough and had enough courage and resources to be able to quit my job and do property full-time. So I know it’s a bit of accelerated story.
Like many know, straying from your parents wishes can be difficult, but it all turned out for the better in the end.
Yeah, very much a tough time for me and definitely a tough time for them as well. I think they didn’t really like the fact that it was so painful for me to struggle. At high school I’d excelled, I was doing sports and music and had a lot on, and was able to conquer all so to speak to a large degree other than being a bit overwhelmed at high school, but I think they were more so relieved than anything else. I recall a few years later when I was talking to them about that time in my life where I said, “Look, you know, I’m not a doctor. Are you still proud of me?” and they said, “Look, as long as you’re not a drug dealer, we don’t care what you do.”
But at the time it was a significant thing, I really felt like I had let them down.
I’m not sure how your parents are with yourself with their Asian beliefs and upbringing. But I believe that parents at the end of the day, if they’re open to their kids performing and being happy, as long as they’re making money and as long as they’re happy, they’re prospering – they don’t necessarily have to be the next Bill Gates or Warren Buffett – they are happy, too. I think that’s what my parents have resolved with myself and I can see that with my younger siblings as well because I was under very much a high pressure environment at home growing up, but I found that as I grew up, my sibling’s pressure was taken a lot of them and maybe they saw that it was counterproductive, the high-pressure environment, whether it was on me or my siblings. But at the end of the day, as long as everyone was happy and healthy and productive, and not doing stupid stuff, sabotaging their lives, getting onto drugs and stuff and dealing with gangs, my parents were happy. I believe that’s how my parents were able to deal with it and these days they’re very happy as long as everybody’s moving forward and not doing stupid things, that is great.
Nguyen had a fast-paced start to his property investment journey.
I remember when I was working for, let’s say, property education company number one, I worked for them I think for one year and I had a goal of buying 200 houses. I didn’t get anywhere close to that, I think I bought three, and working for them full-time it allowed me to save up a deposit, it allowed me to borrow money so that for the first two properties that I bought in the Ipswich area I used the principles that they were talking about, buying under market value, adding value by renovations, refinancing or selling or whatever, and so that was my experience working with that company the first year that I was in the property market. I was very, very active and I bought one property, two properties and then a third property within that time. After the second property, essentially I’d run out of cash and serviceability and so the third one I had to figure out how to do no money down.
Despite not being able to purchase his third property on his own, Nguyen found a way.
At the age of 21, on my third property deal, I think it was in November 2001, I bought my third property and it was a joint venture. No money down and I got it. Simon had fully funded it. He was a Qantas mechanic at the time and he had a $65,000 income, and he was able to fund a property that we bought I think for $67,000 on top of $85,000, so my point is that through the process of the first three projects I learned how to do a deal using other people’s money. And that was one of my constraints early on, is how do you do deals after the bank lends you money and then you run out of money, which is a common problem that people have, especially when they want to grow and expand.
Around this same time, he decided to move on from his first job working with the property education company.
After that first year wherein I bought three properties, I changed jobs and the second company that I worked for had a different angle, they weren’t properly educators as such.
They were property real estate agents and property marketers. To really put them in a box, they had a finance company, they had builders on board as well as acquisitions teams and things like that, so they moved somewhere between 50 and 80 properties a year. Within the two years that I worked with them, I learnt a lot of things about the bigger world of property, how to buy property, how to sell property through instruments such as put or call options, how to go to a developer and do a take out, which is, let’s say, they might have 20 apartments and they would do a bulk buy and get 20 or 30 grand off 5 or 10 properties, buying in bulk under option and then on sell them with a 20 to 30 grand margin in there.
I learnt about the instruments that you could buy property and sell property using none of your own money because that’s what they did, they would secure properties under option, whether apartments or land, and then they would package them up so they were able to make money off other developers, and they’d buy them wholesale and sell them at retail. So during that two years, I really learned a lot and even though I wasn’t getting paid much, I was learning a lot and more than enough to be able to do it on my own in that two year period working with them.
After spending time learning what he needed to know in his first full-time job, he was ready to take on bigger projects.
I was approached by my mentor or my mentor at the time who told me to go to a multi level back in my late teens. I was basically ready – I think I was 23 or 24 at the time – to fund projects and he basically proposed to me, “you’re ready now to go do some projects. I want to buy some property” and basically he was funding my projects 100 percent, and allowed me to go buy a couple million dollars worth of property with a 50 percent stake using none of my own cash.
So my point was that in that three year process, first year working for the property education company, year number two and three working for a property development and sales and marketing company, I built up the skills to be able to do deals using none of my own cash and was able to get a funder as well, able to fund my projects, which is very similar to what you’re talking about in your situation, where you’ve got potential investors and all you need to do now is find deals.
And I was able to do that.
Pretty soon, Nguyen was able to quit his job and focus on property full time.
I was working full-time and then part-time out there finding deals for my business partner Lee, and Lee and I, we don’t do much in property anymore, but we still have contact and I still manage some of his cash. There was basically a stage in my life where he was ready and keen to go do deals, and I used that as a platform to quit my job and do deals full-time because I had a financial backer.
He was able to do this all in the time before many people would even have finished their degree.
I was 23 and a half, turning 24, it was December the 10th, 2003.
Nguyen explains the timeline of how he managed to quit his job at 23.
If you think about it when I was 18 I went to uni, so I started going to seminars when I think I was 19. So then I started working when I was 21, 22 and 23, so I’d only worked at a job for three years. I worked for one company when I was 21, and then the second company when I was 22 and 23 and left at the end of that second year with them so to speak. So when I was 18, 19 and 20, I went to uni, three year degree, 21 I was in the workforce for three years and left around about the twenty-third and twenty-fourth year of my life, so it does sound pretty quick. And looking back I sometimes blink and go, “Jeez that was pretty crazy”. It was a reality because I’d work full time. Around me was property. That’s all they talk about. You wake up in the morning, you talked about property, you talked about finance and build contracts and settlements etc., but on weekends I’d go and on Saturday I’d spend you know five, six, eight hours every Saturday looking at houses and lunchtimes and mornings and after work, so it became a bit of an obsession. And then at night you go to seminars.
With some encouragement, this obsession turned into something a lot bigger.
I wasn’t married, had no kids, no mortgages. I just had some real dreams and at the time I look back and people said, “Nhan, you’re on the right track, keep going.” I had no idea what they were talking about. Great, thanks for your advice but I’m just having a good time and going hard, and pretty gung-ho at the time and I just really didn’t know what I was able to or not meant to be able to achieve because I know a lot of people feel that they have constraints on them, whether they’ve got kids or mortgages or limits. But at that point in time I didn’t know what I could or couldn’t or shouldn’t have been able to produce at that age. And that’s coupled with a lot of challenges because I grew very, very quickly and hit the GFC in 2007, 2008, had a lot of projects that I was managing and some of them made money. Some of them didn’t, some lost money. And so my next round of learning really taught me a lot of lessons and that’s what I do now, which is teach the lessons that I’ve learnt so that people can manage and be able to navigate bad times, tough times, high interest rates in a way that’s manageable. I suppose that’s part of the beginning of my journey.
Nguyen shares one of the hardest lessons he’s had to learn from his journey, with one of his worst investment decisions.
I’d say it was one of the best learning experiences and the worst ever experiential, emotional times for me. It was when we had 20 odd blocks of land under contract and so like I mentioned before in that property development company that I work for, they were putting call options on property. So how that works is essentially you sign a piece of paper which says that you have the right to buy these properties and let’s say at a wholesale discount but you also have the obligation to buy them, so you have the right to buy them and sell them, you buy them wholesale and sell them retail. But if you don’t sell them, you have to buy them, so it’s called put and call option and I did that in April 2007, we secured 20 blocks of land at a wholesale discount. The worth was…let’s call it 5.4 million and we’d secured them for 4.7 so there was about a 700 grand paper profit in there, and the market shifted during the time that they were developing – it was off-the-plan – and we secured it for 4.7. The market lifted and then we were actually able to sell them, and sell them for a million bucks clean profit. So I sold them for 5.7. So myself and my business partner found buyers, secured at 4.7, sold for 5.7, it was a great time in our lives where we started to spend money that hadn’t hit our bank accounts, so we made a million bucks on paper between us and started upgrading things like cars and offices and staff and wives.
No, I’m joking. I didn’t upgrade my wife. My in-laws are Sicilian so if you know anything about the Mafia, they’re Sicilian and you don’t want to mess with the Sicilians. We started spending money on debt in credit cards before the money had hit our accounts.
But things took a turn for the worst.
And that was very, very painful when the GFC came back a year or so later 2008, 2009, and a lot of the contracts, a lot of these buyers that were pretty committed started pulled out of these contracts, and they were doing it legally because we had a 18 month sunset clause, which meant that if they hadn’t been provided the block of land or they couldn’t buy the block of land within that 18 month period, they would have essentially been able to pull out of the contract. And that’s what they did, a lot of them pulled out, but luckily we were able to onsell a lot of the blocks at cost to cover our 4.7 million dollar commitment that we had. So there definitely a lot of learning and very, very stressful time, because if we weren’t able to sell those blocks direct to repay that commitment, essentially we would have had to either buy them or sell them. But you can’t buy them, you have to sell them, we would have had to buy them ourselves and we just didn’t have the cash, it was very tough time get any funding from the banks or any capital from investors at that point in time.
Very, very stressful time and especially since we expected it to make a million bucks and we ended up making still 200k, which was a good profit but it was a lot less than what we anticipated to make. And so I’d even booked a trip to the States and to Europe, and we were overseas and a lot of our contracts were falling over while we were overseas, and managing those settlements from overseas as they were crashing was very, very hard, especially with the time zones, currency wasn’t 80 cents to the dollar, it was 65 cents to American. And so it was really painful, everything that went wrong, went wrong. But at the end of day we still made a profit on that project and lived to learn the lesson, and now the projects that I do are structured a lot differently and we aim to get in. One of my phrases that I teach is “get in, get out, get paid” so that you’re not exposed to the long term changes of the market. Interest rate rises, GFC type plays where people can potentially drop the contracts. A lot of the training that we do these days are centred around how we survived the GFC, and were able to not be greedy and sell our blocks of land very, very quickly and move on.
Nguyen knows how important it is to be aware that the market could change at any time.
I think that a big part of why I’m educating people is because I know that my growth from when I was 21 to 27 was a really huge curve, and once I knew how to get investors and I could find deals, then the world is your oyster. You just keep combining investors with capital, capital with deals, and then you keep buying and buying and buying, because if every deal profitable, so to speak, then you can get in and get out and get paid, and it just becomes its own monster and accumulates. The challenge is that if you think that you’re bulletproof and you don’t have a defence mechanism or you don’t have a backup plan, then you’re basically arrogant and naive enough to think that you’re bulletproof, and that’s when the trouble happens. You start spending recklessly, you just buy everything you can without considering if it doesn’t work out. How do you get out of this if the market changes? What if interest rates go up and what if the market drops 5 to 10 percent or so? If you’re looking at places like Sydney or Melbourne particular, as an example, if you’re just gung-ho and you’re expecting to make the 30 to 40 percent profits that you have in the last few years, then you’re basically exposed and then you’re in trouble.
He believes a real investor understands how the market rises and falls, and doesn’t just expect it to always rise.
That’s why we suggest a handful things, one is you make your money when you buy, so buying under market value when you get in and also get in, get out, get paid. So it is the velocity of money, when you get out, you reduce your debt, you reduce your risk and exposure in the marketplace.
Especially in Sydney and Melbourne, there was a huge arrogance around buy and hold and making 50, 80, 100 grand a year just by sitting on it. But they weren’t around when I was around in 2007. For example in Bondi where people couldn’t give away blocks of apartments, people just weren’t wanting to buy them at all, and now know roughly 12 years later the market has come again back again to correct itself and it’ll go up again for sure.
It’s like the sun goes up and the sunsets. The tide comes in, the power goes out. So people just have too short a view on life in the marketplace because essentially a lot of them that play during the times the market goes up are gamblers, they’re not investors, they’re not long term players. They speculate and jump on board because everybody’s playing the game.
Aside from just property education, Nguyen believes personal skills and personal development is really important for doing well in this business.
I’ve done a lot of personal development training and one of the courses I do suggest people do is what’s called Landmark Forum, they do courses in Brisbane, Sydney, Melbourne. I don’t get any kickbacks or affiliates by recommending them. But it’s a really great personal development course that I think has allowed me to look at a lot of my blind spots and a lot of guys from Tony Robbins also go to Landmark Forum to be able to deal with the things holding them back.
I think some people go to learn about property, they go wanting to learn about the strategy, which I believe is important. However, I believe the more important thing is learning about themselves and personal development, and the balance between the two, which is technical skills and personal skills, really allows you to become a much better investor because you’re aware of yourself, not just about sitting behind a computer with a spreadsheet because you’re going to have to be able to negotiate with people.
Properties are a people skills game, a people business.
I do a lot of negotiating with property owners directly and so you need to be able to one, have people skills, and two, personal development and be able to deal with things when you’re not winning or not getting your way or things are going too slow and things are breaking down. So to answer your question is that my “aha” moments came to me when I was resolving a lot of my personal issues and it made a huge difference in my wealth creation in my businesses because I was much happier, I was less arrogant. I was able to communicate better with people because my personal skills were a lot better and it actually added to my bottom line, as opposed to people thinking you read more books, attend more seminars, get more education to be able to increase your wealth. It’s not necessarily the case.
Nguyen believes with one weekend you could learn a whole range of skills that you can apply to business and your personal life.
It’s a three day event, Friday, Saturday, Sunday, it’s only about 800 dollars. Very, very cheap and cheap as chips.
It doesn’t necessarily focus on wealth creation, you go in there and you have to resolve a lot of stuff you don’t even know that’s holding you back. And some people deal with personal stuff, some people deal with business stuff, some people deal with parents, siblings, past relationships, it’s a whole plethora of things in my life and a lot of my clients have done it. I think Ross Williams has done it as well, a lot of my trainers I suggested to do it because it just gives them the skills.
It’s like someone giving you a screwdriver as an apprentice or a hammer. It’s a skill to be able to improve yourself personally, one which other people aren’t necessarily are able to help you with, your own reflection and self-improvement internally.
I think a critical tool of this game is being satisfied with what you’ve achieved and balancing that with being dissatisfied but not angry at yourself, to always go to another level.
He explains how starting with a number of deals allowed him to make this jump.
I think the couple of deals that I did preceding me leaving my job were ones into twos or two into two, so small developments you could say. It was with the help of my mentor and business partner at the time who basically funded the handful of projects, so one was a two into two which is what we call a splitter block in Brisbane here and another one was a one into two subdivision near the airport, and we had a couple of other projects. One was a five townhouse project in Mackay. So we bought a swag of properties I think during the 2003 and 2004 period, and that allowed me to basically get enough passive income as well as enough stock to be able to buy and sell to be able to do more deals.
So you actually had quite a number of deals running maybe about four to five in that period of time and I remember reading up not long ago that there was one deal that you took on which had a quite a large subdivision development which I think goes up to 20 blocks or something like that you took on…was it quite close to after that period of time or is that much later?
It was a little bit later, so that one was a subdivision of 20 lots in 2007 to 2009; that was one in the GFC where I had a lot of stress and we were able to buy it at a discount but we sold it for good profit nearly a million bucks, a so-called million bucks. During that time the GFC came and a lot of the prices fell and a lot of the contracts got terminated. So we ended up still making 200k, that was about three or four years after that spate of deals there; in-between that I’d done a handful of deals where I found other investors, got bank funding myself, load of loans at the time, and bought a handful box of land and built houses and sold them. So I went through a period of townhouses after those 5 two-bedroom townhouses we did. I think another 15 or 20 or so townhouses in Mackay which were blocks of three, blocks of five, duplexes and I learned the process of strata titling and then after that year that’s when I bought those blocks of land and built those houses and specied them or they call them specy homes where you buy them, build them and then sell them commercially as a speculative play. After that I rolled into those 20 blocks of land.
Nguyen warns that it’s important to start on smaller projects before making the transition into bigger developments.
That’s one of the challenges I find these days, whether I’m doing courses educating people or talking to investors, is a lot of them want to, after they’ve done one into two, they want to jump into one into 10, one into 20, because they think that they’re superman and bulletproof but it’s one of the biggest naiveties that people…the greed gland just pumps and they think they can do anything. When they say anything is possible, absolutely, you can go to the moon, fly to the moon, however you need to build up the skills and the capital. So rewinding back a few years, probably back to 2002, 2001, I did meet another mentor who was doing blocks of 20 and blocks of 20 apartments and townhouses, that was his specialty, and essentially I built a plan or a model to go from individual properties to multiple properties, and I broke it down to various parts. That’s why I went from let’s say ones and twos into multiple townhouses and blocks of units or townhouses to strata title; that was one thing I wanted to learn is how to do strata titling because if I wanted to 20 dwellings, which was modelling off my mentor at the time,
I needed to learn how to strata title, so I took that opportunity and did a whole bunch of strata titling in Mackay. I think it was 23 townhouses we strata titled and sold; and then after that I thought, “Okay, well, my mentor is doing construction, I need to learn how to do construction,” and that’s what I did, I ended up building my own blocks of land and building houses. During that time, probably 2005 to 2007, we built a whole stack of houses in a suburb called Bulimba which is a top-end suburb about four or five kms from Brisbane there and another suburb called Wakely where we built a bunch of houses as well. I learnt how to deal with one, with multiple investors, multiple loans, multiple bank accounts, multiple houses, construction, project management and it’s an organic growth to go from one deal at a time to do two deals and five deals and 10 deals; and it becomes a process where you just gradually expand it. Expand too much sometimes it can get too overwhelming financially as well. But with those five houses that we built at Wakely we had about 20 to 25 thousand dollars a month holding costs. Interest rates were low doc 8 9 percent and it was pretty scary especially when we weren’t getting the prices we were wanting to get. The market was starting to come back a bit and we couldn’t rent them either because they were high end 800,000 dollar homes and we had to keep them pristine for owner occupiers to buy.
Nguyen believes a good developer is educated, and knows not to get in over their heads.
Before we went into the big 20 lotter there was a lot of education that I had to learn on the court. These things are very hard to learn and of course you have to experience the pain. It’s like having kids: you can watch a YouTube video or read a book about how to raise kids but only until you’ve got kids and you’re dealing with the day-to-day challenges of crying and all that, and feeding and financial challenges such as not being able work does it become experiential learning. That’s what makes me a good developer because I know what my limits are and when to slow down and when to accelerate.
Nguyen calls this middleground between risk and rewards the “sweet spot”.
One of the things that I’ve learnt from my mentors is finding that sweet spot.
I’ll just tell a quick story about his experience and then coming back to my experience. He was doing blocks of 20 at one stage and then he expanded it, he was doing 50 townhouses on another deal that was a lower socioeconomic area called Logan that a lot of people may know about, and end product was really cheap at 300,000, 320,000; but he lost money on that project and he basically clarified for himself and for me that you need to find your sweet spot. For me, something around the twenty dwellings is very, very comfortable.
Nguyen shares with us the types of development projects he has going on at the moment.
The projects that I’m doing at the moment, the purchase prices are up to two million dollars. So one site is about 30 dwellings. I paid about a million bucks and my business partner who’s bought the site next door is about 500k, at 1.5 million. We’ve got about 30 blocks of land between us that we’re getting approval at this point in time. So that’s in council. Hopefully that’ll come out the next three months or so. Another project I’m working on is a childcare centre, purchase price about 840 and about 2000 square metres which unfortunately we couldn’t get a subdivision or a townhouse approval on. But there’s a scope for a childcare centre and then I’m doing two small subdivisions which are essentially buy and hold, because I subdivide the blocks, two into four, and then I’ll build a little mini boarding houses to get super cash flow. So in summary I suppose I’ve got a reasonable sized land subdivision, a child care centre which we will get an approval and sell, and then two into four subdivision where we’ll subdivide, hold and build buildings on to rent. So it’s a combination of buying, sell and development in the combination of buy and hold.
The length of these projects depend on the size of the development.
The two into fours which are ones into twos essentially – one is a 600 square metre, cut that into two, and the other ones are 840 odd square meters, cut that one into two. They’re generally a 6 to 12 month play and that’s what you will find when you’re starting out is the ones and twos up to about ones and the fives or so is that they can be quite inefficient relative to the bigger ones. The 30 lotter I’ve owned that for just a bit over a year now and we’ve probably got another 6, 12, maybe 18 months, depending on how we stage the project. So the bigger projects can take 18, 24, 36 months depending on the marketplace, finance, rate of sale. They do have more bang for buck but they do have more challenges, more holding costs, more consultants fees. It’s a balance and that’s why at this point in time where the market place is I’m happy to be where I am. I don’t need to prove myself and try to compete with the likes of Gurner and the bigger boys who are doing bigger projects. It’s about maintaining momentum, confidence and being able to complete projects; you don’t want to have 10 development sites which are all vacant, no rental income and you can’t get it out of the ground because finance is difficult or the planning approvals are very much delayed. So it’s about momentum because I know in 12, 24 months the market will pick up again and either way I’m still aggressive with my buying.
I just need to be very, very conservative with in prices and strategies all the way through.
So realistically for any beginner or starting investor even to an intermediate level, these things take quite a bit of time, as you said you know up to 36 months or three years or so. So it’s a patient’s game as well but also to working out what you can actually hold for that time because anything can happen in three years, it’s such a long time and I guess to be able to do that. Does that mean then you should be funding everything as much as you can initially from upfront through either option deals or make sure that you’ve got cash flow from somewhere to be able to fund your life because you still have to eat right.
That’s right. And I don’t generally eat 2-minute noodles unless I’m camping.
So it’s a very good question and it’s very thought through. So I think that’s one of the things that – when I had those five houses that I was building in the holding costs of five grand a month each roughly, let’s call it 20 grand a month – I learned that you definitely need that holding power. And bigger isn’t always better because if I multiplied my deals it would also multiply my negative cash flow and also multiply my stresses.
So my point is that when I suggest with people starting doing developments whether it’s just a granny flat at the back or building a duplex is thinking big and starting small, because there’s so many layers of learning about it like you said holding costs, being able to build up the cash flow to be able to sustain that, whether it’s from other rental properties, whether it’s from equity, whether it’s from getting money from investors to be able to self-fund projects and not only that it’s the mental state of it. For instance, in regards to my 30 lot subdivision at the moment, the holding costs are roughly 10000 dollars a month and the house has been vacant for about a year now, I intentionally left it vacant because I intended to develop it. It’s taken a little bit longer so we put a tenant in but that tenants only paying 295 a week so it’s barely touching the sides of the holding costs, but it’s covering the rates, insurance and things like that. But to handle that 10000 a month…it’s one, having the wherewithal financially to handle it but emotionally not be disturbed or stressed over having that because you’ve got enough that in the deal, you’ve got enough other deals that have been profitable to sustain those deals based on past profit and equity or cash flow.
So thinking big and starting small is absolutely critical but then you can build up and if you need to access more funds from investors short term you might say, “Look, I need another hundred thousand dollars just for six months to keep this project afloat,” then it’s not difficult to do because you’ve got that track record, you’ve got the balance sheet. So it’s the same thing with the childcare centre, it’s a big site, bit of holding costs in it, three to four grand a month and a tenant ain’t cheap rent because the house is rundown, that’ll exit in a period of 9 to 12 months. So having that wherewithal emotionally and financially to be able to hold it and know that you’re going to exit from it, if you’ve got a whole bunch of negatively cash property, you can negative gear it but at the end of the day if interest rates go up you’re going to get hurt.
Nguyen balances his development projects with a property portfolio which provides stable income.
I think it’s absolutely critical that you do both. I have a philosophy which is build some, sell some, keep some, and when I say build some it doesn’t necessarily mean you have to build houses or townhouses; you can eventually purchase a development land subdivision is building, you’re building road, building driveways and building pipes. So my philosophy of build some, sell some, keep some is absolutely critical in that I’ve looked at a lot of other developers who’ve gone one way or the other and I’ve found that if you just sell everything you’re going to miss out on a lot of things, you’re going miss out on capital growth potentially over the long term, you’re going to miss out on a lot of opportunities to build equity and have the tenants pay off your property. So let’s say our tenant is paying 300 bucks a week in a one bedroom townhouse complex and he’s been paying that rental site for four years. So 15 grand a year, three hundred bucks a week. Times four years, that’s 60 grand that is absolutely critical to pay down my mortgages. So yes and long and short answer is yes absolutely. As I go along every year or two I look at what else am I holding and what else I am adding to my portfolio.
So the last 12 months I’ve mainly been focusing on developing it and selling because I’ve seen the market potentially soften and I want to exit. Having said that over the last couple of months like I mentioned about those two sites which are two into four, in those four blocks of land we can build super cash flow multiple income properties on that, and from each of those blocks, let’s call it 5 rental incomes, we’ll have a four blocks and 5 rental incomes each that’s 20 rental incomes in a period of 12, 24 months to add to the portfolio. So my point is yes absolutely I think it’s critical that people do both but yes definitely I think segmenting them is an ideal way to go.
While there are different approaches, Nguyen believes that it’s important to find the balance that works for you.
Sometimes people might build five, sell three, keep two and that’s definitely a possibility. It does cause some what we call intermixing or pollution or it’s not a clean way because the entity that’s developing will be involved in GST and basses and etc. Sometimes it’s better to have one project which you’re going to buy and hold, I might do a want to do a one into three townhouse, keep the townhouses and then a one into nine subdivision and sell all the blocks of land. So that’s the ideal model but at the same time you’ve got to figure out what’s right for you and when you’re starting out sometimes keeping one out of four is a blessing. You reduce the amount of taxes you pay, GST, you don’t pay agent’s commission as well. So it’s definitely an upside. It’s just whether you can afford to use that debt. So to be able to maintain that property – what I mean by that is with the Royal Commission and APRA and all that debt in banking funding is definitely an asset for yourself. So if you’ve got it locked up in buy and hold it may constrain you from doing future development. So it’s a balance in our balance between what you’re selling, what you’re holding and I find a ratio of maybe one to three or one to four, one to five. Some are closer to one in 10 but that’s okay. The one in 10 that they hold they might put a multiple income property on it and that’ll be five sources of income for just one property.
So everyone is horses for courses but wherever they can, they’re holding something, definitely allows you for the long term paying off of debt and having a debt that’s paid off, a property that’s paid off with positive cash flow.
Fantastic and that’s that’s really good that you raised this up because most people who are developers don’t usually talk about this side of things because it’s usually just development, development development, but I think the smart developers out there do buy sell proportion and and keep a small percentage of it or whatever that they decide in terms of portion wise as well.
A good model you might want to look at is Meriton. You live in Sydney and you look at Meriton and Harry Triguboff, he’s developed 60000 apartments roughly 2000 a year, and so he holds two to three thousand apartments any one time, he’s found it a highly cash flow model which is serviced apartments and he might hold part of a building or a whole building at any one time.
The cash flow comes in.
Exactly. And so I basically looked at a lot of different models of what other people have done. Westfield is an extreme model they hold onto pretty much everything, I wouldn’t say everything but a lot, I think they’ve sold out some of their shopping centres. But that’s one extreme model, the other model you might want to look at is Mirvac. Mirvac have a model where they sell all their residential and they hold commercial sites. So what that says to me is that they find that residential has a great development profitability where they essentially develop it and sell it, and then the higher yields are in the commercial properties, so that that’s another model which is congruent to if you look at Harry Triguboff, he’s selling all the apartments and the that one that is keeping, the service apartments, essentially becomes a commercial property for him which is a high yielding rental income. So yeah that’s that’s where I’ve gotten my conclusions from, is looking at other models and the philosophy of building some, selling some, keeping some.
Starting his journey at just 19 years of age, Nguyen shares the various reasons why he decided to embark on his property journey.
There’s a handful of reasons for that. When I started out I was 19 and I worked for the property education company, I actually wanted to present to people and the first topic I presented on was on goals and I remember even the topics I was talking about was you know, if you have a jar and you put ants on the top of the jar, they’ll go round and round and round in circles. And the reason I mention that is that I’ve always been wanting to share what I’ve learned. I used to read a lot as a teenager, personal development books, Dale Carnegie “How To Win Friends” etc. and I’ve always been fascinated with education and self-development and how to bring the best out of people. Especially myself. And then I saw Robert Kiyosaki in 1999 I think in the convention center and it just resonated with me that I really want to educate and share the message about financial prosperity, even though I was 19 I didn’t have any properties, I didn’t have any wealth so to speak. I just wanted to share a message and impact people in a positive way.
So ever since I was 19 and in my teenage years, I was wanting to impact people and make a difference to other people. And when I was 19, 20, 21 that was when I suppose I had a lot of growth and had a lot of support for my mentor, I had my own rich dad using the words of “Rich Dad, Poor Dad”. Lee, my first mentor who I still keep in touch with today. I just felt so grateful to be able to be gifted with his teachings and tough love so to speak and I felt it was my Christian background as well, it’s necessary to give gifts other people as well. I’ve got a handful of mentors and they ongoing give to me willingly and freely, and I think that’s what part of my mission is to relay and share some of those messages and its impact to so many people. I’ve got clients making 500k profit year in year out on the developments, they’ve quit their job. Some of them their wives have been to be able to quit their jobs because they want to quit. The impact of my mentors teaching me and instilling with me great information generously made a mark on me, and now I do the same for others as well. I think it’s just a mission that I’ve found has helped through the years and the more I do it, the more I enjoy it, and it’s very worthwhile and satisfying.
Like many, Nguyen used various resources and books to educate himself along the way.
There’s a handful of books out there that are really, really helpful. I might rattle a few off, I’m sure you may have covered these in the past. “The Richest Man in Babylon” is a good classic, the “Rich Dad” series. I’d say that probably the earlier ones like “Rich Dad Poor Dad Cash Flow Quadrants” are the more fundamental ones if you can get them in audiobooks. They’re really good as well. I also recommend a lot of my clients who build up a property portfolio on a property business that they look at things like “E-Myth” and looking at ways to build their business in a structure as well, in a format that’s not just a home business, mum and dad type business, but a professional business because E-Myth talks about McDonald’s and how to systematise a business. I think that’s one of the biggest things that I bring to the table when I’m educating people is it’s not just about making money, it’s about how do you turn your property investing and developing into a business, and that’s leverage, that you can go on holidays, that you have systems, you’re not always putting out fires and built to support itself and support you. Not just not just for the sake of making money and putting out fires because you know you’ve got to check the phone every three minutes when you’re on holidays.
Having come so far, Nguyen shares the best advice he’s ever received.
Like I mentioned before you, “Think big and start small” I’d say is a really good phrase to start with. Another one that I’ve heard throughout the years is you make your money when you buy, not when you sell. I know that in many instances, let’s say the market has changed or is changing, if you buy well then you essentially build in the equity or the protection or the buffer for the market change, so you know whether it’s from Robert Kiyosaki or Warren Buffett. There’s a lot of good philosophies that keep your ego in play and make you a lot more careful, because property is easy to get in, hard to get out, is another saying I have. You sign a contract, you’ve got a full-time job, you can borrow, that’s as bit of equity, borrow from the parents, get into a deal. But on the other side, moving it on with at a profit, you know 10, 50, 100 grand more, isn’t always easy as it seems. When the market goes up it’s very easy to hide people’s mistakes because they don’t know what they’re doing. Look at Sydney for example, in 2007 I was down at Bondi and they were giving away blocks of units that people were not interested in. But over the last five or so years the market has gone absolutely crazy and everybody jumped over each other to buy property sight unseen whether it’s a dog box or not. But the tide has turned, whether its Melbourne or Sydney. And so make sure you buy right whatever the market does.
Nguyen shares some of the significant personal habits that he believes contributes to his success.
One thing is meditation, if people can find a way to meditate, it’s really, really important. I think hobbies are important as well. Some people just get so stuck in the world of got to make money, got to make money, want to get out of my job. I get it. You know they’re in their job, they may not like their job, they want to get out of it, they hate their boss and they go from a nine-to five-job and after hours they’re going to different seminars to educate themselves but all they think about is making money and I get it, I get that. That’s why I’ve been in the past as well. But I think your meditation is a good thing. Also participating in hobbies that give you a rounded lifestyle, not just making money, but also the third thing that I participate in is a thing called Landmark Forum. It’s three-day course, it’s quite reasonably priced, less than a thousand bucks and I do a lot of that work. It allows me to basically deal with stress or pressure a lot more easily and quickly and also resolve a lot of angst and anxiety or stress that one might have.
Here is what he would like to tell his younger self if he got the chance:
I’d say that persistence is the key, if I were to look back on the times, persistence is the key. You’ll always find a solution as long as you’re willing to work hard.
Cut down on the alcohol is definitely another thing I’d tell myself. I joke about in seminars how during the GFC I used to drink probably half a bottle of wine a night red wine a night and for some people it’s not a big deal, but as you know with Asian genes, two glasses can be fatal. And definitely that those are the things…persistence, just keep going, keep putting in the effort and cut down the alcohol, because there’s times to deal with stress and I promise you there’s not many people willing to admit there are those kind of problems.
Nguyen has taken to the philosophy of solving his problems, such as stress, instead of hiding them.
There’s always a solution to the problem and there’s always people willing to help. Sometimes we just forget that and prefer to hide and run away from the problems and then that’s where the problems fester. Long-term you have financial problems, personal problems, health problems and that’s where people start dealing with marriage breakdowns and heart attacks and stuff like that, so I know that’s a bit of a different conversation that we may have started but you know that’s what you get with me, you’ll find it’s more of a bigger picture view of success. Development is definitely a part of my life but it’s not the only thing that’s important to me, having a great marriage, great relationship with my kids and great health is important too. I’ve had money and in terms of the past in my health I was getting sick quite a lot back then probably 5, 10, years ago and because of the stress or the pressure I was putting myself under and now I’ve had to spend a lot of time on my health to maintain that and I feel well that’s a very important part of my life. Some people are overly committed to that and that’s the only part, they’re fitness freaks but they’ve got no money. They’ve got no future. That’s okay.
In fact, Nguyen has a very particular approach to conditioning his mindset.
I think that’s the difference that I bring to the table, is my values aren’t just about making money. It’s a more well-rounded approach of happiness health and wealth we call it. And effectively with happiness and health it really doesn’t matter if you’re making 100 grand or 10 million dollars a year, if you’re happy in your relationships you’ll automatically make more money, and if you don’t, it doesn’t matter you’re happy anyway with what you’ve got. You can have a 5 metre boat or 50 metre a boat, if you’re happy, it doesn’t really matter what you have, if you’re unhappy then it really matters what size boat you have or what lifestyle you have, or cars you’re driving. So being satisfied I think is a critical tool of this game, is being satisfied with what you’ve achieved and balancing that with being dissatisfied but not angry at yourself, to always go to another level.
Upon consideration, Nguyen believes he rarely relies on luck in his development deals, and focuses more on effort.
In the book “The Richest Man of Babylon” I think it talks about the goddess of love or something.
So there’s a saying and the saying is the harder I work, the luckier I get. And I’d say look it’s you to effort effort effort, and I’d say it’s 99.5 five percent effort and persistence and then the luck sometimes comes, just because you’re out there pounding the pavement. In regards to the three deals that I bought recently, you could say it’s luck but I’ve invested capital, I’ve invested time in these relationships, and invested time in the systems and the qualifying press deals. So I think success is when preparation meets luck and the preparation has been many years in the making. People think that luck is a big part of it. I don’t think so. I think that if you keep putting putting it out there…from a physics point of view, every action has an equal opposite reaction, if you put it out there enough, something will come back, and it’s just whether you’re willing to take the opportunities or not. Some people they put it out there but then they sabotage themselves when the opportunity is there. They hesitate and then they sabotage like I said and then they miss out on a lot of opportunities. They complain that they didn’t the opportunity but it’s a process of persistence and recognizing opportunities, and willing to take those opportunity and grasp them as well.
If you’re looking to reach out and speak with Nhan Nguyen, here’s the best way to do it:
We have a free report so they can go to our website at advancedpropertystrategies.com.au and can get a free report on opportunities and learning lessons that I’ve had in the past; and definitely get subscribed to our newsletter and from time to time we’ll have events in Lebanon and things like that, but I think that’s the best thing is if you’re just subscribed to our newsletter and get that free report check it all out, and learn as much as you can and take advantage of the freebies on offer.
This episode was produced by Ashlyne Ocampo with narrations and interviews conducted by Tyrone Shum.