11 May How to find the best deal – Nhan Nguyen (Part 2)
Kevin: We’re back with Nhan Nguyen from Advanced Property Strategies. Nhan is giving us some tips on becoming a small property developer.
I wonder if you could just share with us a couple of stories, Nhan, about people you’ve worked with and what you’ve seen them accomplish.
Nhan: Yes, absolutely. A couple of clients who’ve worked with me who have applied the strategies: a guy named Graham, who’s out in the Ormiston area, bought a splitter – which is a site already on two titles – and knocked down the house. He made a quick $60,000 in a period of 10 weeks.
Because it’s already on two titles – we called it a splitter – you can get in, you can get out, and get paid. Because it’s already on two titles, it allowed him to get in and get out quite quickly there.
I had another client recently in Kenmore, Kate, who bought a house that had a lot of termite damage in the property. She bought it in the high $400,000s, spent a good chunk of change on the renovations, and sold it in the low $700,000s to make about $80,000 or $90,000.
It’s about having a clear exit strategy in mind and with a mindset of getting in and getting out and getting paid.
Kevin: Just because it’s on two lots doesn’t necessarily mean you can get two houses on it, either. It depends on the type of house that’s on there and whether or not it can be removed or shifted sideways.
Nhan: Exactly. And there are a few things with the splitter as we talk about. One is the house might be under a demolition control or character precinct – you may not be able to remove the house – or the blocks themselves might be what we call widow blocks, which may be on two triangular blocks as opposed to two rectangular blocks.
Kevin: Are there many of those around anymore, the widow blocks? That’s where it goes diagonally across. You’d need to get a realignment for that?
Nhan: Yes, exactly. So imagine a 20-meter wide block with a 40-meter depth and from one corner to the other corner you have two triangular blocks. That’s what we call a widow block.
Kevin: You know why they’re called widow blocks, don’t you?
Nhan: I’ve heard, but I’m not sure if I believe that story.
Kevin: What is it? What did you hear?
Nhan: They said that before people went to war, they changed the lines or the dimensions of it so that the widows wouldn’t sell the blocks while their husbands were away.
Kevin: That’s exactly what I heard, too. And I don’t know whether it’s true, but it’s a fascinating story.
How hard is it to become a property developer? You and I were just talking about the fact that you have a course that runs for about two years. So it’s all about education, Nhan?
Nhan: Absolutely. We teach people how to do it themselves. We call it the Fast-Track Mentoring Program. It’s about small developments being made easy.
There are so many different ways that you can do development. You can do townhouses, you can do removal homes, you can do subdivisions, you can do splitters, structural renovations. We break it down. And the majority of our clients like to start small. They might do a cosmetic renovation, they might do a one-into-two subdivision. That’s what we teach people how to do.
Kevin: If I decided to do it now, the process of education, how long would it be before I could start putting deals together?
Nhan: If you get the education right, you could be in the marketplace in two to four months really, really quickly. That’s assuming a couple of things. One is obviously getting the right education, but secondly, you have to be deal-ready and market-ready, as we call it. You have to get your finances ready. Maybe you have to get your pre-approval with a finance broker so that you’re able to purchase.
In two to four months, you could be in a deal, and two to four months later, you could be out of the deal if you knew what you were doing. We encourage people to think big but start small. Just start with something small – a sub-$600,000 purchase ideally.
Kevin: What sort of research tools do you recommend people should use? There are lots of excellent online tools. Are there any that you recommend?
Nhan: Yes, sure. The basic ones that a lot of people use already are, for example, Google maps. That’s really great. Google Earth is another good tool. A handful of other paid subscription tools: ones like Price Finder or RP Data, are good databases with actual data of property ownership, property sizes, dimensions, sales history, and things like that. Those are important as well.
Going to another level of getting more specific information are the local property development tools that are online. What I mean by that is that Brisbane City Council has a PD online as part of their website. New South Wales has a planning portal. It’s called New South Wales Planning Portal. And you need to use those tools there.
Those are a suite of tools. Obviously you have to learn how to use them.
Kevin: You mentioned there about understanding how they work. Does someone who buys into those tools get the same sort of information that a real estate agent would in terms of zoning and ownership and when they purchased and so on?
Nhan: Absolutely. Those are the same tools pretty much that real estate agents use. However, you have to learn how to interpret that information. But if you don’t know how to use it – looking up the interactive mapping, looking up the flood maps, looking up the biodiversity – there’s not just the information, it’s learning how to interpret the information and use it.
Why should a property be disregarded? Because it might have this overlay or a noise corridor in it. Why should it be disregarded as opposed to why is there an opportunity there?
Kevin: You mentioned earlier that it’s logical if you’re going to get the education, in maybe two to four months, you could be inside your first deal, and in another two to four months, you’re coming out of your first deal. In other words, you’ve made some cash flow. You’re looking there at anything from four to eight months before you can actually start to pull some cash out of what you’re doing. I know you do this full time. This is what you do.
How many people would be able to support themselves in this type of lifestyle, and how long does it take?
Nhan: I say to people, I’d be wanting you to do that for ideally 12 to 24 months when you can make six figures before you can, for example, replace your job, because there are a couple of times there you might get started and you do a deal and you make $50,000 to $100,000, which is great. However, was it beginner’s luck?
Sometimes we have what we call Superman Syndrome where they might do a first deal and think they know everything and they go into another deal that is a little bit different and has a few different things that they are unaware of or they neglected to check because their ego got a bit inflated. So I do suggest between 12 and 24 months after you’ve done it consistently, made six figures consistently, then look at transitioning from your job.
That’s what a lot of our clients want to do. They want to transition away from their job. It might be because they just don’t like the hours or they like what they do but they just want to be able to do it because they want to do it and not because they have to do it and have other sources of income.
That’s what we help people generally do: replace their income doing property development.
Kevin: Thanks, Nhan.
My guest has been Nhan Nguyen from Advanced Property Strategies.