How Managing Market Risk Can Lead to Chances with Dean Parker
Dean Parker’s decision to give up the stability of his career in IT for a more fulfilling job in the property investment scene was a huge risk. Convincing his friends and family that he knew what he was getting into was difficult considering all the sacrifices they had to watch him make, yet, with determination, resilience and the confidence he would, in fact, reach the financial success he longingly desired, Dean was able to manage and achieved just that.
Join us in this episode of Property Investory where Dean shares both the best and worst moments in his property investment journey and how he translated his skills from the IT world into the property.
Parker created his own business after getting a taste of the property investment life.
I’m the director of Your Style Homes. That’s our business name. We are I guess, or myself am a property investor. Full time I was formerly I take it as a get out of the I.T. industry and be in full-time property. I guess investor/ educator/ developer so that’s what I generally spend my time doing.
A day in the life of Parker consists of mentoring clients and applying both the management and renovation knowledge he has obtained from his property investment journey to their experiences.
We have a team of eight staff. We are running our projects so we have the residential and commercial projects that we undertake. So we’re managing those projects and at the same time, we’re now running some educational events to try and help other people I guess run or get into a property and be effective in property and not lose money and to hopefully make some money along the way. But we also offer property management services to our clients as well. So I guess what we’re trying to do is offer a full turnkey system where people can first meet us via potentially an education event, whether that be a first home buyer event or a property investing event, they can then have a look at the type of properties that we offer to our clients.
And then if they decide to go ahead with something, we can also offer Property Management Services because I guess I got frustrated handing our properties over to our property managers who weren’t doing a very good job at it. So we decided to do that ourselves so we could offer the best possible service.
Original born in Ballarat Victoria, Parker started off his schooling locally and initially faced a sickness back then no one knew about.
I was born in Ballarat in regional Victoria and stayed there I think until I was in about Grade 2 or Grade 3. I think almost all of Grade 2 because I got salmonella which was a disease I wasn’t really it was a sickness that no one really knew about at the time. And although it wasn’t contagious and although I did get very sick from it.
I was in hospital for a significant amount of time. I missed the whole of Grade 2 I think because again because it wasn’t very well known at the time. I end up having to I was basically stopped going to school so I did schooling from home that year but then the year after we moved to Melton which was I guess probably about an hour out of the city out of Melbourne. And that’s where I guess finished off my primary schooling and did all of my high school.
So after say school, you went to primary school then jump into high school did you go to university to study for anything for IT or did you go and start working in IT?
I went from high school straight into uni and did a double degree at Deakin Uni down in Geelong and did a Bachelor of Commerce majoring in accounting and management and also a Bachelor of Science majoring in information systems.
Parker was not exposed to the world of property from his parents. However, he knew that unlike them, he needed a way to leverage his income in order to gain a better quality of life than what he had experienced as an adolescent.
We never had a real lot of money. My parents weren’t tertiary educated or anything like that. My old man worked at Australia Post for a long time and my mum was a nurse so it was not like there was a whole of I guess education or anything passed down and not to say that like I’m not happy about that from them it’s just that they didn’t know what they didn’t know. So from that point of view, it was probably just fundamentally from my parents I guess being a good person doing the right thing. I guess that’s what we got from them but realistically property was more about just the fact that it was something for me. I mean everyone lives in a house you sort of understand how it works a bit. So yeah I guess that works but shares were pretty foreign that was like another language to me so I thought property was an easier thing to get into.
He struggled to maintain an interest in his chosen career of IT. Although he was making something out of his education, he found that at the end of the day he ultimately wasn’t fulfilled.
I wouldn’t say I was happy being an IT person probably. I went there probably because it was an interest at the time and I guess my parents had probably we never really had a lot of money as a family and my mum always wanted me to go off and educate myself and I guess try to create a better life. So yeah I went to Union did that sort of course probably cause yeah I was and I said at the time it was an interest but I guess I wasn’t a big fan of sitting behind a desk day in day out just working on computer programs which is basically what I was. I was a web designer to start with and then went into an I guess a system analyst role so I’d go into businesses and actually help them define their systems and then actually build them for them.
So I guess that’s what I was doing. But yeah I guess it wasn’t overly exciting. So I was always looking for something else but I guess that property thing came about because I realised that it was going to take forever to save up for a dwelling. So it was more about let’s have a look at the property and see what we can do there and see if we can make some money in that way.
Parker’s launch into the property investment world started when he realised the income he was accumulating from his job was not enough for him to secure a comfortable future with his wife.
I was an I.T. person my wife was an I.T. person and we were looking for a way to I guess improve our lives. We were both on reasonably good salaries. We were in a position where we had finance cards and were both trying to save for a house. And we realized that we were probably going backward rather than forwards so we figured that we had to do something different outside of our jobs in order to save for a deposit quickly. So we were looking at all sorts of things shares and anything that we could find at all to try and make some money. And I guess it was through the first book or not first book but the main book that I probably I guess had a significant liking to which was Steve McKnight’s book From 0 to 130 Properties in 3.5 Years. So I guess that particular book was full of really good educational content.
Parker decided to further his knowledge by attending Steve’s educational seminars.
Steve at that time was running educational events and although we’d been to probably at least a dozen if not more different speaking events trying to find I guess the solution to making more money and quicker, Steve was probably the first guy that we met that seemed very legitimate and had really good content. So for me now because I don’t think there’s anyone really out there doing that and I know Steve doesn’t do many events anymore himself. We want to basically I guess fill that void and provide those live education events to people based on actual experience of what we’ve done over the last 14 years and we’ve done a fair bit in the last four years so I am really looking forward to passing that information on.
The risk of entering into property development as a full-time career is difficult to comprehend for those who have not educated themselves properly.
I can remember I guess going to all these education events and one of the things that Steve would always say early on was that you’re going to find that people are going to probably knock you down more than support you because they don’t understand what’s going on and that was definitely the case for us early on. Most of our friends and family just didn’t understand what we were doing and thought we’re probably going to some cult rather than I guess going somewhere to educate ourselves and better our lives so realistically they still don’t really understand it I guess that’s I mean when we started that education thing learnt that that support network was really great.
Through all the success, Parker recalls one of his riskier moments as a first-time property investor.
At the time there was a $7000 first homeowners grant that that we could get. So what we did that I think we paid $77,000 for that unit and the grant was $7000 and we got a 95% loan which meant we needed about $3700 or whatever it was as a deposit. There were some lenders mortgage insurance in there and some legal fees but I’m pretty sure on settlement day we actually got paid like $800 or something for settling that property. So we didn’t put any of their own money into it at all. So the grant paid for the deposit and the bank paid for the rest. So from that point of view that was the only way we could really get into the market. The plan was to live in it but as I said I lost my job just prior to settling in it and we actually I don’t know how I convinced Elise to do it because we’d only really just started dating that early but we actually moved back into my parent’s house. So that first property was really a step backward anyway because we were living in Southbank in Melbourne and having this great life. We’ve got this realisation that we can’t afford, we’ve gone and bought this terrible unit in Melton we can’t even afford to move into because I lost my job. So yeah it wasn’t a great start back then but that’s what we did. And I guess we were willing to sacrifice I guess to get in.
Parker recalls what he learnt from this experience.
And that’s probably one thing looking back and I guess if you talk about help like helping people out that’s definitely one thing we did. We made sure that we made decisions that were for the future and not for the now. And that was part of that. So we as I said we moved in with my parents and swallowed a pretty bitter pill and stayed there for almost a year to save up some money in order to buy another property.
One of the biggest ah-ha moments for Parker was when he was challenged by his mentor to buy something out of his comfort zone.
I remember I’d actually seen a block of four units that were for sale and it was right at the end and I went I can’t afford this I like even though it’s a really good cash flow idea I can do it. But I’ve gone back to report back and I was telling people about this block of units Dave Bradley and Steve overheard me and I remember one of them. I think it was Steve challenged me basically and said that’s probably the best positive cash flow deal anyone’s ever found and you left it there like what’s going on. And I said I don’t have enough money to buy it. And I remember the words were if the deal is good enough the money will come and those words have stayed with me forever because we’ve I guess we’ve never bought hundreds of properties and not necessarily ever had the money to settle them at the time I bought them. But I’ve always been out to find a way because if the deals are good enough the money will come. So what happened was he said you’ve got 10 minutes to call that agent and buy it yourself otherwise I’m going to do it as in I’ll buy it myself. And I was like alright well there’s a challenge. So I called up the agent and bought the property and I think it was we paid $82 000 for four two-bedroom units in Tokoroa and they were rented for $115 each. So this was like $460 bucks of income on $80 grand. So it was a huge yield and better than anything that was going on out there.
Having snatched a fantastic deal Parker stretched his luck out even further.
Through talking to all these agents during that week I realized there was one agent that was selling property based on yield. So that particular property we sold about four months later or I think $170 000 because we’d gone to an agent that was city agent that was selling stuff purely based on return. So he said I can get you 12% return and we might have bought the thing for 19 or 20% I can’t remember exactly what was but so we just gave it to him and he sold it. So we did nothing. I don’t think I even went through the property at all and we made about 70 or 80 grand. After all costs. And that’s what it taught me about: if the deal is good enough the money will come. But that particular deal allowed me then to take a year off work because we’d just earned a year of salary basically in that one deal to actually take that next step to go you know what we’re going to do this full time. So that was definitely a moment that definitely changed our life that’s for sure. If you want to call it an aha moment that there was definitely something that happened at that time.
Our mission statement is satisfaction beyond the keys which is as a developer not only selling something but also managing it for you.
The Importance of Knowing Your Numbers: Managing Risk and Chances with Dean Parker
We had the chance to hear about the journey behind Parker’s decision to get into the property investment scene. Keep listening to hear how he gained the confidence to slowly secure larger and higher profit deals.
It’s mindset but it’s I guess fundamentally across the board it’s education. It’s knowledge. Like we continually I guess educated ourselves and built up our knowledge and experience to the point that you feel confident in doing those projects and you feel confident in your numbers and approaches. So when we came up here we didn’t obviously assume that we could pay the same amount for a kitchen up here that we were doing in Ballarat. We turned around and went let’s go off and get some quotes for kitchens up here so let’s find out how much the kitchens are going to be let’s add in our renovation process like we’ve got hundreds of things that we price so we would price every single item in there to make sure that we we were sure in our numbers so realistically it’s just knowledge and process that takes the fear away from the numbers and the mindset about the numbers.
I mean it’s there because it’s another it can be another zero. Like we were never doing million-dollar projects and realistically now most of our projects are over 10 million dollars. But realistically the process that we follow was the same it’s just that we’re dealing with a bigger number now.
Contributing to this self-made confidence, Parker had the mentorship of Dave Bradley, a Melbourne based property developer with an affluent property portfolio.
Dave Bradley definitely instilled into us was cash flow and just making sure that we knew what cashflow meant and to make sure that we always had enough money and I guess that comes back to those feasibilities again that we’re talking about what we wouldn’t just factor in renovation cost but we would also factor in your holding costs and some extra holding costs and everything else to make sure that you have enough money to finish the projects. So that you’re not halfway through going oh we need more what are we going to do. We would always get all of the capital we needed upfront and make sure that we had it all there and then obviously that made that project very smooth thereafter.
Well I want to ask you more about I guess maybe the best advice you’ve mentioned to me that Steve said to you is if the numbers add up then the money will follow. Would you say that’s been best advice or do you have something else that someone has said to you that has been your best advice?
My advice would be it’s all about the numbers. I’m sure someone’s probably told me that before. But fundamentally all projects: if you take your emotion and everything else aside it’s just being diligent in understanding your feasibility. We’ve just started doing some speaking again just recently and a lot of people are coming up to me afterwards telling about all these deals that they’re doing where they didn’t know the prices to get in and they’ve jumped in and they’ve done the project and not really had any process to follow and they’re losing like significant amounts of money like a couple that I met just last week at Steve’s last mega-conference told me about a project that they bought here that they were going to try and stick in the backyard and they’ve now found out that they can’t build anything in the backyard because of…
– Dean Parker
…an overland flow path which is not flooding but it’s actually just where water would run through and with very heavy rain. And that stopped some from developing it. So this is their first investment and they’re going to lose 100 grand. Like there are about 120 down grand in it they’re going to lose 100 of that in the first go. So I mean for me it’s a one it’s all about the numbers and it’s to just educate yourself.
Parker shares why he wants to start establishing educational programs for first time property developers.
That’s why I want to get back into this stuff I hate hearing about that sort of thing like we’ve been lucky enough to be mentored by people who have drilled that into us enough but for people who are out there that don’t get that or think I’m not going to pay for education, I’ll just have a go at it seriously. There’s too much the risk. We’re not buying a DVD or a or new bike or a new car we’re paying hundreds of thousands of dollars for property and these things can go pear-shaped very quickly whether it’s just a simple investment property or whether it’s a renovation or whether it’s a development. There’s just so many things to consider before going into this. So I’m just passionate about helping people out and getting them on the right track.
Parker started out his property investment journey using a renovation strategy. It was from this original experience of working on a string of properties that essentially gave him a renovation template he could use for every house.
We might have done 50 renos or maybe 40 or 50 renos before we started development and we were able to create a really good system around it. So we were doing most the houses we were doing were brick veneer on slab and they were just cosmetic, maybe kitchens and bathrooms, plant landscaping and just bringing them back for life. So yeah we created this spreadsheet to control our costs and the other key thing that we did was we understood finance and what we learned was that you can get noncompletion evaluation done. So if we bought a house for $200000 we could give the specifications to the bank and say here’s what it here’s what the specs are we want to get an on completion evaluation done and they’d go on to say here it is and they go to check that property and they come back and say ah well if you do all these things to it it’s going to be worth $260000 or at the end. So by doing that meant that the minute we finished the property we could actually pull the equity out that we’ve created and pushed that into our next deal.
Parker shares how developing a cookie-cutter system for renovations can save you both time and money.
Generally, what people do they buy a property, they renovate it, they don’t know how much they’re going to spend. They get out the other end that where it’s going to be worth and then they sit there and leave it on the market for two or three months and then it takes another two or three months to settle and then they get the money at the end which is probably a bit lucky because I don’t know they didn’t budget properly and they didn’t know what it was going to be worth at the other end and then they don’t like they’re not using that money effectively but by creating those systems around the renovations that’s how we actually were able to know pretty clearly what we were going to make and how quickly we could do it and then how quickly we get that money out to stick it back, straight right back into another project. And that’s one of the key reasons we were able to so many renos so quickly. Like as I said we’ve we’ve renovated 200 + properties in that time and that was because we did heaps of those and we have this really good system and we used the same colours in the tiles and everything else was all the same and it was just a cookie-cutter machine that we just put a property into and it spat out a profit basically which was great.
Have you got a personal habit that you think contribute towards your success.
I think one thing that Elise and I are very good at is just getting something finished.
There’s always we call it project fatigue. You can get into a projection and they get a bit hard and get to the end of a reno and you’ve got all those last little bits to do and those last little bits take the longest time but we would just get it done before we moved on to the next thing and some people can get a bit bored and like I just want this to finish and all of a sudden try and start doing something else first. But we would just get in and if we had a project we would get it finished and we wouldn’t let it I guess simmer away and then be a problem. So yeah that’s probably I think that’s a trait we’ve definitely I think is a good thing.
Thinking about his team of workers, managing rapport is an integral part of Parker’s success.
Look I think just communication and doing the right thing by people like the reason why we always had trades that would work for us and that we always show up is because we paid every week. We had a weekly pay run because we understood that that was important to trades, to get paid some builders didn’t pay them or they paid them like in a month or whatever. So trades aren’t necessarily the best at managing their cash especially when it can be sporadic when it comes in when you’ve got your own business so it’s pretty fundamental to get paid at all. But on a weekly basis made it even more appealing.
Some of the things that we did were to say well if you get your invoices in by Sunday night then they definitely get paid Tuesday. that was just the rule that we and everyone knew it and that’s why we had people that we’re always happy to work for us.
Reflecting on his property investment journey, Parker shares with us what he is most excited about for his business in the next 5 years.
What we’re doing at the moment is we’re setting up I guess the education upfront because I’ve been on the front end of selling the last couple of months because I wanted to actually get in there and see what it’s like to sell the property and to talk to people. So I’ve realised that first-time buyers and a lot of investors actually don’t really know what they’re doing.
So that’s a big part of the reason why we want to start the education events for homebuyers to actually explain to them what a contract is and how to buy and what the purchase cost will be and what you’re holding cost will be so people don’t jump into stuff without actually having some sort of method I guess method to the madness. I guess not only about that process but where to buy in what’s likely to achieve capital growth and all those sorts of things as well. So I’m excited to build that education side of the business which is new for us. We did a lot of speaking probably about seven or eight years ago and it was actually a business partner at the time that we had that really wanted to stop that because they thought that thought it was a bit unfair that we were making money out of that which was just crazy stupid thing that we were passionate about doing and unfortunately we sort of had to give it up because they didn’t like the fact that we were getting a dollar out of it. That partnership is no longer in place so we were able to get back into it and Elise and I have always loved helping people. So yeah that’s one thing that we’re excited about doing.
On top of developing the educational sector of the business, Parker hopes to continue assisting his clients invest in the highest quality properties possible.
The property continuing to deliver high-quality properties into the market that are great for owner-occupiers and also investors. We’re finding that even though we’re doing I guess quite well we try to always be best in market so that we’re getting a lot of investors that are buying our product because it’s high quality. The warranties are good. They always get great tenants the tenants stay in there.
So from that point of view yeah we’re excited to continue to deliver those sort of projects and the third part of it then is to offer the ongoing management. So our mission statement is satisfaction beyond the keys which is as a developer not only selling you something but also managing it for you and making and standing by it and making sure it’s going to be a great project or great property or a great investment for you into the future. And so that if something does go wrong you’ve got us to turn to who knows everything about the property we created it. We organised a builder and we know to contact if something does go wrong then happy support people in that process.
If you wish to connect with Parker and find out more about his successful property investment journey, you can reach out to him through his business contact details.
At the moment ysh dot com dot au is where you can go that will always have a redirector come to our new business from that. But yeah that’s if people need to find us that’s definitely where you can and that’s got not a lot of our education at the moment but it’s definitely got our projects and our property management side of things.
This episode was produced by Alex Cooper with narrations and interviews conducted by Tyrone Shum.