Strategies to Tackle Funding Hurdles in Small Development Projects with Dino Di Donato of MoneyQuest Australia

[00:00:04] Well, welcome to another episode of the Residential Developer Podcast. I'm Nathan Battishall, the host of this podcast, and I'm very privileged to have Dino Di Donato back. He's back again. I had so many good comments and feedback from people after that last episode. So thanks for coming back on, Dino.

[00:00:22] Thank you very much, Nathan. Thanks for actually getting me back.

[00:00:24] It's good to have you back. And for those who don't know, Dino's the director and principal of MoneyQuest. He's got a few locations now. He's in Wollongong, he's in Camden, and also Ramwick.

[00:00:35] That's correct.

[00:00:35] There's no others since your last came in, isn't there, mate?

[00:00:37] No, there's no others, mate.

[00:00:39] None others. And look, Dino, that last episode was brilliant. Obviously, we did a bit of a flyover and really just covered a whole lot of topics.

[00:00:47] And I thought it'd be good to break down a couple of things today and just really hone in a little bit more on some of the challenges in funding smaller developments.

[00:00:57] Because I think for a lot of investors, developers, they are, a lot of our listeners especially are people that are either, that are doing smaller projects.

[00:01:06] We've definitely got listeners who are doing bigger projects and we'll definitely speak into that at some stage.

[00:01:12] But I think it'd be great just to really spend a bit of time in this episode, just really honing in on some of the challenges that people face in doing smaller projects.

[00:01:24] Yeah.

[00:01:25] Just smaller things like a duplex or a dual occupancy, maybe keeping a house and doing an extra one on the back or knocking down and doing a couple.

[00:01:33] Have you found the climate, I guess, over the last 12 months quite different in terms of financing?

[00:01:40] Yeah.

[00:01:40] Look, it's very difficult in a small space when you're doing duplexes.

[00:01:44] Normally, you will need borrowing capacity.

[00:01:46] Okay.

[00:01:46] And obviously, with interest rates being so high and people's borrowing capacity isn't as good as it was two or three years ago.

[00:01:53] So in the smaller space, yeah, it is a lot more difficult now to do.

[00:01:57] We do have other options as well.

[00:01:59] But it is a lot more difficult in the small sort of just a duplex type space than it used to be.

[00:02:04] Yeah.

[00:02:05] Yeah.

[00:02:05] So when you say borrowing capacity, what sort of loans are we talking?

[00:02:10] Yeah.

[00:02:10] So basically what that is is basically it's like a normal home loan, okay?

[00:02:13] So it's like a normal construction loan.

[00:02:15] So we have to show the person who has to show the bank the tendency to repay the loan based on the bank's parameters, okay?

[00:02:22] Like a normal home loan, for example.

[00:02:23] So the borrowing capacity for a duplex is pretty much the same as a normal home loan.

[00:02:26] Yeah.

[00:02:27] Or where you can include the rental income of the future rent from the duplex when you're doing the construction loan.

[00:02:35] Yeah.

[00:02:35] Okay?

[00:02:35] So really, so if you've got a really home loan and an investment property and you want to go do a duplex, it makes it quite difficult to get the funding in that respect.

[00:02:44] Yeah.

[00:02:44] There are other options.

[00:02:45] So there is low dock options now for duplex development, which there wasn't a lot in the past.

[00:02:51] There's a few members that are doing it.

[00:02:52] And the good thing about that is, for example, if you're a trading and basically you haven't done your financials or your tax returns for the year, but you've done very well in the last sort of six months, you can get your last two BAS returns or an accountant's declaration to be able to get whatever the accountant says that you've earned or whatever the BAS returns say that you've actually earned.

[00:03:10] And that can be put into your borrowing capacity and therefore you potentially may be able to get a loan.

[00:03:14] It's a little bit more expensive than the bank, but a lot less than going to a private sort of thing.

[00:03:19] And that's very popular at the moment for the duplexes.

[00:03:21] Yeah.

[00:03:22] There's not too many lenders that do it, but it's actually a new sort of, not a new product, but a product that's been used a lot more recently.

[00:03:28] Yeah.

[00:03:28] And it's very good for, especially for tradies or self-employed people.

[00:03:31] It's a really good product.

[00:03:33] Yeah.

[00:03:33] That's out there.

[00:03:34] We're doing quite a lot of them at the moment.

[00:03:36] Yep.

[00:03:36] And you were saying, so that's sitting in between bank and private, is it?

[00:03:39] Yes.

[00:03:39] It is.

[00:03:40] It's pretty much exactly.

[00:03:41] It's sort of halfway, right?

[00:03:42] So you've probably got about a 2% increase on rate on a bank, 1% to 2%, but you're sort of 2% to 4% cheaper than a private.

[00:03:50] So it's still a real option.

[00:03:51] The only thing is you will have to pay interest-only repayments.

[00:03:54] So with a private lender, it's normally capitalized.

[00:03:56] Same with a bank, though.

[00:03:57] You have to pay interest-only repayments.

[00:03:58] So from a cash flow point of view, you still will need to pay repayments each month based on your drawdowns.

[00:04:03] Yep.

[00:04:03] Yep.

[00:04:04] Yeah.

[00:04:04] And look, I guess that can be the challenge, I guess, for a lot of people, isn't it?

[00:04:08] Because these, like, are you finding there are a lot of loans falling over in that space?

[00:04:14] We're actually lucky.

[00:04:15] Not a lot of loans falling over, but a lot of people aren't doing much else.

[00:04:18] So we've got, you know, so in terms of, you've got a lot of people with pre-privileged, for example,

[00:04:21] but they're not pulling the trigger on buying things.

[00:04:22] Yes.

[00:04:22] So then that impacts people buying your investment property if you're doing development.

[00:04:25] So at the moment, it seems to be sort of a bit plateau-y.

[00:04:28] So it's sort of like nothing.

[00:04:30] Yeah.

[00:04:30] So because of the market, it's hard for people to get loans for it to buy the investment property.

[00:04:35] And it's also hard to get loans for the construction of it.

[00:04:39] It is making a bit of a housing shortage even worse.

[00:04:42] Yes.

[00:04:42] Yeah.

[00:04:43] And I think in any climate, there's always ways you can do projects.

[00:04:48] I think it's just about being creative.

[00:04:50] That's right.

[00:04:51] I'm seeing the real emergence of looking for products where you can keep the house,

[00:04:56] keep the house and just do one other.

[00:04:58] Are you seeing a bit of an emergence of people maybe pivoting from possibly moving away from

[00:05:05] or even moving into that existing house and then building it?

[00:05:09] Yeah.

[00:05:09] No, definitely are.

[00:05:10] We definitely are because the end sale price makes a project not as profitable as it once

[00:05:16] could have been.

[00:05:17] People are thinking, well, down in the future, it's going to be worth a lot more.

[00:05:19] So a lot of people are actually keeping the house, renting it out or even moving into one

[00:05:23] and renting the other side out.

[00:05:24] So that's happening a lot more than just doing a normal commercial transaction where you just

[00:05:28] do a duplex and sell it and move on.

[00:05:30] That's less happening now just purely because the profit's not there.

[00:05:34] Yeah.

[00:05:34] Unless you had land from a long time ago.

[00:05:36] But then even if you did that, the land's worth something now.

[00:05:39] And I see still your feasibility still has to focus on what the land's worth now even

[00:05:42] though you've owned it years ago.

[00:05:44] Yeah.

[00:05:44] So realistically, yeah, I've seen a lot more of that, especially a lot of people having

[00:05:49] the front house, building a house at the back instead of knocking a house down.

[00:05:52] That's happening a lot.

[00:05:54] Yeah.

[00:05:54] Or building a duplex at the back and renting them out.

[00:05:57] And then hopefully in the market it gets a bit better in the future than they may sell

[00:06:00] or they might just keep it as an investment.

[00:06:03] Yep.

[00:06:03] Yep.

[00:06:04] And another thing I've seen that's been working really well in a tricky market has actually

[00:06:08] been some of the higher end areas, like areas where you're doing that upper echelon

[00:06:15] where you're attracting a bigger buyer, someone that's got a lot more cash.

[00:06:20] Often the buyers, they always say that once you get around that $2 million product, it's

[00:06:25] generally a cash buyer often.

[00:06:27] Yeah.

[00:06:28] Maybe they've sold a property in Mossman or somewhere in a nice part of Sydney and they're

[00:06:34] downsizing, want to move down to the coast or up the coast.

[00:06:37] Yeah.

[00:06:38] Are you finding some people, some investors are going maybe the private route with some

[00:06:43] of that product?

[00:06:44] They definitely are because, I mean, the build costs are the build costs, albeit there's

[00:06:47] going to be better finishes, right?

[00:06:48] So it will cost more.

[00:06:49] But the land obviously costs will be a bit, but the actual end sale price is a lot more

[00:06:54] profitable.

[00:06:54] There is more risk, obviously, because that sort of end price is not a huge amount of

[00:06:59] people that can afford it.

[00:07:00] Yeah.

[00:07:00] But if you do have a really good market, potentially even get one pre-sale, then yeah, that does,

[00:07:06] that's actually a pretty good way to make some money at the moment.

[00:07:09] Because the higher end market is still going pretty strong.

[00:07:13] Yeah.

[00:07:14] But again, it's a higher risk because you just have to have people at that sort of market

[00:07:19] at that point in time wanting to buy it.

[00:07:21] Yeah.

[00:07:21] But if you do, then yeah, that is, a lot of people are doing, like if you go to the eastern

[00:07:26] suburbs in Sydney, you'll see a lot of development everywhere.

[00:07:29] Yeah.

[00:07:29] Like threes, twos, fours, a lot of that happening around there.

[00:07:32] And if you just drive around, you'll see it.

[00:07:33] Yeah.

[00:07:34] And are you finding a mixture of different funding types that people are going for?

[00:07:37] Based on their circumstances?

[00:07:38] Yeah.

[00:07:39] Look, normally at those ones, they would have to go private only purely because they can't

[00:07:45] afford the buying capacity, right?

[00:07:46] So you have to be earning a few million bucks a year each to sort of get the buying capacity

[00:07:49] to do that at that higher end market.

[00:07:51] So you rarely get people that can do it with a banker.

[00:07:56] If it's over $5 million, then that's fine.

[00:07:58] We can still do it with a bank as a normal development loan.

[00:08:00] Yep.

[00:08:00] But under the $5 million mark, you do have to show a buying capacity even if it's a commercial

[00:08:04] bank.

[00:08:04] Yeah.

[00:08:05] So normally they will go down the profit market.

[00:08:07] Yeah.

[00:08:07] So essentially that means that they just need to be making sure they're factoring in

[00:08:13] those additional costs.

[00:08:14] Yeah.

[00:08:15] Yeah.

[00:08:15] It's really the key thing for that one is the holding costs because people might say, okay,

[00:08:20] in the loan term, they'll say, I'll do it in nine months, right?

[00:08:22] Yeah.

[00:08:22] By the time you do it, by the time you get OC, registered, get a sale, your nine months could

[00:08:27] be 16, 17 months.

[00:08:28] Yeah.

[00:08:28] And your interest at that point in time is that you're fully maxed out.

[00:08:32] So basically your monthly interest cost is huge.

[00:08:35] Yeah.

[00:08:35] Therefore, your profit comes down quite a bit.

[00:08:37] So it's really important that they factor in the loan term, you know, withholding costs.

[00:08:42] Yeah.

[00:08:42] Because holding costs really hurt you.

[00:08:45] Yeah.

[00:08:45] Especially at the end.

[00:08:46] So really in this current climate market, really factoring in a lot more time, factoring

[00:08:51] in a lot more time into the build, but probably the sale element too.

[00:08:57] 100%.

[00:08:57] The sale element.

[00:08:59] It's like normally-

[00:08:59] That's what's killing people at the moment.

[00:09:01] It is.

[00:09:01] It is.

[00:09:01] It is.

[00:09:01] Yeah.

[00:09:01] The sale element is- The OCs and the registrations, they take a bit more time as well.

[00:09:07] Yeah.

[00:09:07] But again, that depends on your builder and depends on your council.

[00:09:10] Yeah.

[00:09:11] But if you haven't got a sale halfway through or three quarters of the way through, that

[00:09:15] can- you need to factor in another three or four months.

[00:09:17] Yeah.

[00:09:17] Which at that point in time could be a substantial amount of money at sort of, you know, 10,

[00:09:21] 11% interest rates.

[00:09:22] Yes.

[00:09:23] On a three, four million dollar lend you've got.

[00:09:25] Yeah.

[00:09:25] That's quite a lot of money.

[00:09:26] Yeah.

[00:09:26] And it can be a tricky market too in terms of pre-sales at the moment?

[00:09:31] Very hard.

[00:09:32] Very hard to get pre-sales at the moment.

[00:09:34] Again, if it's the higher end and it's a downsizer, you've got probably a better chance

[00:09:37] than just a normal sort of duplexing to get a pre-sale.

[00:09:41] Yeah.

[00:09:41] But at the lower end, I think it's really tough.

[00:09:43] At the higher end, you've probably got a better chance, right?

[00:09:45] You've got someone that has a $10 million house, they're more willing to downsize to

[00:09:47] a $5 million luxury duplex or whatever.

[00:09:51] That's probably easier to get a pre-sale.

[00:09:55] It's not easy, but easier.

[00:09:55] Yeah.

[00:09:56] But to get pre-sales for the smaller sort of $700,000, $800,000 townhouses and that,

[00:10:01] it's not hard.

[00:10:02] It's very hard.

[00:10:03] Yeah.

[00:10:03] And in terms of barriers, is there any other barriers you're seeing in your game?

[00:10:07] You obviously are in that space day in, day out.

[00:10:10] Yeah.

[00:10:11] And obviously our listeners are people who are either getting finance or they want to

[00:10:15] get finance and looking to get it.

[00:10:17] What are some of the common barriers you're seeing where loans are falling over?

[00:10:21] Well, it's not falling over.

[00:10:22] We don't even do the loan.

[00:10:23] So basically the barriers are equity.

[00:10:24] The big thing is how much equity have you got to put into it?

[00:10:26] Yes.

[00:10:27] That's a big barrier.

[00:10:28] Yeah.

[00:10:28] And then the margin itself.

[00:10:30] Right?

[00:10:30] So basically if you get told by one real estate agent, it's going to sell for this.

[00:10:35] The builder's telling you to sell for this.

[00:10:36] You've got to do a lot of DD on both of those, get multiple different options to really hone

[00:10:41] down your margin.

[00:10:42] Because your 15% margin could go to 5% or very, very quickly.

[00:10:46] Yeah.

[00:10:46] So the biggest barriers is really getting the feasibility right with trusted builders, trusted

[00:10:53] real estate agents and multiple and having enough equity to put into the deal in the

[00:10:57] first place or having some spare just in case you need to tip it in.

[00:11:00] Yeah.

[00:11:00] And once you talk to people about equity, they need XML, say 50% of the land and then they

[00:11:05] need for the construction.

[00:11:07] It does put people out in the game.

[00:11:10] And then we look at the profitability of what they're saying.

[00:11:12] And then you say, well, what if the price went down 5%?

[00:11:15] Yeah.

[00:11:15] Or the build costs went up 8%.

[00:11:16] What happens then?

[00:11:18] And then all of a sudden they sort of get scared.

[00:11:20] And so, okay, I need to look at something a bit more profitable.

[00:11:22] Yeah.

[00:11:22] So they're the key barriers is really understanding their fees, but really making sure that the

[00:11:27] inputs are correct.

[00:11:29] And once they're correct, you've got to have a range around them.

[00:11:31] Yeah.

[00:11:31] You know?

[00:11:32] Yeah.

[00:11:32] Yeah.

[00:11:32] In terms of the different lending criterias between smaller and larger projects, what are

[00:11:38] some of the, how do they differ?

[00:11:40] Yeah.

[00:11:41] So more of the smaller projects, you will need, if you don't go to the private market, you

[00:11:44] will need to do borrowing capacity, like I said before, okay?

[00:11:47] Yeah.

[00:11:48] But for the larger projects, you can still go to a bank.

[00:11:50] So when I say larger, I mean 5 million plus would be typically what a bank would consider

[00:11:54] large.

[00:11:54] Then you won't need borrowing capacity and you do it as a development loan with a bank like

[00:11:59] a CPA or a NAB or whoever it is, right?

[00:12:01] Yeah.

[00:12:01] Or the big four, it doesn't matter who it is.

[00:12:04] So they're the two different sort of ways to look at it in terms of small.

[00:12:09] Now with the small developments, potentially you could look at the low dock option I mentioned

[00:12:14] before, but you really haven't got too many options apart from then going the private route

[00:12:19] as well if it's a true commercial transaction.

[00:12:23] And in that case, it could kill your profitability because of the interest and fees.

[00:12:27] Yeah.

[00:12:27] Okay.

[00:12:27] So there really is not too much, but the biggest difference is size does make a difference

[00:12:32] in terms of having to do borrowing capacity or not borrowing capacity.

[00:12:35] Yeah.

[00:12:35] You know?

[00:12:35] Yeah.

[00:12:35] And in terms of like when you, I'm sure you get people come to you that really want to

[00:12:40] push into projects.

[00:12:41] Yeah.

[00:12:42] Or they've done a project and they want to sort of keep pushing, but there's barriers that

[00:12:47] are sort of standing in the way.

[00:12:48] Yeah.

[00:12:49] What is, are there any things that you've seen that have been really helpful to help people

[00:12:54] improve their standing, financial standing, ability to really push to that next level?

[00:13:01] Have you seen any strategies that you found have been helpful?

[00:13:06] Yeah.

[00:13:06] It's really about looking at other people's projects.

[00:13:09] I think it's a really good strategy.

[00:13:10] So they come to us and we can talk to them about multiple different projects without mentioning

[00:13:14] names, of course, for privacy reasons.

[00:13:15] Yes.

[00:13:15] But we can talk about what other people have done.

[00:13:18] Yes.

[00:13:18] If other people have used the same build, are the same.

[00:13:20] So, and it's really about just going down and knuckling down and understanding, well,

[00:13:23] how much did that cost?

[00:13:24] Was it 2,500 per square meter to build?

[00:13:26] You know?

[00:13:26] Or was it 3,000?

[00:13:28] And what finishes were they?

[00:13:28] So if you talk to them about other projects, they can pretty much benchmark their project

[00:13:33] compared to someone else's.

[00:13:34] So it's been really good to just talk through different projects with people and what we've

[00:13:39] done personally, what some of our other clients have done.

[00:13:42] And they get a really good view of, okay, well, okay, I can do that or I can look at that

[00:13:46] or someone's done this.

[00:13:47] So I think benchmarking has been really good.

[00:13:51] Yeah.

[00:13:51] And I guess sometimes you'd get people come in where you look at the project they want

[00:13:56] to do, you look at the scenario, the sort of money they're going to need to borrow,

[00:14:00] but they just can't hit that mark.

[00:14:01] Have you found that?

[00:14:03] Have you found it?

[00:14:04] Sometimes people have gone away.

[00:14:05] They might have to go away for 12 months.

[00:14:07] Yep.

[00:14:09] Maybe grow their income, or if they're a small business, possibly look to expand or look

[00:14:15] to do some things.

[00:14:16] Have you found that's been helpful for people?

[00:14:18] Yeah, they have.

[00:14:18] Maybe just giving them a bit of a, I guess, a bit of a goal or something to work towards

[00:14:24] of, hey, you need to get to this place to be able to hit that mark.

[00:14:27] No, definitely.

[00:14:28] Especially in the smaller space and self-employed people, you could sort of, you told them you

[00:14:32] need to be earning this much profit to enable a loan of sort of this much, right?

[00:14:36] So they can go and they can look at their next year and see how they're doing it.

[00:14:40] They might need to go and talk to a JV partner or someone to come in with them to help them.

[00:14:44] They might be able to take some equity out of their other properties to put in to alleviate

[00:14:49] some of that gap.

[00:14:50] But putting a plan in place for them so they know where they stand or letting them know

[00:14:54] for you to do this project, you'll have to go private, for example, because of your venture

[00:14:58] circumstances.

[00:15:00] And therefore, that means you need to have a margin of this to cover that extra costs.

[00:15:04] Yeah.

[00:15:05] If not, if you think your business is going really strong and in the next six months,

[00:15:08] you're going to make an extra $100,000, fantastic.

[00:15:10] Just make sure that you have your ATA portals up to date.

[00:15:13] Everything's paid.

[00:15:14] And clean is very important at the moment when banks look at everything.

[00:15:17] And then they potentially can get a loan in six months if they know that the next six

[00:15:21] months are going to be great, they had a really good six months and their profitability is

[00:15:24] going to improve.

[00:15:24] They'll come back and then we can get a bank loan or a low-doc loan for them.

[00:15:29] So again, it's case by case, Nath.

[00:15:32] Yeah.

[00:15:33] But definitely, it's part of the conversation.

[00:15:36] We talked to them about what they can and can't do and what they should be looking

[00:15:38] at in terms of where they, how much their margin has to increase by to factor in the interest

[00:15:44] and costs and fees and the loan term that they're probably thinking nine or 12 months,

[00:15:48] but probably 18.

[00:15:49] Yeah.

[00:15:49] So it's really giving them understandings, oh, actually, I need to make this much margin

[00:15:53] to really cover myself.

[00:15:55] Yeah.

[00:15:55] You know?

[00:15:56] Because it's a bit of an eye-appet for some people, to be honest.

[00:15:58] And I guess it can be a bit deflating for some people where they thought they were able

[00:16:02] to do a certain type of project, but reality is they can't.

[00:16:05] Yeah.

[00:16:06] But sometimes, I guess it's facing the reality of where it's at and maybe changing your strategy.

[00:16:14] Yeah.

[00:16:14] And I think the other way too, sometimes people come to me and they've already got unencumbered

[00:16:18] properties and they haven't got income verification and they just want to do a commercial transaction,

[00:16:23] just want to build it and sell it, like a proper commercial development, and they don't realise

[00:16:28] that they can do something because of that equity they've got.

[00:16:31] So there are options for those people.

[00:16:32] So sometimes it goes the other way as well.

[00:16:34] Yeah.

[00:16:34] But, you know, but again, they will obviously work.

[00:16:37] It will be a commercial non-bank sort of private sort of deal.

[00:16:40] Yeah.

[00:16:40] But we're in the banking space, yeah.

[00:16:42] A lot of people think they can go and borrow, but the capacity is just not there.

[00:16:46] Yeah.

[00:16:46] And I think that's where it is important and to be working with a company who really gets

[00:16:54] projects and gets developments and actually, but not only just wants, doesn't, they don't

[00:16:59] just want to be invested into you for that project.

[00:17:01] They want to build an ongoing relationship.

[00:17:04] Like one thing I know from working alongside you and seeing how you operate, you very much

[00:17:08] come from that old school mentality of sticking with people for the long term, building long

[00:17:14] term relationships.

[00:17:15] Yeah.

[00:17:16] I guess that's where it can be tricky for investors and developers where there are some brokers

[00:17:24] out there that they're not interested in the long term.

[00:17:27] That's right.

[00:17:28] What, I guess for you, what, is there anything in your life or in your upbringing or in your,

[00:17:34] the way you carry yourself as to why you are so big on that long term investment relationship

[00:17:41] with people?

[00:17:43] Well, really for me, when I first left the corporate world to actually become, have set my

[00:17:47] own business, it was all about helping people and I enjoy that.

[00:17:50] Right.

[00:17:50] So, and it gives me the chance to do that a lot more than normal basic home loan.

[00:17:54] Home loan, you still help someone, but with the development, someone's sort of looking after

[00:17:58] their future.

[00:17:59] They want to improve their financial situation.

[00:18:02] So it's actually really rewarding working with people.

[00:18:04] And look, there's some people who always go and shop around for rates and stuff and that's

[00:18:07] fine.

[00:18:08] Yeah.

[00:18:08] But the, but most people will do value the relationships that we have and, and then the

[00:18:15] ongoing relationships that, that we can go, you know, or I've got, I've got clients I've

[00:18:18] done, you know, multiple five, six, seven deals with.

[00:18:21] Yeah.

[00:18:21] So, and I'll keep going over time.

[00:18:23] So it's, it's, I'm not sure it's upbringing or what it is.

[00:18:26] It's just, it's just, I enjoy it, you know?

[00:18:29] And I think the only way you can do this properly is you can't be transactional.

[00:18:33] It has to be relationship.

[00:18:34] Yeah.

[00:18:34] I mean, anyone that does transaction in any sort of, in your business as well, Nathan,

[00:18:38] transactional type business doesn't go anywhere.

[00:18:40] No.

[00:18:40] It's all relationship based for me.

[00:18:42] And I enjoy, I enjoy talking to people, you know?

[00:18:44] Yeah, yeah, yeah.

[00:18:45] You know?

[00:18:45] So, so yeah, so it's just, it's just something that I do enjoy.

[00:18:49] Yeah.

[00:18:49] And, and look, you know, it's, it's a, it's good to be able to help someone with knowledge

[00:18:53] that I've picked up over time.

[00:18:54] Yeah.

[00:18:55] Yeah.

[00:18:55] No, I agree.

[00:18:56] And I, and I, I, I say that very much for the reason of, I think it's important in this

[00:19:02] industry.

[00:19:03] And I know even through this podcast, I'm trying to educate investors and developers

[00:19:07] and builder developers to, to develop a team and build loyalty.

[00:19:13] And because the reality, the more you do that, you build trust.

[00:19:17] Yep.

[00:19:19] And, and your team get to know other players on the team.

[00:19:23] But the problem is when someone's bouncing from broker to broker to broker to broker to

[00:19:26] broker.

[00:19:27] Yep.

[00:19:28] They're chasing.

[00:19:31] It's very short term focused and not, not a long term view.

[00:19:34] Exactly.

[00:19:34] And it's not taking the whole situation and future situation into consideration.

[00:19:39] That's right.

[00:19:39] Right.

[00:19:39] So.

[00:19:40] Yeah.

[00:19:40] And they're constantly having to educate people on their.

[00:19:43] That's right.

[00:19:44] Their, their, their circumstances too.

[00:19:46] And their, their, their position of where, where they stand.

[00:19:48] And, and really like, it's just not a way of moving forward.

[00:19:52] Yeah.

[00:19:52] I've had some instances too with people.

[00:19:54] They, the banks actually rang me back and said, oh, this is your, this is the same deal

[00:19:58] that you put to us sort of two months ago.

[00:20:00] So someone just goes and shops it around.

[00:20:02] And people are going to be like that.

[00:20:03] You can't stop that.

[00:20:04] They do eventually come back, Nate.

[00:20:05] Yeah.

[00:20:05] So they do come back.

[00:20:07] But majority of people do value relationships, but those ones that bounce around, sometimes

[00:20:12] you don't want them as clients.

[00:20:13] No, they're not the people.

[00:20:14] They're not the people you want to work with.

[00:20:15] And look, even if you are an investor out there, like I want to encourage you that don't

[00:20:21] be that type of investor because for the sake of a small rate, you work with the right

[00:20:26] people.

[00:20:26] They're going to save your skin over and over and over and over again.

[00:20:31] And if someone's good at what they do, they should be.

[00:20:33] Yeah.

[00:20:33] They're renumerated for being good at what they do.

[00:20:36] And that's right.

[00:20:36] At the end of the day, I know your mentality is very much about seeing people win.

[00:20:40] Yeah.

[00:20:40] 100%.

[00:20:41] And do well.

[00:20:41] Yeah.

[00:20:42] Well, we all win, right?

[00:20:43] So it's a good philosophy to have.

[00:20:46] Yeah.

[00:20:46] And you're exactly the same.

[00:20:47] And other people that we work with are exactly the same as well.

[00:20:50] Yeah.

[00:20:50] Yeah.

[00:20:51] And I just think it's a core value and it's something that's important.

[00:20:53] And I just think that's why I like getting you on because you display that.

[00:20:57] You carry that type of mentality and loyalty.

[00:21:01] Yeah.

[00:21:02] Yeah.

[00:21:02] The amount of time you spend on the phone.

[00:21:04] I know you're always helping people.

[00:21:06] And I think it obviously comes from a core value of genuinely wanting to help people,

[00:21:11] not.

[00:21:11] Yeah, that's right.

[00:21:12] It's an important part of what you do.

[00:21:13] No, it's true.

[00:21:14] Thanks, Nath.

[00:21:15] No, it's good.

[00:21:16] At the moment, is there any particular loan, any particular type of deals that are available

[00:21:22] that you're finding are working really well for?

[00:21:25] Yeah.

[00:21:25] Obviously, every circumstance is different.

[00:21:27] But in that small project space, are you finding anything in particular quite helpful?

[00:21:32] The small project space, the low dock loan I mentioned before, that's actually working

[00:21:35] well for people who have had a really good six or nine or 12 months and haven't had a chance

[00:21:40] to do their financials yet.

[00:21:41] Yeah.

[00:21:42] And to do a duplex only, not more than two.

[00:21:44] Yeah.

[00:21:45] But again, if it's a pure, if it's a duplex to sell and stuff, the private market is quite

[00:21:51] popular.

[00:21:52] Yeah.

[00:21:52] The only issue with that is the margin is very tight.

[00:21:55] So you really have to be really good.

[00:21:57] But people are still wanting to do projects in that space.

[00:22:00] Yeah.

[00:22:00] What about, can we talk, obviously, interest rates change, but what sort of rates are we

[00:22:05] looking at for the low dock?

[00:22:06] Yeah.

[00:22:06] So low docks, you're probably looking at about in the low eights.

[00:22:10] Yeah.

[00:22:10] Okay.

[00:22:11] Where you're looking in the mid tens for the private market.

[00:22:14] You're looking in the mid sixes for the bank.

[00:22:16] Yeah.

[00:22:16] So it's sort of around that sort of range.

[00:22:19] And compounding interest for just for the private.

[00:22:22] Yeah.

[00:22:22] So the capitalized is private.

[00:22:24] So the private is capitalized.

[00:22:25] The other ones will be interest only repayments.

[00:22:27] Yeah.

[00:22:27] Yeah.

[00:22:27] Yeah.

[00:22:28] Yeah.

[00:22:28] So, but yeah, so look, there's some, that's some good product.

[00:22:31] But apart from that, again, case by case, if you got equity and there's margin, we'll

[00:22:36] find a solution.

[00:22:37] There's no problem.

[00:22:37] Yeah.

[00:22:38] You know?

[00:22:38] Yeah.

[00:22:38] It's just that I like to tell my clients that, you know what, probably not the right project.

[00:22:43] Yeah.

[00:22:43] Yeah.

[00:22:44] To look for another one.

[00:22:45] And he's roughly where you sort of sit.

[00:22:47] People really value that.

[00:22:48] And I've had a few conversations in the last week or two where people have gone away now

[00:22:52] and looking at some other projects because it wasn't probably as profitable as I thought

[00:22:57] when we speak to them.

[00:22:58] Yeah.

[00:22:59] Yeah.

[00:22:59] Because people do get feasibilities wrong too.

[00:23:01] Yeah.

[00:23:01] Yeah.

[00:23:02] That's it.

[00:23:02] That's it.

[00:23:03] And I think, I think a lot of people can get too emotionally invested into a site as

[00:23:09] well.

[00:23:09] Oh, yeah.

[00:23:09] Definitely.

[00:23:10] Where they'll convince themselves that it's going to work even though they'll come

[00:23:16] to you and you'll break it down and say, look, there's a better site out there.

[00:23:20] Yeah.

[00:23:20] Walk away.

[00:23:21] It's funny because I have a lot of discussions with people and then it takes me a while sometimes

[00:23:25] to convince them.

[00:23:26] Like for me, I'm convincing them not to do something which means there's no financial

[00:23:30] benefit for me at all.

[00:23:31] Yeah.

[00:23:31] Because they're not doing it.

[00:23:32] Yeah.

[00:23:33] You're doing yourself out of the job.

[00:23:34] I am.

[00:23:34] I am.

[00:23:35] But I have those conversations quite a bit and it's a good discussion to have.

[00:23:39] Yeah.

[00:23:40] They keep on coming back with certain things and then, yeah, and then at the end of the

[00:23:43] day it's their choice.

[00:23:44] Yeah.

[00:23:45] But I'm really big on making sure we tell them what we think.

[00:23:48] Yeah.

[00:23:48] And again, look, they're going to make the call, right?

[00:23:51] Yeah.

[00:23:51] And if they make the call, then happy to still do the line but they just need to understand

[00:23:54] the risks involved and what they're taking on.

[00:23:56] Yeah.

[00:23:56] And if they do that and they can mitigate those risks, then go for it.

[00:23:58] And I guess that's where I talk a lot about different pieces of the puzzle, being involved

[00:24:05] before acquisition.

[00:24:07] Like obviously it's important to have your planners, designers involved at acquisition

[00:24:12] but I think it's so important to have your finance sorted.

[00:24:14] Oh, yeah, definitely.

[00:24:15] Or know what you can do and know what equity you need to put into land or a house or whatever.

[00:24:20] Yeah.

[00:24:20] And that means you might have to get a partner on board.

[00:24:23] Yeah.

[00:24:23] Yeah.

[00:24:24] Yeah.

[00:24:24] So.

[00:24:24] And I guess you've probably seen people slow up their development journey by.

[00:24:28] Yep.

[00:24:29] Unfortunately buying the wrong site.

[00:24:31] Definitely.

[00:24:31] Or moving on a deal.

[00:24:32] Maybe they could have, if they'd got some good advice prior to.

[00:24:37] Yeah.

[00:24:38] It depends who they're listening to at the start, right?

[00:24:39] They're listening to a real estate agent or they're listening to, you know, their designer

[00:24:43] or their builder.

[00:24:44] Yeah.

[00:24:45] What they can do.

[00:24:45] So sometimes they might buy something thinking they can get a C2C and they haven't

[00:24:49] spoken to you yet.

[00:24:49] Yeah.

[00:24:50] You know?

[00:24:50] And they can't.

[00:24:51] And then there's another eight months or six months of counsel, which is cost.

[00:24:54] Right?

[00:24:54] Yeah.

[00:24:55] So it's all about mitigating the cost of the project.

[00:25:00] Yep.

[00:25:00] And look, I think I might wrap it up there, but I think it's important for people to get

[00:25:07] someone who's a specialist in finance.

[00:25:09] What's the best way for people to get in touch?

[00:25:11] Like, is there a way people listening who want to really build a strong relationship

[00:25:17] around their finance piece?

[00:25:19] Is there, what's the best way for people to get in touch?

[00:25:21] Yeah.

[00:25:21] Well, probably you could just look at our MoneyQuest Wollongong socials or MoneyQuest

[00:25:25] Wollongong website.

[00:25:26] That's probably the best way.

[00:25:27] In touch with yourself too, Nathan.

[00:25:29] But yeah, it's pretty much that you can, well, you can even do MoneyQuest Randwick or

[00:25:33] Camden as well.

[00:25:34] But Wollongong's our main hub at the moment where the staff is.

[00:25:37] Yeah.

[00:25:37] So just MoneyQuest Wollongong.

[00:25:39] Yep.

[00:25:39] We've got a website.

[00:25:40] We've got, yeah, the normal sort of channels.

[00:25:43] Yeah, perfect.

[00:25:44] And I guess from there they can book in a-

[00:25:46] They'll just ring into the office.

[00:25:47] A consultation or a conversation around.

[00:25:49] Yeah.

[00:25:50] We've got reception open from 8.30 to 5 o'clock every day.

[00:25:52] So there'll be someone always answering the phone.

[00:25:54] We don't work off mobiles or that.

[00:25:56] We work off through our office.

[00:25:58] Yep.

[00:25:58] So, and then we'll go from there.

[00:26:01] Excellent.

[00:26:01] And they'll book in a meeting with myself.

[00:26:03] Terrific.

[00:26:03] Well, look, I hope you've enjoyed this episode.

[00:26:05] It's been very informative.

[00:26:08] I want to encourage you, if you've got a lot out of this episode, share it around with

[00:26:12] people you know, people who are interested in that investment space.

[00:26:15] And we'll make sure we put Dino's details, MoneyQuest details in the show notes.

[00:26:21] So I want to encourage you, if you are in that place where you want to do a development

[00:26:25] and you need a finance piece, make sure you reach out to MoneyQuest Wollongong, Camden

[00:26:30] or Randwick, and talk to Dino and his team.

[00:26:33] I'm sure they'll be able to look after you.

[00:26:34] So thanks for listening and we'll see you next week.