Rob Flux Ambush - Convince me I should consider Property Developing as a strategy 3,2,1 GO!

Okay, so here you are. This is a fly on the wall conversation happening right here, right now. I have with me Rob Flux from the Property Development Network. And Rob and I have been chatting for many, many years and he's a good friend of mine and he reached out and said, hey, you know, I've got this masterclass on the 20th of August. I'd really love your people to see a little bit about property developing. And I was like, Rob, you know, we kind of meat and potatoes, you know, we like long term growth, we like some renovation and creating some equity. Property developing, is it a step too far? And so I was looking at these amazing things that he was going to be talking about on the 20th and I was like, Rob, convince me as a boring, buy and hold, add some value through innovation investor that property developing might be something that I need to consider right now. So Rob, I'm hitting record, you're on in the hot seat. You thought you were just going to talk to me about what you're going to be talking about in a few weeks time, but here we go. Tell me why as property investors should we consider property development?

Firstly, hello Jane, and hello to everybody out there. Okay, so this is a he said, she said type conversation. Let's go, let's fight. Look, there's, there's multiple markets out there, right? And so everything works, but it doesn't work everywhere. And so depending upon what you're trying to do, it has an outcome, sorry, a slightly different area as to where it's going to work and all those sorts of things. But fundamentally when you break it all down, there's only really four reasons why you actually want to buy a property. Okay. When you break it down to it's very core essence, one, lifestyle. Well, that's not really an investment strategy, but you know, it is capital gains tax free if you pick the right area. But we're generally not picking it for the right area. We're generally picking it because it's close to the school, it's easy to get to work, all those sorts of things. And so we happen to make money as a byproduct of really wanting to live there. And usually one partner has the king, the lion's share in what that property looks like.

Yeah.

Okay. Then there's traditional investment. So traditional investment really has two subcategories. There's capital growth and there's cash flow. So looking at capital growth, that's a lot of the things that you're doing with your, your teachings and I guess all your methodologies. Work really, really great in, in how that actually works. But the capital growth there is really letting the market do the work. Okay. So you buy and then you wait. And if you chose well, you wait and eventually it's going to work patiently. Patiently. All right. Eventually it's going to work if you.

Buy in the right area.

Correct, Correct. And as I said, everything works but doesn't work everywhere. So that we're on the same page here. Then there's cash flow. Now when you go for cash flow, you're either going to be buying completely different areas. Right. But typically it's not going to be a capital growth type location. It's going to be, it's going to be something that's either regional or risky, mining towns, those sorts of things, or something where you've manufactured some profit into it by doing some really creative things with either rooming, accommodation or those sorts of things. Right. And, but generally with both of those two approaches, you're taking that 20 to 30 year view of the world. Okay. So which creates a whole bunch of challenges with regards to I have to come up with a deposit, I have to come up with serviceability, I have to convince the bank that I can afford this for the next 20 to 30 years. And you start hitting glass ceilings with regards to how quickly you can start to grow. Right. So that's three strategies. The fourth one is where I play and that is the manufactured profit or property development. That is where we force value onto the property. Now it's also where you dabble, I guess, by, by choosing well and adding value through the renovation process and forcing some capital uplift straight away. But I'm talking about doing this on steroids, Jane.

Okay, take me through it because we do love renovation here. As a strategy, we know that equity.

But my favorite renovation involves a bulldozer. Jane.

Okay, all right.

However, I said that tongue in cheek. In reality, there are many instances where property development will only work if you're able to keep the existing house and the intrinsic value that's obtained within it. So I said that as a throwaway line. So it's. Okay, we're on the same page here. So it's the manufactured profit part that starts to become, I guess really where the market starts to get created. Right. Now if we have a look at, I guess the. I'm trying to think how I'm going to articulate this, but if we have a look at history, right. 220 odd years ago we were a one lot land subdivision.

Yeah.

Okay. Okay. Now, without getting into the Politics of that. Every house, every road, every school, every shopping center, everything that we live in today was created by property developer by understanding the market, understanding the market needs and putting the opportunity in front of, I guess, the audience before they knew they even needed it. Okay, so understanding what the market is doing and where the market is going means that we can we become the market maker. So we are the invest. We're creating the investment stock of the future that your clients are then picking up and then running with later on.

But we've early adopters. You're in there, you're making the market. You're creating something that we may not have even thought we needed until we saw it. And then people come, they buy, values go up, more people develop there. And then we see these hotspots, these kind of ripple effects.

Yeah. And as the properties start to get a little bit tired and that sort of thing, that's where your opportunity starts to then start to come into play, to go, look, there's, I guess an untapped potential there to that we could reignite something that was lit before, but the embers have died down and you're reigniting it.

Okay, well, 1, 0 so far. I'm giving you a 1 on that. I'm going to concede the fact that property developers are the market makers.

Okay, very good. So then, then it becomes, well, if we're the market makers, we need to understand what the market is doing, where the market is going, and those sorts of things. And there's some, some really cool things to actually understand about the, the whole supply and demand, demand dynamic. Okay, so supply and demand really comes down to. Look, I, I talk about 16 different drivers that actually drive the market. But there's fundamentally, there's what government incentives are actually happening at the time. So is the, is the government actually spending a whole bunch of money in a whole bunch of places, which creates jobs and creates opportunity and that sort of thing. There's housing affordability, so there's interest rates and inflation and things like that to say, well, we're creating opportunity, but can people actually afford to buy stuff? There's population growth, so you know, are people moving interstate, intrastate, those sorts of things. And then the last one, why am I having a brain fade here?

Also got immigration. Right. So we've got.

So immigration. And immigration is the biggest one. Right. And ridiculously so, since COVID we locked down our borders for a good two and a bit years, we have now opened the borders up and we said we are under skilled, we are under resourced and we need to kickstart our economy. And the best way to do that is bring in a whole bunch of migrants. And Australia is nothing but migrants when we, when we actually look at it. And we are anticipating over the next three to five years to average about 400,000 people per year coming into Australia. Now they all need somewhere to live.

Which is amazing because we came from like 180 to 200,000 and now we're doubling that. And not only that, I mean, you know, I've started talking about the fortress Australia. We were always seen as the country that kind of got through Covid okay. And, you know, even economically didn't. Well, you know, and we got sanctuary. Like we're a bit of a sanctuary to the extent when you look at some of the other countries and if you look at the map of where all the immigration's going, Australia and Canada are getting the majority. So we're definitely very attractive.

We are. But there's a couple of things that Covid caused which are creating a massive opportunity. That is some of the things I'm going to be talking about on the 20th. Right. So without stealing my thunder for that particular day, what I will say is that Covid was an artificial recession. We had a pandemic and everybody panicked and they locked everything up and, and so our economy ground to a halt. Right. And then they went, oh, we probably shouldn't have done that. We better kickstart it again. And then they created an artificial boom. Right. And the artificial boom then was all the government incentives going. We have to build more roads, we have to build more infrastructure, and we're going to give all these building grants and that sort of thing. And so the market just took off. So we've had an overcorrection down and an overcorrection up. And what we're actually doing is we're actually now coming back to the true fundamentals of the market. Right. And so those 16 drivers that I'm talking about start to say to us, everything's heading north, everything's about to head up, right? So if you are a long term capital growth person, you're going to get some upswing from that. If you are a property developer, we're able to double down on our profits because we will not only get our manufactured profits, but we'll also get the market movement profits.

You're going to get a whammy. Two for two for one, two for one.

So is that two nil?

That's two nil. I mean, you know, obviously they're Going, should I be telling my people about this property development opportunity? And you're talking, you know, I know on the 20th you're talking about things about why land bank now? And I hear land bank. I'm like, I don't want vacant land. But that's not necessarily the case, is it land banking?

Well, no. So land banking is correct. It's not land. It's really buying the right opportunity in the right location for the right reasons. And it's understanding where those population are going and why are they going there. And if we understand where and why, then we can start to measure, well, have they started going there? And if we can then measure, have they started going there? We can go, has anyone done what we've, we're trying to do before me? And were they profitable? Because the first person that goes in, they're kind of rolling the dice. Rolling the dice go, I hope. And then two or three other people see them make money and they go, well, we should probably do that. And then the smart developer, which is what I try to teach my people to say, well, just cookie cutter what someone else has already done in the right location. But know that there's more demand to come. And if you do, then you're, you're able to, I guess, escalate this really, really quickly and de risk it. Right. And that's probably the key to all of this, is the de risking part.

You know what? I think I'm about to concede the third point because what you've said, there is two things that I agree with and fundamental to everything I've taught over the last 20 years, which is first and foremost, the numbers tell the story, follow the numbers. So if we're seeing where there are the movements, then let's explore that further. And the third is success leaves clues. You don't have to be the first out the gate. See if. And it's like when we look at, you know, pricing disparity in a suburb for unrenovated and renovated. We actually need someone to have the renovated property price sold first to actually establish the market. We're not going to be the first in. So I think I'm at 3 nil at the moment, Rob.

So I'm going to say yes, data tells a story like I cannot. This is one thing that you and I are. We get a point each for this, right? So I had before my property development career, and I should actually admit to people I spent 20 years doing buy and hold. I bought my first house at 18, my first investment property at 21. I own my first house outright at 24. So I did okay doing buy and hold. Then I got divorced, put everything back in the kitty, and at the end of that, when. Well, it took me 20 years to manufacture that profit the first time around. And I was in a position where I could have, on paper, retired and didn't quite get there. I then went, what do I do to accelerate that? And that's where I started looking at property development and what I built in 20 years before I built in six the second time round. And that's what we're talking about as to how fast we can actually accelerate it. Now. I'm going through divorce number two now. Jane, Rob, will you ever learn what I know now, with years of practice in actually doing this, I can do it again this time around in three.

Wow. Okay.

Okay. And that's the difference that we're talking about here is to say, look, we, we're. It's order of magnitude better with regards to how fast you can work. But. And I really want to say, but here, 90% of development sites are not profitable. So it's not just, hey, I'm going to go do a development and I'm going to make money. You, it's almost like learning a new career. You've got to actually put the effort in the. The manufactured profit comes from knowledge and sweat equity, putting the hard yards in to actually do the work as opposed to letting the market do the work. So if I'm going to talk about giving you a point, at that point I go, well, you've got an easier run, but I might be sprinting, but I get to the finish line faster.

Well, and I guess the thing is, I mean, I was speaking to someone and if they're listening to this, you know who you are, very dear to me, who said to me yesterday over lunch, the house next door is about to be sold. We're going to sell everything up and buy it because we're sick of having neighbors that we can't control. And I was like, so, what's the plan? They said, well, now we have a big block, so we're going to develop it. I was like, well, you can't just develop any block. You know, there's like a. There's a whole methodology behind it and council approvals and, you know, offsets and all these extra things. And she's like, yeah, but if we get the property first, then we can actually work it out. Like, but what if it doesn't work?

I was like, don't do that.

I don't, because it sounds easy. It's like, well, the house next door selling like what we make our block bigger. So I know that there's those conversations going on and just before I let you go, because I know that you're going to be covering all this stuff, I concede that I am now after, you know, you saying, hey, can we have a chat about this? I'm like, where's it fit? I can see that there's going to definitely be people out there going. But I just want to sign off on the fact that I know there's a perception out there that property developing is only for the rich. Like, do we have to have hundreds of thousands of dollars to start this off? Is it possible? Are you going to like drip some little jewels on your, on your next call and tell me that it is okay if I have?

No. This is the beauty of property development over and above, I guess, traditional investing. Okay. And, and that is because the timelines are so much quicker and we're manufacturing profit the way that we do our lending is very, very different. And so rather than having to prove 20 or 30 years worth of serviceability and you know, the older we get, the, the less lifespan we've got in the workforce becomes harder and harder to actually do. But if I'm doing a project, my record project record is 192k profit in 6 weeks. Jane.

One or two of those a year and be quite happy.

Yeah. So that's my record right now. Not every deal is like that, just calling it out, but you can do it. And that was one of the simplest strategies you could actually do. It was what is called a splitter block. So that is one title that had two lots that were pre approved on it, knocked down the house and sold two vacant blocks of land.

Yeah. And I guess the thing is, you know, for people who are kind of listening to this and going, it's a bit risky, I get it. You know, I'm like Ms. Meat and Potatoes, low risk person. But when there's data and there's an expert who's going to assist you in this kind of information, and I know there is people in my world who have considered property development. I dropped in on Rob's course that you had for your mentoring students here in Melbourne just a few months ago, Rob, and there was like four of my mentoring clients in the room who had made and created wealth through traditional ways and going, well, now what can we do? So I know there's a crossover.

Yeah, absolutely. So just finishing the point I was making before. Because we're manufacturing profit in such a small amount of time, we have access to different kinds of cash and different ways of carving up the deal. Okay. So there are seven different ways. So seven different ways that I can show you how to profit from the property development process when you have little or no money to start with. Okay.

Okay.

Which is really because we're being creative and we're forcing value on, and it's by understanding a couple of basic elements in how you do that. And we don't have time to go into all of that now, but know that time is worth money. So if somebody gives you time, then you may be able to pay them more, but pay them later, and you force the value on. And by doing that, by forcing the value onto the property, you may be able to pay them with future money that you may not necessarily have right now. Okay, so that's one concept, and the other one is risk. Right. So if they share the risk with you, then they can share the reward with you. And so there are instances where you don't actually need to buy the property at all, but rather just control the property.

Yeah.

And so it's by manufacturing opportunities like that that you then go, well, how do I actually make money from the process? Yeah, but also, even if you have some cash or you can't get those creative terms in the purchase, the way that we do our finance, not using residential lending, but using commercial lending, they look at the profitability of the deal and they don't look at the serviceability on it. As a matter of fact, you don't have to pay your interest as you go. You capitalise it and you pay your interest at the tail end. Because even the banks recognize that time is, is. Is money. And so they'll lend us money in very creative ways. Lots of opportunity.

I mean, this is not just, you know, buy a property, hope that you can make money at the end and pay off all your debts. I've seen the calculators that Rob uses in the methodology of the analysis that he makes his people go through to actually make sure they're in the right area, right block, right property. And there is actually a feasibility behind it to make sure they make money. So, you know, I know Rob, having seen your work and having, you know, talked to people over the many years of seeing the profitability that they've made, that there is a structure behind it and there is that integrity of the data, which for me is kind of the driver, the data on where people want to be and what they want to buy but also the data of how we can actually de risk our position. So appreciate, appreciate you talking to me going head for head.

Thank you. So on that data thing, because you raised it before and I meant to make a point and I didn't. I spent 20 odd years whilst I was dabbling in property with a day job, 20 odd years in it as what they call a solution architect designing multimillion dollar data solutions for Virgin, BHP Flight center and a whole bunch of big multi conglomerates. And so I know data tells a story and what I've done is I've put my IT brain and my property development brain together and went how do we actually look at the data underneath and, and, and see the story? And if you can, if you can read the data correctly, it's like the Matrix, right? You see all the ones and zeros come down and all of a sudden you can see that's a doorway and that's a hallway and all those sorts of things. So much so that I guess I am, I guess a major shareholder in a, in a data company called National Property Data, which is all about understanding and reading the data so that you can use it more efficient, effectively and much faster than our competitors like RP and Price Finder and that sort of thing.

So what I might do is reach out to those guys over there and get them to do a demo for us as well.

So we can, we will make sure of that.

We can proof on it. Well, I know I steamrolled you here and in actually hitting record and making you front up rather than going, hey Jane, will you promote my thing? And I'm like, yeah, need to know a bit more about it first. I reckon if we can concede a 3:1 and I would, I'd really encourage people sign up to the 11 hour masterclass, isn't it?

No, it's a one day. What?

Oh my gosh. Okay. You are really bringing value.

I am. I have a history of answering every single question that comes my way and I have, I have been there for 10 and 12 hours at times. So there's going to be, there's going to be about six or seven hours worth of actual content presentation and then I'll go into a Q and A where every single question I'll hang around and after the end of 10 or so hours there's still four or 500 people still on the call asking questions. So yeah, it's.

If you have a question about property developing, sign up for this one day masterclass about what Property, developing land, banking opportunities for the future, growth nodes, where to buy hotspots, all the information. Rob's going to bring his magic. I know that he always overdevelops. I can't but encourage you to do it. I'm not going to be there. I'll be on safari in South Africa. So I'll be sending you happy vibes and I'll be watching the recording, if there is one.

No, there's not, Jane.

There's no recording that you just, you have to turn up.

You have to turn up. And the reason is, and I'm going to go into a whole bunch of things. So firstly, I'm going to look at my read on the market now. I'm going to call it out. Now, I'm not a property economist, okay? But I do have 35 years of doing the, both buy and hold and property development. And so I understand what the market drivers are. And we, we touched on them before. 16 different market drivers. I'm going to show you what they are. With a concept, with headwinds and tire winds, you can actually go, well, is this working for me? Is this working against me? And based on that, if we look at the combined 16 drivers, are we fundamentally going up, down, sideways, that sort of thing?

I'm always on those presentations you do every, what, six months or so.

This is effectively looking into the future. This is a crystal ball that, that I, that I manage, that I, that we, I use consistently to go, where do I think is the market happening? Then I look at, I guess, the traditional indicators which everyone else uses. So an indicator is a measure of something that's already happened. So auction clearance rates, median house prices, they happen. So if you use the two together, you go, well, I'm predicting the future. And then I move a little into the future and I look back and go, was I right? Okay. And if I do that enough times, then I get better and better and better at doing this. And so this is not, I guess, a formal economist presentation, but rather this is the words of sort of the life experience that I have coming to the table that's just kind of dumped out there. And then based on where I think the market is going, which is to the moon, for the record. So where I think the market is going, it's how do we actually find where and how do we know what to put in those places, knowing that we are the market makers? So what is the product type that people are looking for? Where are they going to want to go, why they want to go there? And how do we prove that they've already started to go, so we can just cookie cutter that.

I've got FOMO already. If you're going to turn up to the presentation, please take lots of notes and send them to me because there's not a recording. So, Rob, thank you so much. I really appreciate it. Thank you for letting me blindside you and get all of your goodness. And you definitely have piqued my interest. And like you, there's a lot of people saying now is the time for people to get in and start making, you know, their wealth goals for the future. So I really appreciate your time. Thank you so very much.

You're welcome. Now, two words of warning. It is a Sunday, so I'm sorry about that. And the reason for that is I run events all the way around the country every Saturday. So every weekend I'm running an event either in Brisbane, Sydney, Melbourne or Adelaide. And so Sunday's my. Usually my rest day, but it's going to be another work day for that day. So if you are out on the town the night before and that sort of thing, bring your coffee, bring your Red Bull, whatever it is that you need to do to get through the day because it's a big day.

Yeah. And then look, I've done. I've attended them in the past and I know how good they are. So click the link register. I hope that you get as much value out of this as I have in the past because. Because I know that know turns up with the goods with Jules. And the people who are the leaders in this space will be the people who are going to be in there making money very soon. So thanks a lot, Rob. I really appreciate your time.

You're welcome, Jane. And I hope to see some of you folks on there.