Bob Andersen: 0:06 So we can acquire property, way cheaper than than the normal person who simply goes and buys finished product. And that's how we build long term wealth because that enabled us to as developers to build a substantial property portfolio. But quicker than we can in the normal retail market where we're paying retail price. Victor Lagos: 0:28 Welcome to the debt to financial freedom I am great. Great to be here. Listen, look, I podcast. I'm your host, Victor Lagos, and the founder of Lagos Financial. I've been in the finance and lending industry for 16 years, and I've personally made financial mistakes and learn from them. I started this podcast to share stories and lessons on my own journey, and to share insights that may help others on their journey. And I interviewed people that I've want to give a bit of an intro to Bob for those who don't know connected with that share the same values and mission to help others create financial freedom. My goal this podcast is to share raw, honest, transparent and helpful stories that you can relate to and inspires you to take control of your finances and only have debt that brings you closer to financial freedom. Welcome to the debt to financial freedom podcast. I'm your host, Victor Lagos. Today is episode 11. And I have Mr. Bob Andersen on the show today. Hey, Bob, how are you man? who he is. Bob Andersen is the director of property mastermind. Bob Andersen has over 39 years experience in development, investment, and marketing sectors of the property industry. During this time, Bob has had senior management roles in some of Australia's largest property development companies. Bob has been involved in more than 1.3 billion worth of property development projects that include commercial buildings, apartments, high rise buildings, retirement complexes, land subdivisions, townhouses, student accommodation, and NDIS projects. At any time, Bob typically has between 50 million to 80 million worth of projects in the pipeline. Bob is the author of the book residential real estate development, a practical guide for beginners to experts, and appears in other books, The Secret of Secrets of property millionaires exposed and the new way to make money and property fast. He has also been a regular contributor to different publications such as your property investment magazine, the Australian property, Investor magazine, Money Magazine, and Success Magazine. He's appeared on media interviews to talk about his experience as a property developer on Sky News, Fox News for BBC Radio, and ABC Radio. Bob has changed the lives of so many people through his renowned property development courses by training them to use property development as a vehicle to build substantial cash flow, and long term wealth. Wow. That's very impressive. Bob Andersen: 3:07 But how is that a mouthful? Oh, well, I've been around for a while. So I guess some, you know, slightly longer story. Probably near 40. Yeah. Yeah. Been a while in property development. Yeah. Well, I always say, if I if I often say if I'd found something better to do, I'd be doing it. But the fact that I'm still doing it after all these years is probably testimony to property development. Victor Lagos: 3:38 Yeah. Well, you're obviously passionate about it. And as you've said, well, as your intro said, you've helped many people along the way. But I want to hear a little bit about your personal and your and your professional story. And what led you to be a property developer and to start property mastermind. Bob Andersen: 3:57 Yeah, well, I don't know. It all started with a pretty serious car accident I had when I was a young man, I was on my way home from a march 21. Quite sober, in fact. But I went to sleep about 4am in the morning, and ran into a bridge and that put me out of action for I was on crutches for about a year, and took about 18 months to recuperate. So that gave me lots of time to lie on my back and contemplate my life. And came to the realization I was having a what I thought was a pretty good life. I had a couple of cash businesses, sort of young entrepreneur, just living for the moment really not thinking too much about the future. But it's funny what happens when you have a near death experience like that car accident. In fact, when the police arrived, they thought it was dead. Pleased to say I filled them. But yeah, it gave me a lot of time to think about things on my back and recuperating and realize that there's more to life than just living a sort of life I was living and I decided well, when I when I get well, what am I going to do and I thought a lot about it up Property. I'd had a little bit of a knowledge about property but but really not much at all. Shares sort of scared me. I knew zero about shares. But I knew a little bit about property, because I lived in one. But yeah, got back on my feet. I thought, well, if I'm gonna do property, where's the money made? And I started to have a look around and look at real estate agents, I'd look at valuers and all sorts of people. And I came to the conclusion, pretty sensibly that property developers seem to make the most money. So not even knowing how to do and I thought, well, property development, that'll get me back on my legs because we ended up having to move home with my mum and dad while I was recuperating. I think I had $5 in the bank, by the time I was back on my legs again. And so I thought, yep, I need money. And so property development was where it was going to be. I spoke to a few people I knew I did know through. A friend of my dad's someone to do did some small developments. I knew a builder talk to them builders, not developers, but I thought it was somewhere near. And I also thought, well, I lived in Brisbane at the time. So I thought I'll head to the Gold Coast because I thought everybody went to the Gold Coast to make money. And not realizing back in those days, probably plenty of people went to the Gold Coast and lost money. But anyway, that you are young man 10 foot tall, bulletproof, dangerous student, not even knowing what I didn't know, headed off to the Gold Coast and unable to go straight into property development, I went into agency and I joined a real estate agency at the back of the Gold Coast at a place called Marjory bar, which was selling land estates. And that was my first foray into real property as such, and that was as a salesman. But I was selling land to builders and builders build houses, and I was selling builders houses and talking to developers of the different estates. And we're getting all excited about the fact that I could be one. And so that's, that was my foray, I was lucky enough to, to meet somebody there at the time, who had some land, they got an approval to cut it into four lots. And then they decided to sell it for that subdivision. And I was, I was looking at it to sell it. And then I thought, gee, I'd love to do this, this could be my first chance, I went to the owner, and I said, Look, I'd love to buy it, I just don't have enough money. And that person, Tony was his name, gave me my first big break. And he said, you don't need money to do property development, you just have to know different strategies. And and I ended up doing what we later later came to know as a vendor finance deal with Tony where he sold me the land, took me to his bank, in fact, helped me finance it sold me the land I I settled on the on the site, I took possession of it. And using the land as security, and Tony, I gave him half the money. I owed him the other half, which I paid him back with interest when I sold the land. And so typical, what we call a vendor finance deal, that got me going on my legs, all of a sudden I made money, didn't put any money in, made some money, and I was away. Can't say it was a smooth ride from them, but says it's bumps in his detours still does. But that's, you know, property development is you can make a lot of money out of it. But you got to do it. Right. And as always, there's always things to overcome, like any any business really. Victor Lagos: 8:26 Yeah. Well, and what led you to start property mastermind? Bob Andersen: 8:31 Yeah, so property mastermind is really the the education, business. So we have two businesses, I guess you could say property mastermind is an education where we teach people how to be developers. And we also are developers in our own right. So it came about back in the early 2000s. In fact, when my son joined me after he finished uni, and I thought, Oh, that's great. I'll just buy him a couple of books on property development, it can bring him up to pace and I couldn't find any that were any good. And then I thought, well, what courses are they because remember, I was just full time developing at this point, I wasn't really thinking of the education side of it. Couldn't find any good courses, there was sort of one out there, which wasn't, wasn't really much job. And then I thought, well, there's a bit of a hole there. And you know, over a period of the next couple of years, as you do when you're out, you know, in the marketplace, I did see a few people who had gotten into trouble doing things and I could see that it was just a pure lack of knowledge. They just didn't have any experience, what they were doing and I thought, well, I should do something so actually wrote a book in released in 2006. It's out of print. Now, it's been out of print for a while, but it was it was on property development, how to do it. And then a couple of years later, I thought well, I might take that the next step bet 2009 actually build a proper course. Very early days on online marketing have done lineup was a solid course that I'd sent out in the mail. It was all, you know, CDs, it sounds ancient now, you know, it's probably only 14 years ago with, you know, CDs and manuals. And that was my, my first course, got accepted pretty well. And, and so I then started some weekend workshops and, and then I, I started a mentoring program just for a limited amount of people where I work personally with people on the, you know, helping them with with their developments and sort of what grew from there probably about 14 years ago, until we are what we are now. So yeah, I guess the point of it was like, I could see that people really needed education that wasn't there. There's a lot more out there. Now, of course, most people that have property development courses are actually our students and but back in the day, there wasn't anything there. And I thought, well, if I can get something decent out there, people will be able to always face make less mistakes, get not get into trouble, but ideally, on the positive side, learn the ropes properly, and make money and build wealth out of property development. Victor Lagos: 11:08 And I've seen you mentioned financial freedom as well. And obviously the podcast is called debt to financial freedom. So my question is, what does financial freedom mean to you? And I guess, how do you help your students and your community to achieve that? Bob Andersen: 11:24 Yeah, I guess means different things to different people. But I mean, financial freedom means that, well, you you're in control, I think you're in control of your finances, you're in control of your, of your situation. So you're not at the whim, necessarily, of markets, you're not at the whim of, of society, or, or what what society's expectations are or view. So you need to rise above that. But on a personal point of view, I mean, it means to be able to do the sorts of things that you want to do, when you want to do them, where you want to do them with whom you want to do them, I guess, and to me that that comes back to, to being in control. It means having to work less. And initially, if people are transitioning from full time into ultimately, you know, living purely off their investments, it doesn't happen in five minutes to transitional process, but ultimately, living off passive income, and living off the sort of life that you want lifestyle. into, I think everybody seeks a good lifestyle. It's not the same for everybody. But whatever people's definition of his lifestyle, I think it requires time, because you need spare time sound good. If you're working 80 hours a week in a job, you're not gonna have any spare time to enjoy life. So it requires time and requires money. Not that everything enjoyable, is related to money, some of the most enjoyable things in life don't actually cost money. But it's great if you've got it. And so if you've got time on your side, and you've got money, then then you can create a lifestyle. And that lifestyle isn't isn't partly building future wealth. Of course, that's really important. But it's also enjoying life along the way, and not slugging it out for 40 years until your mid or late 60s Before you can take a deep breath and start to enjoy life. I think. Victor Lagos: 13:21 Definitely speaking my language there. But so, you know, Bob Andersen: 13:24 I know. I followed you and I know exactly how you think. And we're like minded in that respect for sure. Yeah. Victor Lagos: 13:32 Really appreciate you sharing some of your insights today. And I want to ask you, I guess, how does property development fit into, you know, creating passive income streams? Because obviously, it's more about profit, right? When you when you subdivide land, when you when you when you build and then you sell? You're sort of cashing in on that. So it's profit related? How does that tie into creating passive income streams? Bob Andersen: 13:56 But you are correct, and that its profit related? Because we don't do property development if we don't intend to make a profit. But I suppose you could take one step back, we're talking property development. And property is a great asset class. I love it. Yeah, it's the one I got involved in early in the piece. That's the one I've stuck with. And we know that property is a good long term tax effective, proven way of building wealth. It's not the only one. I mean, I'm not, you know, 100% property and 0%. All other strategies, you know, outside of property, not at all. But it's the one I chose, and it's the one that I put most of my effort into. And so we could say, well, I could have chosen property, in my case to build wealth, but property development. Yes, we do intend to make a profit and we do to make a profit, certainly intention. But when you sell your product at the other end, let's let's keep it really simple. As an example. Let's say we were to build a duplex. So two units, we build a duplex. We've got a have a number of options at the end of that, we could sell them both. We could keep them both as investments, or we could even do a mix, we could sell one and keep one. And that's one of the great things to love about property development is the flexibility of being able to sell or, or to keep what we create. So, if we sell, we make a cash profit, and we pay tax on that profit. And we're left with that. And that's the same as any business operation where you have gross income, less your expenses equals your net, and you pay tax on it, it's no different in property development, except that the numbers can be quite substantial in terms of how much it can make, I never worry about paying tax, I'd love to pay more tax next year than I did this year, for instance, which means I'm making more money. So don't ever worry about tax, what you're doing at cost is to be structured the best way you can to minimize your tax, but I never worry about paying it. So so what we sell, that's income, and that's cash. And we need cash, don't we we need, you know, we have to go to Kohl's, every week, whatever it is, and buy our groceries, you got to pay your utility bills, we the lifestyle I just spoke about it requires cash, you know when to travel or when to help other people, whatever, whatever we're doing, we need cash, and we get our cash from what we sell. But what we want to do as developers, if not immediately, then along the way, you start to keep some of the property that we create. And this is how we build long term wealth. Just as you know, somebody out in the normal market might buy property investments for long term wealth, they're looking at cash flow, they're looking at capital growth. Well, that's, that's great. But a big advantage, we're developers, we create property at absolute real cost. So we don't pay retail, we don't even pay wholesale, we pay real costs, we create it out of out of well, when they're gonna say out of nothing, but we created more craftsmen. And that means we're getting Yeah, exactly. So we can acquire property, way cheaper than than the normal person who simply goes and buys finished product. And that's how we build long term wealth, because that enabled us to as developers to build a substantial property portfolio, but quicker than we can in the normal retail market where we paying retail price. So and so as developers, when we finish developing a product, we can use our profit. At the other end, when we finance and hold up, we use that profit as our deposit. So unlike the normal market, where we pay retail price, we have to pay deposit, we normally do that by harvesting equity or other properties that have grown in value. And that's, that's great. But we can do it a lot quicker as property developers. And so that's the long term wealth thing. And we've got that flexibility. We need cash, we sell stuff, we build long term wealth, we hold our product. Yeah, it Victor Lagos: 17:51 makes sense. It actually sounds like flexibility and no brainer for anyone to do property development. But and I think it's one of those things that if it was easy, everyone would be doing it. And there are inherent risks when you do property development, of course. And I want to ask you, from your experience, because you've obviously been doing it for a long time. What are the biggest risks for first time developers, as well as experienced developers? Bob Andersen: 18:19 Yeah, definitely, for first time. First time developers, it's going in there with little or no knowledge. To think that you can learn everything about property development, free online, you can certainly find some good articles and blogs, all sorts of things there. But the detail that you need to know to to effectively do a property development is not, it's not just there. And so you need to educate yourself and do a property development course. For sure, before you launch into doing a development. And it's, that's really important. And that's where I see people going going wrong, sometimes, obviously, I'm out in the marketplace quite a lot. We even get calls from people or maybe a little bit of trouble. And it's often because they simply never never educated themselves or just launched into it. They thought it's a good idea. I'll sort of have a look around. I'll try and reverse engineer what I've seen other people do on the sideline and, and that's how you get into trouble. So that to me, that's the most important thing. That's the biggest risk. The biggest mistake people make when they when they're new. In terms of experienced developers, obviously, they've got past the education stage, they've got knowledge. Sometimes, I think they extend themselves. When I've seen developers, larger developers get into into trouble. It's often because they've taken on too much or too many projects. It's hard to say no. Sometimes when you find another good project and you just jump in there quite often that they really highly did. They may be you know on I'm not against, for instance, using different layers of finance, including mezzanine finance, but but I've seen developers to get the most out of their their equity take on too many projects, very highly geared, you know, using senior debt and mezzanine debt and at high interest, and you know, you only need a bit of a couple of hiccups. And, you know, one gets in trouble in there can be a domino effect. So, I think there needs to be a certain element of conservatism. When respect when you're doing property development, and work within your, your comfort zone, I'm sure yourself, when you've helped finance people into development projects here, you'll feel a lot more comfortable when you know that they're doing it safely. And they're extending themselves to the last cent. It's not a good position to be in. Victor Lagos: 20:53 Yeah, definitely. You've definitely touched on the gearing and skills too much. And, you know, banks, everyone would like to get a bank loan, because usually the cheapest interest rates, you know, they'll extend it over a longer term. But the moment you start building or developing property for profit, when you start going, say, three, four titles, and more, it's considered commercial lending, rather than residential. And even if you're building residential property, from your experience, why would you say that is? Bob Andersen: 21:28 Well, I think that the banks and I'm talking about the retail arm of a bank, which is what you're referring to the, you know, the lower interest, the sort of banking that most people are used to when they're buying their house for an investment property. So, retailer, they make their money by lower lower interest rates, then over a long period of time. So I'd love a 20 year 30 year loan, if you still get 30 year loans, I'm too old for that. But low interest rate long term, that's how they make their money. And so if somebody was to use that sort of Finance to do a development, the bank wouldn't make much out of it. It's such a low interest rate. But for such a short amount of time, I mean, the loan might be 12 months, 18 months, whatever it is two years at a low interest rate. And by the time they wrote in their upfront costs, and hearing that probably, it's probably not worth the bother. And that's why I think that they're not all that in favor, they're more likely to send you off to their commercial arm for a start, where they make their money by charging highest higher interest rate for a short period of time. But then, you and I know that the banks have been pretty tough the last few years, and you can't always be guaranteed a bank alone, even at the commercial arm of a bank. And fortunately, there is other other resources outside of the banking system for developers. So I think that's the reason I wanted Victor Lagos: 22:49 to touch on that a little bit. Because a lot of people have experienced dealing with banks, first tier, second tier, the retail, some of my lessons, I've got experience dealing with commercial finance buying commercial properties still buy and hold. But there are non banks, and there's private lenders that really hone in on this space of development. Why do you think it's their main focus compared to the banks? Why can they do stuff that the banks can't? Bob Andersen: 23:19 Well, it's probably one of the main reasons is that the banks are very conservative by nature. I mean, they don't have to extend themselves to make money, they make so much money out of fees for a start, you know, before they even lend money at a margin. So they do very well out of fees. And then they make the rest of the money or a lot of it anyway, by by lending in a margin above what, what the, what they pay for the money, but so they're not, they're not really pushed for business so much. And they can afford to choose the sort of loans that they want to lend on. So and they've sitting in a pretty good position to do that, though. The price that they can acquire capital app is quite cheap, really, banks, both onshore and offshore. So they get cheap money, they can lend it out cheaper. But and, you know, there's there's a lot of housing loans, of course, in the retail area where they're just lending on completed products. So the difference between a property developers are asking for financial endless money on something that doesn't yet exist them in the land exists. But we're saying well give us some more money to build. And so at the end of it, we have finished product, but we're not starting with finished product. So there's a higher element of risk for a lender in there. But with So, banks, and banks, of course, operate under under APRA. So there's quite strict rules on how banks can operate. But, you know, when you move outside of the banking sectors, as you will know, I'm sure you you know, you operate a lot in that, that non bank sector, they're not under the same rules. They're not under APRA. They operate under ASIC. So it's a different set of rules. They pay more for their money, and therefore they have to lend it out at a higher rate. They have to make a commercial margin on, they don't have all those fees on accounts that normal banks have. So they have to be very commercially minded. And they are. And they'll they've positioned themselves to lend on deals that the banks won't necessarily lend on doesn't mean that they're a bad deal, you can have a good a good deal, put up to a bank, but because of their rigidity, or even because of a postcode, they're just not going to lend to you, but still a good deal. And so the non bank stepped into that space. And they take a big part of the market, what I did hear not long ago that in the development finance sector, that the non bank sector, everything that's not a bank is supplies about 80% of finance these days, whereas many years ago, probably the banks that supplied 80% of development, finance, thank goodness for the non banks, I say, Victor Lagos: 25:59 Yes, and what many people don't know, when you go below the, the non banks who were obviously non banks, you know, still can be quite large financial institutions that, you know, fund managers backing them. But then you've got private lenders who don't even report the acid, and they raise capital from private investors, high net worth individuals, family offices, and they basically pay them for their, for their capital, or return on their investment, with limited risk, because they obviously are providing credit contract to fund a particular project, potentially, but it's, it's short term, it's, they're doing their due diligence on the borrower on the builder and the developer, etc. And, and they're putting a margin. So essentially, they're not even lending out their own money to lending the middlemen. So, but there's a lot of players in this space. And, and I have heard through the grapevine that many of them are cowboys in that they will look at a deal commercially, and they'll know the risks, and they'll know that there's an opportunity for them to take possession of the property at the end, because they know there's a chance a very high chance they're not going to be able to complete the project. So then they'll want to repossess it and take the profit. So that's why I typically steer away from a lot of them, because I know, I don't know them, they're not reputable. So it does come down to who you know, who's got a proven track record and who's endorsed by, you know, the mortgage and finance industry bodies and, and whatnot. So what's your experience with, I guess, sifting through this array of private lenders out? Bob Andersen: 27:45 Yeah. Well, I loosely break them up into banks, which we've talked about, then what do I call a non bank is is often institutional to a degree. And I'm certainly looking for longevity. They're not necessarily a play that's come in recently, but it has drawn in with because the banks have been tight for some time and has drawn in a lot of players in the non bank sector. I'm looking for people that have been around that like, just like you said, they've, they've got a good track record, they've been lending for quite a while. Value valuation firms are happy to work with them. Yeah, they're just endorsed by the industry, and they're fine. Moving into private equity, like you discussed that they're not under APRA. They're not under assets. So they pretty much write their own rules. You have to be, they have to be selected. And you're right, there are there are some lenders in that space, who are looking for a reason for default, you know, and so it's, there are a few landmines there, I think, what, what you need to do. And my recommendation is anybody starting out in property development is to get their finance through a broker. Every day of the week, somebody who understands development finance for a start, and it's quite different from retail finance. And who knows the different lenders and they can, if they don't think that you're appropriate for banks, and they know a number of non banks, reputable ones, who have a good track record. And that's what I always say, get your finance through a broker, particularly when in the in your early years, and maybe even in the late years, for that matter. But, and they will know the places to go to but also some of the ones that have a reputation, not to go to. I think that's that's that's all part of having a good team. Victor Lagos: 29:47 Which actually leads me to my next question. I always talk about having a trusted network professionals as part of your team to help you achieve your goals. In property development. This is even more important because you've got a much more I guess larger network that required to execute a deal from, you know, from concept to completion and onto sale. So what I want to ask you is, you know, what are some of the key professionals you will need in your, in your team, when doing a property development. I know everyone will need a good accountant that understands property development, they'll need a good lawyer that understands, you know, the structure. And if you're doing a syndicate and involving other people, there needs to be certain agreements, and who's going to manage what, you know, who's going to distribute the profit? How is it distributed? What happens if someone dies, etc, there's, there's quite a lot involved in that side. But then once you start looking at the property itself, or the land acquisition, there's a whole bunch of other professionals that even like most people would never even need to deal with on another, you know, in their lifetime. So can you give some listener? Bob Andersen: 30:59 Yeah, so spot on there, you took the words out of my mouth, there's, there's three professionals that I would take with me all the time. And that's a good accountant, as you say, understands tax structures, a good lawyer, property lawyer, and a good finance broker to me, they just would travel around if you'd like to, to different projects, but but then you have the project specific professionals. And that's, that's going to depend a lot on the type of project. So the simpler the project, the less professionals that you need. And to me, the, the smallest property development that you could do would be, let's say, a two lot subdivision, we one mod into a two into two lots and pretty simple little team there. I mean, in terms of the actual rolling out of the development, a town planner, a civil engineer, and a surveyor will handle all of that, they'll help you get your approvals, they'll help you also get the thing built and finished. People both into that would be perhaps people like real estate agents or buyer's agents that can help you find the deal in the first place. And also the marketing at the other end, probably, once again, it could be a real estate agent to help yourself so that, you know, both ends of it. But in the middle, when you're actually doing a development, it could be as simple as two or three people. But as soon as you introduce construction to the equation, it gets more complex. And so to me, the simplest one would be, perhaps when you do a two lot subdivision and you build a house on one or two of the lots, that's, that's fairly straightforward. Once now you're introducing design. So you're introducing, it could be a project builder, who can handle a lot of that the whole design thing in house, or maybe not on or duplex, let's say, that's another simple one, two units join it, I say a duplex is a is a big house with a wall at the middle of it. But once you introduce construction, so there might be an architect or building designer to do the design will have a town planner near as well, we have a surveyor and a landscape architect, and they might be four, even five professionals, we used to get our approval, and then we'll move on to our building permit or our construction certificate. Once again, the architects back with a few more engineers in there to help and a couple of other consultants. So, you know, we might end up on something like a duplex for our full approvals. We have five or six different professional people along the way. And then we move into construction. Well, that's, that's a builder, mostly during that point, and perhaps a quantity surveyor on the way through and then at the other end, well, we're back to, you know, lawyers and marketers and selling stuff. So a good team. Yeah, I'd say a good teams is the key to success. We've got our core team of three that I mentioned, including yourself, and, and all these other ones that don't, we may, we may transport these other professionals from project to project but but sometimes if we're doing a project in a different location, we might use a different term planner, a different architect, or, you know, a different type of product. Maybe some somebody a bit different if we're doing some specialized development. Like something like the NDR endo is where we need a specialized building designer who's very familiar with very strict requirements that are required. So we might not always use the same professionals in every project. Other than our core of three. Victor Lagos: 34:28 Sounds like there's a lot of moving pieces in a development the more when there's construction involved. It's there's obviously much more required. If you're getting private certifiers or if you're having to go through through counsel. There's there's obviously development approvals and they need to get me to go through environmental code sometimes there's quite a quite a bit that you need to manage. So if you're the developer, you need to basically project manage the whole thing or do would you then hire a A PM, or DM developed manager or project manager to kind of do a lot of that legwork that can navigate a lot of moving parts at the same time, and you just pay him a fee, what would you say is a better way of doing? Well? Bob Andersen: 35:14 Well, I personally don't necessarily recommend getting a project manager in to run everything, mainly. I mean, I'm not a control freak. But if I'm getting somebody to manage something for me, I want to know actually how it works in the first place. Otherwise, I'm not going to know what they're doing. And you're not going to learn by engaging a project manager because they're not in the business of having people hanging around and teach them they just want to get in and get paid, get the job done. So that you can, I'm saying you can't, you won't learn much doing that. I've always liked the idea of learning what to do. And then you know, if you're outsourcing, then to at least know what you're doing. So at least do one or two developments before you'd look at outsourcing somebody need to do everything, otherwise, you're not really going to know what they're doing. Or if you if they suddenly go fall under concrete truck or something, they'll be able to pick it up. But you can, you can subcontract in a way. And for instance, during your approval process safer duplex Sorry, I just have to cut dry throat might be a. bit dry, sorry, happened to me to put my water and have a drink just go back to that. During the approval process, you can actually subcontract a bit. So what I mean by that is the the lead consultant with sign or duplex it to me is the architect. Some people might say that's a template, but I'll go with the architect and an architect can coordinate that process, they can work with the town planner, with the surveyor and with the landscape architect to help get that approval. And at the next stage, the building permit or the construction certificate, once again, they can work with the different consultants there. So they're like a lead consultant. And so in a way you can work directly with the architect who can then move to like, coordinate the other consultants. So that's one way of cutting back on your workload, I'd still like to know what everybody's doing. And if you aren't leaving it up to one person, then you need to be right on top of the architect, make sure they don't go to sleep on the job either. So there is that ability to cut your workload back. But to me, the best way is to learn property development properly, do a course get educated, do it yourself, do a couple of projects. And then if you want to start subcontracting, or particularly if you get a few projects going and you got a little bit of experience behind you, then you can bring in a project manager because you know exactly what's going on, you know what they're doing and be over top of everything. And you'll be able to, to actually not be subservient to them. But you are the developers, so they need to work under you. They need to do the job. They're professionals, they know what to do. But you really need to know what's going on. That's, that's the way I've always done it and, and taught it. Victor Lagos: 38:22 Yeah. That's why education is so important, right? It's to equip you with the knowledge and information you need. So that, of course you want to make informed decisions. But it's so you know, to ask the right questions to the professionals that you seek out. So you can guide them. And they don't like you said they don't lead you without you realizing what they're doing, or they take you for a ride. But I haven't seen your course, I don't know too much about it. Are you able to sort of share what's included? Or is it multiple courses that you offer and mentoring programs. Bob Andersen: 38:58 I try keep it fairly simple. We do have a new website coming out. Probably not long after the this podcast goes to in fact, probably within a fortnight so but the current ones got good information on it. That's property mastermind.com.au. The the course that that most people do is is a bundle of two courses. It's an online course where you can learn at your own pace as fast or as slow as you like. And it's a full aided set of property development. So it's got 40 years of experience built into that course. It's good. And also part of that course is a three day workshop, which we have one around mid year, which we which we do on Zoom, and we have one at the end of the year, which is a live in person and at second. It's a great three days. So it's a combination of online and the workshop. And that's launched, watch plenty of developers. And that information about that is is on the website, property mastermind.com.au But yeah Yeah, you just, I can't emphasize as much, you know, hard enough that you really do need to get educated, obviously, I'm gonna push my own education course, but get educated no matter no matter who you go to, don't just launch into property development, because there's so many little twists and turns. Or alternatively, we do have a mentoring program. And it's, it is limited by numbers. That's for people who really want their handheld all the way. So they work individually with, with myself and, and to, to my team members, Hillary as well. And so we were on a daily basis, one on one with people, that's people who really want the confidence of working closely with an experienced developer, all the way through to big safety net, of course, for people and also, they're going to learn really fast how to be a full blooded property developer. And that's really the two main things that we that we offer to get people through safely and get them making money. brilliant thing about knowledge, once you've got it, you don't have to keep reinvesting in it. So generally, it's something you acquire once and and then you know, you're away. Victor Lagos: 41:07 Yeah. And it becomes applied knowledge rather than just, you know, absorbing information you buy mentoring them, you're actually helping them along the way giving them feedback, and stopping them from sort of jumping in because it's so easy to, to like, make a quick decision, thinking it's the right thing to do commit to something and then all of a sudden, it's very hard to unwind, and you're sort of stuck, and you're losing money, and you have to kill the deal, potentially. So I think it's a great thing that Yeah, Bob Andersen: 41:34 exactly. Yeah. One of our mentoring students, Jamie, Jamie was saying not not long ago, he's, he's finished the mentoring program now. But he joined just as he was about to go to contract on a site. And he said that it wasn't a good one, I had a look at it straightaway. And he said that that paid for mentoring program in the first couple of days, and I told him to kill the deal. Do not sign that contract. So as you just rightly said, it's not just what you do, it's what you don't do that matters as well. Victor Lagos: 42:04 Yeah, exactly. And a lot of people will think you need to have access to some cash, right to start property development, you need to have equity in your properties. You need to even have property. But you mentioned that you did it doing vendor finance, and where you didn't put any money down. And there's other ways of doing it. I mentioned that earlier, which is property syndicates, or joint ventures, are you able to sort of give an overview of how that works? Exactly. And how you guys can actually help facilitate that? Because a lot of people don't know the right people or know what questions to ask to get them involved in putting money together to for a site and for a development. Bob Andersen: 42:49 Yeah, quite true. So I call those creative strategies or creative finance, I guess. And my first two projects are exactly that. Different models. But were those and I've got to admit, I did stumble through there. But I managed, I survived my first couple of projects. Got me off to a good start. But yeah, so if if we look at financing a development, it's quite simple that you have to put in a certain amount of equity upfront, then the financier will put in the rest as a loan. And that gives you enough money to do a development. So that so called creative strategies are often around, well, where does that equity come from that first chunk of money that we have to put down before the financier tips in their money? And the obvious answer is, well, if we don't have it, it's got to come from somewhere. So we're is somewhere somewhere, it could be another person, it could be an investor, it could be somebody who has that money, that amount of money, that equity, but they don't know how to do a property development. In fact, they probably don't even want to know how to do a property development necessarily. But they do like the idea of making good money out of a property development. So it's, it's an investor so that that model, in simplicity is what I call a joint venture, because it is a venture to make money, it's jointly in this case, it's between two people. And so the developer partner, if you like to develop a person, well, they would have the knowledge to do the development. And they would basically do it, they'd manage it, like find the site, get the approvals, get it built, get it sold. The other person, the investor, well, they would supply that, that cash equity upfront, to make sure that we could get the loan to do it. And in its simplest form, that's what it is. And that's our way of doing it. Now. At the end, of course, the project makes a profit. And that profit could be shared then between those two people. So the developer, well, they get a chunk of the profit let's let's say it was 50%, which can often be they get 50% of the profit, but they never put any money into it. But they did put in No, it was time and expertise, time and knowledge if you like that, and they got a great reward for that without putting money in the investors point of view, well, they put up the money, they get that money back at the end plus, let's say 50% of the profits. But they didn't have to do the work. And they didn't have to have the knowledge, which in many cases don't. I mean, that investor could be your dentist, who knows, it could be a doctor, it could be a neighbor, it could be a relative, it could be anybody. And that gives them the opportunity to making really good money getting really good return on their capital, without doing the work. And vice versa. It's very mutually beneficial joint venture. That's, that's a typical type of creative strategy. It's not the only one, but it's a popular one. Victor Lagos: 45:45 So my question is, when you start to do larger developments, and you need more capital and more investors, and so it gets a little bit more complex in the structure, maybe a unit trust, you know, you're not necessarily giving away profit, but you're paying interest on loans, because most of the deals being done, and it's just needing sort of more capital injections. Do you have? Do you have ways to help your students that go through your either your mentoring or your course, to present a information memorandum, or some sort of pitch deck to help them raise the capital? Because you can imagine a lot of questions for an investor, especially if it is your dentist and say, Oh, can you give me 300 grand for development? They're gonna want to understand a lot about the deal. And what are the risks involved? What are the potential uplift and the timeframes return of their capital, etc? Like, is that something you guys help with as well? Bob Andersen: 46:45 Yeah, so So in the course, that I mentioned previously, I've got a, I've got a course within a course you could say on a range of these creative strategies, I've chosen five, five, quite common sort of ones to do. And that's in the course as to how they roll out. Within our mentoring program, we also go into that in an even deeper level, and we help people we help, we often help people find investors in that case, in our mentoring program. And investors often like the idea, if they do invest in a project, particularly somebody like myself, who's overviewing it, who has done 1.3 billion, I've actually worked out that I've done over $300 million worth of projects off a creative manner where we put the money in a drawer and various ones, some with just little mums and dads investors and a couple of with ASX listed companies as well, and even a couple of government departments. So So you know, you can graduate up into that. But yeah, we, I certainly teach that. I was doing syndicates back in the late 80s. And, in fact, even prior to that, as I mentioned, my first two projects, the first one was what we call a vendor finance type strategy. And the second one I did was the one I just talked about a moment ago, it was a joint venture with an equity partner where the person that put the money in was my sister's boyfriend at the time. And she had a she had a boyfriend called Keith, who was an earthmover, he had a few dollars, and he saw me make quite a chunk of money out of my first project when the vendor finance one. And he said, My goodness, how'd you do that? And I said, pretty clever case. I said, which wasn't really because I did stumble through it. But and, and got a bit of help from the from the seller as well. And I said, Look, I'm happy to do a deal with you, if you've got some money and true to form, Keith put up the money, the equity. On the second project, we borrowed the rest of the money from the financing. And I did a second one. So I've done my first two projects, two different strategies without putting five cents in the deal. That gave me a love of, of that type of years of structured and fine tune many different ways of making money out of out of out of zero, I suppose zero equity, you know, and syndicates and joint ventures with landowners and using call options, all sorts of things. All we do. Of course, Victor Lagos: 49:18 yeah, we don't even touch on that right call options and options trading. So when you when you basically have the rights to a property without owning it. Yeah, look, we can always do the more detailed conversation. We can probably talk for hours about this. But a couple of more questions before we wrap it up. With a question is with the current interest rate environment that we're in, there's obviously a higher cost of living, high cost of materials for for construction, global inflation that were going on. Would you say it's a challenging time for developers right now? Or would you say it's a good time to find opportunities? Bob Andersen: 49:56 Well, we have gone through quite a challenging time. Now Coming out of the out of the pandemic, talk a little while ago now almost forgotten about that's funny here, here we get on with their life, isn't it now sort of don't think about that too much. But that created some some issues. Of course, it was it was more of a reconstruction after that, that created a lot of a lot of growth in the market, it created a lot of increased costs of construction. And so we've been through the worst of that we've had some very rapid rises, then, you know, 2122, and even a bit into 23. of large increases in construction prices, shortages of labor, shortages of materials. A lot of that, it's not back to what it was, but it has improved quite a bit, I deal with a lot of builders, of course, a lot of quantity surveyors, certainly, material suppliers improved a lot. Labor has improved quite a bit, we did have those large price increases. And while values went up a lot, it was mainly housing that went up a lot in value townhouses did to a degree apartments did to a degree, but not as much. That's because all the stimulus from the government was directed at short term remedies, which really meant more quick, quick builds and housing and that sort of stuff rather than longer term builds with townhouse developments and the like so but that, like everything, if, if you leave it alone, it'll find its own level. And so it's going back to that now. So built, build costs have stabilized to a fair degree, they're still going up a little bit. But if you look at some of the big quantity surveyor firms, they're only predicting three and 4% increases during the next 12 months. So, you know, the worst is certainly past in terms of construction pricing. And I have noticed, even talking to some of our builders, that some of the trades have actually come back a little bit in their rates. But look, it is what it is. Interest rates were we've seen them rise, but you know, they were never going to stay where they weren't my goodness, that's I couldn't believe how low they got. Never seen anything like that in 40 years. I should point out my one a couple of my very early projects, I paid over 20% interest back in the early 80s. For money. There was a credit squeeze on so you know, that doesn't six or 7% Doesn't 8% 9% 10% on on non banks. Yeah, that doesn't frighten me at all. I've made good money in higher interest rate regimes. So it's just getting back, you know, it hasn't reached the 30 year average interest rates, standard variable rate, it is what it is. We'll get used to it again, inflation slowly getting under under control. We've seen it drop a bit, it'll get back to that sort of 3% and probably 18 months, in my opinion, interest rates, I don't think they've got much more to go. And I think I think they're leaving a little bit of a headroom for a pullback in rates maybe sometime next year. But we'll see. But I'm happy enough with with interest rates, they are what they are. There's a lot of other things you do in property development that you can control and make the price of money is just just price of doing business. Really. It's all about getting out there and understanding property development, looking in the right places for the right deals, doing your job Geralyn is giving correct due diligence. And look, there's still deals to be found out there. Yeah, we got we get students we are searching for sure. And when we're looking for a good project to do we throw a lot in the rubbish bin, you got to be prepared to do that. And to find the ones that really work. And when they work, well, you jump on them. And that's there are deals out there. But it's improving. Obviously, it's migration and went back to zero. And that's always been a big driver of of our markets. I've got a housing market and capital growth. And so that's, that's on the increase and look looking for future the next couple of years for overseas migration is quite enormous. And the big winners of that often Sydney and Melbourne, but but the other capital cities as well get get some get a feed out of that. And so I think it's much better times ahead as things settle down. And nationally, we've still suffered a housing shortage we have since 1944. And with a lot more overseas migration coming in, and they're wealthier people are overseas migrants, they don't move into the housing market. They'll move into the rental market, which is really tight, but they'll also buy. And so yeah, I think it's I think it's good time to hit. But sensibly, always sensibly. Victor Lagos: 54:30 One of the my past guests is a friend of mine, and I think she might have done the course with you, Dr. V on PE. And oh, do Bob Andersen: 54:40 you want Yes. One of my mentoring students from the past. Victor Lagos: 54:43 Yeah, she's great. And she's just doing some really good stuff in the affordable housing space. And I think it's important when you're looking at property development and you know, you're gonna make a lot of money but it's it's not just about the money you're you're making. It's who you're impacting. From that development, are you providing housing to people that really need it, especially with the cost of rent going up everywhere, and more and more homelessness going on at the moment. So there are different things, properties, style of properties that you can develop, whether it is, you know, specialized, like NDIS, to help, you know, disability support, or it can be co living arrangements. So, you know, multiple, self contained units within one house, so you're helping the community and keeping the cost of rent down, as well. So, I think I'd encourage anyone out there to really start, you know, looking and learning more and more about this space, if you're interested. And I really wanted to just sort of wrap it up and just mention that to our listeners, we want to offer, you know, a 10% discount on, you know, on your, on your course, or your online course. And you're going to put together a discount code, which is Victor 10. So 10% Victor 10, when you're basically on on the new website, property, what is what's your website called, again? Bob Andersen: 56:10 property, property mastermind.com.au. Victor Lagos: 56:14 Property mastermind.com.au. And when you select a course, just make sure you put in that discount code, I'll put it into the show notes. And and I just wanted to ask one more question about your mentoring because Hillary she she's comes more from a coaching background and a lot to do with mindset. She's your business partner that she helped more on the on the mentoring side. Bob Andersen: 56:36 Yeah, she does as well, should my business partner in my life partner, actually, as it turns out, so I scored, I scored big T times there. But yeah, Hillary has a, he has a long history in in coaching, but also property, she's involved in three developments at the moment still sit down a lot of rent owes, I think he's done about 23 renovations in a time. So she, she bought her first property at 80. So she's, she's all into property, but but coaching and performance coaching, mindset coaching as well, she's been doing that for many, many years. And so that's the other component, I'm sure you'd agree that you have to be successful in any field. It's not just filling your head with knowledge, you have to apply it and reply rigorously, but also everything else that goes with it planning, you have to have a plan, you have to be true to your plan. And you have to be accountable to your plan for that matter. And, and also, you know, be in the right space, head wise. And so property development is not just about absorbing all the knowledge of property development. And we realize that and therefore we our mentoring program, Hilary works with with people as well to help them get organized to and every everybody's different. Everybody is going at a different pace. And we're all going in the same direction in terms of property development, but not everybody is the same different social situations, financial situations, age work, everything. And so we sort of customize a program to suit the individual and heal is at the forefront with all of that. And it's very interesting person in terms of, you know, supplying that that missing ingredient, that six inches of real estate between your ears, which is critical to success, you know, not just the head knowledge of property development. That's a good combo. I think Victor Lagos: 58:22 you guys have figured it out. And it's such an important piece because my last guest, his name is Scott Robinson, he's called the brain guy, the episode will air shortly and he really talks about, you know, your beliefs and your mindset. And it's so important because if someone's come hasn't been born into wealth, and they're seeking financial freedom, they've got some unconscious beliefs and patterns and paradigms that sort of keep them where they're at and keep the ceiling of, of what they achieved financially at that same level. So they do actually need some help to break through those internal barriers and reprogram themselves for success reprogram themselves for for worthiness, right, because imagine you had no money your whole life. And now all of a sudden you find Bob and Hillary and they're offering you a pathway to earn millions potentially, and you've come from zero and the minus. It's such a big shock to kind of comprehend and, and believe that you're worthy of earning that because no one in your family ever has. You've never had that you've never had any opportunities for that. But you want that right, deep down, you want financial freedom, you know that you're capable of doing it. But you want to feel like you, you believe it, and you deserve it. So that's why it's so important to get that mindset, right. And, you know, I want to acknowledge you for the work that you do, the amount of years you've put into this amount of people that you've helped. You and Hillary are doing a great thing and I'm really glad to have you on the show today and to get to know you more and to be able to offer our listeners that discount because I think if if you're listening and this is something that you deep down believe you're you're capable of doing, you know, jump on. And if you want to connect to Bob and the team, where else can What else can they find you? Bob Andersen: 1:00:16 Well, well certainly, we're on all the platforms. Yeah, Facebook, LinkedIn, Instagram, you name it, we're there. It is a good place to start it at the website can have a look at our products, but also, contact us send us an email phone, we got our 1300 number there, we'll, we'll have a chat about your aspirations and you know how we might be able to help with those. Victor Lagos: 1:00:38 I'll probably sign up for that mentoring course, in the coming months, I'd say. Awesome. Thanks so much. Well, thanks, everyone for tuning in. You're welcome. If you enjoyed that, please follow us on our socials. Please tune into the next episode. So you said everything on this podcast is general in nature, and for education purposes only. None of your personal objectives, financial situation or needs has been taken into consideration. I highly recommend you seek personal financial, legal taxation and credit advice before you take any action on what has been heard on this podcast.