Episode 3: Rex Afrasiabi - Property Law & Business

For episode 3, we welcome our amazing guest Rex Afrasiabi (Owner of Bond Conveyancing and MA Legal and host of Real Estate Renovators). Throughout this discussion, Rex shares his incredible knowledge of the legal world relating to property and why it's so important to have a quality team of professionals around you protecting every step you take. 

As a purpose driven professional who loves helping others prosper, Rex offers all sorts of valuable insights from his vast experience to help others learn. When you invest in property, it is important to protect yourself as best that you can. 

We talk about having a goal, being in a flow state and taking educated and calculated risks to get ahead in life professionally. 

Rex also explains the need for more properties to be built due to the serious lack of supply which is causing rental stress and the liklihood of growing price values to come. 

We hope you enjoy the show and welcome you to reach out to the Buyfair team at www.buyfairproperty.com.au  

Transcript

Speaker 1 (00:01):

Welcome to the Property Now Podcast, where we talk all things property, investment and new homes with your host Matt eol. Speaker 2 (00:09):

Yes, there's bad debt. Yes, there's good debt. The good debt is not bad. It will never send you broke. Ever rich people rely on debt to expand because without debt it's pretty hard to expand. It's almost impossible. Speaker 1 (00:20):

If you want to learn more about what's happening in the market and how to benefit from property investment, then go no further. We dig deep as to why our sector is a key to building financial security and safety for your family. Never before has it been more important to understand the playing field than now. Speaker 2 (00:39):

And I would say this, this is probably going to raise some eyebrows with some people, but your family home is not an asset. It is a liability. It's taking money out of your pocket from a cashflow position. Speaker 1 (00:49):

So let's get on with the show. Happy listening and we'll see you on the other side. Speaker 2 (00:53):

So this is going to be a funny little story and I am, what's the punishment dinner or something? There's definitely laughing stakes on me for this. Firstly, welcome to the Property Now podcast for the first time for the listeners, but for the second time for me and Rexy because our producer, which is yours, truly forgot to press the record button on the recording equipment. Speaker 3 (01:17):

So this is take two of the podcast? Speaker 2 (01:20):

Yes, it's take two. We've got the video covered. So I pressed record on the video on both videos, but not on the actual podcast. No, I thought Speaker 3 (01:27):

We had some really good chemistry in the first one. That's if we can repeat all the good stuff that came out. There's always Speaker 2 (01:33):

Technique. There's always technical issues when recording a podcast. We actually tried our first two episodes twice and the audio didn't work, so we had to go back and do it again as well. But it came up good, so fair enough. Yeah, we didn't have this equipment then though, so Speaker 3 (01:49):

This is really good equipment. The lighting is amazing. The camera's amazing. The speakers, yeah. Speaker 2 (01:56):

So I get to introduce you again, Rex. I'm very, very glad and honoured to have a wonderful man sitting next to me today. My guest, his name is Rex Arabi. I've got that down pat now. You Speaker 3 (02:09):

Do have it down pat. You do it so well. It's a really difficult surname to pronounce. Speaker 2 (02:13):

Yeah, well apparently I pronounce it better than you just said before, Speaker 3 (02:17):

But we don't have recording of that anymore. Yeah, Speaker 2 (02:19):

We've got it on video so I can still share that. We've got plenty of video content there, so we're fine in that respect. So yeah, thanks for coming along. Rex Rex is someone that I've got to know a little bit in the last recent times and a very successful and purpose-driven professional in the legal space, but also with a large focus on property. Yes. Hence why we wanted to get you along to the Property Now podcast and have a chat to you mate. So thanks for joining. Speaker 3 (02:47):

Thanks for having me, and thanks for giving me your awesome chair as well. You're welcome. So for those that can't tell from the chairs, I've got the better chair. Speaker 2 (02:54):

I've got the raggedy one. Speaker 3 (02:55):

Hard enough to just go, here you go. Take the best chair. Speaker 2 (02:58):

This keeps me grounded. This keeps me grateful. I feel Speaker 3 (03:01):

Like a king on this one. Speaker 2 (03:03):

Well, that's the rule with having guests here, mate, is that you are the king. You are the focus of the episode. Thank you. Speaker 3 (03:10):

I've got amazing coffee as well. Thank Speaker 2 (03:12):

You. You're welcome mate. So let's go through a quick introduction again. Started a company called Ma Legal in 2008. You've done Speaker 3 (03:19):

Your research. Speaker 2 (03:20):

Yes, yes. And also just recently launched a new business bond conveyancing, which is exciting and very relevant to the Property Now podcast being that you're focusing on property transactions. But I'm interested as well by your upbringing, what you're willing to share. Obviously it sounds like you learned how to be a man yourself and set yourself up. Speaker 3 (03:41):

When I began, I spoke about earlier, so I'll try to keep it more brief this time than last time. I think that's why I stopped recording. I had my own law firm for 14 years prior to having my, let's go actually rewind. Back when I was young, my parents got separated, my mom left with my siblings when I was 12. My dad lived overseas, so I kind of raised myself from when I was 12 years old, which is quite challenging and can be quite fun as well. Had spent my misguided youth hanging out at shopping centres and the likes. I went to three different high schools. I was a little bit of a brat, still somewhat intelligent. I did get into law straight from high school, went to Monash University, did my law school, did a law and an accounting degree, do two degrees. I started working at various big firms, went to a small boutique firm who represents three people in a BIW 400 list, which is really nice. High-end work, one-on-one interaction with them. Also really got to to see how they operate themselves and how their mindset works and what makes them do a deal and not whilst being involved in negotiations or a deal Speaker 2 (04:45):

In life. Is there anything, because people listening to this podcast or ambitious people, they're trying to get ahead in life. Is there anything that you would say they do that you could share that stood out to you? Speaker 3 (04:54):

They take risks more so than anyone else. They're very calculated risks that other people don't do and they plan 5, 6, 10 steps ahead when most people don't. So they go, okay, what if we do this? They actually do engage advisors to guide them through it. So a lot of times when we get engaged as lawyers, we'll get engaged when a deal is done and there's so much input and we can provide before a deal is done, we can help bring it to settlement and do the paperwork once it's all agreed upon. But what they will do is get us involved right at the outset, not letting the other side know they've got lawyers involved as such. So we'd be preparing emails and stuff for the client to be sending off themselves and negotiating certain deals and terms and conditions and the like before it gets to the lawyers. And by doing so, we've got the upper hand because a deal has already been done. Speaker 2 (05:49):

Yeah, they're bringing an army of advisors with them to Yeah. Speaker 3 (05:52):

Yeah. So it does help. But so it was really good work and really good. I was 28 at the time, single, I think I told you earlier, had blonde hair and blue contacts. You shared that. You had that recently, which is concerning. Speaker 2 (06:07):

I didn't have the blue contacts. Okay. No, no, I didn't go down that Speaker 3 (06:10):

Path. It was the eighties or nineties. Maybe Speaker 2 (06:12):

I should try it. I probably look like a vampire. Speaker 3 (06:15):

I think we'll suit you. Yeah, it'll probably look more natural new to me. Speaker 2 (06:18):

Oh thanks. Speaker 3 (06:19):

But the same office that the law firm was in was a fashion company called Blur Optics. They do all the optical for Saan by c Foley, ARA, some of the large Australian brands. Anything optical is never done by the designers. They licence it out. So there's a company called Luxotica who owns all the sunglasses hut and they do all the major Italian brands or opt kind does the major Australian brands. Speaker 2 (06:39):

I really like Sunglass art. Speaker 3 (06:41):

Well it's owned by and Ops M is worldwide owned by the same company who licence every single Dolce, Gano, Gucci, everything's licenced to them. They make it, they do it all. They give it a rule. Speaker 2 (06:53):

I have a rule with buying sunglasses. I don't spend more than a hundred dollars. I lose them. Speaker 3 (06:59):

You can't get much for a hundred dollars these days. I know. Not much at all anyway. I know. Might go like Thailand or something. Chops. Yeah, if that even they're quite expensive. I know it doesn't cost much to make Speaker 2 (07:11):

What isn't expensive. Speaker 3 (07:12):

That's true. It's true. But left the law firm joined them. It was a Friday night drinks and you could tell, I mean you can only imagine the clientele that went to a fashion company and the people that worked in there compared to a law firm is very different. You can Speaker 2 (07:26):

Tell you've worked in fashion. Speaker 3 (07:28):

So Speaker 2 (07:29):

For those not watching the video, Rex is a very well dressed man. Speaker 3 (07:33):

All the compliments. My head's going to be too big, can't fit out the door by the time I leave here. That was an awesome job. I was general manager, legal counsel, travelled the world, went to all the fashion shows, trade fairs, Sydney, most of big fashion houses are in Sydney. So Sydney almost every second week or every week. But it does burn you out. People think, oh, you're travelling the world. It's great. It is. And you meet a lot of people and you do a lot of stuff, but you leave Melbourne to go to Milan, you stay for five to 10 days. You get up early. If you're doing a trade fair, you're setting it up and you are overseeing it all. You go for dinner afterwards, you go to a club afterwards, you go to some private house afterwards, you wake up, who knows who, and then you start again. Groundhog Day. Then by the time you're back on the flight to Speaker 2 (08:17):

Melbourne. Sounds like a reality TV show mate. Speaker 3 (08:19):

It should have been. Yeah, a lot of those. I think someone should do a reality TV show on in fashion industry. Some interesting things they'll see. Speaker 2 (08:27):

I bet I shouldn't be admitting this on air, but I really liked Emily in Paris. I know it's probably a different life. I know it was a marketing agency, but I dunno if you've seen it. It's a Netflix show. It's a bit of a girly show actually. I'm usually into Vikings and these guys Speaker 3 (08:41):

Shows show you are. Speaker 2 (08:43):

Yeah, but this one got me. I was like, oh, it's actually quite good. Speaker 3 (08:46):

Emily in Paris. I'll look Speaker 2 (08:47):

Into it. Yeah, look into it. You'll like it mate. I'm sure Speaker 3 (08:50):

I'll do you know what, working in that high I suppose high stakes, big hours, what was missing paid? Well as well. What was missing is a purpose a why I think we spoke about briefly, it's only so much satisfaction I got from doing what I was doing. I was missing something and that's when I set up my own law firm. And the beauty of being a lawyer in private practise is you help clients no matter who they are, whether mom and dad's buying a house for the first time or a public listed company doing a merger, you're helping someone through a journey and you're entrusted with what is to them, one of the most important parts of their life to you might be a day-to-day transaction, but to them it's not and you're entrusted with that. To see 'em through that journey, that gratitude you get is the most rewarding. Speaker 2 (09:37):

I actually wrote this down before you came in, but one of the things that resonated to me with you is that you're quite purpose driven and it seems to me, I mean obviously you're successful, but it seems to me like purpose is probably the most important part or one of in everything that you do, not just within business or property, but within your personal life or your exercise as well. And Speaker 3 (09:59):

Yeah, I do have goals on everything like exercise, live, I train now, my current thing is to do 10 sessions a week, so I do 10 sessions a week. I've done two boxing challenges, which I know you've got one fight coming Speaker 2 (10:13):

Up. Yes, fight week this week. Yeah, Speaker 3 (10:14):

Fight week of this week. Good luck. Thank you. Looking great. Those challenges, when you have a purpose, there's a fight coming up the eight weeks leading up to that purpose event. Your mindset is in a different state, people can train, but if you've got a goal at the end of it, you train differently, you die differently. It captures your world and I think that compulsive that behaviour, you need to have a purpose, otherwise you don't get it that competitive edge. Speaker 2 (10:44):

And I think you're spot on and it's the reason why I do it. I think going into a proper fight is not something that most people ever experience or would want to experience. However, for me, the main reason I had to explain this to my daughter, she didn't want me to do it understandably. The way I explained it to her was, and I think this is very relevant to property by the way, and I wanted to touch on that, but the way that I explained it to her was exactly what you just said. I said, well sweetheart, this is because I'm doing this because I've got eight weeks where my focus will be on health and fitness strength, bettering myself to a very high level and nothing will get in the way of that because I know that I'm putting myself into an environment where I need to be at my best if I'm going to succeed and if I'm not at my best, well, I mean there's chances of getting hurt and those kind of things. So Speaker 3 (11:31):

I call it a state of flow because when you're in a boxing ring, I also do car racing and motorcycle racing and stuff like that, which I spoke about earlier, off record, off camera. It's you block out the world, you're in that moment and nothing's more, it's almost a sense of meditation because you're in that moment. If you're not, you're going to get hurt. And when someone's in the ring with you trying to punch you, if you're not fully concentrating in that moment, you're going to get hurt. And that sense, if you leave a busy lifestyle, it blocks out the noise in your hair in that moment is blissful. Speaker 2 (12:04):

Plus you get a six pack, which Speaker 3 (12:05):

I'm plus you get a six Speaker 4 (12:06):

Pack, Speaker 3 (12:08):

Especially letting off to summer. Speaker 4 (12:10):

I walk past him around, oh, hello, where'd you come from? Speaker 3 (12:13):

So you're telling us you just walk around Speaker 2 (12:15):

Topless. Yeah, absolutely. Absolutely. My daughter's like, can you put a top on?
(12:21)
No. Well, I've worked for it, but no, look, so I think purpose, especially within property, and it's probably the main thing that I try and impart or help people discover within themselves when we talk about property, because people talk about investment property and it could seem like a bit of a boring topic, but it's like you're setting up your future, you're creating a lifestyle for yourself. You have to have a purpose behind it. It's not just dollars and cents and when you do have that purpose planned out or you've tapped into that purpose, it's easier to make decisions. I don't think that we got you talking about what the elite do because I wasn't recording it, but I did ask you what the elite do a little bit differently from what you experienced. I'd love for you to just explain it again quickly if you Speaker 3 (13:06):

Can. I think this time we did record it, but just in case we didn't, I found when I was working with the BIW Rich 100 list, what those clients did was they planned well ahead. So with respect to property, people should realise when they're buying a property, the statistics show every 10 years it doubles in price. There is a shortage of property. You can look at any rental demand across Australia, the rental prices are going up because there's a supply and demand shortage, which is getting worse and worse with builders going bust. Property is not getting billed. Councils being slow, our population is going to keep increasing and there's not enough houses for us. So this is going to push prices up. Yes, we're currently going through what is seen as a backward step because of inflation and reserve bank increasing interest rates so quickly, but that's not going to be long term.
(13:56)
I would see that falling back to normal and prices going back up within a year. And I think all the statistics show that now too, that when someone's buying property, it's probably a good time to buy a property now because you're buying it cheap and it's going to make probably the most amount of gains now if you plan ahead going, okay, this is going to double in 10 years time, what can I do with the equity in this property and can I buy more and what can I do and expand it? That's when you start setting yourself up. Speaker 2 (14:27):

Yeah, that's really good commentary. I mean I couldn't have said it any better myself. We've just started running some masterclasses and we talk deeply about this stuff. One of the key components of the masterclass is planning and then also understanding what's happening. And I think what's happening at the moment, you're spot on, is that our population is continuing to grow and now that international migration's coming back into play Speaker 3 (14:47):

With coming back stronger than ever. Yeah, they're opening up the floodgates now because we need it of the shortage of staff and employees. So we don't have enough people to do the jobs, which has been so like you see burger places offering $5,000 for someone to work in. The crop industry is dying because no one's there to pick the fruit. So they're opening up floodgates to bring in migrant. Speaker 2 (15:12):

I mean population growth in my opinion is the most important component of price growth because that's supply and demand component as you said, which I talk about quite a bit. It's stressed because of that. We've actually got some stats that we talk about in the masterclass, and I think it's from 1992, don't quote me exactly, it may be even 1985 to about 2000 population growth in Victoria was actually quite stagnant. They didn't increase much in that period. And the price performance in that period is actually very stagnant for about 10 to 15 years as well before that. And after that, you can see the influxes of population and the price is just so comparable to it. It performs in direct comparison to it. So when people come to us and say, well, what are we looking for? It's like, well, we're looking for high growth population Speaker 3 (15:58):

And it's hard to get high growth population, but the advantage of what you do is you sell new homes, predominantly new homes. What investors should look at is you don't just get the growth. You get so many tax savings along the way, instantly you get a stamp duty saving. If you're buying off the plan, then not then you get depreciation. So anything in the house you can depreciate. So Speaker 2 (16:21):

It's one of the world compounding growth and depreciation. Speaker 3 (16:24):

It's amazing though, but if you buy existing, you don't get that. It's only on new bills that you get that I don't think the average investor is quite aware of that. It makes no sense. You see a lot of average investors or jump and buy existing homes, it doesn't make sense from an investment point of view, why would you do it? Speaker 2 (16:44):

Yeah. Would you say that's one of the biggest mistakes that you see people make when investing in property? Because it's definitely what I see. Speaker 3 (16:50):

There's a lot of mistakes that you see people make. The biggest mistake I see is they don't get the contract before they sign to buy the big one. The biggest assets of their life, they don't get a contract looked at. That's probably the biggest mistake they make because there's certain things in there that you should always get a lawyer or a conveyance, someone to look at and read and just to make sure there's nothing that you don't know about. So if you're buying a house to subdivide because you got it's great land, I'm going to put two houses in there, but there's a restriction, you can't do it. There Speaker 2 (17:19):

Goes your profit, Speaker 3 (17:20):

There goes your profit. So there's a lot of stuff in there. And if you're buying new house and land package and stuff, if you don't get the building contract looked at and you don't look at the specifications or you don't realise that it didn't include half the things you thought or the beautiful brochure look showed, then you kind of paying all these extras and you're not getting what you're paid for. So first in Paramount, I would always suggest get it looked at. Most companies, even one of my companies, we provide complimentary to your clients. They would want to get something looked at, no obligation, complimentary, just get a review, get a detailed letter sent to you. This is what you have to look out for, not have to look out for. This is stuff you should maybe negotiate in a contract. It's worth doing. It doesn't cost you anything. It's just that get that tick done before you go to the next step. And Speaker 2 (18:06):

Why wouldn't you do that if it doesn't cost you? I mean even if it does cost you something that's you're investing in setting yourself up properly. Exactly as you said, you've got an army behind you and you're going into a decision with proper advice. Let's talk about bond conveyancing. Great transition into that. You've launched a business recently Speaker 3 (18:25):

Launched a business in October. Speaker 2 (18:27):

Congratulations. Thank you. Speaker 3 (18:28):

So I'm a judge for various different industry awards. So real estate business awards. I'm a judge for them mortgage awards. I'm a judge for young achievers, various other stuff. I don't know why I get chosen to be a judge, it's the honour, but I get to see all the highest performing in different industries. What they do, what I've seen every industry do is get technology and get technology as an enabler. It enables them to do more contact. So real estate is always going to be people selling homes. Technology will never replace that, but technology can help expedite it and take away some of the admin tasks behind it so the agent can spend more time with the customers. Law has not evolved like that unfortunately. So bond conveyance is a law firm, but we have very high tech technology behind us. So we have a team of lawyers and conveyors that look after every transaction, but we also have a team of bots and alike.
(19:31)
It's a very administrative heavy task. So that takes away the admin and also reduces human error. If a human is putting in numbers and documents or whatever the case may be, there's an element of error that could take place this. The bots do it, our human signs off on it and our lawyers and conveyance get more time with clients. And the beauty for clients is they've got an app they can use, a hundred percent never have to talk to us. They can chat to us on an app or they can call us for every step of the way, whether they use it or not. And referral partners or people we work with, they have a portal for every single one of their clients that can see what's happening. Live can updates all the documents there. So in five years time you're like, oh, where's my statement of adjustments? So where's the contract? I going to find it. You just log onto your app again and bank. There you go. Speaker 2 (20:18):

That's brilliant mate. I mean you're talking about high performance. I mean having dashboards and tracking mechanisms for your investments and your property portfolios as well is critical in my Speaker 3 (20:28):

Opinion. So it's one safe hub where you can have all your documents. The traditional way of doing any legal work is you don't have that. You're calling your lawyer for it's five years time. Oh, I need that copy of that contract. Can you get it to us? Or getting updates or whatever the case may. You've got 24 hours, 24 7 live update, ability to talk, download documents, sign documents on the spot, et cetera. Speaker 2 (20:50):

That's amazing, mate. I mean obviously we're going to support Bond and looking forward to working with you guys as well. So yeah, congratulations. I think that's excellent. I might just get you to explain quickly what a conveyancing business is because I mean we're talking with new investors and first home buyers and these kind of things too, and some of them don't know what conveyancing is. Sure. So I think that's important to explain. Speaker 3 (21:12):

So when you go for a transaction of buying a property or selling a property, you need a conveyancer or a law firm. So some people go, there's a law firm or a conveyance, they do the same thing. What's the difference? Both of 'em take you through the whole transaction. The price point, there is a bit of a difference in price. If something goes wrong though, the conveyance will have to give it to a law firm. They cannot have a dispute. They can just go through the transaction and cannot have a dispute. The moment something goes wrong and 10, 20% of cases something can go wrong, it's better always to have a law firm. It may cost you a couple hundred dollars more for the transaction, but that couple hundred dollars could save you thousands down the track. Unfortunately, I know when I deal with conveyances, it's simple for me to just turn around and say, this is turning to a dispute.
(22:00)
You don't have capacity to talk to me. What law firm are you referring it to? And I refuse to talk to 'em because I know their client will then have to go engage a law firm and spend thousands of extra dollars to go just to catch up on what's transpired and then move forward. And that's enough sometimes for 'em to go, that's all right, just what do you want? So there is a distinction. One can have fights, one can't really. One's gone for a five year law degree, got admitted to a Supreme Court. They other one is a six month course to become a conveyance and all they know is a property transaction and nothing else. Speaker 2 (22:34):

Does legal and bond come into play there? Does it tie up together at all or is it totally separate? Totally Speaker 3 (22:40):

Separate. Totally separate. So they're both law firms though. It's called Bond conveying. Force Simplicity is okay, great. You can identify what is, but they're both law firms Speaker 2 (22:48):

And you're not just good at a legal fight, but you're good at a physical fight with your boxing experience. Speaker 3 (22:53):

Yes. Look, I like a fight. I don't mind a fight. I feel like if it comes to anything disputes, sometimes being able to have a fight avoids a fight. So if you don't back down an inch data cycles, well no point having this fight. Speaker 2 (23:08):

Yeah. Well when you're purpose driven as well, it comes back to doing the right thing, doesn't it? If it does something wrongs going on, you want to fix it. Speaker 3 (23:15):

And if you've got the knowledge and the skillset to tell your clients why are you doing something, it's always their decision. We never want to step on, it's their life, their decision, but nine times out of 10 they'll go, that makes sense. Let's try And it works. It works. Because they can't try to fool us with a legal argument. Well, we may be able to get around that. Not that we can full a conveyance. They're not equipped to have a legal argument. Speaker 2 (23:38):

Yeah, that's a great advantage to have and I'm glad that you explained that because we want to put ourselves in a position of whenever we're going into any kind of investment or any position in life where it's important. So that's really good Speaker 3 (23:52):

Too. For the extra couple hundred dollars, that price difference may be it's not worth. Speaker 2 (23:56):

Yeah. And so how do people get in contact with bond conveyancing? Is it, what's the website address? Speaker 3 (24:00):

Bond c.com au, BOND c.com au or bond conveyance. If you can spell conveyance, some people can't dot com au and just mention your client of yours and all contract reviews will be complimentary and no obligation. Speaker 2 (24:14):

Fantastic. Is that an industry standard or is that No, no, I didn't think so. Yeah, that's a big advantage to have Speaker 3 (24:22):

For your clients. Speaker 2 (24:23):

Yeah. Okay. Well there you go. Podcast. There you go. Listen to the podcast and you get a free review. No, that's great. I'm interested too. You are quite property driven. Obviously conveyancing is focusing on property transactions, but Speaker 3 (24:36):

I've also done my fair show of developments in my time and I like as well. So there's good money to be made in property, Speaker 2 (24:43):

Especially in that space, making sure that you're going into something properly, making sure that you're assessing a development opportunity. We're assessing development opportunities at the moment and there's a lot of work involved. Speaker 3 (24:53):

A lot of work. I say always, and I've lost money on developments as well. Personally, you make your money on your acquisition the moment you buy, you should know how much money you're making. You should have a very detailed feasibility. You should know how much it's going to cost you to buy something. Get your permits, how long your permits are going to take, how long is it's going to take, and how much it's going to cost to build it and what the end salary is, Speaker 2 (25:17):

How much it's going to cost to hold it too Speaker 3 (25:19):

And to hold it. Speaker 2 (25:20):

The holding costs are pretty substantial Speaker 3 (25:22):

These days. These days. It can be, you can negate around that. So what we're used to do a lot of the time is it kind of negates your risk as well. So a few of the ones I've lost on is I signed a contract and I did a paid a little bit extra to do a 12 month settlement subject to me getting planning permits. And the vendor knows that if I don't get the planning permits, they get to keep my deposit. Speaker 2 (25:46):

Is this an option purchase Speaker 3 (25:47):

Or No, it was a straight purchase, but it was conditional upon me getting planning permits. If I don't get the plan permits, they get to keep the deposit monies. The deposit money is 10%. So if it's three $4 million, it's three $400,000 extra they get to keep. So from their point of view, they didn't mind, but we lost because what we wanted to put on there was, one of them in particular was 27 townhouses. We couldn't get it, so we had to Speaker 2 (26:09):

Walk. So the mistake was made in the initial contract signing Speaker 3 (26:13):

Because the mistake was made in the initial planning stage. So we always engaged the same architect and group and they've done great for us always. But in this one case, we won't Speaker 2 (26:23):

Mention who they're, no, won't Speaker 3 (26:24):

Mention who they're, they're good friends as well. They're not bagging in any way. They've done wonders for us in other stuff and make really good money and other stuff. But in this one case, they pushed the boundary too much, we couldn't get it, and our feasibility was done on 27th, so we could have got, I think it was 20, so seven less townhouses in the end because of setbacks and the like, if we wouldn't have bought it for that price if we'd known better. So that feasibility at the very outset and making sure the people you're engaging and look, again, we've used the same architects and they've got a right 20, 30 times one time they didn't, but we thought ahead. So if we had purchased it, settled it, held the land for a year and then got this news, it would've cost us a lot more and then tried to sell it or whatever the case may be, or developed it 20 at a loss or break even point at least we go, okay, we know what our loss is on this. It's a deposit monies plus the architect fee. Speaker 2 (27:28):

So your contractual setup was what protected you to it as well. Exactly. Yeah. Yeah. No, that's great. And that's great feedback. I mean we get access to quite a few off market developments and whatnot. I actually had one come drop on my table about a year ago in Ballarat and it just looked amazing. Everything Speaker 3 (27:45):

That pocket of Ballarat, Geelong, it's just booming. Speaker 2 (27:49):

Yeah, yeah. But it turned out, I mean all of the plans had been done up and they were looking for a fire sale. They're trying to get rid of it quickly, which is usually a bit of a vacation Speaker 3 (27:59):

Or something. Speaker 2 (28:00):

There was a good story attached to it as to why they needed to do it, but after doing quite a lot of due diligence on the property and speaking with council and whatnot, we found out that those plans weren't achievable. Speaker 3 (28:12):

Oh, okay. Speaker 2 (28:12):

Yeah. So I mean from a number standpoint, if they were achievable, it was a very profitable development. But if we had have just gone with that, it would've cost a lot of money. Speaker 3 (28:22):

And that's the best thing about getting things looked at because if it came to us, for example, we've looked at it and gone, wait a minute, this is not council approved. This is just preliminary. It means nothing really got to get it approved by council. So it could be conditional upon the whole contract going ahead. We'll buy it, provide council says yes, it's plans. Speaker 2 (28:40):

Yeah, yeah, no, that's fantastic. Advice and feedback. I want to hear about real estate Renovators Speaker 3 (28:46):

Real estate. Speaker 2 (28:47):

This is a property show? Yeah, Speaker 3 (28:49):

Well Real Estate Renovators is a property show, but it's a property, it's a business advisor show for real estate agents. As I said, I'm a judge for real estate business awards, which is like a national award for all the real estate agents. Co judge of mine, Peter Aquila, who owns a company called Real Estate Dynamics. I do training for real estate agents across Australia as well. Him and I during Covid start a show a couple of years ago and we've got a couple of other co-hosts onto it as well that we know well. And we are shooting season three now. We've had some great guests like head of realestate.com au, head of some of the major franchise groups, some bestselling authors, even some other people within real estate Head of Grown. So it's business advisory, how to do things like we had a culture guru in there to talk about how to change the culture of your office space or we've had recently we had the block auctioneers, the guys that sold that house for 1.5 million over. Wow. They actually sold two, they sold a second house first time ever in block history. They sold the under bidder of their auction, bought someone else's house through them. So they made two commissions on the same block. Great guys. Speaker 2 (30:01):

They're she out for dinner. Speaker 3 (30:02):

Yeah, exactly. Great guys. So let's how it all came about. I suppose it's a fun show to do. You meet great people within the industry and talk about their journeys or you get advice out of the real estate agent. Speaker 2 (30:15):

Hopefully one day you'll have me on mate. Speaker 3 (30:17):

Hopefully Speaker 2 (30:17):

We will get the construction space going. Yes. Got to have a voice in that field too. Speaker 3 (30:22):

We don't have anything. We've never had a guest because ours is all traditional big agencies alike. So we haven't had that. Speaker 2 (30:30):

Well maybe one day, Speaker 3 (30:31):

Hopefully won't they soon. Speaker 2 (30:33):

Look, we've been going for about half an hour. I'm really enjoying the chat with you. I guess we're trying to keep these episodes relatively short, mindful of people's time these days. I think what I would love from you is a bit of feedback or advice to people just wanting to get ahead through property. What do you feel are the most important keys, whether it's just a couple of tips or things to look out for, whether it's planning or obviously getting property contracts checked and whatnot, but how do you get ahead as someone that's got ahead in life? What do people need? Speaker 3 (31:05):

What do I used to do for my property? And that's a different level of property. So I did developments. So with respect to developments, as I said earlier, you should know what you're making from the outset, but you should be looking at properties that you know you're going to add value to. How I looked at it to get ahead quickly. If I can't add value in 12 months to 24 months, I don't want to sit on this. Mine was to buy, do something with it, sell, buy, do something. If it sell back then it was probably a lot easier to do prices. You couldn't go wrong no matter, even if you over purchased banking was so much easier. Banking is probably the biggest hurdle I think at this stage. So this day and age, find out what you can borrow and that changes often. Speaker 2 (31:51):

Hopefully that will level out soon. I mean tomorrow will be interesting to see if they increase rates, Speaker 3 (31:56):

Increase it again. I think that will increase it one more time before Christmas unfortunately. But I don't think it'll be much more next year if they do and it'll just plateau. But if you want to get ahead quickly, I'll look at properties to buy what value you can add. The formula I used when I was doing it, and I don't do it much anymore because it's so volatile at the moment. So I stopped doing it for a while. I do other stuff now, but I had a one third rule when I was doing it and my one third rule was if I'm buying a property for a million dollars, I want to make sure that the end sale on that is 3 million. So whatever I purchased for was one third of the end sale prices. Real simple formula to do Speaker 2 (32:39):

So about a 30%. Speaker 3 (32:41):

About a 30% because you say 30% and then it drops down 28% pretty quickly. If there's delays on stuff, you need Speaker 2 (32:46):

That contingency Speaker 3 (32:47):

There. Exactly. And it was easy to find. I think it's harder to find those kind of properties now, but they're still out there and if anything, by starting next year you'll be easier. The alterna to that is, and I've got a lot of good friends who are professionals who are doctors or whatever, they buy and hold, they buy and hold and you see their portfolio grow really quickly. And when you've got 10, 20 properties, it sounds like a lot, but it's not that hard to get to that level. Your passive income, it's so good and you can sell a couple of off if they've increased in value, pay off all the debts on them and all you're getting is this weekly income coming through from rentals. So there's different methods to get ahead Speaker 2 (33:27):

And that's the strategy that we apply with most of our clients. It's the safe and sound, buying a growth corridor, buying new access, your depreciations and your cash flows. We are looking to try and get into properties that are going to support the cashflow for them so that it's not stressful if they can't work for six months or something. But then build on that. And you're exactly right, if we do set it up properly at the start, there's that ability to leverage and duplicate. There Speaker 3 (33:54):

Is the issue at the moment of banking I think is once you get past four or five, they work against you. They shouldn't, but they just work against you. And once you get to that level, you may want to consider setting up various structures to benefit you from this because a lot of people buy the first few in their own personal names and it depends on what they do. If they pay wise, if they work for someone, that's great, no issue really with that. But if they've got their own businesses or companies, they've got an element of risk or exposure. So that should be looking at setting up some sort of family trust to hold the property and investing through Speaker 2 (34:30):

Those means. And who do they talk to? If they want to do that, Speaker 3 (34:33):

They can talk to me. I've got no issue. Again, happy to have a complimentary obligation. I've got an accounting degree. I would always suggest that I work for accountants. I don't want to step on accountants' toes. I can tell what I suggest they should do. I've corrected, not corrected, but accountants have done certain things in a certain ways and I've always jumped in and said, nah, I want to do it this way for these reasons. And the guy came next it and they changed their ways. Speaker 2 (34:55):

Do you ever see old school approaches like vendor finance and option purchase and these kind of things happening? We do, Speaker 3 (35:01):

Especially a lot more so in development space now in development, a lot of people have these big development sites who they can't get the finance themselves anymore. They're holding onto it. They've actually got plans and permits. They just can't get the construction finance, so they don't want out and they want to get out. So no, only way they can do it is to do a vendor finance provision. So we see a bit of that at the moment. Terms is probably less likely than vendor finance, I suppose Vendor finance provides the vendor a bit more security. They've got a registered mortgage of some description Speaker 2 (35:37):

Or joint venture or something along those Speaker 3 (35:38):

Lines. Joint ventures used to be a lot more common. The state revenue office changed the rules around them. Now it triggers stamp duty. So people try to avoid joint ventures or hide it in some other ways. Yeah, Speaker 2 (35:51):

There you go. Well, just even knowing that is something that probably most people didn't know. Speaker 3 (35:55):

Yeah, joint ventures were very common, but even now land banking has against Dan Andrews government has put the windfall gains tax. So if you own land, it doesn't matter if you sell it or not, if it rezones and increases by $500,000 in value, you get taxed at 62%. It's just insane from the moment it gets rezoned. And if you can't afford to pay the tax, that's okay. They'll lend you the money you pay interest on when you sell it, you've got to sell it. So in the past, people used to buy land going, I'm going to buy this farm land in 10 years time, it's going to rezone, it'll be worth 10, $20 million, whatever the case may be. A lot of that. Now that's going to get taxed. Speaker 2 (36:36):

That's ours. We'll take that. Speaker 3 (36:37):

Pretty much just the government. Speaker 2 (36:38):

Yeah, I don't think people realise how impactful tax is, and we talk about it with property often with people. It's like you're paying this much tax, but really you're paying a lot more. Everything that you do is taxed Speaker 3 (36:53):

Well, that windfall gains tax is going to have a major effect. Not now, but in five years time with all the growth corridors, because right now all the growth corridors are just expanding on the rezoning. The next one that gets rezoned is going to have a windfall gain tax on him. So when the developer has paid six to 2% tax on the increase in land value, he's going to pass that on. He's not going to keep it himself, which to have to otherwise they go broke. So that's just going to skyrocket prices Speaker 2 (37:25):

And even just understanding that, and this is why if you're educating yourself and talking to people like Rex or listening to our masterclasses or whatever, it's like there are things that we can't ever predict the future. We can't, don't know what's going to happen tomorrow. But Speaker 3 (37:39):

I think Covid is a great example of that. Speaker 2 (37:41):

Exactly. Yeah. Everyone thought that sky was going to fall and the property world was over. Bob hand, my business partner who's been in the industry for 40 odd years, laughed about how they sold a house and land package for $50,000 in 1989 or something, and they thought that that was going to be, they'll never sell another property again. It was too expensive. $50,000. Wow. Speaker 3 (38:02):

Can't buy a carpark. But I didn't Speaker 2 (38:03):

Have a look at us now. So yeah, whilst we can't predict the future, we can take very educated or make educated decisions and look at the key fundamentals of what is driving price and go, okay, well we're pretty confident that that's going to assist that, so let's go into that space and better ourselves and try and reduce our tax. Speaker 3 (38:24):

Yeah, there's plenty of ways to reduce your tax if you're clever about it. You see big end of town doesn't pay the same tax rates as small end of town or mom and dad's a reason for that. Speaker 2 (38:36):

Yeah. We talk about why the rich people talk about the rich get richer and the poor get poor. It's like, well, yeah, the rich understand how money works and they're constantly developing. They Speaker 3 (38:46):

Take risks though. So it's not about the poor gets poorer necessarily. Just if you don't take any risk in life, you're not going to necessarily get ahead and don't blame someone who's taken the risk and put themselves out there. They could have lost it, but they were lucky enough and always educate guests enough to do it so they've made the money. So instead of blaming 'em, look at what they've done at a copy of, Speaker 2 (39:08):

Yeah, I love benchmarking successful people in sports as well and business and whatever else. And learning from others that have gone and done it is something that inspires me a lot. I Speaker 3 (39:17):

Think sports is one of the most greatest way to look at a human sports athletes train, eat, they devote their life like you are now to a particular sport. Others don't do that. You and I, you're doing it now, but we don't think eat train like a sports athlete. Sports athlete won't sit in an office for 14 hours and eat junk food and live on coffees. That's not being at their optimum. We could adopt what they do from a sports athlete into normal life and maybe work at an optimal level. Speaker 2 (39:51):

My passion for this has just grown and grown as I've gotten older and older because I mean, I see people that I love and care about deeply, family members and close friends who just don't look after themselves and they're constantly saying to me, oh, I'm tired. I don't feel Speaker 3 (40:04):

Well, I don't have time. Speaker 2 (40:05):

Yeah. It's like, well, get up earlier, eat healthier, go exercise a little bit more. You don't have to go crazy. I mean, I love Joe Rogan and the way that he talks about it, it's like, okay, well do it the right way. You don't have to go crazy. You don't have to go and into a professional boxing fight. I mean, okay, I'm doing that, but that's been built up over a long period of time. I've done it before, but just small steps. I think momentum's a wonderful thing and momentum is always occurring whether for or against you're either moving forward or backwards. It's quite often in small increments. Speaker 3 (40:37):

Is it momentum or is it a mindset? Speaker 2 (40:38):

Well, I think the momentum comes from the mindset. Everything comes from the thought as a starting point. A thought creates an emotion. Emotion creates an action, and then an action creates an outcome. So if we can get our thought mindset set up properly in the first place, it can lead to some really, really great things. Speaker 3 (40:56):

I think playing a, your mindset is not that difficult. It just knowing how to do it. There's a very old Sigmund Freud pain pleasure principle, and I live by this. I'll talk about it often. I love it because your body will avoid pain. He likes pleasure, but whatever he does will avoid pain. So if you wake up in the morning and go, oh, it's 5:00 AM I got to get to the gym and you associate pain with that, you won't get there. But if you wake up and go, I got to get to the gym. If I don't go to the gym, I'm going to be fat. I'm going to be this, I'm going to be that and associate pain with not going, you'll go there. It's just a matter of reprogramming, refocusing on why you do something and making something that you thought was painful, seem pleasurable because it's pleasurable to go to because you're not going to get fat or whatever. Just beat yourself up a bit. The more you beat yourself up, the more it hounds in quickly. You can just change like that. Speaker 2 (41:52):

Yeah. I love, it's one of, this is going to sound a bit woo, but one of the divine laws to the universe is the law of polarity and it's understanding that you can't have an up without a down. You can't have an in without an out, a right without a left, et cetera, et cetera. You also can't have a good without a bad. So understanding that good and bad are actually connected, but which one you want to experience is it purely comes down to your choice. And obviously a bad experience of getting up at 5:00 AM can lead to a very good outcome. So go and do it, Speaker 3 (42:22):

But if you make that feel like a good experience from the outset, we'll get you out a bed quickly too. Speaker 2 (42:27):

Exactly. Rex, it's been an absolute pleasure. Pleasure. So mine having you on board, mate. Yeah, we pressed record recording. That was another 45 minutes gone if it wasn't recording. Thank you for taking that. Like a champion. No, it's all, you're a bit bigger than me, so I'm glad you didn't beat me up, but it's been really great learning from you and we're really keen to support Bond and Ma Legal, however we can so, and Speaker 3 (42:49):

Save with us and bi. Speaker 2 (42:50):

Yeah, thank you very much. Anything you want to finish with and part to our listeners Speaker 3 (42:56):

Spot, Melbourne Pavilion this Saturday. What's the date? Speaker 2 (43:00):

10th of December. Speaker 3 (43:01):

10th of December. Matt will be in the Speaker 2 (43:02):

Ring. Yeah, this podcast will be released after that day. So hopefully by the time you're listening to this, we'll be celebrating a good win and a good outcome and no one getting hurt, no Speaker 3 (43:12):

One getting hurt. You can probably watch it on YouTube as well. Yes, Speaker 2 (43:14):

I'll share the link if I go. Well, otherwise we'll keep it hidden. Speaker 3 (43:18):

It's actually hard to find. Speaker 2 (43:19):

Yeah, Brex, whilst I've got you, I've got a gift for you, mate. Speaker 3 (43:22):

Oh, you don't need to. I Speaker 2 (43:23):

Know that you've got your smart watches, but this is a watch label that I created myself a few years ago. You created? Speaker 3 (43:28):

Yeah. Speaker 2 (43:29):

Oh, talk about taking risks. Yeah, I'm a budding entrepreneur as well, mate. So that's for you. A gift for coming along. I've Speaker 3 (43:35):

Heard of this before somehow. Speaker 2 (43:37):

Yeah, so little live life and so this is actually backing up, talking about experience and I'm passionate about creating experiences in life and taking chances and creating value and this was my little passion project. So I'd like you to have one of those. Thank Speaker 3 (43:52):

You. You're welcome. Really appreciate it. Thank Speaker 2 (43:53):

You. Okay, thanks again for being here and thanks for having me. I've really enjoyed the chat. Speaker 3 (43:58):

Pleasure was all mate. Speaker 2 (43:59):

Thanks Mike. Thank you. Speaker 1 (44:00):

Thanks for listening to The Property Now podcast with Matt elo. We hope you learned something valuable and enjoyed the show. Should you wish to reach out to us, you can do so by calling 1 302 8 9 3 2 4 or you welcome to email matt@hellobayfairproperty.com au and he'll be more than happy to help. However you can have a