07: Subdivision Secrets with Matt Jones

Did you know with just two investment properties and one single renovation that you could put over a million dollars in the bank? It's true. And why stop there? Welcome to your Property Success podcast, the show that explores the practical steps to making your property investment dreams a reality. And now here's your host, a lady who showed up to her first camping trip with a suitcase and pajamas. Jane Slacksmith.

Yep. That's true.

How can that possibly be true? I thought you were a country girl.

I am. But when you live in the country and, like, the whole country's there for you to. You know, the riverbank, at the end of the day, everyone goes down there and camps and you're like, well, I'll go back to bed. And, you know. So when I did actually go on my first camping trip over at Monkey Mire in Western Australia.

Oh, really? Yeah.

I turned up. Yeah. With my pyjamas. And everyone laughed at me.

And your suitcase.

And my suitcase. I mean, camping's not for me.

No. What about these days?

No, no, still not for me. I have this romantic notion that we will go camping, but it hasn't actually eventuated. So. Welcome back to your Property Success podcast and episode seven. Thank you for joining us today. We really appreciate you being here, and this is going to be a very interesting and enlightening podcast. So let me start with a question. Imagine for a moment that you could create equity out of virtually nothing. No building, no renovation, nothing other than the land, or, as today's guest says, just by moving a few pegs around in the dirt. Sounds pretty good, doesn't it? I am, of course, talking about the subject of today's show, subdivision.

Oh, I've been looking forward to this episode, Jane. Subdivision is something that certainly floats my boat for the. The reasons you just outlined. You know, you're creating something out of thin air that wasn't there before, or, you know, creating that higher and better use. So I reckon today's episode's going to.

Appeal to a lot of people.

I think so, too. And, John, who better to talk to us about subdivision than subdivision expert Matt Jones?

Yeah.

Oh, for sure. Matt has an absolute ton of knowledge and experience, and, you know, it's going to be a real privilege, actually, to tap into some of that on today's episode. So he's promised us that he's going to be sharing all of his secrets, so. So I really think this one's going to be a doozy.

I think so, too. Look, Matt's a great friend to us here at your property. Success and Matt's story is really one out of the box. Not long ago, Matt Jones was working 9 to 5 as a postie and making about $35,000 a year. Amazingly, he did an incredible reshaping of his life from postie to a property investor and is now living the dream in France. And he did this all by using subdivision. Today he's going to share with us all of his subdivision secrets and some extremely practical tips, I hope, and techniques that you can put into play straight away. Things like the practical steps to doing a subdivision and how to use multiple exit strategies to minimise your risk. We've also asked him to share with us how he uses private finance to fund his deals and how he realised that money wasn't everything and packed up the family and moved to France. Also, he's going to share with us the biggest mistakes that he's made and how you can avoid them. So don't go anywhere. We have a huge show for you coming up with today's fantastic guest, Matt Jones. Hello, Matt.

Wow. Thanks, Jane, for having to be here. Love that intro.

You can record that and use it later.

Thank you.

You have come a long way, haven't you?

Yeah, yeah, it's been a fun ride. It's been about 10 years now, I suppose, and not without its challenges. You know, it wasn't. I didn't take the easy road. It was a lot of learning and continued to learning a lot of mistakes. But it was really just about making a decision that I didn't want to swap my time for money anymore. And property really resonated with me and I just dived into it. Started doing Renault in the beginning while I was a postie. So the postie job was really my transition job, I suppose. I used to be in theater as a lighting technician for 15 years and becoming a postie just sort of cut my wage in half, but it also doubled my headspace so I could learn how to become an investor and do some deals along the way. So that's kind of. That went for a couple of years and then subdivision was where it really kicked off for me. Made a little bit of money with Renault, but I found it was. Took a lot of my time. And whereas subdivision, it really resonated with me because there was a lot of exit strategies there that I could tap into. So for me, that really lowered risk when I got into a deal because I could get out of it in many different ways and I could leverage my time a bit better as well, because as you probably know, there's a Lot of waiting with council. So there's a lot of pockets there where you're not doing anything and that allows you to get ready for your next deal and start getting multiple property projects happening at once. And once I kind of got my head around that, it really sort of. I left the postie job then and haven't been back since. That was in 2007. And I just keep sort of evolving, I suppose, once you start, you keep going to the next thing and getting into a bit of development and then joint venturing. And now we're overseas in France, living over here while it all happens at home.

So let's just go back, you know, 10 years ago, you were a postie. What was. Well, even as a lighting technician, what was the turning point that just went, you know, this is not enough. Was there a book? Rude awakening, what happened?

Yeah, it was kind of everything happened at once. I was just getting to the point in my job where I kind of just see that I saw that I could keep going higher but it wasn't going to get any more fun. And I didn't really see. I didn't like what I saw ahead of me, basically. And I started to question, is there another way? And I had no experience with property shares, business, anything. I didn't even know it was there. It wasn't in my realm of thinking. And I was 33 at the time and I picked up a book at the airport on my way down to. I was flying down to Melbourne to see my dad and it was a stigmat, knockbook nought. 130 properties. Read it, loved it front to back, on the way down, on the way back, and then just went, yep, that's what I'm going to do. I'm going to be a property investor. And I quit my job pretty much a month later from the theater, which was crazy at the time. I look back and it was a really silly decision. I don't encourage anyone to do that.

You need the borrowing capacity, don't you? You need that boring capacity. The job, really, to get to the.

First property job, then went, hang on a minute, I can't borrow money now. And my rent and I've got a credit card debt, okay, So I need to go and find something else. So that's when the posting thing came.

In and you said that, you know, you tried renovations to start with. What was your first deal? Can you tell me about that?

Yeah, I started doing a mentorship and then I started looking for a reno project because I was pretty handy and I Figured that was. Although I could get my head around at the time, just sort of flip a property. So start to build our capital base because we didn't have a lot of cash behind us. So after about. I think it was about seven months of looking around and understanding the market and learning what a good deal was, I picked up a little two better deceased estate in Stafford, in Brisbane, and just did a Renault. Did it all myself, which was nuts at the time. Took a long time. Took about six or eight months, I think it was. Made some money. But it was probably more that the market went up than anything covered up any mistakes I made. But I learned a lot about it.

A lot of renovators find that, don't they? They go back and do the numbers. It wasn't really the renovation, it was capital growth that saved their bacon.

Oh, exactly. Yeah. I mean, we created a nice product for the market, but yeah, it was really just the market going up and it was just a lot of hard yards, a lot of mistakes, and I didn't understand leverage at that time. I thought if I did all the work myself, then I'd save money. But really I was just missing opportunity by being on the tools. And it nearly killed me in the end. I had to go on a holiday to Thailand for a month after that just to get over it and rethink my whole strategy.

And there goes the whole profit, Right, exactly, yeah. And you start again. You said that you were mentored. Have you had a lot of value by doing that? Could you have done it by yourself without having that support or education?

Mentoring has been the key. You know, I'm still mentored today in various forms. You know, that was very much the beginning, just getting the basics down. And then as I grew, I needed better mentors. Not that my original mentors weren't great.

Just outgrow them.

Yeah, yeah, yeah. And getting more advanced and thinking outside the box and learning how to get creative with finance and then personal development as well. You know, I have a life coach that helps me with various things that's become more of a business coach now. And I have a lot of colleagues that mentor me as well just by being a part of their projects. So it's kind of an informal thing. But yeah, definitely. Mentoring is the key. You've got to have someone that's bigger and better than you that can sort of stand behind you and point you in the right direction and work with you.

And so you move from flipping and renovations and what kind of was the bright light that went, oh, there's gotta be more than this. I'm not gonna need to have a month's holiday after the next.

Yeah, I knew that I couldn't be on the tools doing Renault that way. And I don't know what it was. I think it was just something in the mentorship I did at the time that they touched on subdivision and I just related to it. I just liked the fact that you could extract profit or equity out of something that wasn't there before by cutting up the block. Like a big backyard, it's kind of. You don't see it, but then once you realize, you go, hang on a minute, there's real profit there. And the first one I just had a crack at. I kind of knew the basics, but I really learned along the way on that first subdivision and did really well. It didn't take a lot of my time. I think we knocked it all over in six months, made about 50 grand, and it wasn't hard work. I was ready for the next one straight after that. And that's when I knew, okay, well, I've made 50 grand in six months, or I can make 35 grand as a poster over 12 months. I think this is going to work.

Just for those people who aren't aware of subdivision, there's actually multiple subdivision techniques, isn't there? Do you want to take us through those?

Yeah, I mean, that's the beauty of it, I think, the many ways to get out of the deal, and I think that's important to know how you're going to get out before you get in. Even when you're holding it, you need a plan of attack of how long you're going to hold it for or when you're going to realize that gain and subdivision. You know, for instance, a one into two, there might be a front block and a rear lot. You can renovate the front house, hold that, sell off the back block, pay down the line on the front house to create a positive geared property, sell them both off and realize the profit. You can build at the back, you can knock the front one down, build there as well. There's probably about six or seven strategies to get out of the deal, and I sort of assess them all. Pick the one that's most profitable and easiest. But I'm also ready to change. If the market changes or if I think it's going up, I might want to hold onto it for a bit longer or go through with the development, or if I think it's going to drop, I can just dump it or get rid of the backlog to sort of reduce my debt while I can. So that was the biggest sort of attraction, I suppose, was that I could lower my risk by doing that, but also being able to manage my time a bit better, given that I was on the tool so much. This was such a far stretch from what I was doing. I realized that, okay, the application's in council for a couple of months. What can I do now? I can look for the next deal, I can prepare for finance for the next one. I can find a joint venture, whatever I need to do to keep everything rolling and gathering momentum.

Great. And I mean, obviously you've gone from giving it a crack to being very successful at it. There would have been hurdles and problems along the way. Was there anything specifically that? I guess we'd look back and call them learning opportunities now. But things that really come to mind.

Yeah, a big one was managing the team. In the beginning, I just assumed that when you employ a town planner or someone that's working on your infrastructure or whatever, that they're experts in their field and they're going to do the right thing. And generally they do. But what I came to learn was no one really cares about your deal more than you, so you need to be on top of them all the time in a democratic way. You don't want to be forceful about it. You just need to make sure people are moving forward on your project. Because time is what kills the deal. In the end, if you're trying to flip it and get out of the deal. I kind of equate every day to a dollar value. So $500,000 house might be costing you $100 a day. So every day I wake up, there's another hundred dollars in holding costs. So it motivates me to get on the phone, make sure everything's moving forward. Everyone's booked in and scheduled, so it keeps happening. And I made a couple of mistakes with managing people. For instance, there was a survey plan drawn up once, and the easement, the access easement was on the wrong side. And I looked at it and I went, that looks like it's on the wrong side. Why is that? And I didn't question it because I just thought, well, they must have a reason that they put it there.

They're the experts.

Yeah. They know what they're doing. I'll just let it go. And it was a nightmare because it went into council, they picked it up, it came back out. So I lost probably three or four months on that deal and probably about 15 grand just in wasted time. And having to resubmit the application. And I approached the Templar and I said, why did you put on that side? And they just hadn't. He hadn't communicated with the surveyor properly. So they just hadn't talked it through. And I knew, but I just didn't have the confidence, I think, at the time to pick them up on it. So now I'm always really wary and quick to ask questions if I don't understand something, because, you know, no one cares about it more than me. I'm the one driving it. So you've got to be on top of everyone all the time.

Absolutely. Well, that's a great, great tip. And I guess that, you know, over the years also, you know, you've. You've kind of built your own strategy and system. You know, what's. What's your system that you've been able to replicate time and time again, that's the most successful for you?

I think it's been to do with joint venturing now. I mean, subdivision. We got into a rhythm where we could. We could keep doing deals and keep flipping them, putting the cash back into the next deal and sort of build that capital base. And then I kind of got to a point where I just had to take stock of things, where we had a couple of kids at that point, and I was really wanting to step back a bit more. I felt like I was on site a lot and it was turning into a job again. And I could have kept going, could have just doing lots more deals, but my wife and I just sort of sat back and thought, why are we doing this? We're comfortable now just revisiting the whole why factor and taking a step back. And we wanted to go and travel overseas. We wanted to experience that with the kids and learn a new language. And so I started to restructure everything so that I could do that, which meant changing everything that I did. And it forced me to learn how to delegate better and leverage better. And that's when I got into joint venturing a lot, lot more, where I contribute funding or servicing to other people's deals or I help them with investors or they come into my deal. And it just sort of opened up a whole new world of financing for me where you didn't have to just save that 10 or 20% deposit and get the loan from the bank and do it. Traditionally, there was other ways, and once I was exposed to that, it just kind of took everything to a whole new level and took away the glass ceiling. And it was just a case of Learning how to do it safely and properly and professionally. And once I got the hang of that, that's become a system now where I'm not as involved in the deals, but I'm still part of them in a way that I can contribute while I'm over here in France. And then obviously when I come back from France, I'll kick into gear again and get back into subdivisions because I kind of miss it a little bit now. It's been 18 months I've been away and. And I like to get back into the deals. But at that time it was just, okay, I just need to step back and refocus here and spend some time with the kids and do the things we wanted to do, which is the reason we got into property in the first place.

And those joint ventures that you mentioned, that was moving more into development, was it, than subdivisions?

Not really. They're so versatile joint ventures. That kind of happened across all our deals. So we just started to realize the power of using other people's money and it allowed us to do more deals. So in the beginning it was on our deals where people would fund them just like a money partner. We'd pay them a set return and they would be like a silent partner, I suppose, and that would free up our cash. So obviously the cash on cash return was a lot better and we had funds available if we needed to do another deal. It would take a little bit of the profit, but not a whole lot, really, in the grand scheme of things, because you'd only be borrowing it for three to six months. So that sort of allowed us to move further in our existing deals and then from there. Yeah, it meant I could tap into bigger deals, larger development deals that were out of my skill level, but with colleagues that I trusted and I could see their results. So it was great, actually, because it just lifted my exposure, I suppose, to other projects that I normally wouldn't be able to do, like an eight townhouse development or a 30 unit development. You know, it's just out of my league. But seeing these guys do it, I could go, well, how can I contribute? And it's great. It's lucky. Being mentored along the way. You know, you're contributing, you're not making decisions, you're not exposed to the risk as much, but you're still seeing it all happen and come to fruition.

So with private funding, I'm sure people out there have been affected by APRA and ASIC and bank policy changes and, you know, the type of residential funding that we'd Normally, see, with that kind of subdivision, the two into one type of arrangement would be somewhere between 4 and 5%, even lower than 4%. But when it comes to private funding, it's short term funding and you're usually paying a higher interest rate. What's that in the vicinity of just so people have a bit of an idea of what you're talking about?

Yeah, it depends on the market and it depends on the deal as well and what you're contributing. So for an example, maybe if you're tipping in 100,000 or 200,000 to a project that might be for six or 12 months, you might expect to get 10 or 12% return. But we've paid up to 25% for money, depending on how scarce money was in the market, what the credit situation was like, and if the deal was worth it, you know, we were Happy to pay 20, 25% for funding for a short period of time. If it meant we could do this deal, it was going to make us half a million bucks or something. So it's, it's kind of like people.

Often they concentrate on the interest rate, don't they, rather than that what it can allow you to do?

Yeah, exactly. It's just the cost of the project. It's just like, you know, painting a house, you know it's going to cost you 10, 15 grand. Well, so is this money. This money's going to cost you 10 or 15 grand. It just goes in as another line item, as a part of an expense. So once you see it like that, it's really just another tool, you know, to get you moving forward on that project.

So you're saying that you started with the flipping and the renovation strategy and went to the subdivision and flipping to build up the cash. And now obviously, you know, you're in the JV space and probably going to come back and get your hands dirty again. But did you ever hold properties that you had?

Yeah, it's something in the early days we left out of our wealth creation strategy. And it took us a little while to work that out because we're so focused on flipping things and building that capital base and getting into the next deal and getting into bigger deals and pulling a wage from it as well that we, we weren't holding anything. And I look back on that and go, yeah, we should have, we should have done more of that. So that's, that's what we changed, you know, a couple of years ago, where we're more focused on that now. So when we're doing the joint ventures we try and hold something in there like you might get a return, but try and keep something out of the development. And that's, that's our focus. We probably should have started that earlier. I do not regret that because we may not have been able to go as forward as we have. But I definitely think it's something that people should keep in mind. If you can get a balance there where you're building that capital base. But yeah, if you can hold things in the long term as well with the right property, then it's going to get you there quicker, I suppose, depending on what your goal is.

It's interesting because I talk to people a lot about their goals and timeframes and they might say, I want a $100,000 passive income in 15. And I get onto my little calculator and it says, well, you need $2 million in the bank earning you 5%. If you're doing little flips and doing 20, $50,000 at a time, you need a lot to get to 2 million. Whereas in 15 years if you can have two or three really well placed properties, it's almost that set and forget and you can flip some along the way. But those are kind of like the money in the bag for your future where if you did sell them, you could put the 2 million in the bank. I think that combination is really a great strategy. It's interesting to see you've come to seeing and applying that today.

Yeah, it's something we missed and because I always thought if there's growth in the market, because I never expected growth, because if I did that then I would be fudging the numbers. So I would always look at growth as just cream on the top. Whereas now I try and balance it more and go, okay, let's get something that we can hold for a while. This isn't just about flipping this or, or this development, it's about buying the right area, providing something to the market, you know, for the long term. So yeah, it's, it's just a shift in thinking that I probably should have had a little bit earlier, but it's there now, so we all Wish we started 10 years earlier, so I'll just apply that now.

People ask me, what's your biggest property mistake? I said not starting 10 years earlier. So, so I guess, you know, looking overall because it's been an amazing journey and you've, you've done something that not a lot of people do and that like try different strategies and perfect them, you know, in your whole journey, if you're Going to give people advice who are just starting out and thinking about it. What would be the top things that you say you should avoid?

Firstly, I'd say be realistic with your time, with your timeframe, like what you can commit to being a property investor. So don't sort of like, I was very gung ho in the beginning. My first goal was to buy 12 houses in 12 months, which is utterly ridiculous, but that's. I was gung ho and very passionate at the time. But you've got to be realistic about what you can contribute because if a part time effort kind of yields a part time result. So that's fine if you can only commit a part time effort. But just bear in mind it might take you a little bit longer to get there or you need to maybe sacrifice a few things in your life to allocate the time to get there. But whatever you do, do it consistently. If you commit to something and it's going to be three times a week or once a week or whatever it is, do it that three times a week, every single week. Because after six and 12 months, what I've learned is the results are phenomenal over that period of time. It might not seem like much, but when you're constantly having a go, just little things along the way, you just get there so much quicker and so much easier.

I guess the management is really interesting, your point about managing other people. Because I guess that realization that it's your deal, right, so you've got the most to say about it, the most to lose and the most to win. And at the end of the day the buck stops there. So you can't really abdicate that responsibility to others.

Yeah, absolutely. Even if you're a silent partner and something I still say to investors, you can't abdicate it. You put the money in the deal, but you still need to know the numbers and know the deal and know the market. The more knowledge you have, the better decisions you can make. If you're trying to abdicate it, you're probably going to get burned. And you don't have to be the expert. I'm absolutely not the expert in many, many facets and I don't really want to be. I just need to know enough to make a really good informed decision about where my money goes and when it comes back and in what form. The education side is just so important. The time factor. I think a lot of people waste time with their deals. I see. So that $100 a day factor is a really good thing to keep in the back of your mind because it just adds up and erodes your profit really quick if you're not sort of moving forward and managing those people to create momentum and getting into the next deal. Because as soon as you stop, everything kind of moves backwards. It doesn't just stop, it actually goes backwards a bit because it takes time to build that momentum. So, yeah, that consistency, using your time, managing people really well, knowing your numbers extremely well, don't fudge them. I remember doing that in the first deal that I nearly made a big mistake with, where I was so frustrated that I couldn't find a deal. I started to get started to massage the numbers a bit, thinking, oh, you know, we'll probably get a bit more growth here, I might be able to save some money there. Oh, it actually looks alright now and then. Luckily I got out of the deal because something better came along. But if I'd stuck with that, I looked back on that one and that would have been a tragedy. You know, it could have set me back three to five years just because I was getting a bit frustrated and. And kind of just fudging it a little bit. So take note of the numbers. Be conservative with them and don't try and trick yourself. They don't lie. They don't lie in the end.

Exactly. It all comes down to black and white with numbers, doesn't it?

Yeah, yeah. And with spreadsheets and everything, it's easy to sort of change that formula and make it look better.

Rounding errors is what we put it down to.

Right? Yeah.

So for people who are just starting out, we talked about the book that started it all. There was the mentoring that assisted you along the way. What kind of advice would you give people who are kind of looking at property and going, is this for me?

A couple of things. First one is becoming an area expert. And that means focusing on one or two suburbs. If you need to start on the area that you live in, potentially depending on where you live, but knowing that area better than anyone else, better than the agents, better than the other investors, so that, you know, when something comes on the market, what it's worth, what it'll sell for, what you think you can get it for, what the market's asking for and documenting that, you know, spending some time, get a logbook, do it electronically, whatever you have to do, and aim for like 100 deals and go in and crunch numbers on 100 deals. Once you get to 50 or 60, you'll start to be able to do it in your head. You'll feel more confident about it, because you'll know, you know, it's not just a guess anymore, it's just, okay, well I know that that probably that came on the market is going to sell for 450 and anything more than that is not going to work. So focusing on being an area expert and you can do that for free. Lots of ways to make it happen. Being out in the market and talking to agents is probably the best thing. Building a network I think is another really good one. Being around others that are doing. Yeah, yeah, yeah. Just that support because it's a bit of a roller coaster and there's no one sort of kicking you up the butt every day like a boss to keep things forward. So if you're not getting that support from a spouse or friends or whatever, you need to be around people that are going to lift you up and are like minded and believe in what you're doing and they're doing the same thing and you kind of resonate with each other. Kind of like an accountability buddy, I suppose, or going to groups that facilitate that or just someone that you know, that's doing property, you know, hang out with them, have coffee with them about the problems you're having, the triumphs that you've had.

Because often your friends and family have an experience that can actually be a detriment to you, this new interest, can't they?

Yeah. I stopped telling people, you know, what I was doing unless they were interested. In the early days I was because I really wanted to help certain people. You know, this is what I'm doing. You can really help yourself by doing this, this and this. And if they're not ready, then it's just falling on deaf ears and it's just not worth it. I'd rather talk to people that have an interest, want to make a change in their life and then you're happy to sort of show them that path if they're ready to take it and then they'll create their own journey from there. It's just pointing them in the right direction. So yeah, I tend to just keep it to people that know what I'm doing or are interested. Otherwise it can drag you down a little bit.

Exactly. Well, what's the most enjoyable part of it? What have you loved the most?

I love doing deals. I mean, I love the numbers, crunching numbers. I can have my head in a spreadsheet for too long sometimes and I love seeing, particularly with subdivision, I just love seeing something coming out of nothing that wasn't there before. It was just a shed in the Backyard that's become someone's home. And you've been able to help someone get to that point and you've profited from it, which in turn is helped your own lifestyle. And then we're moving into a lot of philanthropy stuff now, which is really floating my boat, where you're kind of looking bigger than your own needs. You can help others achieve what they want to achieve and different charities and things. It's just really. It gets you out of bed in the morning that you can, you can do that. And it's a privilege to be able to do that and just being around people.

Sorry, I was just gonna say it's kind of boring, isn't it, when you know what to do and you can do it yourself and you've had that success and you're like, well, what now? I can do this? And you've kind of proven the fact that the young person 10 years ago couldn't have done it, but you've kind of got to that point and then it's like, well, I can tell other people how to do it. Let's see what they can do, you know? And that's the exciting part, isn't it?

I love seeing people have that shift in thinking where just last night we did a webinar and there was just the great feedback that came back from it.

That's.

For some people, it's actually really life changing. And when you have those conversations with people about why they're getting into property because there's something really emotional that has happened in their life that they really need to fix something. They need to. They can't do work anymore. Maybe there's been an accident or something, you know, and. And it's a real powerful reason and you really want to help those people and to see them have that shift in thinking and change their life and it doesn't take that long, you know, to. It's like what we're doing is rocket science, you know, it's not that difficult. It's just having the mindset to want to do it and just having the courage to go and have a crack and having the reason in the first place to do it is all you need. And having that support around you, it's just a privilege. I said it's a real privilege to be able to help others get there, because I got a lot of help in the beginning too. So it's nice to give back where you can.

Absolutely. Well, where to now? You're in France. Why France? First of all, why France?

France? My wife and I came here separately, like 20 years ago before we'd met each other, and it just resonated with us. And we picked up a bit of French and, I don't know, hearing people speak a second language really impresses me. It's just something that I go, wow, that's so cool that you can talk another language or three or four different languages. So it's something that I wanted to learn in my lifetime. And so we thought, well, now's the time to do it.

Immersion.

Yeah, one and three or four at the time. And we just thought it'd be a great opportunity for them and for us to see it through their eyes was really exciting. And so we just packed up the house, put it in a storage shed, sold the cars and left and just immersed ourselves here.

So you're having French lessons. How are the kids going? Are they better than you?

Oh, yeah. Eli's five. He's been going to French school for about nine months now. And within three months he was. He'd surpassed me. Just incredibly quick, how fast they pick it up. And just watching him communicate with the friends at school and teachers and our friends that come over, I'm always asking him, what did they just say? I missed that. And so he's really embraced it, which is the best part about it for us and the fact that we've made some really lifelong friends over here and fully immersed ourselves in this little town here. There's only about 3 or 4,000 people that live in the town we live in. So we're the crazy Aussies here that are trying to learn French and just be a part of the community. And everyone's asking, why here? Australia is so beautiful. It's my dream to go to Australia. Why are you here? Well, we just want to be normal, you know, we just want to be normal in your little town and experience it. Yeah, yeah.

How do you work from there? Is it difficult?

No, it's been great. I mean, it was definitely. It took us about 18 months to restructure things at home to go, right, how are we going to do this from France? And that was a really good test because everything that I did I had to think about, okay, how do I do this in France? How do I do this in France? So it meant I had to bring in a really good team. I had to restructure everything that I did as far as systems go, because I was very hands on myself. And that was something probably a negative trait of mine, where I was a little bit too controlling or just like to do everything Myself, I thought I could do it better than anyone else, so I had to really re. Educate myself about how to delegate better and leverage better so that we could do this. And then once we got here, it was. It all kind of worked. And I've just got some amazing people around me that are back home that are doing things for me and just, you know, every day I just get online for probably three or four hours, answer emails, maybe have a chat to somebody, plan our next networking meetings, look at a couple of deals, whatever, and it works. You know, with technology these days, it's really not that hard. It's just the time zone really. I got to. Sometimes I'm up at midnight to be in business hours in Australia, but that's fine with me. It allows me just to. It actually frees me up a lot more because of the times. And I find, I look at my calendar and I go, like someone says, oh, can I chat to you on this day? How's your calendar looking? And I look at it and go, well, I'm free, I'm free. I've got nothing.

Choose a day time anytime, as long as it's after 5pm and I'm awake.

Yeah, exactly, because there's no one, they're all asleep, you know, in the daytime here. So it's kind of good because problems get solved by themselves and if that need help, then it's just in my inbox the next day. And I don't have the pressure to answer it straight away because I know they're asleep. So I just go through everything at once and then it's waiting there for my assistant when she wakes up. And we just kind of tag team like that each day, every 12 hours. And it works really well. So we know we can do this, so we know we can do it again. So when we come back, we'll plan the next adventure, I suppose. Keep reinventing it, I guess.

Well, I guess the question is, when are you coming back? Because you've got one of the most amazing meetup groups in Brisbane and I know that just, you know, down in Melbourne, we've even heard about it, that people just love it and hundreds turn up, you know, are they going to see your face again?

Absolutely, yeah. Yeah, I do miss it, actually. It's been 18 months. Like I said, we should be back in early next year is the plan at the moment. And yeah, I'll definitely be coming back and doing the meetings because I miss that interaction and I do enjoy them and I get the same value as everyone else out of it just the people that I meet and the strategies that I continue to learn just by being in the room. I do want to come back and I've pulled in a lot of favors, I think from people running the meeting for me. So I've probably sort of outdone that by the end of this year, I think. So I should really get back in. But I mean, I've been tapping in via video link and Skype and things, so my face is still there. People still know who I am. But it'll be nice to slip back into things when I get back and be a part of that group again.

And look, it's interesting. You talk about systems and teams that allowed you to work overseas and the effort that's put into creating that for your business. But it's the exact same kind of methodology that you put into a property investment deal, isn't it? You put in the system, you put in the time and the effort up front and you get the results to be able to enjoy in the end.

Yeah, it's so true. I can't remember who it was, but they said the sooner you treat your property investing like a business, the more successful it'll be. Because I remember in the early days it wasn't like a business at all. It was a hobby. Paid work was everywhere. I wasn't managing it properly. And then once you start to scale up, it gets really messy. So the sooner you sort of treat it like a real full blown business, you go to work at 9 o' clock and you do emails, you do bookkeeping, you do whatever you have to do and then you can start leveraging that out to other people once you know what the system is. And that's what I had to do with my business is put in better systems so that I could, I could hand them on to someone else so that they could do it. I couldn't. If I gave them a big jumbled mess, then it really wasn't fair on them to try and pull it apart while I'm on the other side of the world. So it was important that those systems are in place. And it just means you can do things better from there. You can upscale your business from there. Once you have those systems, you can keep stepping back, I suppose, so that you're doing less, but you're focusing on the things that, that are more valuable like growing the business or just looking for deals. Having the time to sit back and assess deals is invaluable.

Get lost in the spreadsheets. Yeah, I want to just now finally get back into some of the subdivision questions. So, you know, we're talking about subdivision and a way to, you know, what I love about this is that higher and better use, as you said, you know, turning someone's shed into money basically in their backyard. It's like the diamonds in the backyard scenario. But does it work in any market? You said that you leave the cream on the top of growth out of it. Can you do subdivision in any market?

Absolutely. Yeah, I think you can. And for me that's come from not focusing on the capital growth because you're creating that equity, that profit yourself. It's not the market doing it. So you've got to choose an area where there is some scarcity or that you're bringing a product to market, that want, which might be a block of land or building a new home in an area that people want it in. Getting that part right is critically important. Doing that market research. But the thing I love about property is it's not all about markets going up and down. People have their own needs to downsize, upsize. We had to sell a property on the Sunshine coast for less than what we paid for it at one point because our family was growing and we needed a bigger house and we couldn't afford to wait around for that. So there's so many people in that situation. Doesn't matter what the market's doing, there's still a need for people to move on or upsize or downsize. So it's just about finding that niche, I suppose, in that need in the market. So you're providing something for them. I mean, you can cut up blocks anywhere you like, but if you don't sell it or if you don't add any value to it, then you're really not going to make any profit. So you can get it wrong. Absolutely. So it's important to pick those right areas.

So you need the right. So what I'm hearing is the right area. So how do you do, I guess some top level research of knowing what to look for in an area?

I use Price Finder a lot, so I do research on there. Just filtering out properties. I'll pick a suburb. So if I've just for instance, moved into a new area, don't know anything about it, I'll jump online and I could use Price Finder, I could use Google Maps potentially. Pricefinder just has a bit more info. So I'll just search for all the blocks in that area that are over 800 meters and start looking at them, start looking at the plan, start Looking if there's any precedence in the area, if anyone's done it before, because that's going to help me get my application approved. And just firstly, making sure there are blocks in that area that I can split in the first place, that there is a product there that I can work with precedence. And then looking at that numbers game where what's the block going to be worth at the end, what's the end value once I do split it? And then working backwards from there to see if I can buy something at the right price, so that once, after I've added all the value and paid for the subdivision costs and potentially the Renault, there's still going to be a profit at the end once I sell it back to the market.

When you say over 800 square meters, that would be specific to what the council says that you need to be able to subdivide. So it could differ in every different council area, couldn't it?

Absolutely, yeah. It's very important to get knowledge of your own council code. And that obviously varies from street to street sometimes, I know in some areas, but, yeah, basically finding out what the minimum lot size is and then doubling it so that, you know, you can at least split it into two. And once you know those, those parameters with the council, you know, you lock them in, that doesn't change. I mean, it might, they might change reasoning occasionally, but it's, it's kind of rare. So once you know, okay, minimum lot size is 400, frontage is 10 meters, you've got to have a setback of, you know, a meter and a half between dwellings, a side access needs to be 3.5 meters. All these little parameters, you find out just by doing your research on a few deals and then you lock them in, you know, okay, I need to find deals with those parameters. And that allows you to quickly filter through potential sites. So you might have 10 sites you're looking at just by looking at a plan on a map and where the house is positioned, you can actually cross eight of those off straight away because, you know, it's just not going to work because you've got to demolish the house or it's too close to the boundary or there's not the right frontage. You know, you just, you just let them go, try and work with the easy sites. So getting those parameters right and understanding them helps you to move forward quickly. And then just immersing yourself in with the agents, because I think that the deals come from the agents generally. I mean, I like to have a number of Irons in the fire as far as finding deals. But I really like to communicate with agents as much as possible. Go to their open for inspections, build rapport, educate them on what I'm doing, educate them, some of them, on what a subdivision is, you know, and how they might benefit. If I. If I split a block into two, then they're going to get three commissions out of me, which makes their eyes light up sometimes. So it's just showing them what I'm doing. And I find 1 in 10 is my hit rate as far as agents are concerned, where 1 in 10 actually understand what you're trying to do and get it that they know if they help you, then you're going to help them. And everyone wins in a business transaction. So, yeah, getting those agents on board and getting the deals coming to you. So. So you're not just jumping on realestate.com and having a go, having a go with 500 other people.

So I guess that kind of your experience over the years and what you've seen and been part of with other people's deals. From a feasibility point of view, is there more money in adding a property onto a vacant block, or is it the vacant block itself, or is it maybe the vacant block with the DA attached to it? Where have you seen the majority of. Where most of the feasibility stack up?

Yeah, it's a really good question. And I think you've got to assess all of those things in the beginning and really get clear on what outcome you're chasing. Because you don't kind of want to change it halfway through. Like you don't want to split the block and then go, okay, let's go and build a house on the back. Because then you've got all that lag time of preparing for it, which is going to cost you money and holding costs. So if you're going to build on the back, build on the back. You know, from day one, you're preparing from that from day one, while the subdivision is happening. So everything just leapfrogs, one thing after the other. But I found, particularly my first few deals, we just sold the land, like we say. I went into two. We'd keep the front house, sell the back block, pay down the loan on the front house, and then eventually just sell that front house. When we thought the time was right, and we just thought building on the back at the time was out of our skill level. So there was more risk, there was more capital, required more time. So we just decided to sell the land. And I found it was harder to sell land than a house, because people can't usually visualize what it's going to look like. It's just a block of dirt. But then we learned strategies on engaging project builders and proper marketing to give people a concept. But I think when I did the numbers on, say, building a house at the back, instead of selling the block of land, there was sometimes only an extra 30 or 40 grand in it. And it just didn't seem like, you know, it might take us 612 months to get there. And anything can happen in the market at that time. Why not just realize that profit, leave some money in the deal for the next person and then go on to the next one. But then sometimes if it's a really good site that's, you know, in a great area, close to the city or in high demand, then, yeah, go for it. You know, if it's going to stack up, if the money's there and it's worthwhile, it's worth the extra risk and extra funding, then it's. Then go for it. So it's really just a case of assessing the deal on its merits. And then the DA side of things. Yeah, there's the potential to add value with the da. I don't find that that does a whole lot, though. I think it's a bit of a fallacy there that you can just get a DA and then that adds 50, 100 grand to it. I don't see that happening very much. Sometimes it even detracts from it because you're stuck with that da. So oftentimes we bought a property where someone's done that thinking they should get more money for it. And then when we've assessed it, they've actually tried to create the wrong product in that market on that site. So we're not going to use that da. So it adds no value to us, so we're not going to pay any more for it. So it's about doing the right DA to start with. But then don't expect that, you know, someone's going to pay more money for it because they may not value it in the first place.

And this is what I really love about the subdivision strategy. You know, the. The higher and better value, you're creating something from nothing. There's multiple strategies you can employ and easy feasibility that you can do. But what you've kind of said to us is beware of the need for that product or the asset that you're creating and so that the market wants it. And then we're not talking about putting 30 units or as many townhouses that you can put onto a block and be the winner of putting the most on a block in the area. But we're talking about, you know, finding out what the market wants, finding out what the council will let you do. We're talking two, you know, one into two. So we're still in residential lending kind of scope too, if you want to go down that path. And it's not leveraging a whole lot of money out there. And as you said, there could be JV partners that might want to be part of it and even mentors that will come into the deal. So, you know, there's so many risk minimization, parts of what you're doing and, you know, then it's capital growth. The cream on the top, if you get it, is part that you can add to it. So, you know, I really appreciate what you, you've, you've shared with us and especially for, I guess, new investors who are kind of looking at different strategies and trying to come up with a strategy, this is, this is definitely one that you'd put on the table. It's, I would say, it was almost assumed to be a higher risk because it's out of the normal, you know, mum and dad buying a house and buy and hold or even buy and renovate a little bit. But the fact that you can minimize the risks by doing the numbers, doing the feasibility, knowing you're in the right area, knowing that you've got the right asset, is completely giving you multitudes of ways of being able to create money from nothing. So, yeah, I love it. I think, you know, what you're doing and what you're teaching people and how you're doing it in such a wonderful way. And then you're living the dream. You can prove you can do it too. You're over in France living it. So, look, I really appreciate you being here, Matt. People can get some more information about you from where, Matt?

Yeah, just go to the website. Everything's on there. I'll just direct people there. Now it's propertyresourceshop.com I've got right into blog posting while I've been over here, just to help with my creative outlet. So there's really good blog posts going up there every Tuesday. Yeah, just jump on, drop me a line contact page there. I'm happy to chat with people. I'm pretty good with email. I'll get back to you within 12 hours with the time zone. So if there's something on there you like, let me know.

Perfect. Thank you so very much for your.

Time, Matt, always a pleasure. Jane, thanks very much.

It was really great. I mean, seriously, just go and get the transcript to that episode if you're interested in subdivision, because there was so much good information in that interview.

I know. It was so good. Now you can get that transcript@yourpropertysuccess.com ep7 so, John, where do we start with all that information?

Probably with his story. He started out doing the Renaults and then he went into the subdivision and he was good. He spent seven months before he took on his first project. So it showed, you know, right from the start that he was pretty diligent.

I've got to say, I do have an affinity for his love of numbers and those number crunching exercises he went through. So it's really, really good to see that. You know, he looks at the concept of creating something in the subdivisions out of nothing, that kind of looking out the backyard and going, where's the money? This is fantastic. But there's so many different ways of doing subdivisions.

Yeah.

Lots of forms of subdivision. It was great to hear him list them like the side by sides. That's what we've been doing. The one into two or the one house behind the other. We call that a battle axe block in Victoria.

I don't know if.

If that's used interstate, but it's. The idea is that the rear property with the driveway running past the front property is like an axe. Shaped like an axe.

Oh, I never knew that.

I always thought it was just a name. That makes sense.

Yep.

And yeah, he talked about that he might renovate the front and hold the property and then sell the land at the back to pay down the loan at the front house, which is really clever. He also might sell both house at the front and the land at the back. And he also talked about how selling the land was initially difficult, but. But they then worked up strategies like approaching project builders and so on.

Really clever. He jumps to the end. He looks at the exit strategies before he even starts. So he might have six or seven exit strategies, and he assesses those at the start of every job. But he's willing to make changes to that exit strategy based on the market changes. Because obviously subdivisions, the timeframe can be quite large. He looks at, first of all, what the exit strategy that's mostly profitable for him is and also the one that's easiest for him to. To achieve.

Yeah, it's great. Really is great. And then he went on to the fiso, which was good. I was. I Was glad to hear him describe that because it's exactly the same way as we we recommend in the Ultimate Guide to Renovation. So what's the end value going to be once you know what that end value is? He then subtracted his subdivision cost plus all the potential Renault costs if he did the rent out the front and then the profit he wants to make. And that then dictates what he needs to buy the property for in order to take on the subdivision, which is.

Exactly what we do. Ultimate Guide and Renovation. You know, we start with the end value, we minus the renovation cost, we minus the profit we want, and that equals the buy price.

So a nice, safe, easy formula.

Absolutely.

And then he chucked it all in and went to France, which is great. There's hope for us all yet.

There is, yeah. You know, so sometimes we do put our heads down and we focus on things, and then you put your head up and life is but gone by. So we have to remember why.

Doing so many deals, I ran out of life.

Yeah.

And look what he's doing now. You know, he's in a new country, learning a new language. You know, his kids are being brought up in another culture for, you know, the year or so that he's away and he's, you know, doing terrible work. So, you know, he's really connected with that. Great guy. Great story. I love it.

Yeah, it is good.

Well, John, I guess a huge episode once again. Incredible amount of takeaways for everybody, including us.

Yeah, absolutely. And now it's time for I'll let.

You Joe Suburbs against the Clock.

That's right.

Yes, it's that time again, where you get the chance to test your suburb knowledge while the entire nation holds its breath. Ladies and gentlemen, it's time to play Suburbs against the Clock. The rules are simple to play. All you have to do is answer a question about 10 suburbs in the city of your choice. Within 20 seconds, the lucky winner of Suburbs against the Clock will win one year's free access to your Property Success Club. Your Property Success Club is an in depth monthly masterclass which gives you the practical tools needed to grow your portfolio yourself without having to spend a fortune on expensive seminars or even leaving your own home. So who do we have standing by to play Suburbs against the Clock?

Hi, it's James. Hey, James.

Are you hiding in one of the meeting rooms at work?

Yeah.

Pick that, didn't I? Now tell us, James, are you a property investor or renovator? Where are you in your stage of journey through property investment?

Yeah, we have a Couple of rental properties, which is always fun maintaining.

Okay, so if you were going to choose a capital city to play for today in Suburbs against the Clock, what city would you choose?

Oh, Melbourne, of course. The Grand Final.

I thought so. I thought so. Alright, James, well, for Melbourne, can you name 10 suburbs in 20 seconds that.

Are on the river?

Okay, South Yarra one, Richmond two.

Come on, James.

10 seconds.

Melbourne, Ashburton.

Sorry, James, we've hit 20.

Oh, that's 20 seconds, James.

We only reached four. And I don't think Ashburton's on the river either, mate. Sorry.

Oh, can we, can we send him a book? Yes, can we send him a book? Oh, James, thank you so much for, for, you know, hiding in that meeting room and, and being part of Suburbs against the Clock. If you could put in the chat box your address. I'm going to get you a book.

Thanks, James.

Thank you.

So if you'd like to test your suburb knowledge in the best suburb quiz.

In Australia and the only suburb quiz in Australia, I hesitate to say, simply.

Email supportourpropertysuccess.com and use the subject line Suburbs against the Clock and you can.

Also give us some suggestions because we're kind of running out of ideas for future questions. Well, John, once again an incredible podcast. I've really enjoyed it and we've had a fabulous guest, Matt Jones. And look, he's been a great friend of ours and a great supporter of the ultimate Guide to Renovation over the years as well. Now, if you'd like instant access to the transcript, plus get access to some of the free training we have for our community and all the show notes and links to everything mentioned today. Links like Matt's website, the property resource shop, the networking groups in Brisbane, the Gold coast and the Sunshine coast, price finder software and anything else mentioned on the show, Simply go to www.yourpropertysuccess.com ep7. That's YourPropertySuccess.com au forward/the letter E for echo, P for Papa and the number seven. Or simply Google YPS podcast.

Yep.

And John, we should mention that the ultimate guide to renovation 2016 is fast approaching.

Yeah, it is. Opening enrolments again for seven days on the 20th of October. So if you'd like more information on that and to hear reviews from many past students who have taken the course, simply go to ultimateguidetorenovation.com so that's it for today.

Stay safe everyone, and here's to your property success.

Ladies and gentlemen, it's important for you to understand that you need to take care in applying what you've heard on this podcast to your own personal circumstances. Everyone's situation is different, and while we go to great lengths to ensure that everything we share is accurate, the information in today's podcast was based on personal experiences and opinions and is not intended to be specific to your circumstances. We are not real estate agents, financial planners, lawyers, or accountants and are not liable for any loss, damage or misunderstanding caused by reliance on any information provided or inferred. We highly recommend you seek out the services of a professional or mentor to help chart your own path to property success.