Henry Ledingham is the founder and development manager of +Ethos. His company helps their clients with residential property development in QLD real estate market. Ledingham had worked in the commercial construction industry for 10 years and is now using the skills he learned there in the property development space and helping build successful portfolios for his clients.
Come with us as we learn about the property journey of Henry Ledingham, we delve into the unique situation that he and his wife found themselves in, we discuss his time working in the commercial construction industry, we learn about why it took him some time to start his property journey, we find out about his transition from commercial into property development, and much much more!
We find out what a typical day looks like for Ledingham.
I love to get up early. So, I'm up at 5 a.m., grab a coffee—and I live right next door to a park. So, I go and take my coffee, sit on the steps of my house and look out over the park because it's just an awesome setting to see a bit of a sunrise and, you know, get the sounds of the morning happening around me.
I've started journaling, so I sit down, do a bit of journaling—work out my goals for the day, do some gratitude work. And then I also do a bit of reading. So, it's not necessarily reading relating directly to property development, but just more sort of personal interest stuff. I then start into the day at about six o'clock. And I focus on big tasks that I can get chunked away—but, basically, tasks that I call ‘tasks that make my money needle move’.
So, I heard that phrase from someone else. And it's basically just knuckling down on those tasks and getting them sorted before the distractions of the day. Come in at nine o'clock, switch the phone off, put it on airplane mode, and then make some calls to consultants. Or, if I need to visit a project site, I'll duck out and have a look around the site, speak to the guys.
And then, I love exercising, and I'm really into weight training and a bit of powerlifting as well. So, about mid-morning, [I] try and get a weight session in, and then after that, come back a bit more administrative work, lunch, maybe try and read again for another half an hour and wind down the day with some admin items that don't really need too much creativity. And shut down by about five o'clock and catch up with my partner and find out about her day and decompress a little bit.
Ledingham fills us in on what his wife does for a career and the interesting times they find themselves in.
She works—and it's probably a very topical subject at the moment. She works and is currently still employed by Virgin. So, she's cabin crew; we're going through a really interesting time where she just does domestic fights and has had some shifts—but then, you know, maybe 10% of the amount of shifts she was getting before. And we are literally just sort of rolling through day by day with the news we found out yesterday that they've gone into administration.
With all of the troubles that Virgin have found themself in recently, we get an update on the impact it is having on his wife and himself.
It's been very interesting—like we've moved in together just this year and we've essentially been living out of each other's pockets since the start of the year. So, it's brought us closer together. It's definitely hard for her and also myself, not knowing, you know, what the next day holds in terms of her employment. So, it's one of those things where it's just you play each day as it comes and just be grateful for the things that you do have.
I think, you know, trying to predict the future and trying to, you know, work out all the scenarios—sometimes it doesn't necessarily help in that situation. So, she's studying law as well, so, you know, last year and, you know, looking to sort of branch out into that as well—which, you know, takes the pressure off the Virgin workload I guess.
From Being A Small Town Boy To Becoming A Big City Guy
We delve further into Ledingham’s background and he talks to us about what his upbringing was like.
I had a really lovely childhood, and it was kind of unique in terms of some other people's childhoods I guess. So, I grew up on farms in New South Wales, northern New South Wales, around Moree and Tamworth. And when we lived down there, they were cattle and grain farms. My family were farmers and came from a long line of farmers.
We then moved up to central Queensland near a place called Longreach. So, just to give a better idea where that is—that's about 700 kilometres inland from Rockhampton. So, it's really sort of in the centre and isolated. So, I was born in the country and then, at about age 10, moved up to central Queensland. So, that brought along some, you know, awesome opportunities, but then also some challenges as well. Our closest town was one hour away. And that was just a very small town where there was a supermarket and a post office and that's about it.
And then the city, in inverted commas, closest to us, was three hours away. And that's where you'd literally, you know, plan weeks ahead to go to the big city of Longreach to stock up on all your food and if you needed clothes to go there. So, heaps of awesome experiences. We had floods while we were up there, so we literally got flooded into our property and couldn't get any food or supplies in. And when it sort of got to the point of getting a little bit, you know, desperate we actually had a plane for us, some supplies in, so we had to get out on a big paddock of ours—it was really flat—and slash all the grass down so the plane could land.
Yes, so many things that we experienced out there, which sort of set me up and being able to, I guess, take on any challenge that came my way. Because once you go through those things, everything else generally pales in comparison. So really, really enjoyed it.
Ledingham shares with us the differences between his time schooling when he was in NSW compared to when he moved to the remote area in Queensland.
When we were in New South Wales, just going to a normal day, school—and that was awesome. But then, when we moved to central Queensland, we're obviously very isolated. And the school that was closest to us was three hours away, so we couldn't travel there and back in a day. So, all of the kids in that area did ‘School of the Air’. So, that's what I did. And essentially that was where the curriculum is given to you or given to us. And we engaged a teacher—or we used the term governess back then—and that teacher would come and live with us on the property. And Monday to Friday, they would take us through the curriculum for the distance education school. And for about one hour each day, we would dial in and chat with our teachers and fellow classmates.
But this is back when there was no internet, so it was by a UHF radio. So, it was sort of the old, you know, push-to-talk technology and only one person could talk at a time otherwise you couldn't hear the other person. We had some pretty interesting experiences with that. And you know, you could go sit down in your classroom and do four hours worth of work, and then, in your lunch break, jump on your motorbike and go for a ride and then be back in the classroom. It was awesome.
How big was the class that he was in and did he have any siblings with him?
At that time I was just doing school with my brother, so we literally had sort of a separate, I guess you'd call it an outbuilding or a cottage that was our school classroom. And me and my brother would be there and our teacher. And when we stepped inside that building, that was class time, and when we stepped out that was farm fun time. And the school that we were part of that was based three hours away. That was a school of about 300 that was made up of lots of, you know, kids from the local farming community where everyone was isolated in the same position.
After going through the education system as a child, we find out whether he took on further studies or jumped straight into the workforce.
We moved back at the end of the central Queensland experience back into northern New South Wales. And I finished my high schooling at a boarding school there from that point. I have three brothers in my family, and we all made individual decisions, but sort of the consensus among us was that we didn't really want to continue the farming lifestyle. It's a pretty hard lifestyle, and you've really got to have it in your blood to push through with it.
So, at that point, I wanted to continue my studies. And I went to the University of New South Wales in Sydney, and I started studying construction management there. And that basically, set up the next phase of my life where I was living and studying in Sydney. Coming from, you know, the rural background, that was a massive change—just being in the city and surrounded by so many people and working out how it all operated. It was definitely interesting.
From that point, I studied for my Bachelor of Construction Management and then started off on a career with a commercial builder, a tier one commercial builder.
Taking On Commercial Building Projects
Before moving back up to Brisbane, Ledingham talks about the short period after moving back to NSW.
I was there for about 10 years, and I finished study that took about four years. And then I started working for a commercial builder that was based in Sydney. As I started working for them, they had a project that was based down in Jervis Bay. And it was a project that needed people onsite to be based on-site and not in the office. So, as sort of a young contracts administrator back then, I thought that was an awesome adventure to be part of. So, I stuck my hand up and volunteered to go down.
They were based on-site and that was a fantastic experience. I essentially lived and worked down in Jervis Bay, which is about three hours south of Sydney. And my partner at the time was living in Sydney. So, on the weekends I'd drive back and stay in Sydney, or if the weather was, if it was summertime, we would spend it down in Jervis Bay. Because if anyone has been down there, it's like a lovely national park area with beaches that have got like super white sand, and it's great in the summertime.
So what, what year was that when you went down to Jarvis Bay to work?
That would have been about 2006, I think it was. So, I spent time down there, about three or four years. And then I decided to move to a different commercial builder, just to get a bit of a different experience. They had an opportunity up in Brisbane and it was just a 3-month contract up in Brisbane. And then the idea was to come back to Sydney.
And I went up to Brisbane, completed the project up up here, fell in love with the city and the lifestyle. And they had picked up more business. So, I decided to put my hand up and stay up here. And then that's what led to the next, you know, sort of 10 years of my life.
Ledingham explains some of the work and the projects he was working on for the commercial builder.
There's lots of different tiers of commercial builders. But I guess the easiest way to think of it is they generally build commercial buildings. So, it might be a big distribution centre. It might be data centres. It might be restaurants, banks, office space. And the work I was doing was essentially project management towards the middle and the back end of March.
We are with the commercial builders. So, the work involved our estimating team winning a project. And I would get past essentially a set of construction plans and a budget that we had to build it for and get introduced to the client. And then from that point on, me and Martin had to tender and procure the project—so, engage all the trades. We had to come up with a construction program that...met all of the clients milestones.
And then we had to physically coordinate and construct that project and, all the way, keeping the client up to date and, yeah, working with them. So, there's lots of things that I was able to have the pleasure to build in my time in the industry—like built data centres for TV stations, gyms, banks, office spaces, medical centres.
There's so much variety I found in that industry. It wasn't just sort of building the same product over and over. And that's what I found that my personality really locked on. Like the physical sort of the tangibility that came out at the end of it and I could, you know, I work on a project for X amount of months. And at the end, I could see and touch a product that really is satisfying to me.
He had essentially become a project manager, and we find out how this position came about for him within the business.
It's a process, and it's not necessarily quick. But essentially the common pathway is you start generally in sort of a contracts administrator—or contracts coordinator position, some companies call it. So, you're essentially on the paperwork side there. You keep track of budgets. You're engaging contractors. And while at that point you may not have the experience and the knowledge on how to physically construct things, you are laying the paperwork—the financial and the administrative.
The pathway I took was I wanted to get out on site and experience things physically. So, I worked as a site manager. So, in essence, you kind of deal with trades face-to-face. You're working with them to solve problems or questions that you come up with day to day. You focus on safety at that point as well and controlling and managing safety onsite. And then from there, you can kind of switch back into a more office-based role, in that of like a project engineer—or I went to a project manager. And that's sort of [the] way you, essentially you, right after you know, after the client has engaged some of their consultants and, and given you the concept design. That's when you take over and bring it to fruition.
So, I think that's why I have found it pretty easy to transition from commercial construction to development because all of the processes and the people that I speak to day to day in the construction world, it's the same. It's just a different subject matter in the development world. Now, you know, my chosen product is just land subdivision. But you know, I'm still coordinating designs. I'm still managing trades. I'm still focused on providing the end product, [with] the best quality and also [in] the quickest time frame.
So, it has been a relatively easy switch from that point of view. But then it's required a bit of a change in mindset because there's definitely different specialties that you need to be looking for in the two different worlds, I guess.
On Commercial Developments And Joint Ventures
We delve into the concept of joint ventures and what Ledingham is mainly looking for in a partner.
The sort of quick evolution of my development is that my first development was my funds and mate's funds. So, we joint-ventured together and one of us brought the cash. That was my mate. And I brought the serviceability. So, I purchased the property and shared our time to manage it from that point. At that point I was still working in my full-time job. And obviously, I could only borrow so much from the bank. And there was a ceiling on that.
The next evolution was discovering sort of true joint ventures, no money down projects. And that's where Matt Jones helped me out. Like he spoke about on a previous one of your episodes with his joint venture boot camps. I attended one of those and really, sort of, it opened my eyes that I didn't have to basically buy one property or do one project that reached the limit of my serviceability. If I found other profitable projects, I could approach other people, see if they wanted to joint venture with me and use more experience to manage that. And then it would benefit, you know, myself as well as the other joint venture partner. So, that really took the capital ceiling off my mindset at that point and, from then, evolved into stopping my full-time work and [going into] developing full-time.
And you're right, my approach at the moment is to essentially acquire sites, partner with investors or joint venture partners and turnkey development, and manage the whole process.
His property investing journey has been a mix of developments and a buy-and-hold strategy.
I have purchased properties to buy and hold. And, I guess, the full backstory of my property journey is that that's how I started in property. I would probably say I'm a very late bloomer because, you know, I'm 37 now, and I only bought my first property when I was 33. Before that point I was aware of property but wasn't educated in it. And I just didn't really have a drive to investigate it.
But then, I purchased a PPR that I lived in that was the first property. It was a purchase, which I thought at the time was great. It was an uneducated purchase. And the intent for that purchase was that I would live in it, renovate it, and then essentially get it revalued and see if there was any uplift—or maybe rent it out as an investment property as a long-term hold. That's because my research and education at that point was inadequate.
I had a very tough conversation with my accountant at the time. I sort of explained to him my strategy that I saw for that property. And he had done a lot of property development and investment. And after I told him the nuts and bolts of it, he said, ‘No, I don't think you've selected correctly. That property is not really going to do anything for you. You know, it may be neutrally geared, but it's not really going to grow in value too much. The cash flow is not going to be great. It's essentially just going to be a limit or a handbrake on your portfolio and your serviceability’.
And for me, hearing that, you know, after I'd gone through the effort of purchasing it—and I did a renovation on the bathroom and the kitchen and put sort of two weeks worth of blood, sweat and tears into it—, that was like a slap in the face. But I, sort of, I mulled over it for a couple of days, what the accountant said. He was essentially saying just offload and sell it and, you know, select a better property next time. So, I swallowed my pride and did that. And I'm grateful that I did take his advice because I then started getting myself educated. And it started initially as just getting educated in the buy-and-hold space.
And then, part way through that education where I was going to seminars, listening to podcasts and getting some mentoring, I stumbled on the world of development and I thought, ‘This development stuff is pretty closely aligned to what I do in my day job in construction. I'm just managing people and processes’. That point there was like a light-bulb moment. I was like, ‘This is interesting to me. It's really exciting’—but it also is me being able to leverage a skill that I have. And from that point on, I was just focused on getting educated, tooled up and skilled up for development.
So, it was two steps forward in property initially, one step back, and then onwards from there.
We discuss his first property and the details of what happened to it since he purchased it.
Sold that—and it was the right call. To give context on why it was the wrong purchase: It was a three-bedroom unit, you know, sort of a six-pack—so, the garage underneath and living area up top. And I picked an area—it was in Coorparoo in Brisbane. And at the time of purchase, there was a big development down at Coorparoo called Coorparoo Square that was in construction and about to come online. And right when I had finished my renovations and was going to either put my property back on the market or rent it out, I found out I was competing with some brand new finished apartments that were, you know, a much better location than mine.
So, that's the kind of research that I missed out on in that initial purchase and didn't sort of scope out, you know, how my product is going to compare against what else is coming online in the area.
Would he consider that to be one of his worst property investing moments?
I'd say that that's one of them. The bitter pill to swallow in that one was twofold in the sense that, you know, I had got a decision that I thought was right—I had got that wrong or it just didn't align with my strategy. And then the other point was in a monetary sense, like I spent two weeks of physical labor doing the renovation and then I also piled about $20,000 worth of materials and fixtures and fittings into it. And that was essentially for nothing. I managed to get out of that property and sell it for essentially what I went into it with. But the additional labour and cost I put into it wasn't realised because it was competing with a brand new product down the road.
So, that was a really good lesson to learn—that I essentially overcapitalised on a product that no one wanted, or if they did want it, they would just go and buy it new.
How You Can Find Property Deals Like An Expert Investor With Henry Ledingham
The global pandemic of COVID-19 had a massive impact on a lot of people, and we find out about the effect it had on Ledingham.
I had another one, and that was a sort of a more recent one, which I wouldn't say is my worst investing moment, but it was definitely a stressful one. And it occurred around this pandemic that we're experiencing of COVID-19. I essentially had a project that I was going to settle on, and it was leading up to settlement day. And at that point, I had gone unconditional on my finance because all of the signs with this lender were good. I believed that, you know, it's a profitable project and there was no reason for them to not fund the deal.
But as news of the pandemic spread and gathered momentum and the media hysteria built, that lender essentially pulled out on their finance offer. They said the market for them specifically is too uncertain and [said] ‘We won't be able to fund your purchase’.
So, at that point, that was a real shock. And I was in a position where the vendor for the property wasn't very willing to offer extensions if I got a small extension. But essentially, I had to settle on the property somehow. So, it kicked me into another gear. I overcame that and was able to settle by sort of hustling and just working day and night with other lenders to get the situation sorted.
But the lesson learned was, you know, that in terms of the risks out of left field, you know, I guess, everyone thought that a pandemic was maybe not even on anyone's radar at that point, but it was realised. In my instance, it became an issue and I had to deal with it.
So, I think, while it was super stressful at the time, it's something that I'll remember for the rest of my life. Like, I will have lots of either protections in my contracts now to deal with pandemics where we can essentially activate those conditions and ask for longer extensions. But that was a real lesson.
The Importance Of Applying The Best Strategy For Different Property Challenges
We delve into how he was able to eventually settle the property and why it was done this way.
To give a bit more explanation around that: That project, I was in a position where I was buying it with the DA, and I had been working on it for a couple of months. And I had put a significant amount of my own money into the project. So, if I wasn't able to settle on that project, what happens? With the DA, it stays with the land. So, essentially the owner of the land, if I didn't settle, would retain the benefit of the DA and my money that, you know, had assisted getting that DA would've benefited the owner. And so, all of my work would have been for nothing. And in the REIQ purchase contracts or the Queensland land purchase contracts, there's provisions for delay in the contract.
The remedy mechanism in there is for the contract to be terminated. And that's exactly what I didn't want to happen. Like I needed an extension so I could source an alternative lender. And everything in the contract was essentially saying, ‘Well, this has happened so you can terminate’. I was at a point where I was like, ‘No, I don't want to terminate’. I must continue this contract. I need to extend it because of these acts of nature being the pandemic that have occurred. So, what I was losing by that financier pulling out—that was a financier that was going to lend 70%. So, there was essentially, you know, a chunk of money. I had 30% equity and the 70% lender had pulled out.
So, I then had to scramble to find another lender. And in that environment, it's still occurring now, I guess, the lenders are ratcheting back their LVRs. So, you know, I found a lender, and they were able to do 65% LVR. So, I had to reach out to some of my investing partners and increase my equity position through the assistance of my investors.
The second issue I came up with, once I had locked down the new lender that will come in and assist, was that for this development—it’s a nine lot subdivision—, you need to get commercial valuations. And I had one done with the previous lender, but that commercial valuation was only directed to the previous lender. And when I asked for the valuation to be assigned to this new incoming lender, they wouldn't do it.
They wouldn't assign it. And that was essentially because that value is a risk position. They had valued it before the pandemic started, and they were being told by their professional indemnity insurers ‘Don't assign any valuations’ or ‘Don't do any new development valuations’. So, then the search became—I'd found a lender but they needed the commercial valuation, and I had been granted an extension of two weeks.
So, I essentially needed to get a new commercial valuation done and then loan documents, drafted and created, signed—all done in two weeks. So, the challenge then became, ‘Okay, we've got the lender, now let's find a valuer that is comfortable to visit the site, do the due diligence, do the report and reassure it, you know, within a week so that I could leave the other week for the loan documentation to be drafted and issued and executed’. So, it was sort of a challenge a minute.
But, you know, through the process of going into solicitor's offices on weekends, printing stuff, running to the bank, we got it done, and we managed to settle on the properties. And now, the project is secure and the DA's there. And it's, you know, an awesome project. But there was a big learning from what occurred with the pandemic, which I'll take for the rest of my development career.
We dive into his subdivision. And we discuss the changing market during this time and whether he can get a good return on investment.
My general approach, if I'm looking at sites that are raw sites with no DA on them and I will have to obtain the DA myself, I will only proceed on sites that have a 20% or plus profit margin. With this site, you already had a DA. So, the planning risk element had been removed. It was already approved. We knew there was nine months, and we just had to basically deal with the construction cost risk and the sales risk. So, that's a 15% profit project, and I think I wouldn't want to go lower than that if purchasing a site of that scale with a DA.
The timeframe for the project—it's a 12-month project, and at the moment, it's just starting. So, we foresee that, there's definitely, in the next couple of months, there's going to be reduced consumer-sentiment. And anything that's going to be marketed in that period will have to be competitively marketed.
But I believe that in six to eight months, things will be back to, maybe not where they were before, but people at least will know where they're sitting with their employment. They will know where their finances are heading and the routines, just the daily returns of what we can and can't do, will be well-defined. So, I think it will smooth out. And that's why I believed in that project. It wasn't a project that, you know, needed to be constructed and sold this month or next month. Like, there was a long time frame until sales and settlements needed to be bought on the market.
On Right Perspectives, Property Options And Subdivisions
We’ve heard about one of his worst investing moments and now we find out the moment where everything changed for the better...
I would say that would be it. It was more that my mindset—up until about sort of four years ago—was a PAYG employee. Like, I'd always had a boss, and I've always worked for someone. And I don't know why, but I just hadn't ever considered that I couldn't do something that was wholly and solely of my own creation. And, you know, I couldn't work for myself doing something that I loved.
But as you know, four years ago, as those sort of light bulbs started to switch on, I'd say that was my biggest light-bulb moment or aha moment where it was like, ‘Okay, you've worked for other people and, being a company man up until this point, have a crack at something of your own. Because that way, it can be wholly and solely yours. Your effort that you put in should correlate directly to the effort that comes out. And you can craft something that is to your standard and to your liking’.
So, I'll tell you that was the biggest one, followed closely by, well, this property development stuff is my path to going out on my own and being my own boss.
Ledingham explains his mindset when he was starting up his property development business and how he wanted to gradually phase into it.
I kind of structured it to phase it in. So, my first project I did, which was a six-lot subdivision, I was fully employed in a day job. So, I essentially ran that project in the evenings. Like when I get home, after a day of work, I'd have dinner and then, sort of, punch out two to four hours worth of work in the evenings and then on weekends as well.
As I got that one almost completed, then I bought a second six-lot subdivision online—and I was still working full time. But then, I knew I needed to have some guidance and some assistance with making the transition. So, I started looking around for mentors and essentially linked up with an awesome mentor who helped me craft my exit plan from full-time work into full-time development. And it occurred over the period of about a year, year and a half. So, it was a planned process.
With his experience in building the big commercial projects, Ledingham shares why he decided to go down the route of subdivisions rather than the many available options.
I wanted to just start simple and then build from there. I believe that subdivisions are relatively low-risk in the scheme of development because you're not putting a product, a built product, on there that you're having to essentially guess what the market wants to buy. And I understand that there's a lot of research that goes into formulating the products that the market wants.
But at the moment, I just want to keep it simple. Start with land subdivision. Build that process up towards a solid, you know, process. I can essentially fine-tune it. And then once, you know, three, four years down the track, if I believe I'm at a stage where putting a built product on the land is of benefit to me and my investors, then I'll take that step.
But just as part of some of my mentoring, it was hammered into me: Just keep your focus narrow. You know, don't look at all of the shiny options out there in terms of lots of fancy and different development strategies. Just get focused. Get really good at one strategy and then branch out once you've nailed that. So, I also see subdivision as having the benefit of other exit strategies. So, if the land product isn't generating the interest that you need in terms of sales, you can take the next step of adding a built product. And that might be just a normal dwelling. It might be a dual-occupancy dwelling in some councils. It might be a rooming-accommodation dwelling.
But I liked the fact that I was keeping my strategy simple and also my costs low. Like I obviously don't have to get financing and fund building, let's say, six houses before I can start to pay down that. So, that was the sort of two driving things—I guess, simplicity and overall funding.
We learn more about the strategy behind his subdivisions. And Ledingham explains how he is able to find the best deals for his subdivisions.
So, my strategy now, after I have educated myself and learned from a lot of other way more knowledgeable people, is that you need to understand the council area that you're working in. And by understanding that, you know, the zoning of different land, you will know the minimum and maximum requirements of law. You know the density and sizes you can put on land. So, once you have that knowledge, you can assess different sites, and you can get an educated but not conclusive view of what you could do to a piece of land.
And there's lots of different approaches. But, sort of, the one that I took on my first subdivision—to be specific about a project—is that that was a one acre property, and the selling agent knew that it was capable of being subdivided but didn't know how many lots.
From my education at that point, I knew the same—knew it could be subdivided, didn't know how many lots. I had some initial chats with some of my project team and the town planner. They guided me to say, ‘We believe you can do four lots for sure. That's a given, the council zoning and requirements’. And then on that basis, I got the project under my control—or the property, sorry, under my control by putting a purchase contract onto it with a due diligence period.
And then in the due diligence period—that's essentially where you start getting really specific and speaking to the council and finding out what they will generally approve in the case of the subject property. So, that site was in Moreton Bay Regional Council in north Brisbane. And they have an awesome facility where you can book and have a pre-lodgement meeting that you don't have to pay any money for; they're free.
So, all you have to do is book it in and wait about two weeks. And then you can go into council, sit down with them and say, ’This is the property I have. I would like to subdivide it. We're thinking this many lots. What are your thoughts?’. And they'll give you a planning and an engineering view of the development of that site. And they'll give you some written notes to take away from it. And that was the process I did for that, for [that] subdivision, where I got the project, the site under my control in the due diligence period.
I met with the council, and they guided me to say you can subdivide this into six lots. However, if you do want to subdivide it into six lots, you must provide a new piece of council infrastructure in the form of a new road. So, that was the point where the selling agent thought that the site could only have a yield of four lots. But then I discovered I could actually get a yield of six lots—so, a greater profit.
But then, I had to factor in how much it would cost me to build the road. And then that sort of process then takes off, getting your engineering costs nutted out and worked out, and then assessing before your due diligence period ends, whether you are comfortable with the due diligence you've done and whether you're going to proceed with the purchase.
Henry Ledingham Learns From His Experience And Other Investors
There is nothing like having experience. And he talks to us about how his previous life in commercial construction has helped him find deals and understand if they will be profitable.
Depending on what council I'm working in, I really insist on trying to get some consultation with the council and getting their feedback. And it's generally in the form of that pre-lodgement meeting. So, at least, if you go to council with your intention, they can either sort of say, ‘Yes, we will support that’. Generally, they'll give you some feedback as well. I say, ‘Look, we'd support that, but you may have to add this element or you may have to compromise on that element’.
Or, I've had this as well: I've taken sites to council and they've shot it down from the get-go and they've said, ‘No, absolutely not. We're not doing that’. And that's what you need to be aware of. Before you actually get in a position where you go unconditional on a purchase of a property, you can end up settling on a site that is not developable—or, you know, instead of 10 lots, which you imagine you could get, you might only get five.
So, that is my sort of gold standard of due diligence: doing all of the costing and work with my project team, but then also getting council consultation on what they will and won't support. Because at the end of the day, they're the people that will be approving your application and the development.
We expect these successful property investors to have sophisticated ways of getting deals. But sometimes the best deals are right there for everyone, but you just need to know what to look for.
All of my deals, apart from one, so far have just been out there on www.realestate.com.au. So, I had a bit of a misconception when I started educating myself that I must get everything off-market and I need to build up a big network of agents and deal-finders to be able to get a profitable site.
But I was pleasantly surprised by, you know, the sites that I've found so far. Seventy five per cent of them have just been out there, and they have either been sites where people haven't gone to that level of due diligence. Like they haven't sat down with the council and said, ‘Can we do this? I may [have] missed an opportunity’. Or, maybe it's a site where there's some issues that, engineering-wise, someone hasn't been able to solve—whereas the engineering team that I've worked with have been able to solve.
I've only had one project so far where it's come to me essentially off-market. But that is a part of my business where previously I haven't had the time to be able to build up those connections because I was working full-time. But now, I'm starting that process and sort of developing a regular network of agents that hopefully can bring some of those opportunities my way.
Part of that as well with my chosen strategy—so my focus is land subdivision, as I mentioned, but ideally I'm focusing on projects that are between five lots and 20 lots. And I purposely want to attack those projects because I believe that the competition for those kinds of sites is a bit, you know, generally staying away from the splitters and two and three lots of divisions. There seems to be a lot of competition because that's the, I guess, the entry-level development site. And the, you know, people starting development generally start out on those. So, there's a big section of, I guess, you'd call it the beginner development market and looking for those sites.
And then, there's a lot of bigger developers, way more experienced and knowledgeable than me, that are attacking much bigger sites, 50 to a 100 lot sites. But, by me focusing on, you know, just a bulge, the beginner people and below the big boys, I hopefully can get that competitive advantage on the sites that I attack.
Ledingham discusses his property portfolio. And we find out how many subdivisions he has completed over the past few years.
My business has only started this year, so it’s literally only—we're in April now—four months old. So, I've completed four projects today. And this next one, which is a nine-lot subdivision is sort of the next evolution. But that will be the first project with me working in the business full-time.
On 'The Big Why' And The Books And People Who've Made A Mark On His Property Journey
We delve into the motivating factor of the ‘why’ behind choosing the path of property investing.
I have a four-year plan. And the sort of high-level view of that is to help me get to a point with my personal wealth where I don't have to trade my time for money anymore. And the intent of that is so that I can essentially help my friends and family around me. [To] get to the same level of wealth where, you know, if a pandemic hits, then there's no real stress. If you lose your job, then that's cool because you've got, you know, a portfolio or lots of money just as a nest egg in the bank. And the overall intent is, you know, once I can help myself, I help my friends and family. And then after that, the world's my oyster. I can, you know, branch out into any area that I choose.
But that's what I realised over the past four to five years that I was trading my time for money. And a lot of the time was spent working, and I wasn't really having much time to enjoy life. The goal now is to be able to get to the point where I do still work because I love it, but I can spend a greater amount of my time living and helping other people live and enjoy their lives as well.
Ledingham shares with us some of the people that have had the biggest impact on his successful career.
Matt Jones definitely helped me greatly with joint ventures and [in], sort of, opening myself up to them. I sort of took part in lots of his seminars and education. Someone else who was sort of my most recent mentor is Rob Flux. So, he's based in Brisbane and he runs the Property Developer Network.
So, Rob has monthly meetups in Brisbane that I was attending. And then I reached out to him at the beginning of 2019 when I went. I knew I wanted to sort of leave full-time work. And I asked him if he offered mentoring, and he came back with a course that he has run very successfully and is running still now. It's called the ‘Property Development Formula’. And essentially that course was like a 12-month course that paid mentoring on specific property development strategies and techniques and education.
But then, it also paired another awesome element, which I hadn't really thought of too much before, and it was specific on mindset. So, back then when I did it, Rob was partnering with Tony Meredith, a great coach. And that mentoring over 12 months was essentially lots of, you know—three or four times a month—, focusing on a property-specific mentoring session. And then a mindset session. And those two things sort of built my exit strategy.
That is the real reason that I was able to leave my full-time job when I did. Because without that level of mentoring and that accountability, I believe I would have done it eventually but I wouldn't have done it as soon as I have been able to.
He provides some of his best book recommendations for us.
I read, a couple of years ago, one called, Secrets of the Millionaire Mind. It's by T. Harv Eker. And that was a really powerful book for me in just understanding wealth and how your money mindset or your money or your wealth, sort of, thermostat is created and set. There was nothing really specific about property development in there. But that's a really awesome book just to get a high-level understanding of how your mind works in relation to money and whether you've got a healthy or unhealthy relationship with it.
I read also a book by Steve McKnight, 0 to 130 Properties In 3.5 Years. And although that is sort of more buy-and-hold-investing focused—and it may be a little bit outdated—, the concepts and just the story in there that Steve went through and his success was really inspiring. Like, I read that and went, ‘Wow, this guy has basically charged out and done this all on his own and has been able to make a great success of it’. So, that was really inspiring.
And then one that I've just finished at the moment, which is a bit sort of more business-focused-on-marketing focused is called Sell Like Crazy by Sabri Suby. And that's, sort of, on marketing and digital. And it's something that I had not a great deal of knowledge about before. But it's sort of a one-stop shop in terms of how to approach, you know, marketing and branding and bringing in customers to a new business. So, that's, again, not property development focused, but [it’s] really good for anyone that has their own business.
If he could say anything to his past self from 10 years ago, what would it be?
I would just say open your eyes up to other possibilities—other than being, you know, an employee. Like at that point 10 years ago, I hadn't even really thought about the concept of working for myself. So, I would just say stop thinking about that because there's lots of other opportunities out there for you. And in this day and age, it's getting easier and easier with the information out there for people to do their own thing.
I would also say start finding out about property because I only really started researching and getting my head around property when I was about 33, 34. So, like I would have loved to have gone back in time to when I was 18 and at my first job and just say, ‘Stop and start educating yourself’ back then. Because, as everyone sort of knows that, the time that you're in the market is a massive advantage even if you don't have the means to be doing much in the market at that time, and it just helps a massive amount.
[I would] just say [to myself]: ‘Find out about property and think outside the box in terms of employment. You don't always have to work for someone else.’
How much of your success do you think is due to skill, intelligence and hard work? And how much of it is because of luck?
I think that 90% is skill, hard work and intelligence—that there's always an element of luck. And sometimes that's bad luck. I was thinking about it in the sense of, you know, the pandemic that we've recently experienced. No one really could foresee that. And in most cases, even though there's, you know, short term challenges and hardship, it's only a small percentage. And if you just keep cracking, that skill and hard work and educating yourself and getting more intelligent about what you're doing, that will always overcome it.
So, I'm a big believer that hard work and drive overcomes luck and chance any day of the week.