100 Property Results in Real Estate Deals Completed: What Next?
Nhan Nguyen is a successful property developer with years and years of experience in the property industry. With over 100 deals completed throughout his property career, there is no one better to talk to that can provide us with some of his expert advice on how to achieve great results and make money in the real estate world.
Join us in our first episode of The Think Big Property Podcast as we discuss the mindset you need to have when jumping into your property journey, how the people around you may influence your career, the role that a mentor can play and the importance of having someone around you that you can lean on, and much much more!
– Nhan Nguyen
Have you ever thought about how property developers make insane amounts of profit and what that allows them to do? Mindset is a key foundational principle to enable young aspiring property developers or investors to be successful. In this first episode, Nhan Nguyen and I share some advice on how you can build a successful property portfolio.
I’m really, really excited to be joining this podcast and that it’s the first episode that we recorded ever. I know you’ve done a lot of podcasts. I personally haven’t. I’ve done a lot of live presentations and doing this podcast to thousands and thousands of people is really exciting to be able to share my message. And I suppose the story is not just about me, it’s about what’s possible for people and listeners on this podcast. When I started out in property I bought my first property, but I literally ran out of money after buying my first property and that was a big challenge for me. Growing up we weren’t wealthy at all. You know, my parents came over from Vietnam in 1975 after the Vietnam war, having a surname, like Nguyen is very much a giveaway of being Vietnamese.
And all we knew was hard work and my parents didn’t even speak English. They had to learn how to speak English in Australia. They met in Australia. And you know, my journey through the property, I suppose is a story about a refugee family growing up. I was born in Australia. But we definitely had to go through some hardship to be able to save up deposits. My parents putting me through private schools, not because of anything other than to get a good education and potentially create some financial independence. But it wasn’t quite what I’d planned to do. I really didn’t plan to become a doctor. It was something that my parents had encouraged me to do and I found my way through. So I can share a little bit more, but I think the basics of it is that my parents didn’t have much, I failed my entrance exams to medical school.
Not once but twice, actually got a score of 97, which people think is pretty cool, but it was actually a score of 48 and 49 out of 100 2 years in a row. So from there, it was, I realised that I love doing deals. I love doing deals. I read the book ‘Rich Dad, Poor Dad’ over the years was actually at a high school and I fell in love with the possibility of making money. I wasn’t sure exactly what that was going to be, whether it was going to be through shares, was going to be through the property, whether it’s through business. I tried this and I tried that and a lot of things failed, especially in my late teens in terms of business. But finally, when I was in my twenties, I realised property is the gig. And that’s why I want to share this message with people because I know that there’s so much opportunity out there. You just got to find a vehicle that’s congruent with you and your risk profile and the resources you have.
What’s amazing is you’ve done so much in such a short period of time. Maybe just give it, I’ll give a backstory about how you got into property development and what you’ve achieved in that.
I know this podcast is about property development and how to minimise the number of mistakes in property and how to make the most profit in the property. I think for myself when I started out, I didn’t have a plan to become a property developer. It was one of those things that became a natural progression from the deals that I did. So when I started out as my goals as a 20-21-year-old was, I want 200 properties. I made up this crazy goal. I was listening to a bit of John Burley and Robert Kiyosaki and not knowing what was really possible. You know, when you’re a child and you’ve got kids, you ask them what they want to achieve and they’ll say stuff like, go change the world or create world peace or something that is such a huge game that you really don’t know what’s possible or not because you haven’t been constrained.
So my point is that when I was 21 I bought my first property and because I had momentum and I had a big dream of buying 200 properties I bought another property two months after that using investors’ money. It was actually my dad. He lent me the money for the deposit. I borrowed the rest from the bank and then the third deal I was able to get a money partner to fund that third deal, no money down. So by the time I was 21, turning 22 and within about four to six months of getting in the game going with my first deal, I bought three properties. Haven’t quite hit the 200 deal market but I’m not too concerned about that. But it’s a beautiful challenge along the way.
And that was the start of my journey. I’ve done probably a hundred property transactions since then. I don’t think we’re going to cover all those deals on this particular podcast. That’s the start of it. And you know, those first three deals presented, those are their own challenges of making a lot of mistakes and learning lessons, which paved the way for a lot of the opportunities in the future.
So out of those hundred transactions, how much would you say that’s all been worth in terms of its deals and what have all those deals been like?
In terms of those hundred property transactions has been a combination of let’s say townhouses that were bought, renovated and strata title that I did. I think just off the top of my head, about 23, 24 townhouses in a city called Mikaila, which is North Queensland.
A whole stack of them have been landing subdivisions, which I still do today. I’m working on a 30 lot currently on the Brisbane south side. And just a whole chunk of this and that, buying land, building houses, selling them off. I’ve done it. I think I did about 20 of those. A lot of, like I mentioned were land subdivision projects or put in call options, which is an advanced strategy where you might buy off the plan, off a developer, buy wholesale and sell retail. So there’s a bit of a mixin that. I suppose that the bigger picture, when I started out in my twenties, I had a mentor and I still do. His name’s Ling. He was doing blocks of 20 apartments at any one time. That was his strategy. He’d buy a block of land already with approval, build them, sell them within a 12, 24 month period, make about $2 million.
And I wanted to copy that model. So in my journey actually from where I was to where I am now, part of it was modeled on his model and learning how do I become a developer like him. And even though I’m not doing apartments right now necessarily, I’ve learned a whole stack along the way. Part of my journey was learning how to build houses. For example, I wanted to learn how to do construction. So I did a whole stack of houses there. Five here, four there, three here, and built some houses. Then at another stage, I was wanting to learn how to do strata titling. So that’s where the opportunity for MCI to buy lots of townhouses came along. That was another strategy. So my point is that the deals that I’ve done are part of a bigger picture that was provided to me by a mentor and I followed that path and created my own path.
Everyone’s got their own journey. Everyone’s got their own outcomes and becoming developed. You always need role models and I’m a big fan of mentoring and mentoring others as well as being mentored or have a handful of mentors myself. Even now, you know, people might think, well, you’ve got money now. You’ve got success. You’ve got the skill set. Why do you need mentors? Well, everybody needs mentors in whichever part of their life that they want to get better at or improve or maintain opportunities and mastery of it. I think once you’ve hit a goal, it doesn’t mean that you’re done. You know, if you look at some of the gold medalists at any sport, whether it’s swimming, basketball, tennis, pick a gold medalist, they’re not done with that sport because they love it. They’re passionate about it, and they want to keep doing it and getting better at it because there’s always new distinctions in a property marketplace. The market’s always changing. So if you’re not at the cutting edge of what’s happening, what’s working, what’s not working, in three to six months time, essentially you can lose momentum, you can lose the opportunity, you can miss out on deals just because you don’t know exactly what’s happening.
That’s the reason why this podcast was created because somebody like myself who would love to have your, I guess the main thing was hearing from you and also learning from you as a mentor, it kind of just sparked the reason why we put this podcast together because there’s so much synergy here. And I guess I’ve got like a ton of questions to ask you, you’ve made millions from property development and I’ve got like millions of questions to ask you and that’s probably how this came together. So that way we could actually share this amazing content with all our listeners out there. And I guess my journey in terms of how I met you as well was that I reached out to you. And on our podcasts, you will be able to actually connect and share your story there. And with such a great amount of exposure and so many people listening to your podcast people said, I want to learn more about property development. And I myself wanted to learn more from you. And that’s the reason why we put this podcast together was because there’s so much that can be taught and also learned from property development from a person like yourself. And my journey really starts here with you.
I’m so inspired by the work that you’ve done with your property investory podcasts and there’s so much information and so many good stories out there I think one of the things that I really want to make a difference to people in these podcasts is not only shared information but also give people as we’ve discussed, the opportunity to take action and give tips on how to learn on the job, so to speak, on their journey as a property investor, as a developer. I find being a property investor and being a developer, you don’t have to rush and become a property developer. You don’t have to rush and start knocking down houses and subdividing blocks. If people just learn from this podcast how to save $50,000 on their next property purchase because they buy it from a motivated seller.
I believe my job is done. I really want to help people learn about the ins and outs of property. Because there’s so much conflicting information out there. I want to make sure that this information is unbiased and as your experience with me is that you’ll know I’m very, very blunt at times and making money through property can be challenging, but it’s very, very rewarding. And being a developer might just be a natural progression for people. You might have done buy and hold for three to five years or you might have two or three properties that are underperforming that you want to get an extra, 500-$1000 a week or 25,000-$50,000 a year and squeeze that extra juice out of it. I just believe in excellence and I believe in being the best that you can be. If people are driving to work listening to this and they’re frustrated with their job, maybe you want to quit your job in the next 6, 12, 24 months or so. So it’s all possible.
I totally agree with that as well too. Now what I wanted to ask you as well is we’ve been having constant conversations back and forth with a number of things as well. And I guess one of the things we’ve kind of touched on is why this podcast, at the beginning of the year as well, you had pretty much a big wake up call and you shared with me that you wanted to do something even greater and maybe show the audience what happened during that time.
Earlier in the year I had a bit of a, I wouldn’t say an incident, but I had an operation in 2008 and in 2012 I started to get this lump in my neck and they admitted me to hospital at that time, 2008, and the doctor was a bit concerned, but it went down after a while. But antibiotics and the lump, if you can imagine, get a bald egg, put it in your mouth. That’s the size of the lump that was in my neck earlier this year. And it got bigger and bigger and bigger. And initially, I wasn’t too concerned because I’d had it before and it was going up and down, up and down and dissolving it at times. But then earlier that year it stopped shrinking. So it kept getting bigger and bigger. And there was one point it was quite rock hard.
So imagine a golf ball on the side of my neck, which I went and saw a doctor. They didn’t have any ideas. So another GP didn’t have no ideas and then sent me to the specialist and the specialist was not sure exactly what it was either. But within six days from me seeing him on the Wednesday, within six days I was on this operating table on the following Tuesday getting this lump cut out. And so why it was scary for me is from a financial independence point of view, I wasn’t too concerned, but I believe, I just have such a big message to share with people in terms of what’s possible. I quit my job by the age of 24 financially independent in my twenties. And so a lot of people I know want to quit their jobs and spend more time with their families.
They want to go on holidays without having to think about the price tag or drive cars that they really want or be able to give presents to their kids or put the kids through private schools or I’ll just cut the stress of their wife having to work a second or third job. So I believe that through that wake-up call just reminded me of why I’m put on this earth, to share this message. I am a Christian, a Catholic background. Don’t hold that against me. Being raised with family values to be generous and share with people what’s possible out there. That’s part of my calling and that’s why I’m putting my energy into this podcast because it means I can reach thousands and thousands of people and share this message because I know that a lot of people will resonate with my story and be able to take action and get some great results from it too.
And that’s the thing, we both have very similar values in that sense that we’re Christian and also we want to be able to help and give back to the rest of the world and to be able to impact thousands and thousands of people as well. Not necessarily just through only this podcast, but the things that we can do in many ways. And that’s why I think we put this podcast together in that sense. Because no matter where we go, I think, God will have a presence with whatever we do as well and impacts in some way, shape or form. And it’s just a matter of, I guess, people wanting to hear what we’ve got to say as well too, even though we might not have too much to say at times as well.
It’s just a reminder again of my mission here and also that the property stuff that I do. Robert Kiyosaki’s often talked about creating passive income and having more passive income in your expenses. In my instance, that’s why I started out in property as well. Reading the book Rich Dad, Poor Dad and taking the baton from Robert Kiyosaki back when I was 19. I heard him speak at the convention centre and I said, look, I want to do that and I want to help people in a way, but I can’t teach financial independence until I’m financially independent myself. So it took a few years of doing that and being able to teach that. And now I’ve got thousands of students who I’ve taught and helped make money through property. And I want to reach out and continue that journey as well as build my ongoing passive income as well.
Every year I want to be adding 5, 10, 20 tenants to my portfolio. That’s my game. I’m working on some buildings at the moment. We’ll come back to that content later in the podcast. But every year I’m wanting to accumulate property developed property, buy, sell, buy some, sell some, keep some, and there’ll be some recurring themes that people will find over the podcasts. I think one of the beautiful things is technology these days. If you think about 20 years ago, the technology for the podcasts and streaming and the free stuff, it’s just amazing. But some of the challenges, you don’t know what’s good, what’s genuine, what people’s agendas are. And just being generous is one of my values as well. Giving as much as I can to be able to help people and to help them on their journey. Because you know, I’ve had a lot of help along the way. I’ve had mentors help me along the way. And I want to help other people as well.
It’s interesting because as you’ve said, there’s so much content out there and the biggest challenge that we all kind of face as well is knowing which content that we should actually go through. Because the last thing you want to do is to go on and have a look at that piece of say maybe a video or audio and then go hold on, is this actually relatable to exactly what we want to actually learn about in regards to property development and so forth. And 10 minutes, 15 minutes later you kind of spend that time finding out that doesn’t suit and so forth. And I guess what we wanted to do is just to try and put everything together into one space so that way it’s easily accessible and you know, talk from a sort of down to earth kind of conversations that you and I will be having throughout this podcast to share the information and to be able to ask questions as well and make it interactive.
And the beautiful thing that we want to do here is that we also want to be able to engage with the audience and the listeners and to also reach out and say, look, if you’ve got questions, send them into us. I also am going to be learning a lot of information as well. So hopefully we can share that with the world and also be able to impact as many people as well too.
One other thing I want to add is this podcast will be around half an hour per episode.
I know it’s a big gig, but I think that’s what it’s going to take to be able to plant some seeds and reassure people that they can do it and every week give them some action steps as well. So I’d love to be really sharing some life stories of the opportunities and the deals and the challenges that are either going through or have gone through myself, as well as some of my clients, case studies, their challenges, their opportunities, their achievements as well.
Yeah, it’s fantastic. So we really, really want to make it as real as possible. So we’re going to be probably interviewing as well, some of your past guests and students who have actually gone through and been mentored by yourself as well and, and bring them onto and share their real life stories, but also at the same time give you some examples of other stories of developments that have been done successfully and also the mistakes as well so we can all learn from that. So it’s going to be very, very practical from real practical strategies from like say reno subdivisions, no money down deals, property options and many, many more things that are related to property development. That’s what we’re really, really excited to share about.
Just to recap just a bit of what you’re talking about before there Tyrone, about renos, subdivisions, no money down deals, property options, et cetera. There’s so much when you’re doing development. There was a handful of background skills that I do find that are essential. Jenny Brown and I wrote a book called The Property Investing Formula. And we went through 20, 30 different types of deals or ways you can do deals and in recapping those deals, and I’m not going to go into it and then one by one, but my point is, part of the reason why I’ve done so many different types of deals is when I started doing some deals, I had to figure out how to exit them or solve certain problems that I didn’t anticipate at the beginning. So my point is that why I’m a developer and why I love development is that it integrates a lot of different problem-solving skills.
The biggest thing I love about development is that it’s a leveraged place. So when you’re starting out and you’re doing one reno, and there’s nothing wrong with that, you’ve got to start somewhere. That’s what I started with, some by reno, a rental, buy, reno, sell. That’s where you got to start. But the beautiful thing about property development that I love is that you can scale it. And it’s about one having a bigger challenge but also making more profit. At the end of the day, you’re not doing property development as a hobby. That’s really something people got to get their heads around is that you’re not doing it as a hobby. You need to make it profitable and not just that. There’s a lot of other things that you need to deal with like reducing risk finances, managing investors, managing banks, managing real estate agents, sales.
So there’s a lot of aspects to it, which we’ll obviously cover over the next few weeks and months. But I love the game of development because it’s very much a leverage game. So if you’re wanting to, let’s say do a reno, you can make potentially 50,000-$100,000 on a reno, but if you’re wanting to make $500,000, $1 million, $5 million, you need to scale like doing a buy, reno, sell on a luxury home and making $500,000. That’s very possible as well. But I’d rather sell five blocks of land or 10 blocks of land, which reduces the risk because the end product you’ve got multiple in products as in more stock. It’s like having a pizza, selling off the pieces at a retail price as opposed to just one top end, $2 million, $3 million house, which in terms of buyers, there are a lot fewer buyers for the top end product as opposed to a lot more buyers at the sub $500K. So I love the property development game because it is a leverage game. But having said that, it was a natural progression from doing the ones buy/reno/sells, buy/reno/holds, the ones into twos and then you can increase it that way.
It’s actually a really, really good point there that you’ve raised and I love that you’ve been talking about the problem-solving skill because that’s actually the key component and also leverage as well behind property development. Having those skills in place allows you to better solve different things. And if you take it and have a look at say for example different types of aspects in people’s lives, and I’ll actually probably talk about, from my example, I do a lot of problem-solving in the IT space because I’m developing, working with websites and so forth. And when I look at one big project, it actually is looking at how to break that down to small components and then solving on how to actually put these components all back together to make it work for a great user experience for people online but also for a person to be able to purchase through say an eCommerce store.
And when I actually take those components again and I look at it from a property development perspective, it’s actually very, very similar but just different things in the property. So whether it be working with banks together to get the financing, whether it’s actually looking at the deal and see how you can structure and subdivide and so forth. It’s all about problem-solving. And then on top of that, as you said, leverage. Leverage is so powerful to be able to earn a lot more because instead of working for the hour on say a project that I’m working on at the moment, I can actually leverage off with say a development where you could actually split the blocks into 10 or 15 but also profit from each one. And that’s what I love about property development and learning so much from you about that too.
I love the game because it’s like any game when you’re starting off with a buy/reno/sell or wanting to do subdivision, there’s a bit of a challenge there. Like you’re playing Tetris and sometimes you might have a thousand square metre block. Keep the house at the front, cut the back block off, and finding a way to turn that into a $100,000 or $200,000 profit by being creative is really cool. Some people have different creative flavours, they might like painting them. I like that some people might like climbing mountains and conquering that. For me, it’s that creativity of, okay, how do I turn this thousand square metre block into five blocks and still make 20% profit at $200K? So every deal is different. And that’s what I love about it, there is variety, but there’s also a lot of strategies just like playing chess, just like playing Tetris, just like playing in any strategic game.
For me, it’s a game. Some people like golf, some people like swimming, some people like fishing. It’s just like myself. I love fishing. Everybody’s got a game. But I think when I started in this game of property of looking to buy 200 properties, I found there’s actually another opportunity here, which is property development, which is a way of creating an outlet. I did a deal previously where it was 600 odd square metres, kept the house at the front and I squeezed the duplex in the back. And the thing I really liked about that was no one else could see it. They didn’t believe it was possible. And then I squeezed in a duplex at the back. And not only was it possible, it was actually very, very profitable. So that kind of stuff I love doing all day, every day. Yes, it’s challenging. Yes, there are ups and downs and blockages and sometimes you may not know if you’re going to get a result, but as you do more and more deals, you build up your confidence and get better and better at it. And also you get a better team to advise you along the way.
We delve into the backstory of why Nhan got into property development amongst all the other possible businesses available.
I believe that property development is an art and a science. And is it for everybody? Not really. I think that for some people they might just like the buy and hold and there’s nothing wrong with that. I actually am a big fan of buy and hold as well, but not buy and hold just by itself. And there’s a handful of reasons for that. When you’re doing property development, it allows you to sell down. So what I am saying is, like I said previously is, buy some, so build some sales, some keep, some build, some sell, some keep some. So a strategy for that could be someone who builds a duplex, sells one and keeps one. So they keep one. Their strategy for that might get a rental income, a positive cash flow, and some capital growth along the way.
Very similar to Harry Triguboff, I should say. He builds tons and tons of apartments and he sometimes holds on quite a lot. I know that he’s got like over thousands and thousands of apartments that he’s holding onto himself. So it’s a very seamless strategy and learning off people like them as well has probably been a key component.
Well, look, absolutely. I love his Meriton model. If any of you’ve read the book From Broke To Billionaire that I authored a few years ago, we talk about Harry Highrise and he talks about how he’s built thousands and thousands of apartments. I think 50,000-60,000, kind of lose count now, and he holds onto 2000-3000 apartments at any one time. So that’s really, really cool. Sells some, build some, sell some, keeps some. So the advantage of that for a property developer is, it’s just leverage and accelerated leverage. For those who are starting out, you might have a couple of rental properties and you’re wanting to increase or accelerate the performance. It might be as simple as doing a granny flat out the back, spending 100,000-$150,000 to increase the rent. So anyway, the property development side of things is, it’s balancing between creativity, knowledge of finance, ability to create opportunity out of nothing.
So like I said before, that house where there were 600 square metres, keep the house at the front, build a duplex at the back. That was a great opportunity to create over $100,000 that no one else saw. So that’s really, really cool. We were able to leverage that through my understanding of the zoning, understanding of the marketplace, and understanding finance to be able to create $100,000 profit, essentially no money down as well, which we’ll talk about at another stage. But I think in terms of being a property developer, it’s a big way to layout the creative opportunity. Some people on 1000 square metres or 1200 square metres might put 50 apartments on that. It’s a form of creation. I think manifesting it is a big part of human nature. What people want to create and what people want to leave behind as a legacy as well.
And I’m working on a childcare centre in Melbourne there, which is really cool. It’s 84 spots. We’re going through the process of getting that approved. It’s not quite approved yet, but I know that if I can get that approval through, flick it on, make a few hundred thousand dollars, that’s going to be leaving a legacy for the next developer, create a childcare centre and support 84 families so to speak. I’m moving forward so that kind of stuff is really, really cool. Every time we develop we’re creating new houses for people. I’m working on another, a couple of builds where we’re squeezing a low set house onto 400 square metres and I say squeezing because we’ll be able to have five tenants on that property. Whereas before that property was only one house. Once we’re done, we’ll have two houses with potentially five tenants in each, call it 10 tenants. I’ve increased the number of tenancies from one to 10 so you know another 9 tenancies. So that kind of stuff is really, really cool and yes, because I’m taking the risk because I’ve put my creative energy, put my money on the line and we’ll get rewarded for that. But that’s definitely a part of the process that has to work as well.
Wow, that’s amazing. And I love to be able to hear more about that story shortly as well too. And I know the progress a little bit about the childcare behind it too, so lots of amazing things to share. I guess the other thing that people probably get stuck on is now that they sort of understand why should they consider becoming a property developer. There are a lot of things that people will firstly have blockages as we call them. All the things that hold them back from taking the next step because it’s easy to talk about. It’s great to be able to go and dream and say, look, I think I can make a $100K from putting a duplex at the back of the property and so forth. But then it’s like, okay, how do we do that? What do we need to look at? How do we educate ourselves and so forth? But then there’s always the blockages such as, I don’t think I’ve got enough money. I don’t have enough time and knowledge. I’ve got fear. I’m lacking in confidence. Let’s talk a little bit about those kinds of things because I think it’s important to address these right at the beginning
Each of those topics themselves, I could spend a day addressing and doing workshops on as I do in my mentoring programs, but look, lack of money. That’s something that I hit earlier on in the game. Like I said before, bought my first property, ran out of money, had to find other ways to reach my goals. And at the end of the day, it’s just another skill. If people are willing to learn how to get money partners, how to get joint venture partners, how to do joint ventures and have people fund their projects, it’s actually very much possible. There’s a whole stack of money out there. If you think about people in their self managed super fund, even the amount of self-managed super fund money that’s been lost it and claimed, if you’ve recently seen some of the media about that, how the ATO is basically putting their hand out, collect that money.
But there’s so much money out there that’s looking for a home at this point in time. You know, bank interest rates, if you put your money in the deposit, you’re getting roughly 2% or less on that money. And people who are going into pension phase with their super self managed super funds, they don’t want to be getting 2% if they’ve got 1 million bucks and they’re earning $20,000 a year on that, they can’t live on that. So my point is that it’s not a lack of money. It’s just a lack of knowledge of how to get that money and how to manage that money and have that joint venture work for you. And then that’s pretty much what I had to learn in my early twenties is how to do joint venture deals. No money down deals because I ran out of money and now it’s become a skill set that is teachable. I’ve had many of my clients do deals no money down and there’s a few principles definitely that you have to learn on how to manage that. But if you find a great deal that’s profitable for everybody, the lack of money should not be a problem.
It’s interesting that we raised that because I think, and just from my experience, cause I’m also involved in a few development deals at the moment. And I said I’m kind of the money partner because I’ve got access to investors and I can actually find and source the funds to be added to it. But I think I also too had initially when I first started going, I don’t have the money to do it. But then when you think about it and you flip the coin around and you go make it a win/win situation, these deals, the money actually just comes to you, you become an attraction of money to be able to fund these deals because it’s so profitable for everyone and I totally agree with you on what you just said there. The money will come when you actually find the deal.
Finding the deal and also having the skills to structure the arrangement so it’s attractive and safe for the investor as well. At the moment I’m on a capital raise with investors for my 30 lot subdivision and it’s just a process of figuring out what the offer is, what the opportunity is, how to return their money, how to make their money safe and protected and at the same time prove your ability as a developer. And I’m not saying everybody out there needs to go and raise $2 million. I’m saying raising $50,000, raising $200,000, it’s a process. Like I said to my students, it’s like learning how to ride a bike. Once you know how to do it, you can do it again and again and again. But I think the biggest thing that people don’t know is they are not taught in schools or university necessarily.
When you go back to the source of education in the marketplace, universities, schools, their structure and their premise has been different. They’ve been taught, people have been taught, you and I had been taught at schools to get educated, to get a good job, create that financial security that way. We haven’t been taught the rules of money. We haven’t been taught the abilities to be able to do joint ventures or no money down deals. If you think about banks, they want you to essentially go guarantor on the loan, put your butt on the line, put as much deposit down as you can to protect them. And that’s the system that we’re in. And so it’s looking at the system sideways and looking at it in a different way. Even the banks, they say, Oh, your house is an asset and they’re not lying to you about saying it’s an asset.
They just don’t tell you whose asset it really is. It’s the bank’s asset. You try not making your payments for six months. So my point is that it’s a system that’s been designed to constrain us in a certain way. And if you’re wanting to break that system i.e. leave the workforce or become financially independent. You’ve got to look at different ways because the system is designed for us as human beings to not leave the workforce until we’re 60-65. If you think about it now that the super self-managed super funds don’t allow you to access that pension phase until that time. So essentially they’re wanting you to work for as long as you can to make them rich essentially. Because the longer you have a mortgage, the longer you’re making the banks repayments and making them rich. And that’s why I’m a big fan of reducing debt wherever you can and making my money work as hard as possible.
It’s really good that you raise that point because I’m pretty sure a majority of the population and people who are probably listening to this podcast are trying to find a way out of their working situation. And I guess a lot of people have families that they’ve got to provide money to support their living. They’ve got children, they’ve also got houses or mortgage to repay, cars and so forth. And they go, it sounds great where you are right now, young into what you’re doing and so forth. But how can I actually do this? Because firstly, I don’t have the money. I don’t have the time to do all these kinds of things. I’m like stuck, I’m fearful of actually jumping into these things. And I guess these are the important points that we’re raising because these are very common in real life situations that people are actually stuck in. And this is why I think it’s fantastic that we’re talking about this topic right now.
Exactly. I know I’ve gone on a little bit about that lack of money and finding money partners and the belief of why and how you can get money partners and even those other topics. There’s a lot of exercises that people can do to build that confidence. Oftentimes the beliefs that they have are limiting and they don’t know that they’re limiting, people say, you need money to make money or you can’t do this or you can’t do that or that’s illegal. So I’ve been in the property game long enough to know what’s legal and what’s not legal. And that’s why I need a good team around me as well in terms of solicitors, accountants, town planners, to know what’s really possible and when you’ve got mentors and people surrounding you who’ve done it before, I think that’s the other thing as well.
We talk about the five people you spend most of your time with will be, if you think about it, the five people you spend the most time with, the average of their income will be the average of your income as well in the next three to five years. So my point is when I was starting out, I didn’t know it at the time because I was going to a lot of seminars and the people there, one, they’re in their 40s and 50s. I was 20-21years old going to seminars, day and night, four nights a week because I was just soaking up this information like a sponge. And it turned out that most of the people at those seminars who were, I suppose, egging me on and encouraging me to go forth and multiply was that they were in their 40s and 50s and they were millionaires in their own right.
And I just didn’t realise at the time that’s what I was doing inadvertently was associating with wealthy people. I was just looking for people who, one, were generous enough to share their information, who are walking the walk, but also not just talking the talk but walking the walk. So it was one of those things that I learned along the way as a beginner that the people you spend most of your time with will determine your income. And oftentimes we’re not in control of that because at work, if you’re earning 50,000-$100,000 a year and the people around you or your work colleagues and they’re earning the same money, you wonder why you’re not making more money.
And I guess this is very encouraging, especially for listeners and myself and people who actually want to go through this process as well as associated with us just by listening to this podcast. Just by looking for the information, educating yourself, you’re already associating yourself with very successful people. And you know, hopefully we can take you on that journey because we’re going to be covering a lot of things about mindset. We’re going to be covering things about how to focus. We’re going to be looking at leverage. There are so many topics that we’re going to be covering. And this is the beautiful thing about having these conversations. But also I want to mention as well is that you’ve talked about in the past, and I think you’ve also mentioned a few mentors who’ve said, this is failing fast. And it’s funny that I’m saying that because it’s kind of contradictory because we’ve been taught as we’ve gone through school not to fail. We’ve got to make sure we pass the exam, make sure that things are working correctly. Pass everything and don’t cheat, don’t copy from your neighbour, but everything that we’re going to be doing in property development is actually the opposite. So maybe let’s elaborate a little bit more about what does failing fast mean?
It may seem a bit contradictory to what we were taught. They’ve told us in school, not make mistakes. I want to let people know that I make a lot of mistakes. And very, very regularly, whether it’s every week, every couple of days, every month. And some of the mistakes I make are not small mistakes, I’ll even share one just to kind of give you a reality check because there’s always going to be people listening to this podcast with the two words, “Yeah, but.” So I want to put those ‘yeah. buts’ on the line and get them clear so that we’re all on the same page. And I’ll share you a quick story and we’ll talk about failing fast, when you play this game, earlier in the year I signed a contract for a property, signed a contract and I went unconditional.
And what that meant was essentially I was committed to the contract and paid the small deposit around $10,000 and was committed to settling the property in about three months time. And we had a long settlement, which was great, but a few months into it I just started to get this feeling that it wasn’t going to work for some reason. And you know, essentially I had to back out of the contract. I’d negotiated an exit with the owner. They weren’t happy, but they were happy to take my deposit and I dropped roughly $10,000 deposit plus some advertising costs. So firstly, I do not encourage anybody to do that. I am a property professional and I buy and sell properties for a living. It’s my business. But I drop 10,000-$12,000 on a deal and most people would go, Oh my God, that’s a lot of money.
But for me, sometimes I have to get deals off the market, to be able to get deals going and be able to take small risks along the way. For the average everyday investor, I don’t suggest you do anything like that whatsoever, but you got to learn how to make small mistakes along the way though it costs you a lot of money and all. So I’ll give you a couple of examples of failing fast. One is picking up the phone and ringing five real estate agents in our courses. We talk about what to say, what questions to ask them. We give a bit of a structure, but even just talking to agents regularly and learning how to do that is part of failing fast because we’re not taught how to do that. If you go to university or school, they’re not geared to teaching you how to buy a house.
They’re teaching you how to become a professional, how to get a job, how to get a career. So that’s a good example. The other good example of failing fast is putting in offers. Putting in a low ball, written offers to real estate agents. So if they’re asking for $550,000, finding a motivated seller in putting in an offer of $450,000. So things that don’t cost you a lot of money but may cost a little bit of time, a little bit of energy, obviously you need some expertise on how to do that. And that’s where our training comes in. But you know, those are examples of failing fast and learning quickly about what’s happening in the marketplace.
And that’s great because these little small steps, you don’t necessarily need to go out and buy a property as you said it and lose money on it. You can actually just do these little things by just simply picking up the phone, and I’ve done this as well. I’ve actually called up multiple real estate agents and just ask them and putting in offers and send them in and getting rejected. That’s part of being the process and learning as well because rejection is actually what makes you stronger for the next one. I used to be a real estate agent as well, and I used to door knock and I’d have to do at least 50-60 door notes to be able to get someone who actually opened the door to me and then talk to me. And even then they’d say no because they’re not looking to sell a property.
So it’s all part of that process. And sometimes the more that you do, the more that you fail, the stronger you become. And that’s what I love about this conversation that we’re having about that. So it’s amazing to be able to think further from them. I think the last thing I want to probably cover is maybe before we actually wrap up this episode, is to talk a little bit about the think big, start small process. Because it’s great to be able to think, okay, I want to build this massive building and make millions and millions of dollars, but that’s not where you start. If you’re starting out as a property developer, you go think big but start small. So let’s talk a little bit about that now.
I think that’s very much a fundamental principle that I learned along the way is to think big and start small. And what does that mean? So it could mean some of you might have dreams of doing a high rise building. I know that was definitely one of my dreams that at one stage it’s probably not on my dreams right now. I’m looking at other things like building a McDonald’s or a shopping centre or something like that and you need dreams. There’s nothing wrong with dreams and there’s nothing wrong with goals as well, but I think you’ve got to start somewhere and start somewhere close to your reality. So everybody wants to be the winner. Everybody wants to show off and say, look, make your parents proud, make your family proud. But you’ve got to start small and learn the steps along the way.
So I think a couple of things like even looking at, if you haven’t started out looking at buying a buy/reno/sell or buy/rent/hold, where you can create 50,000-$100,000 worth of equity or profit or you might look at a way of how can I increase my rental income or passive income by 200-$500 a week, set an achievable goal. Because that’s what you’ll find is that if you set a big goal of making $1 million of net passive income, which is a great and really exciting goal to have, you have got to learn the skills along the way. So you might just start off with increasing your rental passive income by just $10,000 a year of $200 a week. And maybe just extending your house at the back with a granny flat. That’ll teach you some skills on construction and development, build pricing, certification rules and regulations, sewer water, stormwater, those basic things.
Or just building one house, buying a block of land at a discounted price, building one house and maybe building a new place inside of it. And what I mean, it might be a one building with two tenancies or five tenancies if you had to build your passive income. So my point is that think big and start small is absolutely critical. That’s where I’ve been, that’s where I started out because you really just don’t want to be exposing yourself a lot, especially in this marketplace. Finance is quite difficult to get. So even doing a one into three may be hard to get finance from a residential finance point of view, perhaps, maybe even impossible unless you’re paying expensive interest rates. Starting small, getting in the game, building the relationships with the bank, with the builders, with the finance brokers, with the engineers, with the town planners.
That allows you to organically grow. We’re all so impatient about making the next million tomorrow. We want to get rid of our jobs. We want to get rid of the stress that might be artificial. We might have debts that we need to pay off. And commitments that we just want to shrug off and move on with. But you know what, you don’t want to essentially shoot yourself in the foot by trying to grow bigger. I’ve seen too many developers, even some of my clients who’ve come to me and they said, look, I want to make $5 million in the next one to two years. I said, well look, learn to walk before you can run. Learn to walk before you can run and learn how to walk.
Well because you want to be able to survive all marketplaces. That’s a big thing I learned in the GFC is yes, sometimes I’ll sell my land at a small discount just so I can move stock and then I can keep going again and again and again. Oftentimes greed is really what hurts people and they’re just not aware of it and they’re not able to control it because they’re not aware of it. So thinking big and start small is a great principle there. Tyrone, thanks for reminding us of it. Sometimes we’re going to take it for granted because that’s where we just move on with other exciting stories and topics.
Well, I love everything that we’ve shared today. I think this big topic here is really the mindset in thinking big and starting small and emphasise that we’re going to be putting out shortly as well too. It’s going to be building on top of this. It’ll be talking about money rules. We’re going to be talking about the different ways of actually developing all the different strategies that we’ve been talking about in a high level approach. So what I would suggest for any of the listeners out there is to actually start here. This is going to be pretty much a step-by-step throughout. So we’re going to be building on each and every one of these episodes and elaborating on talking about the strategies behind each and every one. But before we do wrap up today, we’re going to actually give you, as we said in the podcast, every session and we’re going to give you like an action step or an assignment at the end. So today we’re going to actually give your first assignment and do you want to share with them what their first assignment will be?
I love it. I’m laughing because I bet you I’d bet money that if you listen to other podcasts, no one’s going to be giving you assignments to do. I’m not sure why, but I suppose I really want to give you an opportunity to hold yourself accountable. So obviously we’re not able to speak to you personally. And hold you accountable, you’re going to have to learn how to keep yourself accountable. But I reckon one of the goals they should do is write down three major goals that you want to achieve. Let’s say in the next 90 days and the next 12 months. So I think that’s really cool. Maybe start with the 12-month goal and then work back to the next 90 days. I believe that 90 days is really, really cool because it is more a swallowable, you can see it, you can actually see how realistic it is.
12 months, sometimes we can be a bit dreamy. We might go, I want to make $100,000 in property when you might just be starting out and buying your first property. There’s nothing wrong with having those kinds of bigger goals. But you gotta base it in reality of what’s achievable right now. So I’d say write down three major goals, maybe financially. Maybe financially you want to make 50,000-$100,000 in the next 12 months or you want to increase your passive income by2000-$5000 a month over the next 6-12 months and then roll it back on the next 90 days of what’s possible. And the actual action steps. It might be things like go see your bank to refinance property, increase your equity. Or it might be sold down one of your toys that you’ve been accumulating in the garage.
And you might have three boats that are just sitting there and you’re only using one or none of them. It might be selling down one of your properties that are not performing to get the equity out or reducing the amount of debt that you have. So you can go again or it might be finalising an arrangement that you have with someone you owe money to or someone that owes money to you.