Subscribe
Share
Share
Embed
🎧 Real deals, real strategies, real results. Learn how to find, fund, and operate profitable property plays from someone who’s actually done it.
Hosted by Andrew Wright, principal of Professionals Southport and a commercial investor who rebuilt after losing a ~$15M portfolio during the GFC, this podcast gives you a straight-talking look at what it really takes to build wealth through property.
Each episode delivers practical frameworks, real deal breakdowns, and honest conversations with high-performing investors and operators across residential and commercial.
But it’s bigger than the episodes. The goal is to build a community of like-minded investors who share stories, swap insights, help each other grow and maybe even do deals together.
🔗 Join the community & learn more - leave your email at: www.andrewwrightproperty.com.au
📍 Connect with Andrew: hello@andrewwrightproperty.com.au
Hello and welcome back to another episode of the Andrew Wright Property podcast. Today's episode is one every investor needs to hear. Success isn't just about the deals you do, it's actually about the deals that you don't do as well. We're talking about when to walk away. Andrew, you've seen a huge volume of of deals and I'm really keen to, to get into this because it's not something a lot of people do, do talk about.
But look, I wanna start by asking the world's in huge turmoil at the moment with all sorts of things going on with fuel, the war, and everything else. How is that affecting the property market?
It's really, really interesting, isn't it? I mean, I remember going back, um, talking about oil. If you have a look at social media now, the world's gonna end, isn't it?
I mean, surely. But, um, it, it's really, really interesting 'cause, uh, following financial markets as well as property for the last, I don't know, 35 years, I remember it might've been 2011 to 14 or something. Oil was over a hundred dollars a barrel back then. And. The, the inflation was gonna kill the world economy.
The world's gonna go into recession and oil's never gonna go below a hundred again. And, you know, it was about, um, it was, I remember the date, uh, 20th of April, 2020, oil prices from over a hundred dollars a barrel didn't just go down. They didn't go down to zero, it went to negative. A barrel of oil. This sounds like a physical impossibility, went to minus $37 a barrel, which meant if you wanted to go and order a whole heap of oil, the oil refineries would pay you money to take away the oil because they had it so much coming outta the ground.
They had nowhere to store it.
Wow.
Does that sound impossible? That does go and Google it. Don't trust what I'm saying. Go and ver go and verify. Verify. I'm
gonna have to
from, from oil over a hundred dollars a barrel. In 2011 to 14, it went to minus on 20th of April, 2020.
I mean, at the date of recording.
That's almost six years to the day. Yeah. Um. I, I find that unbelievable. And look, I'm no expert when it comes to oil refining and so forth, but were they just, had they just mismanaged how much they were, they were bringing up at the
time they were at the time producing so much be because they were making so much money at, you know, earlier prices.
Uh, when, when, um, the, uh, uh, shit hit the fan, they just had nowhere to store it. And I remember sending text messages on my phone to some very wealthy people that I knew, Hey, listen. Not financial advice. Why don't you consider taking some long 12 month call options or futures contracts on the oil price?
It's free right now. You're gonna make a fortune. And some people took up that advice and made life changing. Money, capital gains. When the oil price recovered, I didn't have any money at the time. I couldn't do it. And you did pay a premium for those, uh, options because most pundits knew that the oil price would recover, but it was negative.
Wow.
So
it was free.
So your point here is we will get through this.
Yeah. Look, if you're, if you listen to social media now, the world's gonna end. Oil's gonna go to $200 a barrel and all the rest of it. When people can make money, they will. And already around the world now, uh, America's just increased their production of oil quite substantially.
And look, I, I wouldn't be surprised, uh, when the war finishes that oil drops down to $75 a barrel, for example. Probably will never go negative again. But, uh, it'll probably go down to $75. The world will turn around. And everything will resume. I mean, recession will probably happen. Yeah. But guess what, uh, three or four years down the track interest rates will be coming down again, most likely.
And I stand by my conviction from what I said in the podcast here in January, 2026, um, when I highlighted the 18.6 year property cycle
Yep.
Where it forecast in 2026 at property prices. Will go down for three or four years. And I said in that podcast that I, I don't necessarily agree with that, but I do think, and I have high conviction, that residential property in Australia for the next three or four years will probably go sideways.
Okay.
So
now that was your prediction then, and it still is now. I
believe it even.
So the current turmoil, has that had any impact on your. Predict prediction
of it's just reaffirmed it. I mean, at the end of the day, you, you do hear some high, I've heard of some high profile property. People say, oh, I'm gonna sell all my property now because it's gonna, I can buy it back for 50% cheaper in a few years.
I certainly don't agree with that, particularly with the. Massive, um, capital gains tax consequences and paying 5% stamp duty again
every
time, uh, when you have to go and buy it. Like, I just don't think with the Undersupply problem in this country and the high construction costs that we will see a massive correction.
But as I said, I am still quite negative on the next few years. I do think prices will go sideways for three or four years, but what I do wanna say about all of this is that. This world turmoil creates a massive opportunity for people who do want to buy wealth. The majority of people will put the queue in the rack now and won't buy anything because they're, they're scared.
And it is true that interest rates have gone up a couple of times, which means the average person who could borrow 600 grand for a home loan three or four months ago can probably only borrow five 50 now. And I can tell you now, as a residential real estate agent, the last few months when I'm going to open homes, we are still getting.
A lot of people through, but the offers that are coming in, they're not more than the asking price with multiple offers like they were. Most of them are coming in under the asking price because people can borrow five or 10% less than they could. What we have right now, and in particular, I want to point out a massive, massive opportunity and put this on a short reel, Adam is.
The labor government on the 5th of May this year is almost certainly gonna announce an increase to the capital gains tax rate in this country. So buyers, listeners to this podcast, look, get your ass in the gear. You've got two weeks. Go out and start making offers to buy property on, not. Houses that someone is selling as a principal place of residence that are capital gains exempt, capital gains tax exempt, but investment properties.
I've made two offers this week to buy investment properties and my sales pitch to them is, listen, in two weeks time, you're gonna be paying more capital gains tax. You need a contract signed now
before,
and I've given them two offers. Okay, well if you want your price, I want a long, uh, eight, eight to 10 month settlement.
Okay, now, if not, I'm gonna offer you 50 grand less to get a deal done now, because if you don't sign a contract in the next two weeks, you, you might have an extra a hundred grand capital gains tax. So if you're an investor, get out there now in the next two weeks. Here's your opportunity. It's a win-win.
You might get a property 50 grand less, and you might save the seller an extra a hundred grand in capital gains tax. Now we don't know what they're going to announce, and if they don't say that the capital gains tax will increase from the 5th of May, the budget night, they might say, look, it's gonna take effect from the 1st of July, which will give you another six week window for buyers to go out and make opportunities.
I love that.
Mm,
I love that. What is your, what are you expecting them to, to come out and do with the capital gains
tax? I'm no rocket scientist, but the, the, um, the average, uh, commentator on this is suggesting that instead of a 50% capital gains tax discount, they're gonna reduce it to 33%. So you'll pay tax.
You, instead of getting a 50% discount, you'll only get a 33% discount. But who knows? What, what they'll come up with, but it's almost a certainty almost that they are going to increase the rate of capital gain stacks. Now, as a buyer, this podcast is to help people make money. You know what? It doesn't even matter if they change it or not.
The point is, right now, for the next two weeks, as a buyer, you've got that tool, the scare tactic, if you like, which is probably not just a scare tactic, it's reality. But there's nothing stopping you going to a seller and saying, look, if you wanna lock in the 50% capital gains tax discount, now, you better sign this contract in the next two weeks.
Yeah, guess what? You don't have time to go shopping around to find an agent and go and put it on the market. If you've got a property you've had your eyes on and you think, I'd love to buy that property, now's the time
and use this lever up.
Yeah, absolutely. Now
you are a residential real estate agency.
You are dealing with this day in, day out. Mm-hmm. So let's just talk about this exactly what you're, you're on. On about here with this opportunity to do that. Now you're going to an open home this Saturday. You only get to speak to their agent. Do you have this conversation directly with their agent and say, put this to the, to the seller?
How would you go about it?
Well, well, yes you do. You have to tell the buyer, should I say most? Look, most people aren't even talking about this. They, they, they're saying the capital gains tax will increase, but no one's offering advice out there on. What strategy to use to make it to your favor. Everyone's saying, oh, the world's gonna end and there's gonna be more tax.
Well, here's an opportunity with mathematical certainty where you can benefit from doing a deal. I'll turn that question around and reverse it. This Saturday, I am doing 10 open homes at a building.
Mm-hmm. '
cause an owner appointed me to sell the whole building. They built 10 units and I gave them this advice a month ago saying, look, don't trust me.
How about you go and set up a meeting with your accountant? Do the numbers on how much extra capital gains tax you might pay. 'cause I knew they were thinking of selling in the next few years. Find out how much extra capital gains tax you might pay if you defer selling this property. Mm-hmm. They came back and said, Andrew, thank you so much for that advice.
Our accountant estimates that if we wait, we could be up for an extra $1.2 million of capital gains tax when we sell these 10 units. So guess what? They've appointed me now to sell the 10 units. I salt you've, I've got three weeks to sell 'em all.
Wow. Okay.
Okay. So we spit that around.
So if, if you do turn that around Yeah, you are, they're ready to do deals.
Yeah. And I'm surprised there's not more people, uh, you know, talking about these strategies. You
Sure, sure. And for our listeners, where are those units? They
can, uh, 20 Lawson Street, Southport. They'll be open from 10:00 AM to midday this Saturday and the next two Saturdays. Before the fifth of, um, 5th of May budget.
Okay.
Price range, uh, offers over 7 25 to a million dollars, two bedroom and three bedroom units.
Okay. So first home buyers. Um,
absolutely
perfect.
Yeah.
Okay. So a good reason to be listening to this podcast as it actually drops. But look, I wanna look at this more from a helicopter view now because, uh, this turmoil and stuff that goes on and everyone gets scared.
You've talked about this little opportunity, but. People always, there are people who always gain through these times. And it all comes back to mindset, doesn't it?
Absolutely. Absolutely. So look, if you listen to the doom and gloom on social media, it is the world is gonna end. Stay away from property. Look for, for some people that don't have the borrowing capacity, you might just have to sit and hold.
But if you have capacity to buy, I'd like to encourage you to say that now is a, an unbelievable opportunity. To make offers, like, as I said, I've just put in offers. You can make your offers low ball for the first time in a long time. You can ask for long settlements. I'm, I'm asking for eight and 10 month settlements instead of 30 days.
I don't actually have a heap of cash flying around to make all these offers. So I'm using now a win-win situation. Hey, let's reduce your capital gains tax liability, but in return. Give me a 10 month settlement so I can come up with the deposit I need so that I can actually finance the transaction. Look at ways to help a win-win situation.
Help the seller, help yourself either get a lower price for yourself and they might, the seller might save double as much in in tax savings or get yourself a longer settlement so you can get yourself in a position where you can settle. Now, I think. Over the next three or four years. As I said, I am a little bit pessimistic on residential property market.
I do think it'll go sideways, but what that creates is an opportunity to buy because there's not gonna be as much competition. Mm.
Absolutely. Mm-hmm. But yeah, it, it, it all comes back down to mindset too. Don't, don't watch your, your social media. Don't get caught up in, I mean, the news is doom and gloom all the time, isn't it?
Mm-hmm. And, um, they're never there, but the smart people always benefit through these times.
Well, look, look, the interesting thing is, um, I mentioned in another, we did a podcast on some disastrous investments I made. Remember the one where I bought my first house in 1993?
I do. I do
in 23. Lar Street. Kept it for 10 years and I lost money on it.
Yeah. Look for the first time in many investors' lifetime, we could be going on a period now for the next three or four years where people see that same scenario. So just be careful. You can't just throw a dart at a dart board and go buy a house to get on the property ladder and expect to make money over the next three or four years, in my opinion.
Okay. As far as commercial property goes, um, there's a massive fear amongst buyers that if you buy property now and interest rates go up. That there'll be what they call cap rate expansion. As interest rates go up in the bank, investors will demand higher returns from commercial properties. So if those rents don't go up, the values will come down.
Now what I wanna say is if you're a good investor and you can increase rents, you can add value to a property with renovation or whatever strategy you use. A good investor in these times can buy very, very well because there won't be as many buyers and you can outrun. The cap rate expansion by increasing the rent by a higher percentage than what the interest rates go up.
Now, this is sort of complicated stuff, but there are opportunities out there. There's gonna be less competition you need to buy. Well, and as a buyer, don't just throw a data to dart board. You wanna make every buy. You want to think this is the deal of a lifetime.
Mm.
Be tough on your negotiations.
Yep. Love it.
Which probably brings us, you know, to the, the, the core topic of today's, um, episode, which is, you know, um, when to walk away from a deal and knowing what not to actually actually buy. Yeah. So why is walking away such an important skill? Mm-hmm.
As I mentioned just before, like when you. Lose a lot of money and I have lost many millions of dollars with different investments.
You get to a point where you just realize the amount of time it saves, it takes you to save up a deposit for something or to save after tax dollars to put into investment. It's just so, so hard to save money.
Mm,
that you wanna remember. Warren Buffet's number one saying, uh, most important, rule number one of investing, don't lose money.
Rule number two. Don't forget rule number one. Like, it's just so important and because the compounding effect of money, it's not just that your investment might go sideways for three or four years, you, you might lose money and you don't have that compounding effect where you can go in and revalue it and redraw and expand your property portfolio down the track.
So it's just so important. My mindset now, after losing so much money on so many. Different types of investments, not just property is every deal. I wanna make the deal of a lifetime.
And you go in with that mindset. Yeah.
I, I wanna make every deal the deal of a lifetime and it can be a win-win. It's not like you have to screw
the seller.
No, no. And that's what a lot of people don't realize either. And I think that's a, a very key point to make here. That there are ways to get a killer deal and have a, and it be, be, win-win. And I don't think a lot of people think that way.
Yep.
Um, which is what we've, you've just talked about with this opportunity right now.
Yep. Before the, the capital gains
absolutely
expected. Expect change. Two weeks.
Viewers. We've got two weeks. Two weeks. You
might
get another six week extension. They might make it from one July the new financial year, but get in there now. Start making offers.
Yep. Well, let's talk high yield deals. Um. When can they actually be dangerous?
Can I answer that by going through the first real deal of that?
Sure. Let's do that.
Okay. Well, let's go to 66, uh, Ello Street in Gympie.
Yep.
Um,
why did it look so good?
I'm just gonna refer to my notes here. SII, I get all the numbers right? Sure. This property, uh, the agent was asking 850 to $900,000 for, um, I put it under contract.
Uh, at $830,000 with a due diligence clause site unseen, because it was in gimpy, which is three or three and a half hours drive away. Mm-hmm. Now, the current rent on it was, um, I'll just refer to my notes. Um, I'll read it out because I'm old and my memory's not so good.
The current rent was about, uh, $77,000, and there was an empty house on the property with six bedrooms, just, but it was really, really old house. So the rental appraisal for that house was 500 bucks a week. So the total rent fully rented of that. Property was over a hundred thousand dollars a year. So my thinking, my immediate maths reaction, okay, well I've just bought this property for 830 grand a year.
I can get over a hundred thousand dollars a year rent. Have a look at the mass. You're talking 12 to 13% gross rental income can't go wrong. So what did I do? Like I always do, I put this under contract. Let's negotiate eight 30. Smart enough, uh, based on previous mistakes to put in a due diligence clause, just in case.
'cause I wanted to drive up and have a look at the place. Yep. I had a look on Google Maps, um, as well as the, um, massive 12 to 13% rental yield potential. There was this, uh, block of land was, um, uh, about an acre of commercial land. So massive. Uh. Block of dirt in the middle of Gympie right in the town. And I thought when I had a look at the Google Maps, all the shops were built right up against the, um, the footpath right at the front.
Yep. And in the back, there's all this land. I'm thinking, wow, it's own commercial. Should be able to add some dwellings there or absolutely do something with it. Make it parking or something like that. This is a massive opportunity. So guess what happened? I, I signed it all up. Um, with the due diligence clause.
I drive three hours up to Gympie to actually check it out. And when I get there, I drive through the front driveway and it was a massive slope. Like there's no way on earth you could have a car park or build something on, and it just went like dropped straight down right at the back of, and you
couldn't see that from
the, well, Google Maps is an aerial Yeah.
Photo. Yep. And you have a look and it looks like this big chunk of lamb. But what you don't see when you're doing your. Google search is the, the, uh, topography and how steep it is, and I, straight away, I, I felt my heart go down. Oh, shit. I thought I could add value to the backyard here, and I can't. There's just nothing you could do and just absolutely impossible.
Then I paid 1200 bucks for a building inspector to go there and have a look at the, the, the property. It was four separate retail shops with a house on top of it.
Yep.
And, uh, he spent the whole day there, so it cost me 1200 bucks. Yep. And the results were that there were, there was heavy termite damage.
There was live termites throughout. I physically went up on the roof and had a look at it. It was all red and rusty. And when I inspected the four retail shops, I could see signs of water damage inside where water was coming through the roof. And this thing was um, uh, over a thousand square meters of building.
This is a big building. Yeah. But it was very, very old and I knew it would cost. Over 200 grand to replace the roof. Um, six figures probably to fix whatever termite damage was there. There was structural damage, uh, in the footings of the property. Um, the house couldn't even be rented as it was. There was a whole heap of work that needed to be done, the house and from a, uh.
Time point of view, it's a six hour drive for me to go to Gympie and back every day from the Gold Coast. So even though if I was living in Gympie, I may have gone back to that seller at that time and renegotiated a lower price. It still might've been not a bad deal. When I have a look at the opportunity cost.
Of spending six hours driving every time up there to go and do all this work, it could have cost me hundreds of thousands of dollars of lost revenue in my business. Mm. So that was time to walk away. Now I looked on the computer and after me pulling out of that deal and getting my deposit back, someone else actually purchased it for $750,000.
About 80 grand less.
Yep.
And they may do quite okay with that. It's, um, plenty of building there. They might be able to renovate. Increase the rents and they may do very, very well, but for them, they're probably a local that have doesn't, they don't have that same opportunity cost. Sure. And for me, I walked away from a site where I was getting 12 or 13% rent from.
So there's the answer to your question, what's a good deal for someone else who lives there? Wasn't a good deal for me. Yep. I could have renegotiated that price down after the building in pest inspection, but I decided to walk away. And the other thing that scared me too, which I forgot to mention. Is that there was a well in the backyard in that steep thing with, you know, you look down and it goes down forever, and the tenants there educated me on the fact that there was highly likely there were unfilled underground mining shafts that were disused from 50 or a hundred years ago.
Gimpy is a mining town, mining.
Hmm.
And for me to cross that one off the list as well, I would've had to, I actually went to the gi, lined up at the Gympie, um, city council, and they said, oh, it'll be a couple of hours before you can see someone. I was actually gonna go in there and buy the maps off them to see if the old underground mines might have been under that site.
I said, this is all too hard. There's too many risk factors here. I like every deal to be a deal of a lifetime. Yep. This is not gonna be a deal of a lifetime. So I walked away. Now when I do that, I hesitate because. When I tell a real estate agent, I'm gonna buy something. I don't wanna lose credibility by not settling on it.
Mm. So I don't take these things lightly. If I sign a contract, I fully intend to go ahead. And it's not a good thing for your reputation to say you're gonna do something and Don, but there was enough evidence there.
Well, that could have been a disaster for, it
could been 1200 disaster.
1200 bucks has saved you from a, from a disaster.
$1,200 and one day of my life. Yep. Um, could have saved me hundreds of thousands of dollars, many, many hours.
So I,
and, and, and, and is much cheaper than paying for a university degree or something. You know, like that's an education.
Absolutely. And that's, that's a, a big takeaway for anyone listening here, but one other question I wanna, um, ask you on, within that scenario
mm-hmm.
Can you explain to our listeners exactly what a due diligence clause is and what. Allows them to, what sort of scenario and what in, in this particular one, what allowed you to walk away using that clause?
Okay, so again, in very, very rough terms, if, if I don't have a solicitor draft a contract, usually I'll just throw in a clause myself in the special conditions and say This contract is subject to and conditional upon the purchaser conducting due diligence on the property for a period of 14 days or 30 days.
During which time the buyer in its absolute discretion may terminate this contract for any reason, for
any reason
whatsoever, and secondly, shall be entitled to a full refund without deduction of the deposit paid. It's just a blanket clause that says if I find anything I don't like, I'm pulling out. Now, it's un unusual for those sort of clauses to be inserted into a residential contract of sale, but it is extremely common for either development sites or commercial property.
Sure. Okay. That's a really good one for, for people to, um, to know and, and use, um, you know, on deals like this and, um, allowed without it. You, you'd been, well, no, building a pest probably would've got you through Building
a pest. Would've got through on that one
anyway. Yeah, on that one. Yep. So let's talk another one.
So, um, I think you, you've had a, a Townsville deal.
Yes. So this is, um, I think this is the only, the second contract that I've ever signed that I pulled out of. As I said, when, when I. When pe, when agents know I'm signing a contract, they trust that I'm going to to settle. And that's one of the reasons you build trust with real estate agents.
But this is the second contract I've ever signed that I did, that I pulled out of this one was, um, uh, six and a half acres of land right on the uh, Bruce Highway. Um, up in, um, uh, just North Wool Guru, I think is the, the name of the, I can't even pronounce it, but it's, uh, just, just on the north side there of Townsville.
So 200 meters of frontage to the highway. And the, um, selling agent said, oh, look, the, um, a owner of this property has already had discussions with the council who are very, very open to the idea of getting an approval here for a service station Now as a investor. I'm of the belief that in this country, people pay way too much for childcare centers.
They pay way too much for high profile retail commercial properties with A KFC or in McDonald's in there. And they pay way too much for service stations. They, the market in this country in major areas is that people will buy stuff on a 4% cap rate, which means they'll get a 4% net return return. Now, if you flip that around as a developer.
I'm thinking, well, these people that pay such high money, why don't I take advantage of that? I'll build them one. And that's what I saw in this site. There was an opportunity there. Well, if I think people pay too much for service stations, well I don't wanna buy buy one, but I'll build one and sell it because people pay too much for them.
For them. Right. That was my thinking. Now, unfortunately, I, I put that one under contract. I thought I did an unbelievable deal, uh, on the contract. I now, I, I paid them a good price. It was $950,000.
Mm-hmm.
Now, the terms were very, very favorable. I had a seven month settlement, six months of due diligence, which was going to allow me to get the town planners to,
to
get lodge applications and all the rest of
it.
To do all the be to say, I can definitely put a, put a servo here.
Yeah. A small seven and a half thousand dollars deposit, which. For seven months of potential upside is almost nothing to hold it. It's like basically having a seven month option. Yep. For only seven and a half grand. And if, if the market went up or the price went up a lot, I'd benefit with just seven and a half thousand dollars down.
But unfortunately, the end result of the due diligence, which, um. Prompted me to pull out of the contract was that it wasn't a flood affected area. I did see that with the RP data map overlays. You click the flood overlay, I could see about half of the site six and a half acres was flood affected. But the town planner that I spoke to said that you would have to spend at least quarter of a million dollars before you get started just with Civil Works to actually provide a risk management around the flooding before you can even.
Put an application to council for a service station. Oh wow. Or a truck parking depot. So straight away I'd be up for a quarter of a million dollars. And the factor that really killed it off was that when we started going down the track, that it was a state controlled highway and I'd need to fight with the government to allow access off that highway to that site.
I started putting all these things together and then when I'd have to go to the local council after going through all that expense, and they could still say no, because it was a rural zone property that I was going to need to change from rural to industrial, so I could go down and spend all that money and the council, some guy at council might be grumpy and having a bad day might just say, no, Andrea, we're not gonna let you change it from rural to industrial.
The risk factor was just too high, so I pulled the pin. Yeah.
Again, due diligence.
Mm-hmm.
Got, got you. The information you needed to say, just not, not worth the, yeah, worth the risk. Yeah. So, uh, did you lose your seven and a half
time? No. No, because it was, had a due diligence clause in there and. Uh, should the buyer pull out under the due diligence court, they'll be entitled to a full run refund of their deposit without deductions.
So I got the deposit back. Now I was embarrassed to tell the agent that I'm, I'm not proceeding, but there was plenty of, uh, reasons why. Yeah, there was just a super high risk. Now, once again, if that property had have been on the Gold Coast within an hour's drive of me. I wasn't gonna lose hours and hours of time out of my day-to-day business doing a development there, then I may well have proceeded and the next guy who buys that site might do very, very well.
Well, I was gonna say, you would've probably kept your eye on this. Has it sold?
No, it's still on the market now. It's the price. The one in, there's
the price coming right down.
Uh, there's, it's marketed without a price, right? The agents have changed, but it's still on the market. Now, someone else might buy that deal and do very, very well, but for me.
It just was one that I decided to walk away from.
Do you find it hard emotionally? I think I want to talk about emotions when it comes. Mm-hmm. 'cause people get very emotionally connected to a deal that they're gonna do that looks, you know, and you said you, you know, with Gimpy, your heart dropped.
Yeah.
Um, talk me through emotions when you, when you walk away from a deal.
'cause I'm sure there's a lot of listeners who, you know, have done deals 'cause they're so emotionally invested. Yeah. And even when they see a couple of. Red flags, they're so emotionally invested, they, they don't walk away.
It is quite common, and it's more so with first home buyers that are buying somewhere to live in.
The emotions there are tenfold from an investor, but at the end of the day, as an investor, the deal of a lifetime comes around probably once a month. And if you, if this deal, everything happens for a reason. So if this deal doesn't work out, there will be a better one next time. Yes, there are some emotions involved, but you just can't.
Let it impact decision making.
Yep. And very good advice. Very good advice. And realize there, there is always another one around the corner.
Absolute certainty.
Absolutely. Um, Heeren.
Yes. Now this is one, I didn't go to contract on this one. This is just a few months ago. It was a property there, um, a hundred meters away from another site that I own that I'm getting development approval for 15 units for.
Yep. Which we've done another podcast on. Yep. Have a listen to that. That is a cracking episode.
So this one here was going to auction. It was a site, um, uh, I'm embarrassed to say, I can't remember the size, but it was a big, big block of low density residential land. And on the um, realestate.com there were plans up there, concept, concept plans to break that block of land into 35 residential blocks.
So I thought, well, gee whiz, this could be a good opportunity. Because I went online and I'd previously gone online to check around sales in that area because I was buying across the road and that guy only paid like $620,000 for this massive site. And I thought, well, how cheap is that? Mm-hmm. And I thought, well, maybe he's under some financial planner.
He only financial difficulty, he's only bought it a year ago.
Yep. Why
is he, maybe he's in financial difficulty if I can buy that and give him his money back and help him out. There could be a good opportunity here. Break it into 35 residential lots and sell it. Now what I did was, so
again, you're getting excited, you're
getting, the emotions are starting, so I'm going buy this thing.
I'm happy to help this guy out. I'll give him his money back and then maybe I can do a long term subdivision with 35 lots and it's only a hundred meters away from another site I'll be developing. I'm gonna be there anyway. It makes sense. So I ring up a town planner, get some advice, and oh, Andrew. Those 35 lots there that they've have concept plans of which were 400 to 500 square meter blocks of land, they won't be approved.
Here's the town plan. The minimum lot size for a low density residential dwelling is 600 square meters. So the owner has put together these concept plans with 400 to 500 square meter lots when the council plan says you must have a minimum of 600 square meters. So. This is where it's so important for investors who look@realestate.com or real commercial to separate dig marketing, marketing spiel to reality.
Yeah. So some novice person might come along thinking, I can do 35. There was no development approval, obviously.
No,
but there's a plan there for a subdivision of 35, which someone spent an hour on a computer doing some concept plans for. It'll, it'll. Almost certainly never be approved and you can only get 600 meter blocks.
The second thing I did there was I rang up a company that specializes in the provision of electricity.
Mm-hmm.
Because you have to, if you're building 35 houses or or 20 houses, whatever you can do, you need to provide electricity, water, and sewer and all the rest of it. And the electricity provider said, Andrew, unfortunately, there is a strain on the resources in that area for electricity.
And the absolute minimum it would cost for you to put in what they call a, um, a electricity transformer is 500 grand just before you get started. And oh my God.
Wow.
So now if you had a gone and bought that site at auction, now remember an auction contract, there is no five day cooling off period. There is no subject to building and peston.
There's no.
No
conditions at all. You are locked in,
you bid it, it's yours.
So some poor person, if they did go to that auction and buy that, getting excited about a 35 lot subdivision when you can probably only get 20 homes there and you need to spend half a million dollars before you get started putting in a electricity, um, transformer, you're gonna be losing money big time.
So. I walked away. I'm not interested in, in buying that property, but that's just an example of where marketing spiel and the fear of missing out might prompt you to go and buy something where you've just gotta be so careful.
So another, another key takeaway there. Um, be wary of, of marketing what, what is put up doesn't necessarily mean it, it's, uh, a failure.
Listen, you cannot trust. What a real estate agent sometimes puts on a website. Now, that agent was not being deceptive. He. Probably thought, oh wow, you, this is a good thing. You know, you can probably build the 35. 'cause the owner gave him that information Here, agent, here's some concept plans. Now, most real estate agents aren't property developers, 99% of them.
Mm.
So the agent wasn't doing anything wrong, he just didn't know.
Mm.
He's up there promoting these 35 lots that are not approved, will probably never be approved. And even the seller's disclosure statement that I got that agent to send me. Had misleading information in it. Because there's a question in there that says, have you ever received notice from a state government that they're wanting to resume land?
And the tick on that is no. They said no. Now I know that that block of land is a hundred meters away from mine and the state government a hundred percent sure we'll be reclaiming some of the land that they're selling
land. Yep.
But it wasn't even on the seller's disclosure statement. Wow.
Wow.
Now that's not the the agent's fault.
He just didn't know.
No. So be very, very careful. Has the, has the auction taken place on that?
The auction took place,
did it sell?
It didn't sell. And sure enough, the agent, um, has, they've got a expectations there of just under $2 million on that site for a property that the guy just bought for 620 a year ago.
And when you're doing your due diligence, look, you really need to have a look at these things and what price did the buyer pay for it? And if they've bought it recently and there's some sort of massive margin there, you just need to be triply careful.
Yeah. That's a red flag, isn't it?
It is a red flag.
And I'll tell you what, a lot of the best deals that I've ever bought are from guys that have made a fortune on their properties. 'cause they bought it 20 or 30 years ago.
Mm-hmm.
They might be older, 70 or 80 years. They've made so much money out of it, they just wanna. Tidy up their estate for their family.
They've made a heap of money out of it. And sometimes when other people have made good money from a site, you can be a little bit more negotiable sometimes, depending on their circumstances. And it's still a win-win because they've made a fortune out of it.
Mm-hmm.
But if someone's just bought a property for six 20 and they want 1.9 million, they haven't got a development approval, they haven't added any value.
You've gotta ask why.
And that could have been that guy's strategy all along. Well, I'll just do up some concept plans, show someone how they could potentially, um, make
look may maybe, maybe he has got advice, maybe he's got advice and how, how can I get outta this thing? I've just spoken to an electricity consultant and they, I need half a million dollars.
I need to get outta this thing. Let's draw up some fake concept plans. Higher density than any council will ever approve. And let's try and sell this to some other person who doesn't do their due diligence. Yep.
Alright, so let's, uh, let's wrap this up. I want to go back to the key takeaways for you, for our listeners around when, when, you know from a helicopter view, when to walk away from a, from a deal.
Yeah. Look, I'm glad you asked me that question 'cause just reviewing what I just said, it all sounds a lot of negative stuff, but this is the reality of what happens. People sometimes will try and sell properties for as much as they can. They're investors and that's what they're trying to do. So you gotta know what goes on.
I mentioned at the start of the outset of this podcast that I do think property prices in this country, particularly residential, will probably go sideways for the next three or four years. But what I wanna say is that there are opportunities that are gonna be there for the next three or four years for you to buy phenomenal deals.
You can negotiate harder now because there'll be less buyers. Sellers are gonna be more open to longer settlements, slightly lower prices. There's gonna be opportunities everywhere, but you need to walk away from a deal. That it doesn't
add up.
Tick the boxes to the deal of a lifetime. You wanna buy a property when you settle.
You want to be going home at night thinking, wow, that was a good deal. Don't just throw darts at a dart board for the sake of getting on the property ladder because the next four or five years. Is not gonna be like the last four or five years where everything you buy goes up in value.
Yep. And look, I wanna make the point now to our, our viewers and our listeners, what this podcast is all about.
Andrew does this 'cause he's got a huge amount of knowledge and wants to help. You to, to, to look at things. This has been a, a risk management episode, essentially, but look, reach out if you, you know, Andrew's willing to, to talk to, to absolutely. Any one of his listeners or, or viewers you can email him at.
Um, it's, uh, hello at, uh, Andrew Wright property. Dot com au. If you want some advice, if you just want to chat, this is about creating a community of property investors who help each other, potentially even do deals together. So please do jump on the website, subscribe to get, uh, the, uh, the updates, and, um, reach out to Andrew if you, if you just want to have a, have a chat about anything you've heard on any of these, these podcasts.
It's what. We've set this up to be able to, to do so. I mean, this has been such an important episode. Realize that walking away is just as important as going ahead.
Absolutely. And the second thing that people need to remember is what we talked about before. You got two weeks. Go and help out a seller who's got a big capital gains tax problem in the future.
Go and make 'em an offer a little bit less than what they want. Make a win-win deal in the next two weeks. Don't go and listen to another 20 podcasts without making an offer. Go out there in the next couple of weeks. Help a seller. Help yourself. Go and do some deals, now's the time to do it.
Absolutely, absolutely the right deals.
Build wealth. The wrong ones can set you back years. So if you got value from this show, please share it with others. Um, subscribe to not miss an episode on any of your, we're out there on YouTube on all of the, uh, all of the, uh, audio platforms, Spotify, apple Podcasts. Give us a, like, give us a comment and, um.
Stay tuned. We've got a heap more great episodes coming up. Andrew, once again, thanks very much.
Thanks, Adam.