Property Development and Running a Business With Sunhoc Khou
In this episode of Property Investory, Sunhoc Khou shares his fresh take on residential property development and business building. With a wealth of experience in the industry and early guidance from significant personalities such as Troy Harris, Khou reveals how exactly he found success in property development and his decade-old business, HWD Homes.
Listen to this episode of Property Investory to hear what Khou has to say about starting and running a development business with his brother, his good and bad experiences investing in property, and the important lessons he has learned thus far on his property journey.
Despite working a full-time job in accounting, Khou has found success in part-timing property development by working on dual occupancy sites.
My name is Sunhoc Khou. I’m actually an accountant by trade but I’ve obviously turned my attention to property development in the last five to seven years and that’s what I do at the moment.
So if I go back to the start line, we started off in the obvious in the residential property development and we just looked at sort of dual lock sites and it gradually moved on from there. So we’ve actually done one on the site behind an existing property before moving on to two, then done three four and so on. So but we’ve sort of kept it in that sort of range of about four units and that’s sort of our niche at the moment.
With his success in developing on multiple units, Khou has turned to commercial finance and business bank loans just to work in residential areas.
Depending on the lender normally was around yeah like you said three or four units, some might do four or five on the residential under the residential space but still like a business line. So yeah depending on the lender but that’s probably about the stage where you move up to the business commercial finance. We just found an easier area especially in this market at the moment to get finance and that’s sort of why we stayed within the smaller development space.
So when we first started out we were able to get residential finance especially for the one at the back or for the dual lock. But as you do more projects they, all the banks and non-banks and second-tier banks sort of move you along to the business banking section anyway and even when they say you’re getting residential rates they still make you do business banking applications. So it’s a business bank loan but you go for the residential area.
But as you do more you inevitably end up in the business banking area.
On any given day, Khou balances working at his full-time job and managing his property development business with his brother. Fortunately, on the property development side of things, Khou is mainly doing administration work at his own pace.
I still actually work a full-time job at the moment. I still do my job, my finance or accounting work but on a given day in terms of the property development, I’ve actually got to set up pretty well. So a lot of my work is actually on the phone or on email. So it’s actually just responding to the consultants making sure the real estate agents are doing their job and following up lead to sales. So to be honest, a lot of it is actually just overseeing administration more around the project managing, just making sure things on time, on budget and everything’s moving along so it’s really just on the phone and answering emails, to be honest. Unless I’m out on site sort of doing some deal appraisals. But even when we’re looking for deals a lot of that’s done in the back office before we go on-site to check it.
Khou worked in the property industry only on a part-time basis as he found it difficult to get into an investment without solid contacts nor experience and information.
So it does vary quite a bit depending on what stage the properties are and sorry, where the deals are at.
Cause we’ve been doing it for a while, at the start if your intention was to still work full time, it’s difficult at the start cause you’ve obviously got to make the contacts, you’ve got to get that knowing where you don’t have to be chasing things up all the time and you’ve got that sort of relationship with consultants and you can give someone a task and you know it’s going to get done. So me and my brother on the business together so we may spend two hours a day each on administration maybe not even that.
That being said, Khou is looking to get into property development full time in perhaps a year or two.
Our intention was always to go full time with property development but I’ve been fortunate enough to have some very good mentors and be a part of some good networking groups where we were advised that, cause I guess the dream for everyone is to go full time into their own business but we’ve sort of got a transition plan just to be a bit more conservative especially with the way the market is so that was the advice that we were given that probably is something that we should look at but not to jump straight into that but obviously, depending on each person’s circumstances that might change.
To be honest with what we’ve built up we could probably… So when I say we, it’s my brother and myself, we could probably do it now but it’s just something that we want to cause we’re still young and still sort of enjoy the busy lifestyle for now. It’s something we want to look towards in the next sort of 12, 18 months.
Khou grew up in the southeastern suburbs of Melbourne and engaged in his studies all the way up to a post-graduate level.
I grew up in the southeastern suburbs of Melbourne. So Ferntree Gully if you’re familiar with that area, it’s around the Knox area. So I went to a public school there and that all worked out all well.
So I actually went to primary school and high school in the Knox area and I did a Bachelor of Commerce in accounting after high school so I got a bachelors and a CPA qualifier. So a lot of studies.
Along with his studies, Khou also worked at a few part-time jobs.
I worked in what is now Bunnings but used to be McEwans.
‘m not sure you remember that but I think Bunning’s took McEwan’s over. Probably decades ago I had part-time jobs at Dick Smith and that got taken over or went bankrupt. So yeah just did whatever I could do at that time.
Despite graduating university with an accounting degree, Khou has since left the field to be able to spend more time in property development.
I jumped straight into a, like a graduate accounting job so to speak. And yeah just moved into different areas of accounting and finance and since that point and what I’ve had to do and this is probably one of the things I didn’t touch on before when I said I work full time, I actually had to move out of finance and accounting to be able to do my development as well. So obviously an accounting or finance is very normal size whereas even though I’ve got a full-time role now, it’s very flexible. And the reason I sort of left the accounting field to work full time is to be able to do my property investing and developing as well.
He moved onto operational planning in the utility industry simply because it is more flexible and allows him to pursue property development further.
I’m in operational planning in the utility industry and for me to do that, at that time so I did that probably four years ago.
So that was a really big sort of milestone for me because obviously I’d study three years undergrad and three years post-grad to get my CPA and then to actually give, well you know in a sense give sort of the finance career up to move into planning where it was more flexible so I can work from home. Start when I want, finish when I want was a… it’s obviously not since quitting your full-time job but it was a big sort of move for myself to be able to make sure I could pursue sort of the property investing side of it.
Like many developers, Khou and his brother started off with renovation. Having attended a few property investment workshops, the brothers were keen to put the theory into practice.
Like many developers, so we actually started off in renovation. So we were I don’t know how I put it. So we, my brother and myself were avid both property networking workshop attendees so people that go to all these events and get that sort of motivational aspect of it.
So we used to go to a lot of those workshops where people present and talk about passive income and all that. So we were always interested in property investing but developing itself was sort of something that came maybe four years down the track when we actually sat down and figured out what we really want to do because we had bought property before developing so sort of like, not to be disrespectful but more of a mum and dad sort of investor where we’re just buying our property to renovate without any timelines or budgets or any sort of goals. It was just one of those things where you’d hear in the media that that’s what everyone should be doing, we should be trying to invest so we did that without any sort of clear direction. So to answer your question yes we had bought property before we pursued our developing sort of path.
Khou and his brother had always been interested in working on a business together and happened to stumble on the property as the perfect opportunity.
My brother and I were always interested in running our own business. We just didn’t know what it was. So we were, sounds a bit funny when I look back at it now. So we actually looked at franchisors, subways and grilled, big franchises thinking to be a franchisee thinking maybe that’s the way to go. And then we bought a few vending machines thinking that might be the way to go.
If I was to think about whether my parents had any influence over the property side of it, they would talk about it like most mums and dads but not particularly in developing itself.
So we always had an interest in business so it sort of led us to the property side of it anyway. So there’s only so many things you can do business, shares, property in terms of investing and we sort of looked at each one of them and felt that share trading definitely wasn’t for us. And opening a franchise business definitely wasn’t for us either. And that’s the hard thing trying to figure out what you’re good at I think.
Their first development project was a valuable experience as Khou recalls it as the most disgusting property he’d ever seen.
We ended up renovating, so it wasn’t a lot. So we did three renovations. So the first one we bought was the most disgusting property I’d ever seen. It just needed a full makeover and it was just filth. I think it was a guy on benefits who had a few dogs that lived in the house. So it was just urine and faeces everywhere. It was just filthy but it was cheap so it was a good lesson that after we did our first one we kind of thought. we’re really not good at this renovation thing so we end up doing another two very small renovation jobs more like cleanup and dress up as opposed to wall changes and kitchen changes.
However, Khou and his brother have since, sold all their investment properties.
We’ve actually sold everything that we have bought to date. So this would have been back in 2007 or 2008. But that was two hundred and thirty-seven thousand which is a deposit for a house these days.
So you know when you look at look back at it’s pretty amazing how the prices have increased. But yeah it was the first one we bought but it was a good stepping stone cause we learned a lot from that one.
Khou made a decent sum out of his first development project, which led him to question his talents and learn more about the property market.
We made around 90000 off that one. So well I mean, we were absolutely stoked but we weren’t sure if that was the renovation or the market. So I think when we look back at it we might have gotten lucky and a lot of it was the market because we bought such a crappy property in an okay area. And we spent maybe 50000 ish on the renovation, 50 to 60000 from memory. So that’s gross before tax. So we wouldn’t have done that under, from memory, under a business or anything. So we just bought under our own personal names and not had any GST issues or anything like that.
Since then, both he and his brother have taken on many other projects, with a third still in the process of completion.
From when we first started off, we’ve done around 15 projects to date with some of them still ongoing. So not all of them we’ve actually built because obviously with the market changing we normally assess and then see whether there’s actually any value selling with permits or actually in the land itself. And so 15 and we’ve taken to completion around two-thirds of those.
So that’s really good. And during that time I probably ask you a story based kind of thing. During that time those 15 projects have you had any sort of worst investing or worst development moments to be a share in terms of story for us.
In terms of financials, the worst one we did would probably be our third project. So we broke even on it and it was a project that we bought.
So this is before we took the whole business thing seriously and it was in our early days. We had just bought one that we thought was good value and ended up being able to build through on it but we held onto it for, we did the project over four years which was probably double the length of time we should take and really something that we didn’t, to be honest, we were quite lucky because we bought as almost as a test project to see whether we wanted to do developing and didn’t lose any money on it but didn’t really make any money on it and it wasn’t something at that time we took seriously. So when I look back on it, it was probably quite likely we lose money on it because we just decided to build on it without too many numbers or anything like that.
Khou believes they were quite lucky on their property journey as despite not having much experience, they were able to turn over profits or break even with their first development projects.
This was the third property we bought. So it was in the suburb called Heidelberg Heights in the northern suburbs of Melbourne. So it’s quite close to the city, probably 13 to 14k, so we bought that because of that reason. Because at the time it was probably a lower socioeconomic area but quite close to the city. So we thought there was good value in it and that was the reason why we bought it. And I thought, to be honest if we bought and sold it we probably would have made quite a bit of money because of how the market changed over time.
But we decided to develop it without any knowledge which is why I say we were probably lucky and not one of the ones that decided to do or get into developing without the proper sort of knowledge and actually lose a lot of money.
After their third property, the Khou brothers decided to get serious by joining a property program called RESULTS.
Probably off that one we decided that we needed to get serious and actually seek out a mentor. So we’d, up to that point we were sort of I guess you could call it a part-time investor, we just wanted to be in the market because that was what everyone said we should be doing. So we were actually part of a property program called Result. I’m sure you’ve heard of them.
And they were really good in terms of the goals set and the foundations but what we found with that program was, it was a very generalized program in terms of it taught you a lot of things and because of that we tried to do a lot of things which is absolutely no fault of the program itself, it’s just we didn’t take the time to sit down and actually decide what we wanted to do. So we said okay Renos we’ll try development or we went to New Zealand and bought eight properties cause we wanted to try it.
Khou even invested in a mentor to start seriously pursuing property development.
From that point, we sort of sat down. For my brother and myself and said okay well developing is actually what we wanted to do. What we thought we were good at, the project management side of it. We thought we were quite good at looking for deals which we found good deals we just didn’t know how to execute them so we actually found a mentor. You may have heard of him so we went into a program run by Troy Harris and that’s sort of when we joined that Troy sort of looked at our portfolio and said Guys you need to get serious and get real, what are you trying to do. We gave him our goals and we’ve had renovs, developing overseas, investing and he just said “You’re trying to do too much and if you’ve got enough money to try invest in all these areas then good luck. But if you want to focus on one of those areas then you’d probably have much more success”. So that’s when we sort of decide to get serious and just pursue developing itself.
While hiring a mentor is costly, Khou believes it is worthwhile because of the catered education mentors provide.
We’re big advocates of having a mentor especially if you’re focused and you know actually what you want to do then you can seek out a mentor sort of in that area of expertise. But I think when people run into the sort of issues is I think when they get a mentor and they’re not decided on actually wanting to pursue a particular sort of skill set that’s when you can sort of waste a bit of money. But yeah I think the cost on mental education is definitely worthwhile. From our point of view anyway.
In order for Khou to move forward on his property journey, he had to choose a particular field he wanted to develop the skillset for.
It was actually when I joined Troy’s program when he asked for sort of what our goals were out of our investing I guess career and he sort of just put it on us and said you know you’re trying to do too much anymore. I think you might waste your time trying to join in this program and thinking you can pursue all these three straight sorts of investing ventures or three or four or whatever was at that time and that’s when my brother and myself actually thought he’s probably right.
What why are we trying to you know to focus our time all these different investing strategies when we should just be doing the one and trying to do it well. And that was the was the big sort of catalyst for us to move forward.
Khou and his brother settled on development after learning to love the project management side of it.
So we were pretty confident we were good with the relationship side and getting things done. I mean I’ve got a finance background, my brother’s, he works in a bank but he’s quite good with the networking and the relationship-building so he was good at finding deals and one of the aspects with developing getting the finance so I sort of had that covered in terms of understanding the numbers in the end and just based off the projects we’d done in the past, it was actually the one where we thought if we actually focused on it we would get the best outcome, the best financial outcome for us as we made a bit of money but we thought That’s nice. It’s not something we’re passionate about or actually interested in getting our hands dirty and doing so it really. Yeah. So it kind of let it kind of just led to property development then we just sort of knew that’s what we wanted to do.
Not only were the Khou brothers lucky during their experimental stages on their investment journey, but they are also lucky to have both a good personal sibling relationship and a good business one as well.
I know that was a big thing where we’re extremely lucky because we’ve got a very, lucky we’re very close in our normal personal lives and we were able to complement that relationship with our business relationships. We argue a lot but we don’t – it’s nothing personal. Sorry I shouldn’t say we argue a lot, we discuss and debate a lot but we don’t, but it’s never anything personal. So we’ve actually got a very good relationship like when it comes to the areas that I look after, the financing the administration part of it he doesn’t question me, he trusts in what I do and vice versa like he looks for deals. We just have that trust with each other.
So you were talking about mentors and mentors and very very important to help you move forward. So.
Yeah, this was my shyness all I say. But yeah essentially like were big advocates of having a mentor especially if your arm is your focus and you know actually what you want to do then you can seek out a mentor sort of in that area of expertise. But I think when people run into the sort of issues I think when they get a mentor and they’re not decided on actually wanting to pursue a particular sort of skill set that’s when you can sort of waste a bit of money. But yeah I think a lot of my mental and educations is definitely worthwhile. From our point of view anyway.
Definitely it’s so important. All right well let’s step into maybe perhaps a moment in time where you had an aha moment like an amazing moment that just clicked for you. You’re able to share with us about that story.
Yeah. So I’m not a Tushnet before so was I. Let me join Troy’s program when he asked for sort of what our goals were and our investing I guess career any sort of just put it on us and said you know you’re trying to do too much anymore. I think you might waste your time trying to join in this program and think you can pursue all these three straight sorts of investing ventures or three or four or whatever was at that time and that’s when my brother myself actually thought she was probably right.
What why are we trying to you know to focus our time all these different investing strategies when we should just be doing the one and trying to do it well. And that was the big sort of catalyst for us to move forward.
It’s really interesting because we can all try so many different things until we actually find the one that works. Why. Why development though. Because you purchased a property over in New Zealand. You also did one renovation here. Why development at the day.
Was more the project management side of it. So we were all pretty well pretty confident we were good with the relationship side and getting things done. I mean I’ve got a finance background my brothers my brother’s she works in a bank but he’s quite good with the networking and the relationship-building so he was good at finding deals and one and one of the aspects it’s developing is training and finance so I sort of had that covered in terms of understanding the numbers in the end and in the space of the projects we’d done in the past. It was actually the one where we thought if we actually focused on where we’d get them we’ll get the best outcome. Well the financial outcome for us as we did the. We made a bit of money but we thought That’s nice. It’s not something we’re passionate about or actually interested in getting our hands dirty and doing so is really. Yeah. So it kind of let it kind of just led to property development then we just sort of knew that’s what we wanted to do.
It’s so interesting always asking about why for ourselves.
Yeah yeah, I said it’s a little bit challenging to explain but it sounds like both you and your brother had really complementary skill sets as well to help each other out. Did you ever think that this is what you both would do together? Because not necessarily every family member is always happy to do business with each other.
Yeah, I know that that was a big thing where we’re extremely lucky because we’ve got a very lucky were very close in our normal personal lives and law able to guess what’s coming to Lingala. Yeah. Complement our relationship with that business relationships. We are arguable but we don’t. It’s nothing personal. So I shouldn’t tell me got a lot we discuss and debate a lot but we don’t. But it’s never anything personal. So we’ve actually got a very good relationship like I like when it comes to the areas that I look after the financing sort of the initiation part of it he doesn’t question me he’s out for choice in what I do and vice versa like he looks for deals. Yeah. Would we just share that trust with each other?
Excellent. I think that’s so important because it’s good to have a number. I guess I or different opinion because sometimes we might not be set on something but to have someone else differing experiences and so forth really helps make clarity stronger.
Yeah for sure yup.
Sunhoc Khou on how to balance the commitment of a full-time career with property investment and development
Keeping focused and actually taking action were the first difficulties Khou faced heading into his property journey.
I would say maybe just the focus side of it. So we always had like most people interest in investing but in our early days we probably actually never took the time to actually focus on it properly. Like we were interested in it but it was more a part time interest as opposed to actually wanting to get our hands dirty and actually you know to sit down, look for deals, crunch numbers. But yeah I think that’s probably just I think we’re just probably a bit more immature and not really ready for the… trying to focus on a goal and getting it done.
When you start how old were you when you first started looking at the properties?
So in mid 20s I think. Around there. I haven’t sort of looked back at it, I wish I took it a bit more serious back then. It’d be a lot more easily now.
And as for the best advice he’s ever received, Khou reckons what Troy taught him about doubling down and focusing has been really helpful.
The best piece of advice we got from Troy was the focus one. Really just focus on the one thing we wanted to do and do that well. So when I look back and I think about, I still keep in contact with Troy, but when I actually think about Troy himself and what he’s taught us, that’s the thing that stands out the most. I think with teachings and developing itself I think it’s the process itself is not difficult to understand. Obviously getting through the processes is a challenge, we counsel on that.
So that education part of it, I think you’ll pick up the actual mindset like you touched on and focusing is sort of what stands out when I think about Troy and his sort of teachings to us. And if I was to think about Dave the thing that he always bangs onto us is we can always go harder so if we take a position on the market, we should take action on our position and just do as much as you can.
In terms of moving forward, Khou believes that it’s always about doing the most you can.
So we approached Dave to mentor us because we wanted to grow our business and we wanted to, I mean we knew how to develop, we’d done you know a few successful development deals but we said what is the next steps. We don’t know like what do we need to do to become proficient full time investor or developer over the next 20 30 years and he said well you know you’re doing two deals at the moment you need to do five, you need to look at how do you do 10 deals or 15 deals. The numbers itself doesn’t matter. But it’s what you want to achieve and your goals. And if you want to make this a success then yeah you need to go hard and do as much as you can.
So it’s not so much the market itself, it’s just sort of stretching yourselves and your capacity on what you can do in a number of projects, size of projects.
On the business side of things, Khou was taught that the growth of his business really depended on his own actions.
So he was about more, yeah like you said, the business mindset so it’s not so much go hard and go bankrupt, it was if you want to do double amount of projects like you need to understand how do you do double amount of projects, you need venture partners, you need investors or you know you need to know how to get there but whether you want to take that step I mean that’s up to the individual. But if that’s something you want to do then you can, so if you need an investor and you want to do it you go get an investor. So that’s what he taught us on the business side of it.
Khou’s career as a property developer found success when they started to work on his business, as opposed to in the business.
My brother and myself actually sort of push each other. So we, I think you know when you go through tougher periods where you kind of just have that feeling that you’re not doing enough I think.
So yeah cause I’ve got a business partner with my brother, we’ve sort of just keep ourselves accountable for our goals and because we’ve sort of got things churning pretty well, even when we’re not holding hard enough, going hard enough per day, we’ve got stuff moving along that we can tick off each day just to keep the wheels in motion and then when things sort of get a bit slack sort of think okay what do we, sort of sit down and say well what do we do now, do we look for another project, do we get more funding. Yeah just looking at sort of working on the business as opposed to in the business.
While Khou knows that most people would not be able to handle working two jobs at once, especially in the property industry, Khou makes it work by building on his networks and working relationships every year.
So I would say this is not optimal. Because I do have friends who are full-time developers and I can see that they could definitely get stuff done a lot more efficient than I can obviously cause they got more time.
So in terms of how we get it done, I think it’s from the years of the relationship so we’ve built up sort of you know six seven years of relationships with a few different builders, brokers, draftees, engineers where to be honest, if I need to get a deal done I’ll just sent them an email with the drawings or what I need done and they sort of action it. So for anyone thinking that it’s easy to do it it will take you a bit of time to get those relationships so if you think you can just work full time and send an email out at lunchtime and expect an engineer to do drawings or prioritize your drawings, that’s probably not going to happen. But it’s just the years of the relationships we’ve built and the quantity of work we’ve given back to some of these guys or girls for them to I guess get that sort of priority on their list.
Networking has always been a time-consuming challenge and while his connections have rewarded Khou, they did not come without sacrifices.
So it definitely is a challenge or was a challenge in the earlier days and to be honest, it still is a challenge in this market and especially, we’re located in Melbourne and the Melbourne market has been very hype until the last six months.
So trying to get agents to respond and that sort of stuff was challenging and there was a lot of agents that came into the markets as well so it made buying deals difficult. So we still have that challenge now. But in the earlier days, I should mention we did take a lot of time off to do it. So in terms of like leave and working from home days actually I don’t think people may not realise how big of a change was for me to move careers as well to do this. So the as I touched on before, the planning role I have now was or is extremely flexible and that was one of the reasons why I could do it. But obviously, I gave up my accounting and finance career for thar. So yeah you just have to find ways to get it done. Like if we took leave days, I mean I had to change professions I was in so I could do this.
Khou was able to secure his relationships with builders by being willing to pay them and give them jobs.
I know a lot of people have issues with trying to get builders. I know if you ask someone they go I’ll just grab a project and get a builder to quote it. And then when you grab a set of plans to get a builder to quote it, they just think you know boy you’re just wasting time, you’re just another tire kicker wasting my time. So it’s not as easy as some people say it is. But some of the consultants we did have to pay for their time. But we were quite open to the fact that if we have to pay a builder for his time, we’ll pay him. So we weren’t too concerned… I know a lot of, that might be a bit of an obstacle for some people trying to get feedback and actually paying someone for advice that maybe they’re not going to use at the moment but we’re quite liberal or in terms of doing that and I can’t remember any specifics but if we, but I do recall if we had a job and we had a consultant we wanted to use, we would just give him the job without sort of this is the best practice without getting two or three quotes as they sort of tell you to do and going back to that same person again you know to build that relationship.
So our traditional process would be we would get the permits for the construction, most of the time at the moment we assess whether there’s any value in selling the permits
The good sides of his pedantic habits…
So there’s that saying you know, if you do something every day toward your goal, that’s sort of what I base it on.
Like most developers, we would find a site in sort of, we try to develop close to home. I mean the sort of Doncaster area at the moment of Melbourne. Doxil sort of area. So we do deals from sort of Manningham council down to sort of Maroonda sort of Croydon Ringwood where it’s a little bit cheaper than closer to the city.
So we’ll just network with agents. We would buy most of our stuff off market I dare say. It’s just like the relationships with consultants, we have relationships with agents. They sort of bring us deals some good some bad. So our traditional process would be we would get the permits for the construction, most of the time at the moment we assess whether there’s any value in selling the permits and if not then we’ll engage an agent to start marketing the properties off the plan and then obviously once we’ve got our permits through council and all the work and drawings from the engineers and get the building permit, we’ll engage a build and start construction. That’s sort of the high-level processing.
Khou is always assessing the risk before he makes any development or investment plans for a property.
In the last sort of not so much in the market right now cause I know the market’s sort of stagnated and sort of going sideways at the moment. When the Melbourne market was high probably the last six months, sites of permits were selling quite high. People were paying exorbitant prices for the permits so it was just a checkpoint where we would just assess it to say well if we built it, we’d obviously take financial risk, construction risk. You know how much profit would you make vs. how much would we make if we just sold the permits at the moment or even just selling with the land because the market moved so much during the last two years. So yeah just assessing the risk. Is it left the building for an actual bit of profit or is it better just to sell and move on to the next project. And that’s more just a risk mitigation thing for us. That plus most banks require pre-sales now anyway.
So how long do you wait between that process before you get people to buy or purchase it before it actually gets built? Or do you start the process of building?
Depending on the funding options. So with the projects, we have currently…
So they’re doing us a three unit project, there is the ability to get funding and just from our personal financial circumstances, other developers might have different ones. So for three units, we’re able to get funding with no pre-sales. But anything above we are required to get depending on the fund and 50 per cent debt coverage or 100 per cent debt coverage. So you would require presale. So a lot of it is driven by the banks at the moment, all the finances. So if you know you need to get pre-sales the earlier you start the better.
If Khou met himself 10 years ago what would you say to him?
I would say to him, get focused a lot more quickly. And get focused and sort out what you want to do it. And stop procrastinating cause I’m by rights quite a lazy person.
I can relate I am procrastinating because it’s too hard sometimes. What are you most excited about in your property development journey over say the next five years?
So this is actually quite an exciting period for us actually because we’re sort of in that miss where we probably, well we can go full-time development in the next sort of 18 months if we choose to and we’ve got sort of projects that we’ll finish next year and probably a couple that will go over the next 18 to 24 months. So we’re just growing the business is probably the most exciting part and whether we take that step of well you know not being so conservative and actually relinquishing full-time employment and yeah going as hard as we can in our business.
So I would say we do this full time with part-time hours. So for the last year three to four project per annum and that’s constructing or selling permits or just making a deal of any sort of property kind. But although we’re not doing full-time hours we think we’ve got enough deals to cover us for full-time employment. So yeah, if that makes sense.
For Khou, there is no minimum when it comes to the profits he’s looking to make, merely it’s time-variant.
There’s no minimum. So when we are assessing a deal like you just do sort of the raw numbers and you know they’re just draft numbers we like to have sort of a minimum 250 in a deal but obviously things change in time and you might reassess as the project goes on and that changes and so could be, so we’ve done a deal where we’ve built three units in a suburb in Ringwood and that only netted us 150 thousand, probably bought but we knew that going in because we bought the site with permits and it took us sort of 15 months from buying to completion so short term deal lower profit. So yeah it just does depend on the deal.
Khou’s personal habit which he finds most contributing to his success is his tendency to be really pedantic about things.
I don’t know if this is a good or bad one. So I am quite pedantic in returning phone calls and answering all my emails even if I to stay up late at night. But yeah that’s probably. So there’s that saying you know, if you do something every day toward your goal, that’s sort of what I base it on. So if there’s something that needs to be done especially if I’m holding up a process I absolutely hate that. So yeah just respond to all your consultants, make that phone call just yeah just take action. It sounds small but it just gets things moving.
It can be a bit of clash too cause sometimes I get too into the detail to do stuff that I forget I need to look at the big picture and see where the business is going. So that’s I guess that’s the downside of having that sort of addiction to getting property stuff done.
Books and other mentoring resources have been irreplaceable for Khou on his property journey, as they propelled Khou into property investment.
The reason we actually got into the property or one of the reasons why it sort of piqued our interest was so for my birthday my brother actually bought me that you know the infamous 0 to 130 property that three and a half years that had Steve McKnight and David Bradley in it. So we always had an interest in business but that book was probably the one that’s what… I thought well this is quite interesting and the things that you can actually do with poverty as opposed to just buy and hold. So that was probably the first resource that we had that sort of got us into the property investing sort of area. Yeah and then I guess all of the other books that most people have touched on the Robert Kiyosaki books as well.
And yeah we’ve been pretty lucky in terms of mentors I’ve had, I mean as I mentioned we were part of Results that sort of gave us a good foundation on goal setting and so we’ve had Troy Harris that really he’s the one that taught us how to develop in terms of the process, the timing on really how to get the best and highest best use out of site and maximise the financial gains from a project. So we’ve also been lucky enough to have Dave Bradley as our mentor. So he’s not so much about developing itself he is more around sort of the business mindset on how to grow the business. So yes we’ve been fairly lucky, it’s come at an expense but I think ourselves require it.
And for those who are looking to learn more about Khou and his development business, he shares his contact details.
So I have a website which is HWDhomes.com.au that I use and that’s out development business.
And if you want to contact me so my email is on hop. So it’s [email protected]