Securing Funding for Property Development with Dino Di Dinato of MoneyQuest Australia

[00:00:00] As investors and developers, we see the world differently.

[00:00:04] This podcast uncovers the untold truths of what it really takes to become a multi-million dollar residential developer.

[00:00:14] On Nathan Battishall, let's get to work.

[00:00:18] Welcome to the Residential Developer Podcast. I'm the host. My name is Nathan Battishall

[00:00:23] and I'm really privileged and honored today to have a really good friend but an amazing guest

[00:00:28] who I know is going to give incredible insight and value in today's podcast.

[00:00:34] This is Dino Di Dinato. He's the principal of MoneyQuest in Wollongong, MoneyQuest Ramwick

[00:00:41] and recently MoneyQuest Camden.

[00:00:43] That's correct.

[00:00:44] It's good to have you in Dino.

[00:00:44] Thanks, Nate. It's really good to be here mate. It's a bit of a drive.

[00:00:47] That's it. I tried to get you in last month but you're overseas all day.

[00:00:52] Yeah, I was in America for three weeks which is great with the kids so it was fantastic in LA so it was great.

[00:00:56] You're back to your thriving finance business.

[00:01:00] Yeah, it's quite busy at the moment so yeah, we're back into it.

[00:01:04] The staff did really well as a way which is great. I try not to do too much while I was away but you know it's like,

[00:01:08] Nate, we own business. You have to still do things but overall all the clients are service which is great.

[00:01:14] That's good mate and look, I think just to start off with just obviously our audience

[00:01:19] or investors, developers, builder, developers, mums and dads, you deal with them day in, day out.

[00:01:24] I do.

[00:01:24] You want to just tell us a little bit about your background, you know, your education, your background,

[00:01:29] how you got into broken. You obviously dabbled a bit yourself in development.

[00:01:35] You've got a big client base of developers too so maybe just tell us a little bit about...

[00:01:39] Yeah, so my old background, I was in the corporate world doing sort of corporate accounting

[00:01:43] and finance. I worked on some large projects with Bliss Cap Steel, Johnson & Johnson,

[00:01:47] New Lever. I then about eight years ago created my own business

[00:01:50] and basically got into mortgage-broken. Started off with doing mainly residential mortgage-broken

[00:01:56] and then it dwarfed into commercial. Basically I got an accounting background

[00:01:59] and I got a lot of contacts in the business world so basically, and I love property as you know

[00:02:04] and development myself. So it really just dwarfed into me working on sort of commercial

[00:02:09] and development finance and I built a team to do the residential sort of homelines

[00:02:14] and they'd sort of go hand in hand together.

[00:02:16] So basically I've been, had my business for eight years, started off at a little windang just myself

[00:02:21] and then it's dwarfed now into we've got sort of six other brokers, seven support staff,

[00:02:26] four officers and it's sort of going very well. Hard work as you know so nothing is easy

[00:02:32] so it's sort of a seven day a week job but we love it. Love helping clients,

[00:02:36] especially in the development front. So for me I'm very lucky.

[00:02:39] I can purely focus purely on commercial and development finance because I've got a good support team

[00:02:43] to take care of pretty much all the asset, the equipment, the homelines

[00:02:48] and the way I work is we have more of a relationship with the client.

[00:02:51] So for a developer whether it's doing a duplex or a high-rise you wither from the start

[00:02:56] all the way through. It's not a thing of coming to us and saying

[00:02:59] I want finance now I'm going to start tomorrow. That doesn't work.

[00:03:01] You need to be wither from the start and give me advice from the start all the way through.

[00:03:05] Helping with the feasibility all the way through settlement.

[00:03:07] And that's probably one thing I really love about you and obviously I've had a lot of clients

[00:03:12] who vouch for what you do as well. But I think that accounting background

[00:03:17] must be really helpful when it comes to broken because I just think it's a pretty

[00:03:24] maybe untalked about skill set.

[00:03:26] Yeah it is. It's good to have the background.

[00:03:28] It really helps with the larger complex sort of businesses.

[00:03:30] It also helps with helping the client steer them in a way that can go talk to their account

[00:03:35] with some knowledge already instead of going there with nothing.

[00:03:38] So it does help. I do use a lot of knowledge but I'm sort of not acting as an accountant now

[00:03:43] but I was still giving them some advice that they can take to their accountant

[00:03:46] and that way it makes it sort of a lot better and obviously I don't do it with myself

[00:03:51] so I know what they can and can't do.

[00:03:55] But again, always refer them to their own accountants

[00:03:57] but just giving them extra knowledge.

[00:03:59] Knowledge is key right?

[00:04:00] So if I can help them in any way that I've got other expertise in

[00:04:03] then it does help and it does play a good role.

[00:04:06] And I guess you're probably at the front end of someone's development journey

[00:04:12] even if they are an experienced developer but even a mum and dad

[00:04:16] like essentially you are at the front end where some of them are second guessing

[00:04:20] or they're not sure whether they even can achieve that project

[00:04:25] or whether they can secure that land to do that project

[00:04:27] so you're probably seeing people right at the front end

[00:04:30] where they maybe are a little bit nervous about the process.

[00:04:35] Yeah, a lot of people sort of don't realise what's out there

[00:04:37] so they might have gone to their bank direct and the banks say,

[00:04:39] no you can't do that.

[00:04:40] And they say okay I can't do it.

[00:04:42] There's so many different options, so many different things like there's bank funding

[00:04:45] there's non-bank funding, there's private funding,

[00:04:47] there's a hybrid of it in between

[00:04:48] so it's really understanding all that

[00:04:51] so that you can help a client with whatever they need to do

[00:04:53] whether it's a GIPLEX or a HiRISE

[00:04:56] understanding what their borrowing capacity is

[00:04:58] do we even need borrowing capacity or not

[00:05:00] because there's some obviously depending on what sort of finance you do

[00:05:03] so it's really understanding the client, what they need and what they can do

[00:05:07] and then you find a solution that best fits them.

[00:05:10] And it's not just for the first one, you're looking at ahead

[00:05:13] so you look at okay after the first one you want to do four or five of the next 10 years

[00:05:16] how are we going to set you up for that

[00:05:18] what are we going to do to enable you to do that

[00:05:20] it might be you might still the first two or three completely

[00:05:22] then you start holding, you might want to hold it

[00:05:24] and then you might want to sort of leverage that for the next one

[00:05:27] so again it's a case by case

[00:05:29] but there's so many different types of funding available for developments

[00:05:33] the key thing is really is it's all about equity

[00:05:35] having equity whether it's property or cash

[00:05:38] that's the key thing, borrowing capacity is one thing which you can talk about later

[00:05:41] but really the equity is the key factor in all this

[00:05:44] yeah, yeah, no that's really good

[00:05:46] and in terms of you mentioned feasibility

[00:05:48] and it's funny because last week

[00:05:50] last week's episode we did we talked about

[00:05:53] the fact that some people don't run accurate fees

[00:05:57] or they inflate the numbers

[00:05:59] and then that brings about huge levels of pressure

[00:06:03] they're not in that development side of things

[00:06:05] one thing I love about you, you are

[00:06:09] you try and make sure to bring things back to a more conservative element

[00:06:13] make sure there's fat, that there's contingency

[00:06:16] that the feasibilities are

[00:06:18] they're not over inflated to impress a lender

[00:06:22] do you see a bit of that sometimes?

[00:06:24] I've seen it all the time and there's a couple of different ways

[00:06:26] there's also the overflating or not understanding what the real costs are

[00:06:29] but it's also about not seeing the small things

[00:06:33] for example I see people saying

[00:06:34] I'm going to sell it for $800 grand each

[00:06:37] I'm going to build it for $2 million

[00:06:39] but what they're not factoring in is that $800 grand

[00:06:41] you're going to take GST off that

[00:06:42] and then the build costs have they factored in GST

[00:06:44] and I'd say potentially it could be your 15% margin

[00:06:47] to go down to 5% or 6% or 7%

[00:06:49] if you haven't thought about taking GST out of the sale price

[00:06:52] that's just one thing I see all the time

[00:06:54] the other thing too is people don't do sensitivity analysis

[00:06:57] so they'll say my build costs can be $2 million

[00:06:59] I'm going to sell it for $5 million

[00:07:00] I make $3 million profit

[00:07:02] but I need to actually look at the different elements

[00:07:04] and break them all down and say

[00:07:05] what if it takes me 3 extra months to build

[00:07:08] what if it takes me 6 extra months for the holding costs

[00:07:11] what if the prices go down by 2%

[00:07:14] as well as build costs go up by 8%

[00:07:15] what's the double-wме of that

[00:07:18] so as you know in NAITH we do sensitive analysis

[00:07:20] for our clients so I give them a pack

[00:07:22] at all the different elements

[00:07:24] what potentially could go wrong

[00:07:25] and it could be like every single thing bad goes wrong

[00:07:27] they'll still make a margin

[00:07:28] there might be two things might go bad

[00:07:30] some might go good

[00:07:31] and then so you've got to arrange

[00:07:33] that your margin might be 15%

[00:07:34] but your range could be minus 5 to plus 30

[00:07:36] or your range might be 10 to 20

[00:07:39] which is a lot better

[00:07:40] so you want to make sure you're honing on that range

[00:07:42] so it's not a huge range

[00:07:43] that way you know the physicality is good

[00:07:46] it's got continuously built in all the elements

[00:07:48] so therefore if you've got a 15% margin

[00:07:50] or 20% margin

[00:07:51] you've got a little bit of fat built in every step

[00:07:53] guess what

[00:07:54] it's really more than 15

[00:07:55] but you've got that there

[00:07:57] so very very important

[00:07:58] feasibility is critical

[00:08:01] and then the valuation

[00:08:03] is another critical part of it

[00:08:05] whether your property is worth more or less

[00:08:07] the valuation is going to cause your finance

[00:08:10] to be lower or higher

[00:08:11] yeah that's brilliant

[00:08:15] and I think it plays a big role

[00:08:18] in people's stress levels

[00:08:22] doesn't it?

[00:08:23] if someone has taken too much risk

[00:08:25] the problem is you're dealing with that stress

[00:08:29] everyone down the line

[00:08:30] the builder

[00:08:31] everyone involved in the project

[00:08:33] that is dealing with the client

[00:08:34] that is so stressed out

[00:08:35] they've taken huge levels of risk

[00:08:38] when maybe they should have said no to that site

[00:08:41] and maybe found something a little bit more sustainable

[00:08:44] or risk mitigation too right

[00:08:45] so if you are a builder yourself

[00:08:47] and you know what

[00:08:48] I can go there on the weekends

[00:08:48] and do this or do the tile on myself

[00:08:50] in addition to your normal third party work

[00:08:52] you can bridge some of that cost back

[00:08:54] but if you're a momentary investor

[00:08:55] that wants to build a duplex

[00:08:57] with a third party builder

[00:09:00] and they hit rock or something

[00:09:01] you've got nothing built in

[00:09:03] if the market is really tough

[00:09:04] and you can't sell it

[00:09:06] for the price you wanted

[00:09:07] and then the cost blew out

[00:09:09] and interest rates go up five times in a row

[00:09:12] you really start to sort of hurt a bit

[00:09:16] so it's really important to have that sort of fat built in

[00:09:18] and be really clear on the feasibilities

[00:09:20] use your QS as well

[00:09:21] to just cross-jack it

[00:09:23] which you have to anyway for a lot of tenders

[00:09:25] but you might want to do that early on

[00:09:26] even though it's a cost

[00:09:28] just say you're sort of really aware

[00:09:29] of what everything really potentially can be

[00:09:32] and look

[00:09:34] obviously a lot of people are talking about

[00:09:36] different types of funding

[00:09:37] and you mentioned it before

[00:09:39] and you just run us through

[00:09:40] look some listeners are obviously

[00:09:42] very experienced in terms of

[00:09:45] what funding options are available

[00:09:46] but there's a lot of people out there

[00:09:48] even listening to this

[00:09:50] podcast, Summer Experience

[00:09:51] Investors, Developers, Mums and Dads

[00:09:53] others have got not so experienced

[00:09:56] can you just run us through

[00:09:58] the different types of lending options

[00:10:00] that are available

[00:10:01] maybe even just some pros and cons of each

[00:10:04] just from a small project perspective

[00:10:07] yeah for sure so

[00:10:08] at the start of it you've got a duplex

[00:10:11] so for example if you're going to do a duplex

[00:10:13] and you're not going to sell it

[00:10:14] so you're going to hold it

[00:10:16] you can potentially get a normal

[00:10:17] and you've got the borrowing capacity

[00:10:18] which is tough but if you've got a borrowing capacity

[00:10:20] you can potentially do it as like a normal home loan

[00:10:23] with normal bank rates on a 30 year loan term

[00:10:26] that's assuming you're not selling it

[00:10:28] so that's just the normal investment

[00:10:29] Mum and Dad want to build a duplex

[00:10:32] and so we can

[00:10:33] and if you've got the borrowing capacity

[00:10:34] that's the cheapest way to do it

[00:10:36] if you're planning on selling it

[00:10:38] that becomes a commercial product

[00:10:40] so basically it has to go down the commercial route

[00:10:42] a lot of banks obviously don't

[00:10:45] they sort of it might be tough

[00:10:47] to do it with other banks

[00:10:48] for the Mum and Dads home loans

[00:10:49] so we do have non-bank options

[00:10:51] and we also have private options

[00:10:55] now we do have a new sort of funding

[00:10:57] that's sort of come up in the last few years

[00:10:59] some of the non-banks are actually doing low dock

[00:11:02] funding for example if you're a tradesman

[00:11:05] you haven't done your financials for the last year

[00:11:07] but you've done really well

[00:11:08] they will do a construction loan

[00:11:10] with low dock which is a bit cheaper than private

[00:11:12] over a 30 year loan term

[00:11:14] and you can actually build a duplex

[00:11:16] if you want to do 3 or 4 or 5 or 6 or 10

[00:11:20] then it becomes a bit more difficult

[00:11:23] so from a bank's perspective

[00:11:24] the majors aren't really into the smaller

[00:11:27] sort of developments as much

[00:11:28] plus they'd want more experienced people

[00:11:30] third party builders

[00:11:31] they'll still look at potentially

[00:11:32] borrowing capacity if it's sort of a smaller one

[00:11:35] so they're sort of very hard to get bank funding

[00:11:38] for less than 10

[00:11:40] once you get over that

[00:11:41] and over 2 or 3 million

[00:11:43] the banks come into play as a development loan

[00:11:45] but we'll talk about that for a second

[00:11:47] the trobes of the world

[00:11:49] so the trobes are good non-bank

[00:11:50] that does a development product

[00:11:52] it's like a 2 year product

[00:11:54] where there's no borrowing capacity needed

[00:11:57] they'll look at your margin of the property

[00:11:59] based on their QS that they've put together

[00:12:02] and the valuation that they sort of order

[00:12:04] as long as you've got about a 15% profit

[00:12:07] they'll be able to fund 50% of land

[00:12:09] and then potentially 70%

[00:12:11] of the gross value of the end product

[00:12:14] so they're a good option

[00:12:15] they won't fund the GST

[00:12:18] so basically if you've got a builder

[00:12:19] that quotes you 2 million plus GST

[00:12:21] they'll only fund you the build cost

[00:12:23] not the GST

[00:12:24] it needs to have a bit of a float for that

[00:12:27] but they're a little bit cheaper than a private lender

[00:12:30] and the good thing about those is if you want to say

[00:12:32] sell 1 or 2 in T1

[00:12:34] you potentially could revert it to a 30 loan

[00:12:36] if you've got some borrowing capacity on that end debt

[00:12:39] now the most common at the moment

[00:12:42] is going through the private lender

[00:12:43] what they would do

[00:12:44] they'll look at the deal itself

[00:12:46] obviously there will be an OVR

[00:12:48] associated to it

[00:12:49] but really it's about the equity

[00:12:50] so again it's normally 50 to 55% on the land

[00:12:53] and then they'll go probably 65 to 70%

[00:12:56] of the value of the product at the end of it

[00:12:59] and with that is capitalised interest

[00:13:02] so you don't have to pay anything to the end of the loan

[00:13:04] which is good

[00:13:05] that interest and fees will be in the facility amount

[00:13:08] okay

[00:13:09] so and look that's a huge market

[00:13:12] that everyone's playing in at the moment

[00:13:14] the bank rates now

[00:13:16] that they're obviously the 6s and 7s

[00:13:18] and the sort of private rates are sort of between 9 and 11

[00:13:21] there's not a huge gap like there used to be

[00:13:23] 2 or 3 years ago

[00:13:24] where their rates were so low

[00:13:25] so the private market's gone through the roof

[00:13:27] because the gap between bank and private is so small

[00:13:30] and then the parameters are so much better

[00:13:32] so private funding would be probably I'd say most of your

[00:13:36] people listening would probably need to go

[00:13:38] to other latrobe or private funding

[00:13:40] because to have borrowing capacity for 2 or 3 or 4 million

[00:13:43] in addition to what you have

[00:13:46] is quite difficult

[00:13:47] and so realistically most of them will probably go down that route

[00:13:51] and I'd suggest they look at having a really good commercial broker

[00:13:54] there's good contacts with the private lenders

[00:13:57] because you don't want a normal residential broker

[00:13:59] who'll just flick it to a mortgage manager

[00:14:00] and then you get double fees

[00:14:01] you need someone that knows what they're doing

[00:14:04] stays with the whole time

[00:14:05] and puts you with the right private lender

[00:14:07] for your scenario

[00:14:10] that's all I can sort of hear

[00:14:11] but that's some very high level

[00:14:14] different funding

[00:14:15] I could talk all day about it

[00:14:17] but basically and again

[00:14:19] it depends on every single case

[00:14:22] that's different

[00:14:22] the key thing is equity and cash

[00:14:24] so if you own a dirt, fantastic

[00:14:27] if you don't, it's okay

[00:14:28] we can still do it

[00:14:29] but normally looking at having at least 50% of land

[00:14:33] done and then depending on the final product

[00:14:36] valuation

[00:14:36] is going to determine how much of the borrowing

[00:14:39] you can do on the bill cost

[00:14:42] and you mentioned something before

[00:14:43] I thought it was really good

[00:14:47] in terms of working with

[00:14:49] working with someone to get an idea

[00:14:52] of what does the next 5, 10, 20 years

[00:14:55] of their development journey look like

[00:14:57] is everyone different, aren't they?

[00:14:59] do you find that's key?

[00:15:01] really knowing what do they want to do this

[00:15:03] as an ongoing type of project

[00:15:05] project to project

[00:15:06] is the long term goal to hold 10

[00:15:09] or hold 5

[00:15:10] exactly right

[00:15:11] do you look right into that?

[00:15:14] I do because someone might want to do one

[00:15:16] development and they want to just pay it off

[00:15:18] so that's a different view

[00:15:20] if someone wants to do multiple ones

[00:15:21] we'll be saying

[00:15:23] let's build up your equity

[00:15:24] by basically the first

[00:15:25] if you might want to sell them

[00:15:27] but then later on

[00:15:28] to hold it is actually key

[00:15:30] so you want to get to that stage

[00:15:32] so if you know they want to do that ongoing

[00:15:34] you know what equity

[00:15:36] they're going to need for the next project

[00:15:38] that's how you structure the debt here

[00:15:39] so you might put more or less of your own money

[00:15:41] in at different stages

[00:15:42] depending on what you want to do

[00:15:44] if you want to do multiple projects at the same time

[00:15:46] then you're going to max out your loan

[00:15:47] if you don't you might want to have a smaller amount

[00:15:49] because the rates are quite high

[00:15:51] so that way your margins better

[00:15:52] and then to the next one

[00:15:54] so again if you want to do

[00:15:55] one every six months

[00:15:57] then it's different if you're doing three at the same time

[00:15:59] it'll be a different strategy

[00:16:01] on how we actually fund it

[00:16:02] because you don't want to max out

[00:16:05] your lending all the time

[00:16:06] because the rates are quite high

[00:16:07] if you could put more of your own money

[00:16:10] in if you're doing one at a time

[00:16:11] it might be better

[00:16:12] if you've got three opportunities

[00:16:13] and you want to just know what I'm doing at the same time

[00:16:16] then we'll structure it differently

[00:16:17] so again it's me understanding

[00:16:20] what they want to do ongoing

[00:16:22] so if it's two duplexes

[00:16:24] or if they want to do 10 and then 15

[00:16:25] and then they go to high-rise

[00:16:27] it's a different strategy in place

[00:16:29] and we'll look at different funding options for that

[00:16:32] and like it said it's a case by case isn't it?

[00:16:34] Every single person's got a different scenario

[00:16:37] different borrowing capacity

[00:16:39] different vision, different end goal

[00:16:40] and then look they have to stop thinking about rates

[00:16:44] when you get into development

[00:16:44] so most people who move from

[00:16:46] never done development

[00:16:47] and they go oh hang on you're charging me 10%

[00:16:49] or whatever plus 2% fees

[00:16:50] you look at the margin of the end product

[00:16:53] by doing this project

[00:16:54] what are you going to yield as your profitability

[00:16:57] with a bit of a buffer rate

[00:16:58] of interest and things

[00:16:59] if that profit is actually a good return

[00:17:02] then the rate becomes secondary

[00:17:03] because it's actually enabling you to do the project

[00:17:06] I have too many conversations

[00:17:08] oh the bank's at 6.5

[00:17:09] and you're saying it's 9.5

[00:17:11] the bank won't do it

[00:17:12] first thing so do you want to do the project or not

[00:17:15] and if you do

[00:17:16] you're going to yield say half a million dollars at the end of it

[00:17:19] and it might cost you an extra 30, 40 thousand in interest

[00:17:21] so I want people to stop thinking about the rate so much

[00:17:24] and we'll do everything we can to do the cheapest

[00:17:25] that's not what they say

[00:17:26] it's more about let's enable you to

[00:17:29] build and sell and make a margin

[00:17:31] I've had a lot of developer clients

[00:17:33] like would you rather a percentage of something

[00:17:35] or a percentage of nothing

[00:17:37] and that's the difference

[00:17:38] a lot of people just sit there and do nothing

[00:17:40] because they're too afraid to step out and do something

[00:17:42] and I'm sure you've seen this

[00:17:45] but I see a lot of feasibility

[00:17:47] day in, day out

[00:17:48] and I'm amazed

[00:17:49] the amount of people that

[00:17:52] I talk a lot about feasibilities

[00:17:55] either being pumped up

[00:17:56] or they haven't put contingency in

[00:17:58] one of the big ones for me

[00:17:59] is people are unrealistic

[00:18:01] you mentioned interest rates

[00:18:03] but also time

[00:18:05] yes, time's the biggest one

[00:18:06] like they go on the bare minimum to build

[00:18:08] bare minimum to sell the product

[00:18:10] the bare minimum to get the approval

[00:18:12] so all of a sudden everything's like

[00:18:14] everything's based on the best case scenario

[00:18:16] that's exactly right

[00:18:17] so then they haven't factored in

[00:18:19] the time blowouts that do happen

[00:18:22] on all of those elements

[00:18:23] and all of a sudden that interest

[00:18:24] can build up

[00:18:26] and all of a sudden

[00:18:28] what could be 15%

[00:18:30] the holding cost

[00:18:31] so you might have to hold the land

[00:18:34] with a private lender

[00:18:34] it's like 9.5%, 10%

[00:18:36] and it blows out by 6 months

[00:18:37] 9 months, guess what

[00:18:38] there's another $100,000 out of your

[00:18:40] margin that you haven't factored in

[00:18:42] because you haven't actually paid for it yet

[00:18:44] you have to ensure you pick that up

[00:18:46] and then you have a few other things that go wrong

[00:18:48] look saying that though

[00:18:49] as long as you sort of

[00:18:51] get some different people to test

[00:18:53] your feasibility

[00:18:54] go to 3 different agents

[00:18:55] for the valuation of the property

[00:18:59] talk to a few different builders

[00:19:01] understand it

[00:19:01] so just really knuckle down on that

[00:19:03] sort of feasibility

[00:19:05] because the lender's going to as well

[00:19:06] they're not going to lend you money

[00:19:08] without doing their due diligence

[00:19:09] on the builder

[00:19:09] on the actual project itself

[00:19:11] using their own real estate agents

[00:19:14] they're going to tell you

[00:19:15] but they're going to do their own

[00:19:16] they're not going to take it on

[00:19:17] and they're quite smart about it

[00:19:19] so you might go to them

[00:19:19] you've already bought the land

[00:19:20] they're going to say

[00:19:21] well sorry there's no margin

[00:19:22] I'm not doing it

[00:19:23] just because of the private land

[00:19:24] doesn't mean they're going to do every deal

[00:19:26] it's got to stick up for them as well

[00:19:27] because they've got to pay back their investors

[00:19:29] and they're not going to put their investor money

[00:19:31] at stake

[00:19:32] if the project's not there

[00:19:35] that's what it's important to do early

[00:19:36] before you even buy the property

[00:19:38] that's why if you're working with a team

[00:19:39] if you've got a good commercial broker

[00:19:41] that you work with

[00:19:42] day in, day out or whenever you need to

[00:19:44] you can just ring them up

[00:19:44] and say can you help me with this

[00:19:47] and that's what we do with our clients

[00:19:48] so they continue calling us

[00:19:50] and we start with them

[00:19:51] before they've been bought half the time

[00:19:53] and that's really a key part of

[00:19:56] I spoke about this last week's episode

[00:19:58] on the feasibility

[00:20:00] because the feasibility is not just about

[00:20:02] a plan for the planning point of view

[00:20:04] but it's also having the funding

[00:20:07] you won't get funding if you've got to pump up visibility

[00:20:10] people are very smart in this game

[00:20:13] especially the private landers

[00:20:14] most of them are ex-brokers, bankers

[00:20:16] all developers or investors

[00:20:18] so they understand it all

[00:20:20] and at the end of the day

[00:20:21] if they're saying no

[00:20:23] that's probably a really good indication

[00:20:25] this is the development to walk away from

[00:20:28] with the bank there's no different story

[00:20:29] but if a private lender says no

[00:20:31] you might want to rethink your whole project

[00:20:32] because they've obviously carried out the due diligence

[00:20:34] that you either should have done

[00:20:36] or you didn't do adequately

[00:20:38] and that's what's really important

[00:20:39] if you're working with a good broker

[00:20:41] they can help you through all that

[00:20:42] with the lender

[00:20:43] you don't want to be sort of shopping

[00:20:45] you deal around to five, ten different places

[00:20:47] because then they'll be saying

[00:20:48] why is it still here all the time

[00:20:50] but if you've got a broker

[00:20:50] he'll know where to go straight away

[00:20:52] and he'll talk to him sort of on the side

[00:20:54] with that actually putting applications in

[00:20:56] so you don't want to shop your thing around

[00:20:58] because you shop around

[00:21:00] someone's going to say well hang on

[00:21:01] this has been across my desk twice

[00:21:03] and we've seen it happen quite a few times

[00:21:05] with some clients

[00:21:06] and even though the deal might be good

[00:21:09] they might say well hang on

[00:21:10] why is it being shopped around

[00:21:12] to 15 different places over the last year

[00:21:14] so that's really important

[00:21:15] not to shop your deal around

[00:21:18] you're dead right

[00:21:20] and I've seen that where

[00:21:24] developers are continually changing

[00:21:26] vendors, brokers

[00:21:28] they're continually changing builders

[00:21:29] they're continually changing planners

[00:21:31] designers

[00:21:32] and quite often it's because

[00:21:34] they're obviously not building that trust

[00:21:37] and they're not building that team

[00:21:38] or they don't like what they're hearing

[00:21:40] is that for right

[00:21:41] they're going to someone who's going to tell them

[00:21:43] what they want to hear

[00:21:44] not what they need to hear

[00:21:46] and that's the thing too

[00:21:47] some people might say

[00:21:47] they might see dollar signs

[00:21:48] and they'll just go and do it on

[00:21:49] or do whatever they need to do

[00:21:50] or go somewhere else

[00:21:51] that's not as reputable

[00:21:52] private as some other ones

[00:21:54] so you really need to make sure

[00:21:55] you've got someone in your team

[00:21:57] like if you're going to be doing

[00:21:58] development whether you're doing one

[00:21:59] two or 15 of them

[00:22:01] you need to have a core team

[00:22:02] obviously with yourself

[00:22:03] Nathan with your business

[00:22:04] you need to have a really good

[00:22:05] a really good accountant as well

[00:22:07] is really important

[00:22:09] and a really good broker

[00:22:10] to help you with the finance stuff

[00:22:11] and then I'll see the building

[00:22:12] and all that's on the developer

[00:22:14] they're sure there

[00:22:15] can do that themselves

[00:22:16] yeah

[00:22:17] and look having a great team around you

[00:22:19] when you realise everyone is pushing

[00:22:22] in the direction of ensuring

[00:22:23] you generate wealth

[00:22:24] cause I always say to people

[00:22:26] like my job's to make you wealthy

[00:22:28] because by doing that

[00:22:30] 100%

[00:22:31] you'll continue to come back

[00:22:32] we'll continue to do work together

[00:22:34] but it's satisfying

[00:22:36] seeing people do well

[00:22:37] that's one thing I love about you

[00:22:39] you get the satisfaction out of

[00:22:40] actually seeing people

[00:22:41] thrive and do well

[00:22:42] 100%

[00:22:43] and the thing is too

[00:22:44] you just want to make sure

[00:22:45] that people make the right cause

[00:22:47] and they're going to do

[00:22:47] what they're going to do anyway

[00:22:49] but if you do it

[00:22:50] generally as part of the team

[00:22:51] and you say no

[00:22:53] like four or five times

[00:22:54] sometimes they need to hear that

[00:22:56] there's too many people out there

[00:22:57] that don't say no

[00:22:58] and just want to do everything

[00:23:00] and sometimes as you know

[00:23:01] some of the things we've looked at

[00:23:02] in the past

[00:23:03] we haven't done

[00:23:04] yeah exactly

[00:23:06] when you think about what happened

[00:23:07] a couple years ago

[00:23:08] with 14 interest rate rises

[00:23:10] in that time

[00:23:12] people had done their feasibilities on

[00:23:13] 3-4%

[00:23:15] and now they're here with this

[00:23:17] and if their project was delayed

[00:23:20] there could be a bit of trouble now

[00:23:21] and then the build costs went up

[00:23:23] by 25-30%

[00:23:25] so lots of things happen

[00:23:26] so it's sort of one of those things

[00:23:29] that if you did have a strong

[00:23:30] tibial analysis

[00:23:31] you probably wouldn't have picked up

[00:23:32] all these tibial analysis

[00:23:32] this has been an outlier

[00:23:34] but you would have picked up some of it

[00:23:36] if you would have had

[00:23:36] a bit of a clear feasibility

[00:23:38] but luckily the prices went up

[00:23:40] so really sort of

[00:23:41] but still

[00:23:42] there's been a lot of builders

[00:23:43] in a lot of trouble

[00:23:44] and over the last few years

[00:23:45] and maybe you've seen this

[00:23:47] so it's probably a question

[00:23:48] I think about

[00:23:49] and I'm sure other investors

[00:23:50] and developers think about this one

[00:23:52] but obviously getting delayed

[00:23:54] settlements is brilliant

[00:23:55] on a site

[00:23:55] because it obviously buys your time

[00:23:57] you can save on holding costs

[00:23:58] but I see sometimes

[00:24:00] a lot of people

[00:24:01] they then run their numbers

[00:24:02] based on forecasts

[00:24:04] now it's good to forecast

[00:24:05] don't get me wrong

[00:24:06] yeah it's great

[00:24:07] because you can get an idea

[00:24:08] what potential profits could look like

[00:24:10] but have you seen

[00:24:12] sometimes where people

[00:24:14] unfortunately that they have

[00:24:15] developed a feasibility

[00:24:18] based on potential forecasts

[00:24:20] and then that can really

[00:24:22] bring them undone

[00:24:24] because a lot can change

[00:24:25] in 18 months or 12 months

[00:24:26] well the one thing about forecast

[00:24:27] in any sort of situation

[00:24:28] they're going to be wrong

[00:24:29] because the forecast is just an estimate

[00:24:31] based on I mean

[00:24:32] so yes so look forecasting

[00:24:34] you need to sort of

[00:24:36] you're going to have to forecast

[00:24:37] sometimes obviously

[00:24:38] but you should be doing it

[00:24:40] at that point in time

[00:24:40] what is the profit today

[00:24:42] then do a sensitivity analysis

[00:24:43] on what you think

[00:24:45] may happen on different scenarios

[00:24:47] if you're trying to forecast

[00:24:48] going forward

[00:24:49] that's quite

[00:24:51] my view is that it doesn't make money now

[00:24:53] that's one thing

[00:24:53] you need to walk away

[00:24:56] and then

[00:24:56] do a sensitivity analysis

[00:24:57] but trying to say

[00:24:58] oh price is going to go up by 10%

[00:25:00] and rates are going to go down by 2%

[00:25:01] that's the factor on

[00:25:03] that's a recipe for disaster

[00:25:04] and the lenders won't look at that anyway

[00:25:05] the lenders will look at it as of today

[00:25:07] what's the value of saying it today

[00:25:08] what's the QS saying

[00:25:09] it's worth

[00:25:10] the cost today

[00:25:11] so that's how the lenders will look at it

[00:25:14] so even if you want to forecast

[00:25:15] you're not going to get funding

[00:25:18] obviously we've been talking about borrowing capacity

[00:25:20] and that's a big thing

[00:25:21] for investors and developers

[00:25:22] especially once they're wanting to push past

[00:25:24] say doing a duplex

[00:25:25] maybe doing some multi-dwelling

[00:25:27] what are some strategies

[00:25:28] or what are some things

[00:25:29] that people listening

[00:25:32] and residential developers and investors

[00:25:34] mums and dads can do

[00:25:35] to maximise their borrowing capacity

[00:25:37] for doing say

[00:25:39] maybe a slightly bigger project

[00:25:41] maybe like a full pack

[00:25:43] or a five town house

[00:25:44] or even three

[00:25:45] like going from a duplex to three

[00:25:46] or a little bit more

[00:25:48] what are some things

[00:25:49] that people can do

[00:25:50] to maximise their borrowing capacity

[00:25:52] so with borrowing capacity

[00:25:53] it's really going to only be relevant

[00:25:54] when you're doing say two

[00:25:56] potentially three

[00:25:57] if you learn to do three

[00:25:58] and there's a couple that do four

[00:26:00] so it's not going to be real

[00:26:02] and it's only if you're going to keep the stock

[00:26:03] because as soon as you sell it

[00:26:05] it becomes a commercial product

[00:26:06] and therefore it goes down a different route

[00:26:10] but like the big four

[00:26:11] will still get capacity for the fours and five

[00:26:13] so if you think of bank funding

[00:26:15] for borrowing capacity

[00:26:16] look how much is not too much

[00:26:17] you can do really

[00:26:19] apart from if you're self employed

[00:26:21] you might want to show some profit

[00:26:23] that's a thing

[00:26:25] but realistically

[00:26:26] the borrowing capacity is going to be really

[00:26:28] it's quite strict

[00:26:29] it's really based on your income

[00:26:31] even with your expenses

[00:26:33] there's a national living hems that they use anyway

[00:26:35] so you can't really do much there

[00:26:37] it's not really too much

[00:26:39] to be honest in terms of borrowing capacity

[00:26:41] to help

[00:26:42] and with developments

[00:26:43] you need a lot

[00:26:44] so basically

[00:26:45] it's really for really high net income people

[00:26:49] that are earning

[00:26:50] two, three, four hundred thousand a year each

[00:26:52] because as an example

[00:26:54] I look at the five times real

[00:26:55] whatever you're sort of earning

[00:26:56] times by about five

[00:26:58] and plus obviously rent or income

[00:26:59] that's roughly what your borrowing capacity is going to be

[00:27:01] so if you earn two hundred grand a year

[00:27:04] let's say

[00:27:04] it might be a million dollars capacity

[00:27:06] add some rent there

[00:27:06] you might get one and a half million capacity

[00:27:08] that's sort of what you sort of look at

[00:27:10] assuming nothing else

[00:27:11] you got nothing else

[00:27:12] so realistically unfortunately in the eighth

[00:27:15] there's not much you can really do

[00:27:16] except for get a high job

[00:27:18] or have a more profitable year

[00:27:21] in terms of that

[00:27:23] I think dude there is low dock options

[00:27:25] for the self-employed people

[00:27:29] that if they haven't done their financials

[00:27:30] they could look at the last two or four base returns

[00:27:33] and they can get funding for a duplex

[00:27:35] based on the last two or four base returns

[00:27:37] so if they have a really good six months

[00:27:39] then potentially there are funding options out there

[00:27:42] that would do for basically for a duplex

[00:27:45] so there would be a bit more expensive than a bank

[00:27:47] but still cheaper than a private

[00:27:49] unfortunately most of the

[00:27:50] developments in the small ones

[00:27:52] if you're doing an actual development and selling

[00:27:53] you're going to have to go down the path of

[00:27:56] a latrobe or a private

[00:27:58] where it's based not on bank capacity

[00:28:00] but on the project

[00:28:01] so in terms of based on the project

[00:28:04] you want to just walk us through what they're looking for

[00:28:06] and you are wanting to push into a slightly bigger project

[00:28:09] so normally from the land

[00:28:12] if it's land you're looking at about 50% to 55% LVR

[00:28:15] and LVR is the loan

[00:28:16] versus the value of the property ratio

[00:28:18] so if you've got $500,000 loan

[00:28:20] the end of the property is 50% LVR

[00:28:22] if it's a house that you're buying and knocked down

[00:28:24] it's better because you could get up to 70% on that

[00:28:29] so basically and then what they look at

[00:28:32] is the end gross value of the project

[00:28:34] that would do 70% on that

[00:28:37] so if you've got a project that's going to have

[00:28:38] a really high end value

[00:28:40] then you potentially could

[00:28:42] fund the whole development cost

[00:28:44] in terms of the whole build cost

[00:28:46] so that's what you need to look at

[00:28:48] you want to have that high end result

[00:28:53] so that's pretty much how it looks at

[00:28:54] then you look at the margin

[00:28:57] normally you're looking at a return of about 9%

[00:29:00] internal rate of return

[00:29:01] or you could do about a 15% to 16% margin on cost

[00:29:05] would be the bare minimum

[00:29:06] before it starts to get some questions

[00:29:09] there's always ways to get extra funding

[00:29:11] and things if you want to

[00:29:12] but again for a cheap funding option

[00:29:15] where it's just first mortgage

[00:29:18] looking anywhere between 9% to 11% rate

[00:29:21] plus a couple of percent fees

[00:29:23] that's what you look at

[00:29:25] when you get larger

[00:29:27] there is different ways to do bank funding

[00:29:29] and then get a private to be the second mortgagee

[00:29:31] behind the bank to fund the gap

[00:29:34] and that becomes a bit more expensive

[00:29:36] in that sense

[00:29:37] depends how big you want to get

[00:29:40] there's also funding now available

[00:29:42] for the largest go

[00:29:43] which I do with a lot of fund managers

[00:29:45] and asset managers

[00:29:46] they're coming to the market now

[00:29:47] not as private lenders

[00:29:48] they'll take a stake in the actual project

[00:29:51] so say a 25% preferential equity stake

[00:29:53] and they'll fund the project that a private

[00:29:55] or a bank wouldn't

[00:29:56] but they own a percentage of that profit as well

[00:29:58] and that's a new thing that's happening

[00:30:00] not new but it's getting a bit more prevalent

[00:30:03] some of the larger fund managed groups

[00:30:05] are actually looking at that

[00:30:06] more than they used to

[00:30:07] but it's always been there

[00:30:08] it's just more than used to

[00:30:09] so depending from your small residential

[00:30:11] all the way through

[00:30:12] there's different ways

[00:30:14] so there are some really good options

[00:30:17] for people who maybe just can't

[00:30:19] quite fund the gap

[00:30:21] that they can take a lesser profit

[00:30:23] and go in with someone

[00:30:25] and actually pull the trigger on some

[00:30:27] really good profitable projects

[00:30:29] it's good risk mitigation

[00:30:30] by having a few different partners in there

[00:30:32] obviously it's not always easy

[00:30:33] to have your partners

[00:30:34] but if your partners are your team

[00:30:36] it makes a big difference

[00:30:38] and there are these lenders out there

[00:30:39] that will potentially come in as a partner as well

[00:30:41] normally for the larger projects

[00:30:43] but it's good to know that they're out there

[00:30:46] and they'll find a project

[00:30:47] that potentially couldn't have got funded

[00:30:48] or you might want to do three projects at once

[00:30:50] and because you've got that

[00:30:51] you don't have enough equity

[00:30:52] to put into this project

[00:30:54] therefore you go well you know what

[00:30:55] I can still do this project

[00:30:56] earn 75% of the profit there

[00:30:58] that I could have done

[00:30:59] and yield this margin now

[00:31:01] then waiting three years

[00:31:02] and who knows what can happen in three years

[00:31:04] that's the key for me

[00:31:05] is about can I do

[00:31:08] and yield profit now

[00:31:09] and what's my opportunity cost of doing that

[00:31:13] yeah

[00:31:14] and the last probably 12 months

[00:31:16] you've probably seen it as well

[00:31:18] I've seen so many DA approved sites on the market

[00:31:22] and off market

[00:31:23] and look for me probably

[00:31:25] it comes down to a couple of factors

[00:31:27] one, a lot of people haven't run their numbers

[00:31:29] you haven't been realistic on their fees

[00:31:32] and then there's

[00:31:32] I think there's a lot of people

[00:31:33] that can't get the funding

[00:31:35] to do the development

[00:31:36] and the problem is though

[00:31:37] these people that have secured these sites

[00:31:41] the raw site

[00:31:42] they've obviously got the uplift on it

[00:31:43] they've got the approval

[00:31:44] but the problem is they're then trying to obviously

[00:31:46] come out of this

[00:31:48] this headache

[00:31:49] with some end profit

[00:31:50] yeah

[00:31:50] but the problem is people are then going and buying these sites

[00:31:53] that don't stack up

[00:31:54] that's right

[00:31:55] like you do you

[00:31:56] do you generally try and encourage people to get a raw site

[00:31:59] and get the uplift

[00:31:59] like do you think

[00:32:00] what are your thoughts around getting uplift

[00:32:02] through an approval

[00:32:03] for me the most

[00:32:04] it's all about the land right

[00:32:05] so what do you buy in the land for

[00:32:07] getting the land at a cheap price

[00:32:08] is critical as everyone knows right

[00:32:10] but yeah if you can't like buying a DA site

[00:32:12] I probably wouldn't

[00:32:13] unless you're a builder

[00:32:14] and you've got sort of

[00:32:16] you're a third party builder

[00:32:17] you've got fixed staff

[00:32:17] you might as well buy it

[00:32:19] and buy it and just build it

[00:32:20] because you're going to actually

[00:32:21] help your current business

[00:32:23] if you're doing as a development

[00:32:25] buying a DA site

[00:32:26] the person who's done the DA

[00:32:27] they've probably overpaid for the property initially

[00:32:29] then they've got the small uplift on it as well

[00:32:32] and they're trying to sell it

[00:32:33] because the cost to build it

[00:32:35] and the margin is not there

[00:32:35] so they're like why would you sell a DA site

[00:32:37] you're buying a headache

[00:32:38] so it's to me buying it

[00:32:39] I'd be really questioning buying a DA site

[00:32:42] and I'd be really doing my numbers on it

[00:32:44] there could be some times where it's okay

[00:32:45] and there's reasons why

[00:32:47] you know you would but

[00:32:49] I'd suggest that if it's a DA site for sale

[00:32:52] on the small end

[00:32:53] I'm talking the largest scale is different

[00:32:54] but we're talking for you know

[00:32:56] for a lot of people listening here today

[00:32:57] between two and ten top dwellings

[00:32:59] I'd suggest there's

[00:33:02] there's a reason why

[00:33:03] and I'll probably stay away

[00:33:05] I'd rather get the raw site

[00:33:08] and then get it DA'd

[00:33:10] and then that that

[00:33:11] because you're going to have the uplift for that

[00:33:13] and that's where a lot of the headaches come down to

[00:33:17] don't they

[00:33:17] like really it's the acquisition

[00:33:19] that's where so many other problems happen at acquisition

[00:33:22] well most people

[00:33:23] a lot of people who know

[00:33:24] they can do two or three on their site

[00:33:25] when they sell their land

[00:33:27] they're selling it with that

[00:33:28] pretty much that thing in their mind

[00:33:30] right so they'll want a million bucks

[00:33:31] for a site that's got through in it

[00:33:32] even though it's not DA approved

[00:33:35] so that's what's happening

[00:33:36] and then people buy and then do the DA

[00:33:37] and then wonder why the uplift is not there

[00:33:39] or why they can't do the project

[00:33:40] so yeah my view is just

[00:33:43] you need to have the team right at the start of the process

[00:33:46] and make sure you look at

[00:33:48] everything in detail early

[00:33:50] yeah that's good

[00:33:52] because I see too many developments

[00:33:55] where people don't make money

[00:33:56] a lot

[00:34:00] so that's what's

[00:34:01] especially now it's a lot tougher than it was

[00:34:03] you know a few years back

[00:34:04] and look you scratched on it before

[00:34:08] but I think it'd be good

[00:34:09] just for the listener

[00:34:10] because I think presenting your deal

[00:34:12] to the lender

[00:34:13] like private lender

[00:34:16] is key and can you just

[00:34:18] give us a bit of a rundown of what

[00:34:20] does that look like from a presentation point of view

[00:34:23] like what are you expecting

[00:34:25] or what do you believe

[00:34:27] is the best way to present a deal

[00:34:29] for a lender so that you can obviously

[00:34:32] build their trust

[00:34:33] gain their trust and obviously get it funded

[00:34:35] key thing for me whether it's going to a private

[00:34:37] a bank or whatever

[00:34:38] it's really putting a little pack together

[00:34:39] it might be a two or three page pack

[00:34:41] so the first thing is

[00:34:42] the actual person doing development

[00:34:44] like who are they

[00:34:45] have they done developments before

[00:34:47] what's their experience

[00:34:48] what's gonna be their involvement

[00:34:49] really critical to see

[00:34:51] who's the builder

[00:34:51] is the builder known to the lender

[00:34:53] is it reputable

[00:34:55] or is it just someone down the street

[00:34:56] if they are what have they built before

[00:34:59] then you look at the feasibility

[00:35:00] in detail

[00:35:02] then you show them the sensitivity analysis

[00:35:04] most people don't do that

[00:35:05] I always do

[00:35:06] and I always get feedback back from the lenders

[00:35:08] you give me all these graphs

[00:35:10] and things that are there

[00:35:11] you give me all this information

[00:35:12] this is fantastic

[00:35:13] so it's showing me a risk range

[00:35:14] and then you talk

[00:35:15] and then you show them

[00:35:16] what I'll be doing is

[00:35:17] okay here's three real estate agent

[00:35:19] estimates on what the value is

[00:35:21] here's some build quotes

[00:35:22] or what it is

[00:35:23] so really packaging it up in detail

[00:35:26] and you're showing the lender

[00:35:27] you've thought about the risk mitigation

[00:35:28] you've thought about what potentially might happen

[00:35:30] and you're still very comfortable

[00:35:32] in going ahead

[00:35:33] that's how you don't just say

[00:35:34] okay I want a loan for a million bucks

[00:35:36] and here it is

[00:35:37] you do that

[00:35:38] you're not gonna get the good price too

[00:35:40] so it's a rate for risk price as well

[00:35:42] if they can see that you have mitigated risk

[00:35:44] there's a low LVR

[00:35:44] you might get half percent of the rate

[00:35:46] and that doesn't seem like much

[00:35:48] but every little bit counts

[00:35:49] so it's really about packaging it up properly

[00:35:52] talking through it

[00:35:54] and if you're comfortable

[00:35:55] me as a broker

[00:35:57] actually with the deal

[00:35:58] they can see that in the way I present it

[00:36:00] the way I talk about it

[00:36:01] with the lender

[00:36:02] and if they trust me

[00:36:03] which if I've used them before

[00:36:04] then guess what

[00:36:05] it's a pretty much a ticket flick

[00:36:06] yeah right

[00:36:07] and that's why we use

[00:36:08] sort of certain groups

[00:36:09] that we deal with

[00:36:10] and they go through

[00:36:12] because a lot of people

[00:36:12] go through these mortgage managers

[00:36:14] and they look at 50 different privates

[00:36:15] and then they get double fees

[00:36:16] it's just not right

[00:36:17] you use your core people

[00:36:18] that you'll work with

[00:36:19] you trust

[00:36:20] you know if something goes wrong

[00:36:21] they're not gonna just take the house away

[00:36:22] they're gonna sort of give them time to come back

[00:36:25] you know so

[00:36:25] and that's really critical

[00:36:27] in the private lending space

[00:36:28] and then okay just gonna charge default interest

[00:36:30] if you've kept the private in touch

[00:36:32] just say things by it by six months

[00:36:34] if you've kept

[00:36:35] and there's things outside your control

[00:36:36] like a COVID or something

[00:36:38] if you've kept the lender

[00:36:40] updated

[00:36:41] chances are they're not gonna charge

[00:36:42] your default interest for a few months

[00:36:44] for example

[00:36:45] if you've done that

[00:36:45] if you've done the right thing

[00:36:46] if they can see it was beyond your control

[00:36:48] if you said nothing

[00:36:48] and then you haven't done anything

[00:36:50] then guess what

[00:36:51] you still get charge default interest

[00:36:52] and then three months, six months in that track

[00:36:54] they could start proceeding

[00:36:56] to take the property off you

[00:36:57] so really really important

[00:36:58] you have the good connections

[00:36:59] with the private lenders

[00:37:00] all your broker does

[00:37:03] really important you find

[00:37:04] in your area or it doesn't have to be an area

[00:37:05] a really good commercial broker

[00:37:06] that's got those relationships

[00:37:08] if you go down this path

[00:37:09] you don't want to go to a normal residential

[00:37:11] haven't got

[00:37:12] I'm sure they're great at what they do

[00:37:13] but they haven't got the experience

[00:37:14] they'll be flicking it to someone like me

[00:37:16] and there'll be double fees

[00:37:17] yeah so

[00:37:18] yeah that's it

[00:37:19] and I think you nailed it there too

[00:37:21] because I think

[00:37:25] having people that understand development

[00:37:27] understand feasibility

[00:37:29] understand the type of packs

[00:37:30] building trust

[00:37:31] have trust with lenders

[00:37:33] that's such a key thing

[00:37:34] because trust is one of the biggest driving forces

[00:37:36] I think in doing residential developments

[00:37:39] if you don't have trust with your team

[00:37:40] that's right

[00:37:41] and your team don't have trust

[00:37:42] with the stakeholders they're dealing with

[00:37:44] in your case

[00:37:45] the banks and the lenders

[00:37:47] if you don't have that

[00:37:49] it's really hard to pull the trigger on

[00:37:51] it is

[00:37:52] and for us

[00:37:53] whilst we've got full commercial accreditation

[00:37:55] we're all the big four for any loan size

[00:37:57] to get full commercial accreditation

[00:37:59] not every broker has that

[00:38:00] you might have maybe 15-20% of brokers

[00:38:02] who would do the commercial dealers with that

[00:38:03] other ones might say

[00:38:05] okay yeah no worries

[00:38:05] they'll just flick it on

[00:38:06] and they haven't got the contacts

[00:38:07] in the banks to use

[00:38:08] so if you're going to go to a bank

[00:38:09] you need to go to your banker

[00:38:11] that you can trust

[00:38:12] that we should put a deal together

[00:38:14] well for you

[00:38:15] if you just go to a branch

[00:38:16] or go to a normal sort of lender with a bank

[00:38:18] they won't know what they're doing as well

[00:38:20] it sounds weird

[00:38:20] but you have to have

[00:38:21] your development property guy that you go to

[00:38:23] and they have to be good

[00:38:24] so you just need to have those contacts

[00:38:26] and you need to know

[00:38:28] which bank has appetite at the moment

[00:38:30] like for example at the moment

[00:38:32] I know obviously banks want you to have presales

[00:38:35] for the larger developments

[00:38:37] St George has come out with a new policy

[00:38:38] he's saying

[00:38:39] under 20 million

[00:38:40] under 20 dwellings

[00:38:41] they won't need presales

[00:38:43] there's heap of other parameters

[00:38:45] I think if you're wrong it's not that simple

[00:38:46] but something like that

[00:38:47] because they've seen the market go towards private

[00:38:49] and so they're trying to get back into the market

[00:38:52] so they've come up with no presales

[00:38:54] for under 20 million under 20 dwellings

[00:38:55] which is a great product

[00:38:58] some other banks are going to come out with a similar

[00:39:00] so they're all trying to call back

[00:39:01] what the private market has done

[00:39:04] at the moment

[00:39:04] so saying that though

[00:39:06] the bank has still got huge parameters

[00:39:07] very low

[00:39:08] it's tough

[00:39:08] but at least you know

[00:39:10] that's sort of happening anyway

[00:39:12] yeah

[00:39:13] excellent

[00:39:13] well look I think

[00:39:15] we might wrap it up there for time

[00:39:16] but I think

[00:39:17] so much ground we can cover and I'll

[00:39:19] sorry mate I've probably got to talk to you

[00:39:21] I can't stop talking about it

[00:39:23] I get so much value listening to you

[00:39:26] and I'm sure our listeners will

[00:39:27] and maybe there's just something

[00:39:29] like a parting

[00:39:30] how can people find you

[00:39:32] yeah so very easily

[00:39:33] so basically our business are MoneyQuest

[00:39:36] Woollong, MoneyQuest, Camden, MoneyQuest, Rangwick

[00:39:38] so basically just go online

[00:39:40] and you'll be able to find your websites

[00:39:42] easy to get in touch with yourself

[00:39:43] Nathan

[00:39:45] but yeah so we're very happy to help

[00:39:46] any one of your clients

[00:39:47] we deal nationally

[00:39:48] so it doesn't

[00:39:49] you don't have to be here

[00:39:50] you know we've got clients

[00:39:51] we've got clients

[00:39:51] so anyone more than happy

[00:39:54] to have more conversations with anyone

[00:39:55] that for all your clients or your listeners

[00:39:58] very happy to help anyone out

[00:40:00] or point them in the right direction

[00:40:01] even help out their own brokers

[00:40:03] no problem at all

[00:40:04] I just love helping

[00:40:04] it's a good feeling

[00:40:06] oh it is

[00:40:07] I do expect a bit about a pizza

[00:40:08] in a six pack

[00:40:09] yeah exactly

[00:40:10] nothing for free

[00:40:11] but that's about it

[00:40:12] yeah perfect

[00:40:13] well it's been good to have you on

[00:40:14] I'd love to get you back on again

[00:40:16] because I think there's just so much more

[00:40:17] we can learn in this space

[00:40:18] anytime

[00:40:19] for our listeners

[00:40:19] but yeah look guys

[00:40:21] thanks for tuning in

[00:40:22] I hope you've got a lot of value

[00:40:23] out of that session with Dino

[00:40:25] as Dino said

[00:40:26] if you want to get in touch with him

[00:40:28] he'll be able to have a chat with you

[00:40:29] look at your borrowing capacity

[00:40:30] look at some options

[00:40:31] of how you can

[00:40:32] achieve funding for your developments

[00:40:34] look if you really got a lot out of that session

[00:40:36] I want to encourage you to share

[00:40:37] with your family

[00:40:38] your friends

[00:40:38] your colleagues

[00:40:39] make sure you like and subscribe

[00:40:41] make sure you subscribe

[00:40:43] on our YouTube

[00:40:44] our Spotify

[00:40:45] and our Apple podcast

[00:40:47] and we're on all the other major channels

[00:40:49] so thanks for tuning in again this week

[00:40:51] and we'll see you again next week