Building Custom Duplexes in Sydney with Patrick Ung from Pro Duplex

[00:00:01] As investors and developers, we see the world differently. This podcast uncovers the untold truths of what it really takes to become a multi-million dollar residential developer. I'm Nathan Battishall, let's get to work.

[00:00:19] Well, welcome to another episode of the Residential Developer Podcast. I'm the host of the show. My name is Nathan Battishall and we're really privileged today to have Pat from Pro Duplex. Pat's a duplex builder in Sydney. He's becoming really well known, especially niched into that space of duplex, dual occupancy. So I just think we're in for a treat today. So welcome to the podcast, Pat.

[00:00:43] Awesome. Thank you, Nathan. Glad to be here. Really excited to talk about all things duplex and construction and property development.

[00:00:50] Definitely. So look, it'd be good just to get to know a little bit about you. I know you recently got married. You got a little bub on the way. You got the ring on the finger.

[00:00:58] Got the ring on the finger.

[00:00:59] All set.

[00:01:00] Yeah.

[00:01:00] You want to tell us, just tell us a little bit about yourself, your background, sort of what got you into, especially niching into duplexes, a little bit about your company as well, just to kick yourself.

[00:01:11] Yeah, absolutely. So I was born in Sydney, grew up in southwest Sydney in an area called Capramatta, moved to St. John's Park, which was a neighboring suburb.

[00:01:23] And shortly after in primary school, I moved to the Hills District. So specifically Castle Hill, then Kellyville, where I grew up most of my life.

[00:01:32] I finished high school at Cherry Brook Technology High School. So that's still in the Hills area. And in terms of tertiary education, I did civil engineering at the University of New South Wales, where I got to learn everything about engineering and construction.

[00:01:51] Shortly after that, worked with an apartment builder that focused on high rise apartments in the city.

[00:01:58] So that was a really good experience. Got to learn like how builders build in terms of managing large teams and large projects.

[00:02:09] And shortly after that, worked for a large commercial builder called Built. I'm not sure if you heard of them, but they focus on high rise offices, hospitals, and also a lot of fit out projects.

[00:02:23] And yeah, I always knew that I wanted to go out on my own.

[00:02:26] Yeah.

[00:02:27] Right. So my whole family is into business. We have an entrepreneurial spirit. It's in my blood.

[00:02:33] Yep.

[00:02:33] And I just thought, you know what, home building is probably the way to go. I think, you know, I have a passion for construction. So yeah, I'll dive right into home building.

[00:02:44] Yep. Yep. And in terms of, obviously your company's called Pro Duplex, which is obviously very niched down. What, I guess, what brought you about, what made you want to niche down into creating a building company that specifically specializes in duplexes, which I think is a brilliant idea and a brilliant name too.

[00:03:05] Yeah. Yeah. So it's a funny story of how this happened. So my brother and my dad had a block of land that they wanted to develop into a duplex out in the Hills District. And me being in construction, I was helping them get quotes from other builders just to see how much it would cost to build a duplex.

[00:03:28] And I was just thinking to myself, why don't I give it a crack? Why don't I try building it? And, you know, told my brother, my dad, Hey, look, I'll build it for free for you. So obviously they'll pay for all the construction costs, but I'll manage it. They don't have to pay me a cent.

[00:03:45] Yep.

[00:03:45] And I get to learn from the whole experience and they get a duplex bill at a really cheap price.

[00:03:53] Yep.

[00:03:53] Yeah. So, and, and from the whole experience, I realized that navigating the duplex planning laws and certification and subdivision at the end is actually quite a complex process.

[00:04:05] So I thought, why don't I niche down into, into duplexes so that I can guide customers and, and clients all the way through the whole process and just help them navigate all of that.

[00:04:18] Yeah.

[00:04:18] Yeah. So that's how I came about starting ProDuflex.

[00:04:20] Yeah, that's great.

[00:04:21] And look, I think, um, obviously I've, a lot of my involvement's very much been from the early stages of a project, but I've found, uh, really since COVID with the fluctuation of pricing and we've seen construction, the cost of construction probably go up 40%, uh, the last three, four years.

[00:04:42] Um, so it's tricky, like, and obviously anyone doing a development or doing a duplex, uh, for example, and we'll, we'll probably just talk duplex construction, duplex building for the sake of today's episode, being the fact that you're, you specialize in that space.

[00:04:56] But, uh, obviously the whole reason you're doing a duplex build is to, for some sort of a profit, whether it be to, to rent one, to hold and sell one or sell them both.

[00:05:06] You're obviously doing it for some form of, of development or investment purpose.

[00:05:11] So it's, it's quite a tricky space for people when it comes to doing a duplex to sort of make sure the numbers stack up and work.

[00:05:18] And have you found that having your involvement as the builder early in the piece to help people reverse engineer those numbers is beneficial?

[00:05:29] Oh, absolutely.

[00:05:30] You know, it's, you hit it, you hit the nail on the head a hundred percent when people build a duplex, obviously it's, it's for financial gain.

[00:05:39] So the last thing you want to do is design a duplex that's really, really expensive.

[00:05:44] That doesn't suit the context of that neighborhood or that suburb only to overcapitalize it and not get the return that you, that you were looking for.

[00:05:52] Yes.

[00:05:53] Right.

[00:05:53] So, um, and, and another issue that I find is that clients come to me, they've already purchased a block of land only to find that it's not actually duplex compatible.

[00:06:04] Yes.

[00:06:04] That they can't subdivide it or, or a really big one I see is that the land slopes down towards the rear of the property and they can't get permission from their neighbors to drain stormwater.

[00:06:14] Yes.

[00:06:15] And, and to create an easement through the neighbor's property.

[00:06:17] Property.

[00:06:17] So a hundred percent, they, they should definitely always talk to, you know, a duplex design specialist or a duplex builder.

[00:06:26] Yeah.

[00:06:26] Just to help navigate that.

[00:06:28] Yes.

[00:06:28] And give the project the best chance possible from the start.

[00:06:32] Yeah.

[00:06:33] Yeah.

[00:06:33] And I know even on this episode, we talk on this podcast, we talk a lot about having your dream team.

[00:06:40] And for me, I think more than ever, you need not only consultants early in the piece because consultants are all well and good to help you navigate the compliance side of things.

[00:06:50] But like you said, you've got to be able to build this thing and not overcapitalize.

[00:06:57] And, you know, it's pointless building a high end duplex in an area where it really just, you know, project or mid spec is what, what the market needs and wants.

[00:07:07] Yeah.

[00:07:07] Absolutely.

[00:07:07] So, so you see people buy their sites and they just haven't used that team.

[00:07:12] And I'm, I'm, I'm telling a lot of people more than ever, like investors and developers and people wanting to do projects, especially duplexes, that you need to have a builder.

[00:07:22] Like you need to have a builder in your dream team.

[00:07:25] And I think gone are the days where you, you know, you're dealing with 10, 15, 20 different builders.

[00:07:32] My, my mentality is always have a builder you can trust, have a builder that you want to work with long term, especially a lot of people doing duplexes.

[00:07:41] You don't just want to do one, you want to do well out of it and move on and do it again and again and again.

[00:07:47] And I just think it makes sense to have a, that longevity with a builder that you can trust.

[00:07:52] Like are you, are you finding that sort of where you're trying to head down and building that longevity with some clients that you can just work with long term?

[00:08:00] Yeah, absolutely.

[00:08:01] It's a hundred percent.

[00:08:04] You want the dream team, right?

[00:08:06] You want to build a team consultants, duplex design specialists, duplex specialist builders.

[00:08:12] Yes.

[00:08:13] Because what we find is once you do one duplex project and you find that it's profitable, then you want to do another.

[00:08:20] Yeah.

[00:08:20] You get the profits, you get the capital and you just want to do more and more and more.

[00:08:25] And that's, that's what we're seeing now.

[00:08:26] We're seeing a lot of, you know, mom and dad investors, they dip their toes into property development.

[00:08:32] And usually, you know, duplex is probably the, the introduction to property development that's attainable.

[00:08:39] Yes.

[00:08:39] For the average mom and dad developers.

[00:08:41] Yeah.

[00:08:42] You know, going into apartments and townhouses is, it's probably later down the line.

[00:08:46] Yeah.

[00:08:46] But if you want to dip your toes in, duplex is where you start.

[00:08:49] Yeah.

[00:08:50] And definitely they should speak to a builder or a duplex design specialist like yourself.

[00:08:56] Yeah.

[00:08:56] Because we've seen it before.

[00:08:58] We've done it so many times.

[00:08:59] We know what works.

[00:09:00] We know what doesn't work.

[00:09:01] And, and, you know, the last thing you want to do is, you know, go to a designer that doesn't really specialize in duplex.

[00:09:10] You know, they do commercial spaces, they do granny flats, they do renovations, they do, you know, everything, like every, every sort of development.

[00:09:20] But they don't know what would work in that area.

[00:09:23] What would return the most value for them.

[00:09:25] Yeah.

[00:09:25] So that, that's a massive thing.

[00:09:27] Yep.

[00:09:27] Yeah.

[00:09:28] It's so true.

[00:09:29] And I think you absolutely nailed that point there around the costing because I'm sure you've had to do this and we definitely have where an architect or someone or it could have even been a building company where they've completely missed the brief in terms of just because you can build a 250 square meter per side duplex on that block.

[00:09:51] Like in Parramatta, for example, doesn't necessarily mean that, that it's feasible.

[00:09:58] I always say to a lot of people that, you know, you can do a four bedroom that's 170 or 160 square meters, or you can do a four bed that's 200.

[00:10:09] You can even do a four bed that's 250.

[00:10:11] Yeah.

[00:10:11] Just because you can build that extra 100 square meters per side doesn't always, in certain areas you can do that.

[00:10:17] But in some areas you can completely overcapitalize because 100 square meters of extra build per side, that can really blow the costs out.

[00:10:25] And if you're not going to get the resale.

[00:10:28] It's not worth it.

[00:10:29] It's not worth it.

[00:10:29] And I'm sure you've had projects come across your desk where some poor person spent, an investor or developer spent all this money to get the plans drawn, to get it fully approved, all of the consultants, engineering.

[00:10:45] And then you've got to completely go back to the drawing board and start it all over again.

[00:10:50] Yeah.

[00:10:50] We see that all the time.

[00:10:51] And, and there's, there's a statistic that says 70% of homes designed are never built.

[00:11:00] Yes.

[00:11:00] Right.

[00:11:00] So it's such a big factor because they, exactly what you said, they, what we find is a lot of mom and dad investors, they do make decisions based on emotions.

[00:11:13] Right.

[00:11:14] So it's their first duplex project.

[00:11:16] They want it to be beautiful.

[00:11:17] You know, they want to spend as much money as they can on it because they want natural marble here.

[00:11:23] For example, they want really high ceilings.

[00:11:26] They want a 250 square meter duplex four bedroom, as an example.

[00:11:31] But sometimes that doesn't translate, especially within the context of that area.

[00:11:35] Right.

[00:11:36] So what we find is, we also find that sometimes clients come to us with DA and CDC approved drawings already.

[00:11:45] Yes.

[00:11:46] But there's always an opportunity to value engineer that.

[00:11:50] Yeah.

[00:11:50] Right.

[00:11:50] Because often we find that they separately engage all the other consultants rather than use the consultants that the builder or the architect recommends.

[00:12:01] Yes.

[00:12:02] And what we find is the structural engineers, as an example, over design it.

[00:12:08] Yeah.

[00:12:09] Right.

[00:12:09] To cover their liability.

[00:12:11] Yeah.

[00:12:11] So they might specify a raft slab or a strip footing slab when in fact you could have got away with a waffle pod slab and saved 30, 40, $50,000.

[00:12:20] Yeah.

[00:12:21] So it's always, so exactly what you said, it's so important to engage a builder or a duplex design specialist really early on in the process.

[00:12:30] Yeah.

[00:12:30] I agree.

[00:12:31] And I think that's where we're telling a lot of investor developer clients, especially if they're not a builder developer, which a lot of people are, your mums and dads or people that are quite successful, profitable in their day to day.

[00:12:45] And a lot of them want this as a side hustle to generate income and wealth for the future on the side.

[00:12:50] And you get the right team around you, designer, builder, and the rest of the team.

[00:12:56] For me, I've found the best developers are the ones who, and investors are the ones who don't micromanage and who get great people around them.

[00:13:05] Builder, designer, for me, two of the most key people in that team who you can trust, who you can rely on, but who can help do a lot of the heavy lifting for you.

[00:13:17] And you spoke before just about, yeah, not being too emotionally invested because if it is for a profit or a development purpose to generate wealth, you do have to strip that.

[00:13:32] You've got to strip that emotion back because emotion, although emotion is good in terms of getting the feel of a product, it's not your friend often though when it comes to making decisions that are going to move the development forward and ensure that the bottom end of it is highly profitable.

[00:13:50] Yeah, absolutely.

[00:13:51] You know, at the end of the day, you're building a duplex too based on numbers, right?

[00:13:56] Yes.

[00:14:01] You're invested in it, but at the same time, what we see is that we do get quite a lot of clients that come to us that build to live in one side.

[00:14:11] Yeah, that's true.

[00:14:11] Right?

[00:14:12] So it's a different conversation, isn't it?

[00:14:14] Absolutely.

[00:14:15] Definitely a different conversation, but what we see is that they build to live in one side and the other side they rent out or they sell.

[00:14:23] So you can be emotional on the side that you live in because it's personal.

[00:14:26] You can spec it up a bit more.

[00:14:27] Spec it up a bit more, absolutely, and you can find, you know, really cost-effective solutions on the other side where you don't have to spend too much, but you still deliver a great product that suits the area and you can maximise your return on investment there.

[00:14:41] Yeah, that's great.

[00:14:43] And even – and you're so right, like a lot of people are doing that, especially younger people now to get into the market.

[00:14:48] They need to be able to do a duplex, live in one side, sell the other, lower the mortgage.

[00:14:54] We've even seen some people obliterate a mortgage by being able to do that type of scenario.

[00:15:00] Yeah.

[00:15:01] With the idea is you might do it once, twice, two or three times to get your mortgage right down so you've got no debt, which duplexes are such a phenomenal way, aren't they?

[00:15:10] That's great.

[00:15:11] Just to lower a mortgage.

[00:15:13] But even – have you found it's important working with people knowing their strategy of what they want to do?

[00:15:20] Because if they do want to live in one side and, for example, if they want to hold one side long-term as a rental versus, say, someone might want to live in one side and then sell the other side.

[00:15:31] If it's a long-term hold versus a short – like a sell quickly, there's even things you can do on that side because if you're holding it for a long time, you can even pull back on some things, can't you?

[00:15:44] Like if you're not selling it, like if you need to sell it, sometimes you've got to do a few more things to the facade or have some certain finishes that – to be able to sell it, not just for a good return but not have it sitting on the market too long as well.

[00:15:57] That's right.

[00:15:58] Yeah, yeah.

[00:15:58] So if you're looking to sell it, you need to have some features that when the buyers come in, they go, wow, this is amazing.

[00:16:06] You know, just a few features.

[00:16:08] You don't have to overdo it and really spend too much but a few features on the facade, a few features internally as well.

[00:16:15] And I would even say, for example, maybe appliances that are well-known, right?

[00:16:22] So when the average buyer comes in, they don't know too much about, you know, like what size studs you use or what the structure of the home is.

[00:16:32] But what they do recognize are appliance brands.

[00:16:35] Yeah.

[00:16:35] So if they see something like Fischer & Paykel, Miele, Smeg, they will instantly – yeah, they will instantly can connect to it and they can – they'll probably think, oh, wow, the rest of the home must be built out of a really high standard.

[00:16:48] Yeah.

[00:16:49] Right.

[00:16:49] So there's all these little tips and tricks.

[00:16:52] And when we talk about rental properties, you want to choose something that is very low maintenance.

[00:16:59] Yeah.

[00:16:59] Right.

[00:16:59] So you don't want to choose natural stone marble benchtubs where you'll have to maintain and reseal it every one to two years.

[00:17:06] Yeah.

[00:17:06] If you're choosing timber decking as an example, you don't want to choose natural wood where you also have to, you know, sand and reseal every one to two years.

[00:17:15] Maybe spend a little bit more, choose something like a mod wood timber deck or an eco deck and you never have to maintain it.

[00:17:23] It's more durable.

[00:17:24] You never have to reseal it.

[00:17:25] Yeah.

[00:17:25] Right.

[00:17:26] So those are little tips and tricks that we like to, you know, kind of explain to our clients and say, hey, look, spend a little bit more here.

[00:17:33] Probably don't spend too much here because that would align with your investment goals.

[00:17:39] I like that.

[00:17:40] That's really good.

[00:17:41] Good.

[00:17:42] And in terms of your, I guess, your area, what are some of the areas that you tend to sort of like to build in?

[00:17:49] Do you build all across Sydney or have you got specialist locations or suburbs that you tend to target?

[00:17:56] Yeah.

[00:17:56] Yeah.

[00:17:57] Sure.

[00:17:57] So we service all of Sydney.

[00:17:59] Yes.

[00:17:59] But what we find is that a lot of the clients that are coming to us and a lot of jobs that we're doing are around the Ride and Parramatta Council areas.

[00:18:06] Yes.

[00:18:06] We're also doing one in Reesby right now.

[00:18:09] Yep.

[00:18:10] So the more southern areas.

[00:18:12] Yeah.

[00:18:12] But yeah, we service all of Sydney.

[00:18:14] Yeah.

[00:18:16] I think Ride is a great market.

[00:18:19] I was about to say that.

[00:18:19] Yeah.

[00:18:20] Ride's good, isn't it?

[00:18:21] Yeah.

[00:18:21] It's a really hot market.

[00:18:22] And the great thing about Ride is just to the north and northwest of Ride, so just to the north, you've got Keringi Council.

[00:18:32] To the northwest, you've got Hillshide Council.

[00:18:35] Yes.

[00:18:35] And right now, they have banned the subdivision of duplexes.

[00:18:39] Yes.

[00:18:39] Right.

[00:18:40] So you get – if you build a duplex in Ride, you're not really competing with all the neighboring LGAs and suburbs around you.

[00:18:49] Yeah.

[00:18:50] It's just such a great market there.

[00:18:51] Yeah.

[00:18:52] And even looking at – like we've got clients that do a fair bit in Ride and the numbers are quite good.

[00:18:57] Like when you see that – provided they get the site for the right price, the feasibilities look terrific.

[00:19:04] Oh, yeah.

[00:19:05] In those areas.

[00:19:07] So I agree.

[00:19:08] And what are you seeing in the market?

[00:19:11] Like what are some of the current things you're seeing?

[00:19:13] Like in that market, what are you seeing, for example, in Ride or in – like what's the market looking like?

[00:19:21] Yeah, sure.

[00:19:22] Duplex perspective.

[00:19:23] Ride is really hot right now.

[00:19:25] Right.

[00:19:25] There is a big appetite amongst homebuyers and, you know, owner-occupiers that want to live in Ride.

[00:19:33] And they're happy with duplexes.

[00:19:35] Yeah.

[00:19:35] Right.

[00:19:35] So you've got a 600 square meter block of land, split down the middle, build a dwelling on each side.

[00:19:41] They don't mind that.

[00:19:42] They actually enjoy that because they want to live in the area but they want something that's affordable.

[00:19:47] Right.

[00:19:48] So they might not be able to afford a place, a single dwelling or a freestanding home but they want something new as well.

[00:19:56] Yeah.

[00:19:56] So a duplex is just a really good way to tap into that market.

[00:20:00] Another thing that we're finding in Ride is that – and this is what a lot of real estate agents have told us.

[00:20:07] You want to have a bedroom on ground floor.

[00:20:12] Yeah.

[00:20:12] And you want a bathroom with a shower on ground floor.

[00:20:15] Yeah.

[00:20:16] And the reason is there's a really big Asian market.

[00:20:19] Yeah.

[00:20:20] There's a lot of ethnic people in Ride.

[00:20:23] Yeah.

[00:20:24] In the Ride Council area.

[00:20:25] Yes.

[00:20:26] And they have their parents live with them.

[00:20:27] Yeah.

[00:20:28] So they've got their elderly parents.

[00:20:29] That's massive now, isn't it?

[00:20:30] It's huge.

[00:20:30] Huge right now.

[00:20:31] So if you don't have a bedroom on ground floor, you might be missing out.

[00:20:35] Yeah.

[00:20:36] You might be missing out to a wider market.

[00:20:39] And we tell our clients this all the time.

[00:20:42] Whenever you build a duplex, you want to cater to the widest market possible in that area.

[00:20:47] Yeah.

[00:20:47] So bedroom on ground floor, shower on ground floor.

[00:20:51] Yeah.

[00:20:51] That's a really hot tip for the Ride Area.

[00:20:53] Yeah.

[00:20:53] Yeah.

[00:20:53] And it's funny you say that because I think I'm seeing that spreading to so many different areas,

[00:21:00] not just Sydney, but even like outer areas now like Wollongong, Central Coast, Newcastle,

[00:21:07] like quite often I find Sydney sets a bit of a trend and then a lot of sort of suburbs,

[00:21:13] especially on the East Coast, tend to follow that trend.

[00:21:16] Even in the Shire, it's massive now like you have to have that either guest bedroom or master bedroom with the ensuite on the ground floor because you're right.

[00:21:28] Like with the affordability now, the cost of living, it's just it's inevitable now that a lot of younger people,

[00:21:35] even when they're having kids, are still living at home to save up for a mortgage with their elderly parents.

[00:21:42] So or for the empty nester, they can essentially just purely live on the ground floor.

[00:21:48] And when their kids and the grandkids come to visit, you know, the upstairs can be set aside for them, I guess.

[00:21:55] Yeah.

[00:21:56] Yeah, absolutely.

[00:21:57] Yeah.

[00:21:57] That's definitely a trend that I'm seeing as well.

[00:22:00] Yeah.

[00:22:00] Yeah.

[00:22:01] Yeah.

[00:22:01] Just, you know, two or even three generations in that one home.

[00:22:06] And obviously having that separate area of upstairs and downstairs and having the elderly parents that struggle to get upstairs.

[00:22:13] Yeah.

[00:22:14] Ground floor bedroom is just key.

[00:22:16] Yeah.

[00:22:16] Yeah.

[00:22:17] And it's funny.

[00:22:18] It's funny now, isn't it?

[00:22:19] Like duplexes are, like you said, they're so acceptable now.

[00:22:23] And you walk through even the ones you've done.

[00:22:26] I've seen obviously a couple you've done and they're like houses now.

[00:22:32] Like, well, we call them duplexes, but they're as big as most of the houses you knock down.

[00:22:38] I laugh because most of the houses that you knock down to do an infill duplex, each side ends up normally as big as what you just knocked down.

[00:22:47] Like, isn't it?

[00:22:48] Like you generally, like under CDC, most of the time you can get your four bedroom, two bathrooms, sometimes even five beds.

[00:22:55] Yeah.

[00:22:56] Or like an upstairs rumpus, really beautiful size open plan living areas, our frescoes, even plunge pools.

[00:23:03] And like in terms of what you guys have been building, are you finding they end up being quite almost like feeling like you're in a house?

[00:23:12] Yeah, absolutely.

[00:23:13] And, you know, you got, it's very easy right now to get, you know, four bedroom, three bathrooms or even five bedrooms and three bathrooms.

[00:23:22] Um, there's one that we're doing that we've just completed in Dundas Valley.

[00:23:26] Yeah.

[00:23:26] The one that you guys did for us.

[00:23:27] Yep.

[00:23:28] That was five bedrooms plus a theater room and three bedrooms plus a plunge pool at the back.

[00:23:33] Massive.

[00:23:34] Plus a double height ceiling void in the, in the living and rumpus area.

[00:23:37] It's just, it's just massive.

[00:23:39] And, and the way that you guys designed it, we had three meter ceilings on ground floor.

[00:23:45] Yeah.

[00:23:46] 2.7 meter ceilings on level one.

[00:23:48] So it was just huge.

[00:23:49] As soon as you walk in, you're just like, wow, this is huge.

[00:23:53] This is a duplex.

[00:23:54] Yeah.

[00:23:54] Yeah.

[00:23:55] So I think those are, you know, you can definitely achieve a large duplex.

[00:24:01] So each dwelling feels like a normal home.

[00:24:04] Yeah.

[00:24:05] Yeah.

[00:24:05] That's brilliant.

[00:24:07] And look, I think one of the things I'm finding a lot of, and I think it's, that's why it's perfect to have you come on.

[00:24:14] And, and is because a lot of people are buying a site or they're looking to buy a site for the purpose of doing an investment.

[00:24:24] Like a lot of people want to either sell one, hold one or sell them both.

[00:24:29] The big thing's making the numbers work and the numbers stack up.

[00:24:33] Like what's your process?

[00:24:34] How are you helping, how are you helping clients early in the piece navigate, build costs?

[00:24:43] Because it's, it's tricky.

[00:24:44] Like I'm sure you hear this where people say, oh, what's, what's the square meter rate?

[00:24:48] But it's not, there's no such thing as a square meter rate.

[00:24:51] We all know that.

[00:24:52] Like, you know, some people say it's three and a half, four and a half, whatever it is, depending on the spec of the build.

[00:24:57] But the problem is there's a lot that goes on below the ground that comes into play, then finishes and all that sort of thing.

[00:25:03] But obviously the whole purpose why people are doing these sort of developments is they want to make sure that their numbers are stacking up.

[00:25:11] How are you, how are you navigating that space when you've got a blank canvas?

[00:25:17] How are you finding, like, do you have any tips or advice for the audience who's listening to this, who are either doing projects or getting ready to do projects?

[00:25:30] How do they navigate that space to make their numbers stack up when they're doing their feasibilities?

[00:25:35] Yeah, yeah.

[00:25:35] Look, I understand so well what it feels like to kind, to try and navigate that whole process and make sure that the numbers stack up.

[00:25:45] You know, I definitely feel for them.

[00:25:47] It is quite a complex process.

[00:25:49] Yeah.

[00:25:50] I think the first thing that we've got to look at is how much they can even borrow.

[00:25:55] Yeah.

[00:25:55] You know, if they can't borrow, say, you know, over a million dollars, then there's no point to even start.

[00:26:03] That's a conversation.

[00:26:04] Yeah, as an example, right?

[00:26:06] And obviously another thing is the area as well.

[00:26:10] You know, what area are they looking to invest in?

[00:26:13] Yeah.

[00:26:13] What areas make sense to build a duplex and sell, right?

[00:26:17] Yeah.

[00:26:17] So first step, definitely look at how much they can borrow.

[00:26:21] You know, typically we find that investors already have their own mortgage brokers.

[00:26:24] Yeah.

[00:26:24] So they can have the initial conversation with the mortgage broker saying, hey, look, here is my income.

[00:26:29] Here's how much I have saved.

[00:26:31] Awesome.

[00:26:32] I can spend up to $2 million, you know, developing my own block of land and subdividing it to duplexes.

[00:26:39] Yeah.

[00:26:39] Perfect.

[00:26:40] Right.

[00:26:40] Then they come speak to us and we can tell them, you know what, $2 million is great.

[00:26:46] That's the right amount that you want to spend, say, for example, in the right area to design, develop, build, and then sell at the end.

[00:26:55] That's perfect, right?

[00:26:57] But there's also something that we help our clients with and that's a feasibility spreadsheet, right?

[00:27:06] Yes.

[00:27:06] Or a development feasibility spreadsheet.

[00:27:08] It's not perfect, right?

[00:27:10] Because the interest rates are always changing.

[00:27:12] An example, the interest that they get from one bank versus another is always different as well.

[00:27:19] But it shows them what their predicted return on investment is if they spend this much on construction plus all of the other total development costs.

[00:27:30] So these are things like long service levy, interest rates, stamp duty, real estate agent fees, even marketing when you want to sell it at the end.

[00:27:41] Yeah.

[00:27:41] Right.

[00:27:41] Yeah.

[00:27:42] So we take into account all of these costs and it will spit out what your return on investment is.

[00:27:48] Yeah.

[00:27:48] And also what the profit or predicted profit is.

[00:27:51] Yeah.

[00:27:52] Right.

[00:27:52] So.

[00:27:52] That's brilliant.

[00:27:53] Yeah.

[00:27:53] That's the biggest thing.

[00:27:55] So from that, from that whole exercise on that feasibility spreadsheet, you'll be able to see, okay, if I, for example, want to purchase a block of land, how much do I need to purchase it for?

[00:28:08] So that the figures actually stack up.

[00:28:10] To hit that margin.

[00:28:11] To hit that margin.

[00:28:12] Yeah.

[00:28:12] Right.

[00:28:12] So, and the margin, you know, it depends from, you know, investor to investor.

[00:28:17] Yeah.

[00:28:17] But what we find is somewhere between 15% to 25% is desirable.

[00:28:21] That's it.

[00:28:21] Um, but yeah, it just really depends.

[00:28:24] And what we find is duplex is a relatively low risk investment versus say townhouses or, or high rise apartments.

[00:28:34] So.

[00:28:35] You can bring the margin down.

[00:28:36] You can bring the margin down because your risk is a lot lower.

[00:28:39] Yes.

[00:28:39] And, and you know that you're going to hit that target unless for example, um, you know, the market crashes, which it rarely does.

[00:28:48] That's it.

[00:28:49] Yeah.

[00:28:49] And especially if you've, um, I talk a lot about this, but especially if you've made your feasibility conservative, you know, you haven't pumped up the resales.

[00:29:00] Um, you know, you've got a lot of research on the resales and you haven't sort of gone the best case scenario in your resales.

[00:29:07] You've worked it off sort of like a, like a lower on that lower side.

[00:29:12] Cause I think I'm sure you've found this, that some developers, because they get emotionally invested in a location or in a site, they go and buy a site where they, they force the numbers to work.

[00:29:26] Yeah.

[00:29:26] Yeah.

[00:29:26] Like, so they, they went off an unrealistic build price, you know, they got sucked into paying too much for a site.

[00:29:34] And I've, I've, I've seen this more the last couple of years than ever where people have basically paid too much for the land, but then they expect to try and get the build 200 K cheaper than what it should be to try and win their numbers back when essentially what the problem was, they paid too much for the site.

[00:29:53] Yeah.

[00:29:54] And so they should have said no to that site.

[00:29:57] Yeah.

[00:29:57] Have you found that?

[00:29:58] Yeah, we, we find that a lot.

[00:30:00] Um, but you know, it, it all comes back to it being an emotional investment and it all comes back to, you know, not having done the numbers at the start.

[00:30:10] Yeah.

[00:30:10] Right.

[00:30:10] And that's the biggest thing.

[00:30:11] But look, if they, if they pay too much for the land, that's not the end of the world.

[00:30:15] Yeah.

[00:30:16] Right.

[00:30:16] You know, sometimes people do come to us, they go, look, we've got a home design, DA, CDC approved.

[00:30:21] We purchased this much for the land.

[00:30:24] Yes.

[00:30:24] We purchased it for a bit too much, but you know, what can we do?

[00:30:28] Yep.

[00:30:29] Right.

[00:30:29] And one of the things that we do is we help value engineer the project.

[00:30:33] Yeah.

[00:30:33] Right.

[00:30:33] So we, so we might say, you know what, the structural, the structural design is overdone.

[00:30:38] Yep.

[00:30:38] Right.

[00:30:39] We, we can find a way to save $50,000 on there while still achieving a resale price that is, it's high enough for you to make a profit.

[00:30:48] Yep.

[00:30:48] Right.

[00:30:48] As an example, or some of these finishes and, and appliances that you've chosen a really high end, you can still achieve the same resale price.

[00:30:57] If we tone this down a bit.

[00:30:59] Yeah.

[00:30:59] And we find ways to save.

[00:31:01] Yeah.

[00:31:01] So there's, you know, it's not the end of the world, but it does hurt when you overpay for a side.

[00:31:05] Yeah.

[00:31:05] Yeah.

[00:31:06] And I guess if you are looking to do this as a long-term, either side hustle or some people do really well and this becomes their main gig, their everyday, I guess, their everyday thing where they become full-time developers.

[00:31:21] But even if it is like a side hustle or a part-time thing to generate wealth, some of the best, some of the best lessons are ones where you have, you know, you realize that you're a bit too emotional on that first one you did, or you realize that you, you got sucked in and you paid too much for the site.

[00:31:39] So, you know, sometimes even just getting out of it, making a little bit of profit, but it's the best lesson for the future to understand the importance of, hey, running your numbers really accurately, you know, in detail before you've even purchased the site.

[00:31:54] Yeah.

[00:31:55] That's the danger.

[00:31:56] You can go to auctions sometimes and get sucked into.

[00:32:01] Oh my goodness.

[00:32:02] Yeah.

[00:32:02] Get sucked into paying, paying too much.

[00:32:05] But you're right.

[00:32:05] Like, that's a really good point.

[00:32:07] Like, there are ways, aren't there, to value engineer and, you know, rescue sometimes.

[00:32:13] Some sides can't be rescued, but there are plenty of ways, aren't there, to rescue a project if some decisions were made that weren't, I guess, in the best interest of a profitable development.

[00:32:27] Yeah, yeah.

[00:32:27] There's definitely many ways to rescue a site, but ideally we don't want to get to that, right?

[00:32:33] No.

[00:32:33] We want to design it in a very cost-effective but smart way from the start of the project.

[00:32:41] That is the best way that you can achieve the highest return on a project, right?

[00:32:46] It's to find the right site, design it the right way, that suits the context of the suburb, that caters to the widest market possible, and then deliver it with a reputable builder that will deliver it correctly for you.

[00:32:58] Yeah, yeah.

[00:33:00] Yeah.

[00:33:00] And I guess sometimes I find it, I really take my hat off to builders like yourself who are doing, you know, these type of developments are great because quite often people think, do a duplex.

[00:33:16] Yeah.

[00:33:17] In this market, what's happened sometimes is they go to like a volume type builder and we've all had clients who've sort of been stung in the volume market side of things where there's a lot of hidden costs and there's a lot of games and tricks.

[00:33:33] And so I love the custom builder who will work with a client through that process because we know it's a long-term relationship.

[00:33:41] Yeah.

[00:33:41] It's not just doing one project.

[00:33:44] It's, hey, we want to go on this journey with you for a long time to come.

[00:33:48] Yeah.

[00:33:48] So have you found sometimes that's where it can be tricky with some people where they have been a little bit burnt in the past by maybe, you know, I'm not picking on volume builders because it's not all volume builders.

[00:34:00] There's amazing volume builders out there.

[00:34:02] Yeah.

[00:34:02] But I've had hundreds of people I've spoken with over the years who have, they've been stung by the cheaper volume type builder where everything's just an upsell.

[00:34:16] Everything's a variation.

[00:34:17] Everything's an opportunity.

[00:34:18] So all of a sudden that's where they get a big gun shy.

[00:34:22] Have you found some of that?

[00:34:23] Yeah.

[00:34:24] Yeah.

[00:34:25] We definitely have seen that a lot.

[00:34:27] But you know what?

[00:34:28] There's, like you said, there's great volume builders.

[00:34:30] And just as similarly, there's also, you know, custom home builders that are quite unethical, you know, where they have predatory practices in terms of excluding hundreds of thousands of dollars worth of items in their contract.

[00:34:47] Yeah.

[00:34:47] Hidden clauses, hidden conditions that stings the investor or the mum and dad developer later on.

[00:34:54] Yeah.

[00:34:54] So, you know, it's not just volume home builders.

[00:34:57] Because, I mean, yes, I tend to see a pattern where it does tend to be a lot more from volume home builders.

[00:35:04] But, you know, we find that those are the best clients.

[00:35:08] Those are the best leads that come to us.

[00:35:10] Yeah.

[00:35:10] You know, people that have been stung before where they've learnt, you know, they've learnt the hard way, which is unfortunate.

[00:35:16] Right.

[00:35:16] They've learnt the hard way that, okay, going with the cheapest upfront price ends up being the most expensive.

[00:35:23] Yeah.

[00:35:23] Right.

[00:35:24] And we find they are our best clients because when they come to us and our upfront quote is $100,000, $200,000 more than the cheapest builder or more than the volume home builder.

[00:35:38] Yeah.

[00:35:39] They are smart enough to compare the inclusions and exclusions.

[00:35:43] Yeah.

[00:35:43] And find that we're actually cheaper.

[00:35:45] Yes.

[00:35:45] Right.

[00:35:45] By the end of it.

[00:35:46] So, yeah, yeah.

[00:35:48] I'll give you an example.

[00:35:49] We've just signed a duplex job in Reesby.

[00:35:52] The client showed us a quote that was $150,000 cheaper than us.

[00:35:58] Yes.

[00:35:58] Right.

[00:35:58] But that day they signed the quotation.

[00:36:01] They sent us an email saying they formally rejected the other builder.

[00:36:05] Yep.

[00:36:05] And they've gone ahead with us.

[00:36:06] Yeah.

[00:36:07] And that's because they built two houses before.

[00:36:09] Yep.

[00:36:10] One house and one duplex.

[00:36:12] So they've gone through that whole process.

[00:36:13] They've been through the pain.

[00:36:14] They've been through the pain.

[00:36:15] Yes.

[00:36:16] And they don't want to go through it again.

[00:36:17] Yeah.

[00:36:17] Yeah.

[00:36:18] You're 100% right.

[00:36:19] I've got a lot of clients in a similar boat.

[00:36:22] They've been through the pain of it and they want a company.

[00:36:26] They want a builder they can trust because it's often with a lot of these people, it's

[00:36:31] often not a one-off project.

[00:36:35] Yeah.

[00:36:35] And if you can really turn that experience around and really give people a great experience

[00:36:42] where everything's upfront, everything's honest, everything's, you know, on the table for them

[00:36:48] to see, you're right.

[00:36:48] Like I've seen it over and over and over again where maybe a project or maybe a volume type

[00:36:55] builder has come up with a quote and on paper it looks like, yeah, the numbers stack up

[00:36:59] way better on the feasibility.

[00:37:00] But yeah, you're right.

[00:37:01] Once you add in all the little hidden costs and things that haven't been included and

[00:37:06] the opportunities they've got to sting people with those, you know, those variations, it ends

[00:37:13] up at a similar price.

[00:37:14] But quite often you're getting, for me, you want to be working with someone who understands

[00:37:20] this isn't just for this build.

[00:37:22] We want to work with you for many years to come.

[00:37:24] Yeah.

[00:37:25] And I think that's what I like about your model.

[00:37:28] And I think that's why it works because you understand it's not just a, you want to work

[00:37:35] with this client for life.

[00:37:36] You want to be able to see them, you know, end up with quite an amazing profitable project

[00:37:43] and celebrate that with them and move on to the next one and the next one and the next

[00:37:47] one.

[00:37:47] Yeah, absolutely.

[00:37:49] You know, like our ideal clients are the ones that build with us again and again.

[00:37:52] You know, they had such a great experience on the first one, sold it for a great profit

[00:37:56] that they just want to keep doing it.

[00:37:58] Yeah.

[00:37:59] Right.

[00:37:59] And often the goal is for them to quit their full-time job.

[00:38:04] Yeah.

[00:38:04] And have this, you know, have this become their full-time job.

[00:38:09] Yeah.

[00:38:10] Right.

[00:38:10] So that's the goal.

[00:38:12] And, you know, sometimes it is a bit hard to explain to a client that's never built before.

[00:38:20] Yeah.

[00:38:20] Right.

[00:38:21] Where they get a few quotes from us and a few other builders.

[00:38:24] You know, it's really tempting to go for that, for that cheapest quote.

[00:38:28] Yeah.

[00:38:29] And I understand 100%.

[00:38:30] Yeah.

[00:38:30] Like in their mind, they're saving $100,000 to $200,000 on the cheapest quote.

[00:38:36] Yeah.

[00:38:36] And because-

[00:38:38] It's very rarely that, is it?

[00:38:39] Exactly.

[00:38:40] Exactly.

[00:38:40] It's, and it's so important to, but it's hard though, right?

[00:38:46] It's hard for them to understand what has been included in one quote versus another quote.

[00:38:52] Yeah.

[00:38:52] If they've never been through the process, if they're not in construction or design, right?

[00:38:56] Yeah.

[00:38:56] It is hard.

[00:38:57] Yeah.

[00:38:57] So I feel for them 100%.

[00:38:59] It's, it is hard to navigate.

[00:39:01] So podcasts like this, I think it's great.

[00:39:04] You know, keep educating the customers and, and that's what, you know, that's what we do

[00:39:08] on our Instagram, our TikTok, Facebook, all of our videos.

[00:39:12] We just want to keep educating, keep educating.

[00:39:14] So that by the time the clients come to us, they already know, okay, I've got quotes from

[00:39:19] other builders, but I noticed, you know, they've excluded all these things based on the

[00:39:23] video, on your videos.

[00:39:24] Yeah.

[00:39:24] Yeah.

[00:39:25] That's good.

[00:39:26] And one thing, one thing I've, I've learned in this game, especially when it comes to duplexes,

[00:39:32] especially if they haven't bought the site, but even if they have, a lot of people will

[00:39:35] say how much to build a duplex on that site, but like how long is a piece of string?

[00:39:41] And, and, and I get it was, that's why some of them might initially go to a volume builder

[00:39:46] because they've got a preset design, all that sort of thing, but it's still not the set

[00:39:50] and forget price.

[00:39:51] Like for me, the question's not how much can I build a duplex for on that site is, I think

[00:39:58] the better question to ask.

[00:39:59] And then even for our listeners, I think this is a perfect way to look at a site, look at

[00:40:03] a development site is not how much can I build a duplex for, but the question is saying, what

[00:40:11] return do I need to make on this site?

[00:40:13] And then that determines what your costs are.

[00:40:18] And then you can determine whether it can be done.

[00:40:21] That's right.

[00:40:21] And I think that's, that, that's one of the problems I've seen the last couple of years

[00:40:25] is where people are paying too much for a site or they, they get themselves into such a position

[00:40:30] where they're, they're trying to build a duplex for an unrealistic price,

[00:40:35] or they're trying to be, go over and above and make a return, uh, make, make a return

[00:40:44] that's just not feasible because you're not going to get a builder that, and if you can

[00:40:48] find a builder that can build it for that price, I'd be worried, you know?

[00:40:51] Yeah.

[00:40:51] So, you know, I think that's an important thing because, and that's where I guess having

[00:40:57] a builder involved really early in the piece, you, you, you can then know, okay, if you,

[00:41:01] if you've got a site in Ryder, if you've got a site in Reesby or if you've got a site in

[00:41:05] the Eastern suburbs, like, and if they start throwing a number, oh, you know, I can only,

[00:41:10] I can only spend a million dollars where you're like, yeah, well, you know, it's walk away,

[00:41:14] walk away from the site.

[00:41:16] Yeah.

[00:41:16] Yeah.

[00:41:17] Yeah.

[00:41:17] Absolutely.

[00:41:17] And, um, you hit the nail on the head.

[00:41:21] You got to involve a builder early on.

[00:41:22] You got to involve a duplex specialist designer early on because we know the numbers.

[00:41:27] Yeah.

[00:41:27] We know what would work.

[00:41:29] Yeah.

[00:41:30] Definitely.

[00:41:30] But, you know, I do feel for, for clients, especially if it's their first time, um, you

[00:41:35] know, that there's so much information that they need to take in and they don't know where

[00:41:40] to start.

[00:41:40] Yeah.

[00:41:41] Right.

[00:41:41] And, and, you know, that's, that's where we come in.

[00:41:44] That's where this podcast comes in.

[00:41:46] Yeah.

[00:41:46] Just keep educating them so they can make the right decisions and fingers crossed.

[00:41:51] Right.

[00:41:51] Their first development is, it's very profitable and works well so that they just keep going

[00:41:56] and going and going.

[00:41:57] Yeah.

[00:41:57] Yeah.

[00:41:58] Yeah.

[00:41:58] And look, it's a numbers game, isn't it?

[00:42:00] Really?

[00:42:01] Like, because for me, that's the key.

[00:42:03] Like it's before you even buy the site, the numbers need to work.

[00:42:07] The numbers need to stack up.

[00:42:08] And you're right.

[00:42:09] Like it's, it's such a, it's a, it's a difficult enough space for a builder or a designer or

[00:42:14] a developer to navigate.

[00:42:16] But for someone who's never done this or they're very green in this space, it's, it's tricky.

[00:42:22] It's tricky.

[00:42:23] And, and, and it's hard enough even for a builder to really give you a hard and fast number.

[00:42:28] And that's why I think it's important to make sure you've got margin.

[00:42:33] But margin.

[00:42:33] Yeah.

[00:42:34] And I guess, have you found that being involved really early in that design phase is important

[00:42:40] too?

[00:42:40] Because it means then you can look at it early in the piece and, you know, you can shave

[00:42:46] the design back.

[00:42:47] Like you said before, strip away some of the emotion because at the end of the day, square

[00:42:53] meterage is square meterage.

[00:42:54] If, if, um, 30, 40 square meters extra per side, that can blow the cost right out.

[00:43:02] Definitely.

[00:43:03] Yeah.

[00:43:03] It can definitely blow the cost right out.

[00:43:04] And it's, it's so important to involve a builder early on.

[00:43:09] You know, I sound like a broken record, but you must, you have to do it.

[00:43:12] Right.

[00:43:13] Yeah.

[00:43:13] And I'll give you an example.

[00:43:15] In, in ride, we, we have this client that purchased the site, 855 square meters.

[00:43:20] So it is, it is a large site and, uh, the land is relatively flat.

[00:43:27] So one of the recommendations that we had was build a two story home, you know, five bedrooms,

[00:43:33] three bathrooms on each side.

[00:43:35] It seems to work in that area, especially along that street and especially compared to neighbors

[00:43:40] and, and what people want to buy in that area.

[00:43:44] But initially he was going to, um, create a basement level.

[00:43:49] Yes.

[00:43:50] But a basement level does not make sense if the land doesn't slope down towards the street.

[00:43:55] Right.

[00:43:56] Because if you've got a flat block of land and you're excavating, you meet, you know, you

[00:44:00] from the street, the car dives directly down into the basement and you're excavating all

[00:44:05] that space.

[00:44:06] It's just a huge cost.

[00:44:08] Yeah.

[00:44:08] You don't need it.

[00:44:09] Yeah.

[00:44:09] You need, you don't need to pay for.

[00:44:11] So if you have a flat site, take advantage of it.

[00:44:13] Yes.

[00:44:13] Just build ground floor plus level one.

[00:44:16] Um, but you know, if we didn't explain that to him and he didn't engage us early on.

[00:44:21] Yeah.

[00:44:21] Um, you know, the architect, the average architect might've just designed that three story.

[00:44:25] Yeah.

[00:44:26] They might've just done it.

[00:44:27] Yeah.

[00:44:27] And you know, he's, he's, he's got a budget of about 2.2, $2.3 million.

[00:44:32] Yes.

[00:44:33] Um, it wouldn't be feasible.

[00:44:34] Yeah.

[00:44:34] Yeah.

[00:44:35] Yeah.

[00:44:35] Yeah.

[00:44:36] That's it.

[00:44:36] And like basements are a really good thing and you touched on something there.

[00:44:40] Like what, what do you find?

[00:44:42] What are the big costs involved in basements?

[00:44:44] No.

[00:44:45] Yeah.

[00:44:45] Do you find like what, what, what, what are some of the big costs that can blow a budget

[00:44:48] out when it comes to a basement?

[00:44:50] Yeah.

[00:44:50] So the biggest cost would be if you run into contaminated soil, right.

[00:44:56] Or if you've got groundwater and when you start digging.

[00:44:59] So those are huge.

[00:45:00] And one of the biggest risks with duplexes or any construction job is what's in the ground.

[00:45:07] Right.

[00:45:07] You don't know until you start digging.

[00:45:10] Yes, you can get, you know, boreholes or, or, you know, core logs done from the geotechnical

[00:45:15] survey, but generally they only do one or two boreholes.

[00:45:18] Yeah.

[00:45:19] So you can see the soil profile, for example, um, you know, clay to a certain number of meters

[00:45:24] followed by rock.

[00:45:25] Yep.

[00:45:25] But you don't really know until you start digging.

[00:45:29] Yep.

[00:45:29] Right.

[00:45:29] Another big one is when you start digging your basement level, what if you run into rock?

[00:45:35] Yeah.

[00:45:35] Right.

[00:45:35] That rock is very expensive and timely to, to excavate and remove as well.

[00:45:41] Yeah.

[00:45:42] Um, um, you know, I was, I was talking about groundwater.

[00:45:46] You got significant groundwater, then you've got to waterproof those basements.

[00:45:50] Yeah.

[00:45:50] Right.

[00:45:50] So that's another, another big cost.

[00:45:52] So look, I don't want to vilify basements.

[00:45:56] No.

[00:45:56] Basements.

[00:45:57] Basements.

[00:45:58] They have their place.

[00:45:58] Yeah.

[00:45:58] They have their place.

[00:45:59] A hundred percent.

[00:46:00] Right.

[00:46:00] If you've got waterfronts or you've got.

[00:46:02] Waterfront.

[00:46:02] Yep.

[00:46:02] Areas where you can get that return.

[00:46:04] Yeah.

[00:46:05] Yeah, definitely.

[00:46:06] And look, ride.

[00:46:08] I feel like ride is probably the starting suburb or West ride or even Stratfield where it does

[00:46:16] make sense to be at a basement level.

[00:46:17] Yeah.

[00:46:18] If your site conditions allow for it.

[00:46:20] Yep.

[00:46:20] Right.

[00:46:20] So that's things like your land slopes down towards the street.

[00:46:24] So there's significant slope.

[00:46:26] So you want to reduce, reduce the amount of excavation that you do plus reduce the amount

[00:46:30] of drop edge beams that you do.

[00:46:32] So doing a basement there kind of makes sense.

[00:46:35] It does make sense.

[00:46:36] Yep.

[00:46:36] But I feel like anywhere further out West where it is, you know, more affordable, um, as you

[00:46:43] go further out West, you probably don't want to spend as much money on having that third

[00:46:48] level.

[00:46:48] Yeah.

[00:46:49] Yeah.

[00:46:49] So, so that's my big tip for basement levels.

[00:46:52] That's good.

[00:46:53] I like it.

[00:46:53] And look, I think another key thing, and you probably hear a lot of this too, because

[00:46:59] we talked a lot about building in different areas, different suburbs, but even within suburbs,

[00:47:04] different streets can require different spec of build.

[00:47:07] We hear a lot of this, um, different spec of build, like from, you know, mid spec, high

[00:47:14] end or luxury.

[00:47:16] Like, can you just talk us through that?

[00:47:18] Just, just for the everyday investor developer, someone wanting to do projects or doing projects

[00:47:23] from a builder perspective, what, what sort of things are we talking about?

[00:47:27] Like the, what makes a project mid spec?

[00:47:30] What makes it say, you know, high end or luxury?

[00:47:34] Yeah.

[00:47:35] What, what are some of the key things?

[00:47:37] Yeah, sure.

[00:47:38] So mid spec in, in, in my, in my opinion, uh, would be things that are sort of towards

[00:47:44] the builder range stuff.

[00:47:46] So you've got builder range tiles, builder range appliances.

[00:47:49] Um, uh, you know, you, you can still opt for, you know, the well-known brand of appliances,

[00:47:54] but you want to stay towards the lower end within that brand.

[00:47:58] So for example, you can get a Bosch oven that ranges from $700 all the way to in the thousands

[00:48:06] or in the few thousand dollars.

[00:48:07] Right.

[00:48:08] So even though Bosch is widely known, you've got the lower end, which is the builder's

[00:48:12] range and the high end.

[00:48:14] Yeah.

[00:48:14] So mid spec will be more sort of, um, builder range items.

[00:48:18] Yep.

[00:48:19] Um, you might have one or two features here and there.

[00:48:22] Um, you know, you might have, uh, a little bit of stone cladding here, not too much.

[00:48:27] You might have, um, some patterns, so aluminum or timber look patterns, um, also known as mod

[00:48:34] wood or deco patterns.

[00:48:36] Yep.

[00:48:36] Um, yeah.

[00:48:39] And you can have the odd skylight here and there.

[00:48:41] Um, so that, that's what I'm, what I think of when I think mid spec.

[00:48:45] Yeah.

[00:48:46] Now, when you go to the high end stuff, that's when you can start to get really fancy with

[00:48:50] things, right?

[00:48:50] So you can have curve stone, um, curve stone waterfalls, as an example.

[00:48:55] Um, you can have the high end appliances like Melee.

[00:48:59] Um, look, I have my reservations about Gaggenau.

[00:49:02] Um, really expensive.

[00:49:04] Yeah.

[00:49:04] Um, in my eyes, I can't justify it, but you know, if you're building a really high end

[00:49:08] home, sometimes it doesn't make sense to have that sort of appliance.

[00:49:12] Yeah.

[00:49:12] Yeah.

[00:49:12] Um, high end homes generally have, you know, higher ceilings.

[00:49:17] So ground floor, you want something higher than 2.7, ideally probably about the three

[00:49:22] meter range.

[00:49:23] And when you go to level one, you want something that's 2.7.

[00:49:28] Yep.

[00:49:29] Or higher.

[00:49:30] Generally 2.7 is probably sufficient for level one.

[00:49:32] Yep.

[00:49:33] Um, I generally wouldn't go 2.4 meter ceilings on level one because it starts to feel small.

[00:49:39] Yeah.

[00:49:39] So one of the, one of the flaws with duplexes are that by nature, they're generally quite

[00:49:47] narrow because you're getting a normal size block of land, splitting it in half.

[00:49:53] So typically by nature, they're quite narrow.

[00:49:55] So having that higher ceiling, especially on level one, where, you know, most of the

[00:50:01] time is 2.4, but if you could somehow stretch it to 2.6, 2.7 for high end homes, it would

[00:50:08] really open up the space and make it feel very grand.

[00:50:11] Yep.

[00:50:12] Yeah.

[00:50:12] No, that's good.

[00:50:13] That's really good.

[00:50:15] And it's like anything, isn't it?

[00:50:16] You can sometimes then mix, mix the materials, but I think it's important for the investor

[00:50:21] to, to know what market they're in and what the market requires, I guess, isn't it?

[00:50:27] Yeah, definitely.

[00:50:28] That, that, that is the main thing.

[00:50:30] Yeah.

[00:50:30] Yeah.

[00:50:31] Yeah.

[00:50:31] Yeah.

[00:50:32] Look, and I guess in terms of, um, contracts, like what are you finding now is what, what type

[00:50:38] of contracts are most investors sort of wanting when it comes to the actual build contract?

[00:50:43] Yeah.

[00:50:44] Like you've got your different types of contracts.

[00:50:46] What, what type of contracts are you finding that most of your clients are going with?

[00:50:50] Yeah.

[00:50:50] Yeah.

[00:50:50] So, so the two, for the listeners, there's two main types of contracts that we see a lot,

[00:50:55] uh, the fixed price building contract.

[00:50:57] So that's just the price that they have from the start.

[00:51:00] Um, and it stays at that value except for obviously variations, provisional allowances

[00:51:06] that adds on top.

[00:51:08] Yep.

[00:51:08] Um, that, that is the most common one.

[00:51:11] And the reason why that's the most common one is because it gives the client the most safety.

[00:51:17] Yes.

[00:51:17] Right.

[00:51:17] They know that the cost will be pretty much this amount except for variations.

[00:51:23] And that, that's the contract that lenders also want to see.

[00:51:28] Yeah.

[00:51:28] Right.

[00:51:28] So a lot of lenders won't, won't approve a construction loan unless the builder can provide

[00:51:35] them with a fixed price contract.

[00:51:37] Yeah.

[00:51:37] Right.

[00:51:37] Fixed price lump sum.

[00:51:39] The other side is cost plus.

[00:51:41] Yeah.

[00:51:41] And I can see a lot of builders, you know, opting for the cost plus contract just because

[00:51:46] of, you know, that 40% material price rise since COVID.

[00:51:50] Yeah.

[00:51:51] Um, and you know, and they want to reduce their exposure there, but, um, I, I just find that

[00:51:59] it's too risky for the clients.

[00:52:00] Yeah.

[00:52:00] Right.

[00:52:01] So for the listeners out there, you want, ideally you want to stick with the fixed price

[00:52:07] building contract unless you really trust the builder.

[00:52:10] Yeah, I was about to say that trust is a big thing, isn't it?

[00:52:13] After a long while working together, you build that camaraderie, you build that relationship

[00:52:18] that where that, that could come into play.

[00:52:20] Yeah.

[00:52:21] Could come into play.

[00:52:22] Yeah, absolutely.

[00:52:23] And, and look, cost plus contracts do work.

[00:52:25] So if you, if you build that relationship with the builder over the years, they built

[00:52:29] a few for you before you trust their numbers and, and they show you, um, their books when

[00:52:34] they're building, uh, their project and they're happy to do that, then cost plus

[00:52:38] could work because if you de-risk, if you reduce the risk on the builder, then they

[00:52:44] would likely give you a better price.

[00:52:47] Yeah.

[00:52:48] Right.

[00:52:48] So they will reduce their margin if you de-risk their risk profile.

[00:52:53] Yeah.

[00:52:53] Right.

[00:52:54] So definitely has a place there.

[00:52:56] Yeah.

[00:52:56] Um, but for the everyday Australian, everyday investor, generally it's a fixed price.

[00:53:01] Yeah.

[00:53:02] Yeah.

[00:53:03] And look, it's one of, it's always been in my mentality to make sure that, um, my thoughts

[00:53:10] are you want the builder that you've engaged to do well.

[00:53:13] You want them to make profit.

[00:53:14] You want them to do well financially.

[00:53:16] Uh, because I've seen this where you get some investors that might've done six, seven

[00:53:22] or eight projects and they've used a different builder for every project.

[00:53:26] And for me, you've got to ask yourself, why is that the case?

[00:53:29] It could, and quite often it's because they've screwed down every builder they've worked with

[00:53:33] that, that they'd no longer want to work with that client because it was such a poor experience

[00:53:37] or the client's continues to pick the wrong builder who burns them.

[00:53:42] That's right.

[00:53:42] So for me, I just think find a site, find a builder who you can trust, you can build that

[00:53:50] dream team with, they understand your model and your strategy to generate wealth.

[00:53:55] Um, you, you know each other so well that they'll be, the builder will be able to be able to tell

[00:54:00] you if that's not a good site.

[00:54:02] It's a site that's not going to be profitable and you build that trust, don't you?

[00:54:06] Like, yeah, you build it from the start.

[00:54:08] Yeah.

[00:54:08] Yeah.

[00:54:09] And it's, I think it's in investor or developer's best interest to make sure that your builder is

[00:54:15] paid well for what they do so that they, they can continue to grow their company to provide

[00:54:21] better services anyway.

[00:54:23] Yeah.

[00:54:23] Yeah, definitely.

[00:54:24] And, and what, what, what I've seen recently and we've all seen that we've seen it on the

[00:54:30] news as well, the insolvency rates for construction companies are at record highs.

[00:54:36] Yes.

[00:54:37] Right.

[00:54:37] It's, and, and it doesn't seem to be slowing down every month.

[00:54:40] It seems to be going up and up and up and, and you got to ask yourself, all right, if I'm

[00:54:46] choosing the, the, the cheapest builder or the builder that doesn't have a reputation on

[00:54:52] delivering good products and good quality homes, how long would it be before they fold their

[00:54:59] company?

[00:54:59] Yeah.

[00:55:00] And you're left with a half finished home, which no other builder wants to take because

[00:55:04] they don't want to accept the risk of, you know, having a poorly built foundations as an example,

[00:55:10] or a poorly formed and poured slab or a poorly built, you know, framed home.

[00:55:16] Right.

[00:55:16] And once the builder folds and you're left with a half completed home, no builder wants to touch it.

[00:55:21] Yeah.

[00:55:22] Right.

[00:55:22] And, and I just, there's a story.

[00:55:26] I have a friend who, who's, um, this, this was before, um, I became a builder.

[00:55:32] He opted for a cheap builder.

[00:55:34] Yes.

[00:55:36] They finished, you know, pouring the slab, building the frames and the builder folded.

[00:55:41] Yeah.

[00:55:41] And, and he's stuck for years.

[00:55:44] He couldn't find anyone to, to finish the job.

[00:55:47] Every builder that quoted has quoted a few hundred thousand dollars more than it should be.

[00:55:51] Yeah.

[00:55:52] And, and you end up losing your life savings based on one poor decision trying to save,

[00:55:59] you know, that $50,000, $100,000 upfront.

[00:56:02] Yeah.

[00:56:02] Yeah.

[00:56:02] So, but I feel for the, for the first time, uh, investors, because how do you choose a good builder?

[00:56:13] Yeah.

[00:56:13] What do you look out for?

[00:56:14] You know, and there's so many things to look out for.

[00:56:17] Um, you've probably seen this, um, a lot, you know, you, because you've worked with so many builders,

[00:56:22] you know, which builders are good or bad.

[00:56:24] Yeah.

[00:56:24] But how does the average client look for it?

[00:56:28] Yeah.

[00:56:28] You know, you know what I mean?

[00:56:30] So yeah, it's definitely hard.

[00:56:32] Um, there are a few things that I would suggest, you know, if they're looking for a builder,

[00:56:38] um, one, you, you want to make sure actually the first thing you need to look for, check

[00:56:45] if they're licensed, right?

[00:56:46] That's the first thing.

[00:56:47] So go to service, New South Wales, go to builder slash contractor license check and just type

[00:56:53] in the company name.

[00:56:53] Okay.

[00:56:54] Awesome.

[00:56:54] Yep.

[00:56:55] They've been, they've been around for, you know, um, more than just half a year.

[00:57:00] Um, yet the builder's license been in play for at least a few years and okay, good.

[00:57:07] There's no home warranty insurance claims on them from previous clients saying that their

[00:57:12] work is defective.

[00:57:13] Yeah.

[00:57:13] So that's probably the first step.

[00:57:14] The second step is I would say, look at Google reviews or online reviews, um, client testimonies

[00:57:22] as well.

[00:57:23] So if they can give you a few of their previous and most recent clients so that you can call

[00:57:27] and say, Hey, look, I'm thinking about building with XYZ homes or XYZ building company.

[00:57:34] What, what has your experience been with them?

[00:57:36] Yeah.

[00:57:36] Right.

[00:57:37] Right.

[00:57:37] And, and that's probably a really good way to get a glimpse in, in whether the builder

[00:57:41] is operating, uh, in a ethical way or if they looking to, you know, give you a really cheap

[00:57:50] upfront price and interesting you later on.

[00:57:52] Yeah.

[00:57:53] Um, or another issue is if they take forever to build a home.

[00:57:57] Yeah.

[00:57:58] Because time is money.

[00:57:59] Yeah, definitely.

[00:58:00] Especially with the interest rates.

[00:58:01] Now we, we even see some clients that do still do a little bit on private money too sometimes.

[00:58:07] So especially CDC, you can, you can obviously get it approved a lot quicker now.

[00:58:12] So we sometimes see people get the land on private money sometimes, um, or they borrow

[00:58:17] a little bit of private money to get it over the line.

[00:58:20] Uh, so time is a big factor, isn't it?

[00:58:22] Yeah.

[00:58:23] Time is huge.

[00:58:24] Yeah.

[00:58:24] Well, you know, we're at record level interest rates.

[00:58:27] Um, you know, say over the past 10 years, um, we got so used to cheap money, cheap interest,

[00:58:33] and now it's, it's gone really high.

[00:58:35] And, and the only way for it to be feasible is if you build it within a certain amount of

[00:58:40] time, otherwise you're just, you know, bleeding money every week.

[00:58:44] And, and one tip that I would advise is negotiate the liquidated damages with your builder.

[00:58:51] Yeah.

[00:58:51] So for the listeners out there that don't know what liquidated damages are, also known as

[00:58:55] LDs.

[00:58:56] Yep.

[00:58:57] LDs is the penalty or the cost that the builder needs to pay you, the client for every day

[00:59:05] that they go over their construction duration.

[00:59:08] Yep.

[00:59:08] Right.

[00:59:08] So for example, if they say, yep, we'll build, um, we'll build the home in 52 weeks and, and

[00:59:16] you get to 52 weeks, but they haven't finished the job.

[00:59:18] They need to pay you a certain amount of money, whether it's $50, $100, you want it to be a

[00:59:26] number that's large enough so that it covers a big portion of your costs.

[00:59:31] Yeah.

[00:59:31] Plus it hurts the builder enough and it's incentivizes them to finish on time.

[00:59:36] Yeah.

[00:59:37] Yeah.

[00:59:37] Yeah.

[00:59:37] Yeah.

[00:59:38] And I guess it's probably a bit of a flag if a builder won't, won't accept that, won't

[00:59:43] take that on because straight away you're going to say, okay, well, why can't you back yourself

[00:59:47] to build it within that allotted timeframe?

[00:59:50] Yeah, that's right.

[00:59:51] Big red flag.

[00:59:52] If they, you know, if they kick and scream when you, when you, um, uh, propose, um, liquidated

[00:59:58] damages and, and, and, and look, obviously it doesn't make sense to the builder if you

[01:00:04] say, okay, yep.

[01:00:05] Liquidated damages at $300 a day, right?

[01:00:08] It's just, or $400 a day.

[01:00:10] It's just, it doesn't make sense for them.

[01:00:12] It's just too much of a risk.

[01:00:13] Yeah.

[01:00:14] You just want it to be at a reasonable amount.

[01:00:16] Yeah.

[01:00:17] So.

[01:00:17] Enough to help you cover some interests and some of your costs and, but like you said,

[01:00:22] to incentivize the builders to keep it moving.

[01:00:25] Exactly.

[01:00:26] And I, and I guess you, you've probably seen it, uh, and probably even lost out jobs to

[01:00:31] other builders where they have over promised.

[01:00:33] Yeah.

[01:00:33] And under delivered when it comes to time because money's dot the dollars is, is obviously

[01:00:38] one thing, but I think I've seen that too, where some people, they're just builders.

[01:00:42] Well, um, you know, they're really, they don't factor in contingency.

[01:00:48] Like my thoughts are, if, if it's a six months, month build, you're better off telling the

[01:00:52] client, look, allow for 12.

[01:00:55] Yeah.

[01:00:55] Um, don't, don't, don't say six months if your last seven, eight, nine builds have taken

[01:01:01] nine, 10, 11 months.

[01:01:02] Absolutely.

[01:01:03] Um, so I think that can be the challenge too.

[01:01:05] And, and I guess that's where the LDs liquidated damages can be a great thing.

[01:01:09] If, if they're not willing, if they've said six months, but they're not willing to accept

[01:01:13] LDs.

[01:01:13] Well.

[01:01:14] Big red flag, right?

[01:01:15] There's a red flag, isn't there?

[01:01:16] That they're, that they're not, they're probably not confident.

[01:01:19] They're going to hit that mark.

[01:01:20] They just, they wanted to obviously get, get the project over the line and win, win that

[01:01:26] contract by, um.

[01:01:29] Yeah.

[01:01:29] By, yeah.

[01:01:30] Just over promising.

[01:01:31] Right.

[01:01:31] Yeah.

[01:01:32] Yeah.

[01:01:33] No, that's, it's been good.

[01:01:34] Well, I'd love to get you back on.

[01:01:36] There's so many topics and things we can talk about, but just for time's sake, um, it'd be

[01:01:41] good just to, one last thought and even if you can just tell us, uh, tell our audience

[01:01:45] just about how they can best get in touch or find, um, find your pro duplex.

[01:01:50] Obviously we'll be, we'll be putting the, um, your contact details in all the show notes

[01:01:55] so people can get in touch and inquire and, and, um, especially if they're wanting to do

[01:02:00] a duplex in and around Sydney.

[01:02:02] Um, yeah, just feel free to share one last thought and then tell us where we can find

[01:02:07] you.

[01:02:07] Yeah.

[01:02:08] Yeah.

[01:02:08] Of course.

[01:02:09] Um, look, we, you can find us on.

[01:02:11] On Instagram, TikTok, um, find it in the show notes.

[01:02:15] Um, you can search us up on Google as well.

[01:02:18] Um, we have a website, um, with the contact form or, and even my phone number.

[01:02:24] Um, and look, I think one last thought is try to consume as much knowledge and education

[01:02:33] around building a duplex because navigating the planning laws, um, navigating the whole

[01:02:39] development life cycle is really complex.

[01:02:42] So educate yourself as much as possible.

[01:02:45] Uh, podcasts like these are great.

[01:02:47] You know, you get a lot of tips and tricks on when it comes to building a duplex and designing

[01:02:52] it and even acquiring the sites.

[01:02:54] Um, but also, also, um, look us up on Instagram.

[01:02:59] You know, I'm, I'm always posting, um, information about the latest, latest planning reforms about

[01:03:04] tips and tricks on materials to choose, um, how to acquire sites, what to look for in a

[01:03:10] duplex site.

[01:03:10] So yeah, go through all of that.

[01:03:13] Keep educating.

[01:03:14] Um, keep consuming knowledge.

[01:03:15] That's probably the best way to do it.

[01:03:17] Brilliant.

[01:03:18] Well, it's been good to have you on Pat.

[01:03:20] Always love chatting with you.

[01:03:21] Love your knowledge.

[01:03:22] And look, thanks for listening in.

[01:03:24] I hope you got a lot out of this podcast.

[01:03:25] It was so insightful.

[01:03:27] Uh, be sure to reach out to Pat and the team at Pro Duplex.

[01:03:30] And, uh, look, if you really enjoyed this episode, feel free to share it, spread the word,

[01:03:35] share it with other investors, developers, and don't forget to like, and subscribe to this

[01:03:40] channel so you can keep in the loop with what's, what's happening in the industry and stay educated

[01:03:44] as Pat mentioned.