Nathan Battishall Reveals Top Property Strategies for Developers

[00:00:04] Well, welcome to another episode of The Residential Developer Podcast. My name's Nathan, I'm the host, and I'm going to go through a little bit of question time. I get some questions come through and often the questions can be quite similar. So I've put together a series of questions that I want to just spend a little bit of time unpacking over this short episode. So I hope it brings you a lot of value. I'm sure a lot of the questions that I'm going to dig deep into are relevant to many people who are wanting to do in the next episode.

[00:00:34] investments, developments, and projects. So the first question was around this current market, and it was, the question was that I'm finding my duplex feeso numbers not stacking up in most places at the moment. Any tips on what to look for? And look, that's definitely a very common and a very relevant question that I've found in this current climate, that there are a lot of areas where the numbers are not stacking up to do duplex

[00:01:04] in key areas in particular areas. For example, and I don't really play in this space, but I find in the new subdivisions, a lot of the numbers aren't stacking up for the duplexes. And this is where we're seeing a bit of a revert or a bit of a remorthing back into going down the single story path to get the construction cost down lower to target and tackle a larger buying pool.

[00:01:33] But I think another thing, and I spoke about this in the last episode when I, on my own, I spoke around the thought of keeping a house. I find that numbers are stacking up a lot better if you can keep a property. A lot of properties aren't stacking up at the moment where you're doing a knockdown, where you're knocking down a property to build a duplex.

[00:01:56] So looking for sites and looking for possibilities of where you can keep a dwelling and do a couple more or keep a dwelling and do a dual lock with one more dwelling, whether it be one at the front, keeping the house at the front, doing one at the back, or keeping or doing a side by side, depending on the configuration of the block.

[00:02:14] I did that episode on corner blocks, the corner block keepers, the power of actually looking for corner blocks where you can keep a house and do another dwelling. These are the type of deals and developments that I'm finding are quite attractive in this current market.

[00:02:31] Looking for deals that in this current market where you can go after a better buying pool. Again, sometimes it probably sounds like I'm rehashing from things I've said, but I think it's important to know that a big part of the buying pool in this current climate is the downsizer.

[00:02:49] Retirees downsizes people looking to get a new property, less maintenance, both internally in the product, but also smaller yards, less maintenance, downsizing, ideally single story or at least a bedroom, the main bedroom downstairs so that they can live their entire day and week on that ground floor level is very popular.

[00:03:16] So I think it's just a case of being creative and not doing what you did two years ago isn't going to work today. And I think it's just being really creative about looking for different strategies, different scenarios. There's still a huge shortage of housing rentals as well.

[00:03:37] So not everyone has this ability, but if you've got the ability to build a product, for example, you might be able to keep the house, maybe do a three-bedroom single story instead of a four-bedroom double story townhouse or maybe do a villa or do a dual lock as a single story scenario. And if you can hit the right numbers, the agent might tell you you need four bedroom, double garage, two bathroom.

[00:04:07] Now, if you're going to hold it for a good while as a rental, you can do a four-bedder that's 160 square metres or a four-bedder that's 200 square metres plus garage. Sometimes even less. Yes, we've done them in 140 to 145 square metres, 150 in a four-bedder. Now, you might think like the difference between that 150 versus a 200 square metre, there could be 50 square metres.

[00:04:35] Now, that adds up when it comes to the build costs. Now, in terms of rental return, you might not get a whole lot more rent if it's still a four-bedder, but it's 200 square metres versus a four-bedder that's 150 plus double garage, still hitting all of those, ticking all of those boxes. So if you've got the ability to hold, rent out, and then chime in on the capital growth. At the moment, you can buy properties for a fair price.

[00:05:03] There is a lot more power back in the hands of the buyer. And look for some areas where there is good capital growth. Not everyone's got that ability. That's where you might look for a property where you can maybe sell the old house, keep the new house as a rental, claim the depreciation, and also hold it for a while. You're not paying capital gains because you're not selling it.

[00:05:33] And you can also obviously get a rental income, but you can, if you've looked for an area where you've studied it and understand there's good capital growth, you can really chime in that way if you've got the ability and the capacity. So it's just about being creative, looking at strategies, and discovering what works. Another good question is how do you determine the yield on a townhouse development site?

[00:05:58] And how can you determine if it's three, four, five, six or more dwellings confidently? It's a great question. And I think it can be a tricky one. If you're not in the space of design or constant development, determining the yield on a site is very critical and it's very key.

[00:06:17] And it's not as easy as just I see some people, they have funny formulas where they'll go, I've seen this formula where they go 0.9 of the site, so 90% of the site. Then they divide it by, for example, 200 square metres or 250 square metres per dwelling. But look, at a high level, that may get you close-ish, but there's so many factors you haven't considered in that.

[00:06:45] And I just think anyone that's going to run off those type of formulas, you're running into really dangerous territory. Reason being is they haven't factored in that particular council's landscape area requirements. You haven't factored in, is there native trees on the site?

[00:07:03] Is there trees that may pose issues that could have tree protection zones, which could mean that a particular portion of the site, worst-case scenario, may not be able to be developed. They haven't factored in overshadowing. They haven't factored in all the different elements of private open space, driveway manoeuvring areas. They haven't factored in a lot of those elements.

[00:07:28] So I think when it comes to working out the yield, first and foremost, I think it's important to really get an understanding of what is on your site. That's the first thing you've got to assess. Is it a raw site? Is it clean in terms of overlays? Is there bushfire overlays? If there is, is there any APZ zones? Is there any areas that are going to come higher than the BOW 29 rating that's going to impact the usable area of a site?

[00:07:55] I'm amazed at the amount of sites I come across where someone's already purchased it, where they haven't looked at some of those constraints. Is it flood affected? Could that flood affection mean that you can't subdivide? Or is there a portion of the block that has flood affection that hinders what can be developed? Is there easements? Is there elements of the site? As I mentioned before, is there native trees on this site that, yes, there may be a possibility of that tree being removed.

[00:08:25] But sometimes you can even go as far as going to an arborist, getting an arborist advice where they may say, look, that's a native tree. It's in good health. It's in good order. However, I would recommend you try and design around it.

[00:08:40] So what I would always say to a client is if that tree is in good order, good health, in your mind when you're running your feasibility, especially to determine the yield on the site, you want to run numbers in your head saying that tree needs to stay. It's a bonus if it possibly can go. It may mean an extra townhouse sometimes too.

[00:09:03] But in your mind when you're running your feasibility, you've got to be conservative in the sense that, and this is where I see a lot of people come into trouble, where they've run the best case scenario of that tree going, I'll get that extra townhouse. So let's just say that they've determined that you can get four with that tree gone. So they've run all their numbers on four.

[00:09:26] And if they've run a tight feasibility of it working on four, the problem is there's no buffer of going down to three. So for me, and we had a recent project for a client on the south coast, they had a townhouse site. It could get six if a tree could go or five, one less townhouse if the tree had to stay.

[00:09:53] So I just said to them, we worked out the yield and I just said, run your numbers on five. If the numbers don't work on five, walk away. Now, if you want to take it on six, that's at your own risk, but just know there's a good chance that tree can't go. So we made sure it was conservative. Anyway, long story short, that site now, that tree can go with a little bit of creativity and working backward and forward with council.

[00:10:20] So that feasibility now is terrific, like unbelievable because we were conservative and we had that type of approach. But look, it's not a rarity, but I hear the other side of the scale happen a lot more as well, though, where that tree has to stay because the numbers stack up on five. Not just stack up, but stack up conservatively. There's good margin, good return, good profit. There's contingencies and all those things factored in at five.

[00:10:50] Obviously, six just puts it through the roof. But even at five, the numbers are still terrific. They hit the particular ROI that that developer needs and wants. They've put in the right contingency. They've put in contingencies on construction, on the approval side of things. They've put contingencies on interest rates, contingencies on the time taken as well. So there's all these different contingencies for overruns and overrides.

[00:11:17] And what it does then, it takes the pressure off you in that process of doing that development. But in terms of determining and working out the yield, you've got to look at that particular council because every council is different. They've got different front setbacks, side setbacks, rear setbacks. Councils have got different car parking requirements. Like some councils have a 0.2 per townhouse visitor car parking rate.

[00:11:42] Some have a 0.5 per townhouse car parking rate, visitor parking rate. A lot of people don't factor that in. Some councils let you put a visitor car park in front of the building line. A lot of them don't. You know, you've got private open space, certain requirements for private open space. Some private open space is required to be off the boundary. It can't be some within a metre or 1.2 of the boundary. You've got floor space ratios.

[00:12:11] You've got height limits. You've got landscape areas is another massive one. People forget to factor in. Some councils have deep soil zones. So there's all these elements that you have to factor in. And even once you start to get over a certain number, some councils require community, public open space, like communal open space, sorry. Once you get over a certain number, another big factor as well that people forget about is once you get over a certain number,

[00:12:38] a lot of councils require you to have adaptable dwellings as well or livable dwellings where you have certain requirements. Sometimes you might need to have a little bit more of a ground floor footprint on that product. But then you've also got to look at your market. If your market is only desiring or going after single storey, the yield on a single storey villas versus townhouse developments can be very different. You might get three villas versus five townhouses. Then you've got to run your numbers.

[00:13:07] It's all well and good for your numbers to be looking really healthy for five townhouses. But if the market is not buying them or wanting them or desiring them, you're likely then going to have to drop your price or you could be sitting with them for a long time before selling them. So you're factoring in time, interest rates, holding costs, all of those elements as well. So the big thing is determining what type of product you're wanting to do and then really determining what constraints you have on that site.

[00:13:35] What size cut driveway do you need? Maneuvering. Just because the Australian standards is 5.8 metres for manoeuvring a vehicle into a vehicle space, some councils require seven metres. You've got to factor in the widths, the aisle widths. You've got to factor in the manoeuvring. There's a lot of factors that people forget about. Then you've got the landscape strip down the side of the driveway. You've got overshadowing. You've got all those elements. And just because you can fit six townhouses, what if three of the six don't meet solar access requirements?

[00:14:06] So there's a lot involved when it comes to determining the yield. Now, a simple site, I find a simple site that's clean. Often, someone like myself where we're doing this day in, day out, we've got hundreds of past projects we can draw upon.

[00:14:24] Often, I've found that within a particular council area, we've done projects where that particular block configuration, we've done similar projects where we can pull up a past project in the same council, very similar size block. And we can accurately and confidently determine the yield. Yep, we can do three there. We can do four there. We can do five there.

[00:14:49] Generally, I'll say to a lot of people, generally, if it's touch and go between, say, four and five or three and four, where best case scenario could be four, definitely three. Finally, I'll always say to someone, if I'm not confident in a yield, I'll always say, commit to doing a feasibility sketch.

[00:15:12] Now, a feasibility sketch, and a lot of people don't want to spend a little bit of money on a feasibility sketch, and I get it at that early stage. But for spending a little bit of money on your research, and if it is a site that genuinely does stack up, I'll always say to people first, let's just say it's a site you can well and truly get four on, but there's a reasonable chance you can get five. But I'm not fully confident without drawing up a feasibility sketch.

[00:15:41] I always tell people, run a fees on four, then run a fees on five. If it stacks up well at four, we'll run it on four, and anything else is upside, because I know you can get four on it. But if it needs to hit five, if they run it on five, and the numbers are great on five, but not terrific on four, but I'm not fully 100% confident they can get the fifth, I'll always say, look, if you want that assurance and that confidence that you can get five,

[00:16:10] that it needs to get five to stack up, you're best to have some dollars set aside just for a small feasibility sketch. It doesn't need to be a full detailed plan. It's just a mud map. It's simply a site layout with all the compliances factored in. It's factoring in landscape area. Yeah, front, sit back, side, rear. It's factoring in car parking, number of visitor spaces, all the compliance elements.

[00:16:38] It's obviously factoring in, will it get solar access? Where will the private open spaces be to get that solar access? It's making sure that once this is sketched up, that we're confident that we know that we know that we know that we can get a fully compliant, or a very compliant with possibly very minimal variations on the site. And then we do that sketch, and it gives the developer, gives them confidence to know that they can go and acquire that site,

[00:17:06] knowing that it will stack up. And look, if they miss out on the sale, that's just the cost of doing business. It's the cost of making wise decisions. But imagine buying a site that can't be developed. You could lose 10s, 20s, 30s. You can lose six-figure sums in revenue by not running your numbers and just guessing and not having that accuracy.

[00:17:28] And I always say, like, mental health, peace of mind, comfort is something that I'm big on developing and strengthening and growing in this industry, because I've seen too many investors and developers stress out of their minds because they're just reckless with their numbers. They're reckless with their yields. They're reckless with all that side of it. So that's the big key. Once you've done a few developments, you'll even have your own projects to draw on.

[00:17:53] But I think the key is to just engage with the right people who know their stuff, whether it be town planner, building designer, architect, those type of people who can accurately map it out. But I always say, have a little bit of money set aside when you do developments. Have a little bit of money set aside for your due diligence, whether it be an arborist.

[00:18:17] Paying an arborist a little bit of money, whether it be paying a town planner, an architect or a designer, building designer, a little bit of money to do that feasibility sketch. And if you've got that money set aside, but factor that into your feeso too. And I've said this a few times. I'm amazed the amount of people that don't factor in their due diligence into their feeso. And if you factor in some money, whether it be five grand for a smaller project, if you don't use any of it, well, it's all cream.

[00:18:47] But even if you don't use any for that project, it might have actually been, you might have spent a couple of grand on some due diligence on a previous project that you didn't go ahead with. Well, you've factored that into this project because you've put some buffer in there. You've put some, you've factored that in. And it's just, it's one part of a feeso I just find that gets neglected. So look, in terms of calculating a yield, it's not as easy as just one, two, three, four. Every council's different.

[00:19:17] If it's CDC, it can be a little bit more predictable, whether it be doing terraces or doing a duplex CDC or dual locks, detached dual locks. But I think the key thing with determining your yield is first and foremost, be conservative, look at what's on the site, and then you've got to really study the compliances and work from there.

[00:19:39] If you want to get good at it, well, get good at actually reading councils, DCPs, getting a clear understanding, and even downloading, looking in the area. Like, you'll be amazed if you look at an area where, for example, a key area where there's five townhouses, you look, you want to get six, and you might look around the area and see there's five or six blocks with DAs on them. All of those blocks might have five townhouses, but you're trying to get six.

[00:20:07] So you can download those. You can download those DAs from the DA tracker even and look at them, study them. Why have they only got five? There will be common things that you'll see in all of them, which will help you then navigate and make decisions. And if you've got things like native trees and things that could hinder the site, well, you need to factor those things in and address it from there. Next question, another really good one.

[00:20:33] What areas of poor design impact build costs? Build costs? And look, this is quite a big one because at the end of the day, I think build costs are often dictated by often the design that they're given. And for me, I'm really big on buildability. I think when you're doing development-based projects. And that doesn't just go for mid-spec projects.

[00:21:01] That's also high-spec projects because I think often I'll see things done on particular sites that didn't need to be done that way because it has no impact on the feel, the look, the feel, the function or the form. It's got no impact on the facade. It's got no impact on the look of the design. But sometimes it's come as a result of carelessness or just lack of knowledge, lack of construction knowledge.

[00:21:31] But a couple of big ones I see when I look at people's plans or where I look at developments is just little things. And they're things that I got taught from a young age in the industry, just having great old school builders and people who had the care to pull me aside and actually educate me on not so much what to do, but this is why. This is why you need to factor these elements in.

[00:21:57] And like I'm amazed the amount of designers that don't factor in if they're doing brick veneer, like factor in the nearest brick courses. There's nothing worse than having to cut bricks, cut bricks on site because you haven't factored in the brick courses for the external walls on a building. And you start to do that. You start to add up unnecessary costs. And it may not be a huge cost, but it all adds up. All these costs add up.

[00:22:21] Where possible, try and work to your plasterboard sizes if you can to avoid unnecessary wastages if you can. All these sort of things just help the speed. They help obviously ease. They help with the wastage elements. So I think factoring those things in.

[00:22:41] Another big one I see is avoiding unnecessary steelwork, especially if it is a competitive type product where the margins can be tight and you want to just bring that cost down a bit, work closely on the buildability. That's where having a good relationship with a builder. Your builder slash engineer is very vital in looking at ways of how can we avoid unnecessary steelwork? How can we avoid unnecessary beams? How can we avoid unnecessary cantilevers?

[00:23:11] How can we avoid larger spans? How can we avoid large steel lintels over the top of big sliding doors? Are there things we can do that won't have an adverse impact on the overall look, feel, design of that product to get the best return possible? But how can we cut costs? How can we do things in a smarter way?

[00:23:34] And I just think it's a vital part of the design space to actually get very good at buildability. Like I think gone are the days where you have a designer that's just great at design.

[00:23:47] But I think in this space, in investment development space, but I think even in general, I think it's vital for any design professional to look to upskill themselves in becoming better and more skilled and more knowledgeable around buildability. Because you start to understand what can and can't be built.

[00:24:09] You can start to get a really clear understanding on how to avoid cost overruns, how to actually make this product more buildable so it can be built quicker with ease, less wastage, you know? And so that you can minimize unnecessary elements like huge amounts of steel. So I think that's a really key one.

[00:24:31] And I think even just things like designing the roofs, you know, I'm amazed when I see designs where there's just tiny little valleys where it just could have been a slight, just little bit of extra thought gone in to keep that roof a little bit simpler. Especially in elements where you don't see it. Like I get why certain products, you've got to have a facade to really pop. But sometimes you'll see valleys at the back of a house or at the side of a house or a part of the house. No one sees it.

[00:25:00] It has no impact. It adds no value. And it adds unnecessary costs, extra time. You know, the cost can come, you know, when you're talking the framing, the trusses, the roofing, you've got extra valleys, you've got all those little elements. You've got to cut the roofing into place. There's all these little elements that can just over time can add up.

[00:25:27] And if you've got a few products, whether it be townhouses or a duplex, any type of development, those things with good, like, pre-thought about what you're doing and just thinking about those things early in the piece can have a really – that can be very beneficial in terms of really making the product more buildable.

[00:25:50] And another one I see at times as well is I've seen where people put expensive materials, for example, wall products or materials or features down the side of a property, especially a duplex. If you've got a duplex, you're generally 920, 950, sometimes a little meter off the side boundaries.

[00:26:13] No one's ever going to see those side boundaries these days because the property next door is 920, 950 a meter off their boundary as well. So literally the only time you see that property is when you're walking down the side or picking up the garbage bins.

[00:26:29] And at times I look and I see some of the features where people have put expensive wall materials or products or even worse features down the side of that property that have absolutely no impact on the design. No one ever sees it and it just adds unnecessary costs. And I think some of it just comes as a result of when you're designing it, you might be looking at it on your software.

[00:26:57] You're trying to get it to all marry in and work, but you're not thinking about the end product. And all of these things can add up to actually really create a product that is effective. Sometimes different flooring systems can suit particular blocks a little bit better. If it's a sloping site, sometimes it's actually better to avoid too much cutting and filling and retaining walls. Sometimes it's actually better to go more of a timber framing system.

[00:27:27] I've done a development myself where it made more sense to bring it out of the ground a little bit more, avoid too much cutting and filling and retaining walls and backfilling and doing all those elements that can blow the costs out.

[00:27:43] For no return, especially in areas where you get no return, but just thinking long and hard about how to best create this product so that it is super cost effective and so that it's buildable too. And just creating simplicity in that build process. Sometimes it's minimizing time. Sometimes it's minimizing wastage. And sometimes it's minimizing all of the above.

[00:28:10] So I think there's just some really key things to factor in. There's a whole lot more in that space. But it's just important to think through those things. Work with companies. Interview companies. Designers, building designers, architects. Interview them. You know, in that early space when you're looking for someone to work with around how they look at buildability. How they think about buildability. How they educate themselves around buildability. Because I think it's very, very popular and very common.

[00:28:39] It's very beneficial if you want to get a good ROI, especially in those areas that have no impact. What can I add to my tender package to avoid unnecessary variations? Now, that could be... When we say tender package, it could be a tender package. A lot of people don't tend to tender out these days. It's not... That can often be a government word. But I think this question is very much geared around how do I...

[00:29:09] What can I do to ensure that my costings or my quotes or... From my builder or builders is coming back accurate. And I think that's what scared a lot of people in this market. It has been, I guess, the lack of just the concern around variations, around getting accurate costing and pricing.

[00:29:35] And I think, look, to a lot of builders' credit, I think sometimes the documentation that goes to a builder leaves a lot of area for assumption and leaves a lot of area for guessing. And the danger with that, when you're leaving a lot of area for assumption and guessing, is it's a nervous space for a builder or a contractor to be in, where they've got to make assumptions on things like tyre heights. They've got to make assumptions on the level of finishes, the product.

[00:30:03] They've got to make assumptions on, you know, some of the features, the cabinetry. If there's a lack of detail and there's a lack of understanding about what they're actually wanting on that side or if there's no geotech or there's no structural or there's no detail around certain features within, whether it be external features or internal. If there's no, if there's no, if there's no, if there's no, if there's no, there's a lack of understanding about the exact wall materials, the products.

[00:30:32] It's all well and good just to say cladding, cladding to specific, cladding to as per future detail. But that, what does that mean? What does that mean when a builder's quoting it? Is it, you know, is it a Hardee's product? Is it WeatherTech? Is it a lot, another lightweight cladding system? It's all well and good to say, you know, external wall, product to be determined and rendered. And this is a common thing you'll see on a DA plan.

[00:31:00] But if you want accurate quotes from a builder, you've got to get down, write down and specify the details. And I know I've been in this space on both ends of the scale, obviously in my design career, realising the importance of it, but also doing my own developments and projects and understanding the importance of actually alleviating guessing,

[00:31:23] alleviating complexity, alleviating any room for interpretation from the builder. So if you want accurate quotes, if you're getting a couple of builders to tender or to quote or to price up your project, or if you're doing a project and you're determining what builder you want to work with, well, the key thing to do to avoid a lot of these variations, and look, some variations will happen as a result of what's under the ground that you do not know about.

[00:31:50] And that's where having good contingencies and having some additional costs set aside for some of the unknowns is vital and key. But I think there are a lot of things that are within your control. And if you have the right details and documentation, you can actually save yourself a lot of money. I always say spending a few grand on some additional documentation can sometimes save you 20, 30 and even 40K in variations and different hidden costs.

[00:32:19] And every builder's got a different take and weight. They deal with variations. Like I know recently we had a builder on, Michael from Sky, who's got a very different approach. And I thought it was a great approach where he doesn't smash people with huge markups on changes and variations and different things. But there are a lot of builders out there. That's where they make their cream. That's how they operate in that space is where the variations are.

[00:32:47] That's where they make a lot of their return, a lot of their margin, and that's their way. There's not so much a right or wrong way. There's just different ways. And you've got to know who you're dealing with and how you're dealing with them. So for me, a couple of key things, just because you've got a set of CDC or CC plans doesn't mean much.

[00:33:05] Like I said, you're not required for CC or CDC to show details like wet area plans, details around the size of the niche, where the niche is, tile types, tile heights. You're not required to supply electrical plans, how many downlights, how many power points.

[00:33:23] You know, you're not required to supply all the details around the finishes, the material types, the fixtures and fittings, the flooring types. You know, are you going engineered flooring? Are you going tiles? Are you going your hybrid product? Are you going polished concrete? Like all these things can change the cost dramatically on a project. And if you don't have a document, documents and a detailed, that's where there can be a lot of assumption.

[00:33:52] And it's fair for a builder to make us, if they're making an assumption, they're going to generally go on the higher side and they're going to generally have to make assumptions in their mind. But if you're getting three different builders to quote a project, you're getting three different interpretations of that same set of plans. And because there's a lack of detail and a lack of documentation, they're all going to make assumptions based on a different way of looking at things.

[00:34:16] And all three builders in their own mind could have been right, but they've all interpreted the same plan differently and taken assumptions based on maybe past work they've done, past projects. One could have gone ridiculously unders. One could have spotted, and sometimes builders will do this, where they'll spot opportunities for variations where there's a lack of detail, lack of documentation.

[00:34:40] And I've had this happen for clients where a builder might say, I didn't factor in a benchtop in the butler's pantry because there's nothing documented there. Because if there's a lack of detail and it hasn't been pulled out, all of a sudden you're paying for that. I didn't factor in joinery in this particular cupboard. I only factored in this type of joinery in the walk-in robe.

[00:35:03] I didn't factor in 40mm stone benchtop on the main island bench. I only factored in a 20. Or I didn't factor in these niches, or I didn't factor in this type of material or product. I didn't factor in this type of feature. I didn't factor in Hardee's cladding. I only factored in this cladding.

[00:35:29] And before you know it, all those things can add up to 10s, 20s, 30s, even hundreds and thousands of dollars in variations. So I always say two important things you can look at is detailed documentation, or some people call it tender documentation. Now, generally that will be done by your building designer or your architect. You'll pay a bit of money for that. But we're not talking a huge amount of money, but you'll pay money for that. But that money, it does a couple of things.

[00:35:59] Getting the detailed documentation. And the other key one that can be very helpful, not in every project. If you're doing nicer spec product, interior design is very vital as well. Because what it does, it enables you to determine your fixtures, your fittings, your floor coverings. You can get your electrical really down pat. You can get your tiles, your tile heights, all your wet area plans.

[00:36:23] You can get your joinery plans for your kitchen, your pantry, nail down your bench tops. You can nail down all the fixtures and fittings, all of those elements of the project. And even the tile types, you can specify. You can go right into depth so that you've spent a bit of money on those two elements. But sometimes that spend can save you 10s and 20s and even over 100 into the six-figure saving mark by lack of assumptions then for the builder.

[00:36:53] But not only that, you're getting a more accurate price back from your builder or builders because they're all quoting apples for apples. They're all quoting the exact same product, the exact same thing. And what this does, it avoids unnecessary variations, which saves you money in the long run. It ensures that you get the product that you wanted. Okay?

[00:37:15] So you keep the builder accountable then to the products that you selected, to the products that you want, so that it gets done to spec, especially if it is a product where you need to hit a certain mark at a certain requirement, a certain look and style to hit that mark. But also what it does, it protects you that if things aren't done as per the plan, you can hold that contractor accountable.

[00:37:42] But it also minimizes mistakes on site because if you've got the height of the niches, if you've got the tile heights, if you've got the tap heights, if you've got the location of PowerPoint switches, if you've got all of that down pat, you've got the particular type of flooring, color of flooring, everything's down pat. It minimizes mistakes on site and it just enables a more concise and clear process and communication.

[00:38:09] Another question is, any tips on how to keep the cost down when you're doing a property development to hold? And I think this is a good one. I think there's a lot of this going on at the moment. I think a lot of people are looking at ways to hold. And I think long term, I think that's the dream of every investor and developer is to be able to hold property so that it grows and capitalizes over time in value.

[00:38:37] So you've got rental income and you're able to build up wealth through asset over time. I think that's a really key thing because I think a lot of people, they haven't worked out their strategy or sometimes they morph and change. And I get it. We've got to be able to pivot. But I think getting a good clear understanding of what you're looking to do early on is very key because a product that needs to sell and a product that you're holding for rental can be very different.

[00:39:06] A product that you need to sell, you might need to spec some things up. I always talk about you've got to get the floor plan right. The layout's got to be right if you're selling. You've got to get that product right for what the market wants. The finishes have to be the type of finishes that are going to sell it. Not just sell it, but sell it ideally quickly to minimize your holding costs. But I think also the facade's got to pop. It's got to have that element to it. But if you're looking at something for a long-term hold, and I think it's important to look at it, how long do you want to hold it?

[00:39:36] Some developers just want to hold it for a certain amount of time, sometimes five or six years, and then avoid the GST. Hold it for that time. Get a bit of capital growth. And then sell it. Claim some depreciation. Sell it. And then do it again. Some people want to hold it for longer term, 10, 20, 30 years for the life of the loan sometimes. So it's important to understand what your strategy is.

[00:40:03] But generally for a hold property, I always sort of say you've got to get a good, clear idea of, okay, get an idea. And just dealing with a couple of real estate agents, not just one, but a couple, at the end of the day, you're going to want to deal with some good agents with a good record of basically handling and managing rental properties.

[00:40:25] But you want to get a good idea of the type of yield, the type of rental return you're going to get on that property based on different scenarios. What does the market want? It's all well and good to do a double garage, five bedroom, three bathroom, two living area, but the market may not want that. And you've got to weigh up then the cost, the build costs, you know, build costs versus the rental return.

[00:40:51] And just start to really get your figures and get your numbers, you know, nutted out just to get an idea of the type of return that you're going to get and the yield that you're going to get on that type of property. And sometimes like let's just say a lot of areas, the market may want a four bedroom, two garage, two bath, two and a half bathroom, popular.

[00:41:11] And in terms of the size, like size is hugely important when it comes to building because, you know, obviously you don't just factor in a square metre rate. But in simple layman's terms, if you work off a square metre rate, I said this in a previous podcast that you could do a four better in 150 square metres versus a four better in 200 square metres. 50 square metres for each product is massive in terms of the build costs.

[00:41:41] You know, there could be a huge amount of saving if you can get it, but the rental return might be quite minuscule in terms of the extra return because it's, at the end of the day, it's still only a four better, still only two and a half bath and still only two garage, but it's 50 square metres smaller. Let's just say you might get $20 a week extra. Is it worth spending that extra money on that build for that extra $20 a week?

[00:42:10] You might just run your numbers, weigh it up and just hone right in. It's all about numbers. So it's a case of running your numbers, getting a really good picture and a good idea. Just because you've got all this floor space doesn't mean that you use it. Even for a sell, it's not always beneficial. Some areas it is. You want to max out the site. Sometimes it's not about maxing out a site.

[00:42:31] It's just getting the numbers to work, reverse engineering it, getting those numbers to work, and then pushing ahead on the development journey based on those numbers and how they stack up and how they work. So I think that's a big key. Obviously, buildability, like I spoke about earlier, that's key. If it's a long-term rental hold, buildability. Make it buildable. Make it cost-effective. Look for products that are low maintenance. You don't want to be constantly replacing products.

[00:42:59] You don't want to be constantly maintaining this property. Ideally, you want to avoid painting the property. So get products that don't require painting. Get products that will last the test of time, that are durable. Sometimes you'll spend a little bit more on a particular product because you know it'll endure. It'll last the test of time. It'll deal with the wear and tear a lot better. So you've got to factor that in. And just look at your finishes too. Certain finishes, again, look at the wear and tear. But at the same time, look at the product.

[00:43:26] Don't put products in that are overly expensive. Like certain areas, like I've seen it sometimes where people put engineered flooring in an area that has no determination on rental yield, rental return. They spend all this money on flooring. The problem is it gets scratched. It gets damaged. It gets wear and tear over time. Whereas they might have been better off going a more cost-effective floor finish and product. And especially if it's a longer-term hold.

[00:43:55] And look for products that are cost-effective but also ones that maybe are less wear and tear. And just really looking at your finishes. Don't go ridiculously over the top. And don't use products that are, you know, going to be constantly having to be repaired. So it's just super key, super key to look at those things. And in doing that, you can make a smart decision, smart investment decision,

[00:44:23] and a well-informed decision for that long-term hold. Another good question is how do you handle the stress side of developments? And look, I think that's a big one. And I've spoken a little bit about this in the past. It's something that I'm very passionate about in this development space because I think we've never had more access to education than ever.

[00:44:49] We've never had access to more knowledge, mentorship, all that side of thing when it comes to projects, investments, doing developments. But one thing that doesn't get spoken about a lot of is dealing with the stress side of development projects. And look, I always say there are things that you can do prior to doing a development, to de-stress a development.

[00:45:17] And I always say, like, when you're running your feasibility, run a feasibility not just based on the dollar factor but also the time factor and factor all elements in because the reality is if you don't factor those contingencies and you don't factor those things of time, delays, overruns, all those things in, it can deplete you emotionally, mentally, physically, even relationally. It can take its toll.

[00:45:45] That's why it's important to really look at a project and de-risk it from a stress point of view too. At the end of the day, if you're doing a project that is highly profitable, you're mitigating a lot of the risk, you're thinking of additional exit strategies, you're looking at alternate methods and ways to pivot if you need to pivot, you're able to de-stress the project so that you've got a great peace of mind,

[00:46:15] you can enjoy the things in life that are important, whether it be family, whether it be health, your physical health, your mental health, your emotional health. For me, all those things are key and important. And at the end of the day, you've got to be the captain of your ship. If you let the deckhands run the ship, well, the reality is you're going to get disaster. You've got to be the captain of your ship.

[00:46:41] And the way to be the captain of your ship is to determine that I am going to do this the right way from the very get-go. Now, you might have found yourself, maybe you listened to this podcast and you partway through a project and unfortunately you made some decisions that have put yourself under pressure. You know, the big thing is don't be afraid to ask for help. I think a lot of people, they dig their head in the sand and I've been there. I've 100% been there myself where you put your head in the sand, you run yourself ragged

[00:47:11] and you stress yourself out to the max where you've got nothing left in the tank because you've kept yourself up at night worrying, you're thinking about it, you're stressing about it, you're worried you're going to lose your house because you put your house up first mortgage or you've used that as an asset and you've made these decisions that have put yourself under pressure. But I think, you know, I think the way that everyone's got different ways that they handle stress, but I think it's just looking after all of your tanks.

[00:47:38] I liken my own life, I try and look at my own life through a series of gauges. You look when you're driving a car, you've got a number of gauges on your dashboard. You know, you've got your speedo, you've got your temperature gauge, you've got your revs, you know, some have all different gauges. You know, the newer cars these days, you've got like consumption of fuel, you've got the temperature of the car, you've got all these different gauges that determine

[00:48:09] different elements of the economy of the vehicle and to be able to get the best economically out of that vehicle and for the health of that vehicle. And it's the same in our own life, you know. We've all got gauges that I see in our everyday, you know. We've got physical gauges, mental gauges, emotional gauges, social gauges, relational gauges, spiritual gauges, you know.

[00:48:36] We've all got these different gauges and all of those gauges, there are things in our day, in our life, in our profession, in our passion, in property development that will replenish those tanks and deplete those tanks. And the key thing to do is to not let those tanks run empty. And so you've got to understand and get self-aware. And sometimes it takes just really, really just nutting it out and becoming self-aware.

[00:49:04] Yeah, this is for me, is understanding what are the things that physically deplete me and what I do. And when I know what those things are, when I'm self-aware of what depletes me physically, emotionally, mentally, relationally, socially, spiritually, all that sort of thing, when I understand what depletes me, I've then got to understand, okay, what are the things that I can put in, the fuel that I can put into myself to make sure those

[00:49:34] gauges don't run down to empty. So you develop one or two key things that you do within your daily life, within your daily rhythm to ensure that you're mentally sharp, you're mentally switched on, you're physically strong. You know, for me, I've got my morning routines that are very important to me these days where it's a series of different things, you know, from a mental, emotional, physical, spiritual

[00:49:59] point of view that I know give me a big advantage and kickstart when I start my day, that I start my day sharp, focused in the zone and ready to roll. So for me, it's on me though to make sure that I'm looking after those areas and those spaces. So even if you've found yourself in that stress state, you've got to look at some things to help you strengthen and get through those periods of time where you can be a bit drained

[00:50:26] or you can be a bit empty and so that you can, you know, build yourself up and strengthen yourself and replenish yourself. But don't be afraid to ask for help. Get external help. Get some peers. Get some mentors. You know, sometimes people have got to bring in a money partner. Take a little bit less profit. Sometimes you've got to be bailed out. You know, sometimes you've got to learn the hard way. You know, I've had a project where we just broke even and would have made incredible profit if the market had been what it had been.

[00:50:55] But because we'd run conservative numbers, we'd factored in heaps of contingency, even with a whole bunch of things not going to plan, you can sometimes get out of it and you can kick yourself and say, why didn't I make profit on that project? But well, reality is I've got mates and people in the industry have lost three, four, 500,000 on one just small deals through, you know, through economies and markets and things not working out, but not having far contingencies and not having a whole range of different things in place.

[00:51:24] So I think you've just got to continually remind yourself why you do what you do. Remind yourself of who's in your corner, who's around you. You know, for me, my driver is my family. I've got a beautiful wife. I've got kids. They're my, you know, they're my why. They're my priority. They're my why. And I've got to constantly remind myself, why do I do what I do? And, you know, I think that's where a lot of people, they lose focus on their why.

[00:51:52] And all of a sudden, before they know it, money can become the big driver or is never meant to be. It could have been the passion for that industry. It could have been to generate wealth, to have adventures with your family. It could be to set your kids up. It could be to do what you set your kids up in a way that was never set up for you and just create generational wealth as well. It could be, you know, to build some lifestyle, set up a retirement for you and your wife. Everyone's got a different why. And when you keep coming back to your why and you keep coming back to why you do what

[00:52:20] you do, you can just refocus, regather and just reset. And each project, just get better at it. Get smarter at it. Learn from things. Don't be afraid to go to people who are better than you. Get around people who are better than you, more advanced than you. So humble yourself to that place where you can grow and learn and realise you don't know it all. Realise that, you know, there's always something to learn. There's always someone smarter. There's always someone sharper.

[00:52:49] There's always someone that you can glean information off to help you in that space. And you'll find even when you just get around people and talk about your stresses and your struggles and your difficulties, you'll find that people, sometimes when we're going through it, we think that we're the only one going through it only to realise there's often people in our corner who've been through that and worse. And just by listening to them talk about their overcoming story or the way they got through

[00:53:15] it or that they navigated it or they came out the other end, it just gives you that little bit of hope, that little bit of a kick, that little bit of a boost, just that camaraderie, a real life example of seeing someone who got through it and went through it. And all of a sudden you realise, you know, it's not me against the world, that there's a way out of this, there's a way through this. And then all of a sudden the floodgates open and you can learn and glean. And look, there's always a way forward.

[00:53:44] There's always a way forward. Sometimes you've got to pick yourself up out of the dust. But there's always a way forward. And I think that's just when we're going through it, we're not open about it, that it can be difficult. So look, I hope you've enjoyed this episode. There's always so many questions that come through. There's even ones on this list today that I couldn't get through. But look, I hope you got a lot out of this episode.

[00:54:09] As I always say, please share, like, subscribe, any family, friends, people you know in the industry that you think will benefit from this episode, please share it with them. Thanks for listening and I'll see you next week.