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🎧 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
How do you find a site that makes money? It's the, the way I look at it is I researched and studied where people made money. Mm. And, um, it came down to stocks and shares and financial planning and, and, and the really three or four key things. Even though we live in the internet boom and everything, I still think there's some key areas someone can start with nothing and, and, and, and be successful, and property was one of them.
But sometimes when you're trying to start off and do things, you, you gotta risk everything. It's knowledge and the relationships and time. I, I have a saying, "If you design it right, build it right, price it right, it's gonna sell and lease itself."
Hi, I'm Andrew Wright, Principal of Professional Southport, and this is the Andrew Wright Property Podcast. I've built a multi-million dollar property portfolio, delivering a seven-figure annual rental income, and led my real estate team through thousands of sale and lease transactions. In each episode, I share real deals and strategies that will help you find, fund, and operate profitable property deals.
The aim of this show is to provide education and build a community of like-minded investors who can collaborate, share insights, and help each other in each other's journeys. You can make excuses or you can make money, but you can't do both. So come and join us
G'day, listeners, and welcome back to the Andrew Wright Property Podcast. I love talking to successful sportsmen who have transitioned into business and investment, and today's guest is a friend of mine, David Fielding, who has been in the real estate development game for about 25 years and has completed something like 60 different projects.
David, welcome to the podcast. Thank you, Andrew. Great to be here. David, I know your sporting history, and, uh, I don't want you to think you're boasting, I, I just want you to disclose, uh, what sports you played and the level of your success because the character that you build training really, really hard in any sport, I think, can be transitioned across, uh, into business and sport.
And I just love hearing these stories, and I'm sure the audience will too. What sport, what were your sports, and, uh, tell us a little bit about your, your work ethic at training and the levels that you got to in sport? Yeah, sure. Probably, I went to primary school here in Australia. Actually, primary school in Melbourne first, so I played a bit of AFL as a child, Essendon under nines.
Okay. Then we moved to Singapore- David's 6'5 at the moment, by the way. He wasn't in primary school, but he's a big guy. Go on. I probably should have played AFL later, actually. I'll get to that in a second. Uh, and then we moved to Singapore because my dad was a pilot. So, um, we grew up in Sing- spent a couple of years in Singapore, then moved back to the Gold Coast.
Mm-hmm. So at the Gold Coast, uh, went to primary school, played rugby league, and then, uh, moved to Rockhampton. And, um, my dad was the pilot for the S- Flying Doctor, the Central Queensland Aerial Ambulance, I think it was called at the time. Yeah, right. And played rugby league there. But then because he moved to, my parents moved to Papua New Guinea, I went into boarding school and they gave me a choice where to go.
So I'd spent a couple of years on the Gold Coast, so I ended up on the Gold Coast at boarding school. Okay. There we played, uh, rugby union, uh, swimming. That was one thing. Because we'd been on the Gold Coast, our parents didn't want us to drown, so they put us into swimming straightaway. So within six months I was competing at states and then nationals and then Pan Pacs and, and everything like that.
And then, uh, into boarding school you don't focus on one sport, you play many sports. So played rugby, basketball, athletics, uh, uh, the marathons and everything like that. So I didn't do rowing I did a fair bit of surf life saving, things like that. So it's a very typical childhood growing up on the Gold Coast, even though we moved around a little bit.
Mm. But a lot of it revolves around sport and, and I think it's im- imperative that kids are in sport, and as you're an adult, you continue with sport. 100%. Now, what I found during my lifetime is that my favorite sport changed. So from age 13 to 17, did that happen to you too, or was swimming or, or rugby your favorite sport the whole way through?
They, they were, but I was tall, so I was good at basketball too, so I played in the first five at school. But it was swimming, and then it became rugby, then it became career, university career, and so I didn't play a whole lot. I did play touch footy and I played touch footy for 30 years. But I did revert back to...
I had a love-hate relationship. When you, when you, when you compete quite high- Mm ... you know, there's a lot of training, a lot of pain, a lot of commitment, a lot of sacrifice to get- Mm ... to a quite high level. And I had a love-hate relationship with swimming, but in my 30s, I just, just rediscovered it, masters swimming.
Still very competitive. Uh, got back into that for a couple of years and then, um, you know, found, found the love for it again, I suppose, and I still do ocean water swimming at the moment, which is another version of, you know, master swimming, I suppose. What is Pan Pacs? Pan Pacs, it's just, uh, the Pacific nations, in a way.
Mm. So it's, it's changed over the years- Mm ... but it usually means, uh, New Zealand, Australia, uh, it can be Singapore, Asian countries. Around to the US sometimes the US is involved. Okay. There's different levels of it. The Pan Pacs they talk about these days is the elite level of, uh, under the, under the Olympics, the World Championships, then there's probably European- Mm
Championships and, and Pan Pacs or something like that. Okay. So one of, one of my, um, roommates at Ipswich Grammar School boarding house was, um, a swimmer, and I used to get up at, like, 5:30 every morning to go. I was a cross country runner and middle... I'd go out running, and every morning he'd be go out and he'd go and do 100 laps of the 50 meter- Yeah
swimming pool. Yeah. Or 50 laps or whatever he did, and then late afternoon I'd, I'd be going out for a second run and he'd be going back to the pool for a second training session. Yeah, yeah. Is that the sort of discipline that you had as a swimmer? You were out there once or twice every single day training?
Oh, absolutely. Minimum two hours in the morning, two hours in the afternoon, competition Friday night or club night Friday night, and then com- competition either Friday night at your club or another club- Yeah ... and then weekends on top of that. It, it's a, it's a incredibly disciplined sport. Um, and to, to get to the top, yeah, absolute 100% discipline and commitment.
I just find it so interesting in swimming that when you go to the Olympic Games or Commonwealth Games and you watch it on TV, there are some athletes there that do multiple disciplines, and they'll go out and they'll race a 200 s- 200 meter race. Mm. And then two hours later they've got a heat of the 400 or something.
I mean, as a cross country runner or, or you just wouldn't do that. Like you, you- Yeah ... they're actually doing multiple events in one day. So that rigorous training that you're doing, um, obviously prepares you for doing multiple events in one day. Oh, ab- absolutely. It, it's, it's an incredible high level. Like, I've heard the comments made that- The rugby players, being an ex-rugby player myself, they're not...
They're athletes, but swimmers and probably runners- Mm ... and, and other categories are elite sportsmen- Yeah ... because of the eliteness and the focus and, and everything like that. Yeah. So that's not putting anybody down. Every, every, you know, I love both of the sports, all of the sports really, but- Yeah ... the dedication, especially because you're doing it yourself and you're doing it in a pool, and anybody that, e- everybody's got a comment about swimming.
Up and down the black line, they love it, they hate it. Every la- even people that don't do swimming have got a, you know, some thoughts on swimming itself. Yeah. So no, it's quite, it's quite incredible. It really is, and I take my hat off to anybody. I didn't get to any of those levels. Mm. I tried to have a shot at it, but, um, the, to get there, even not to win, just to get there- Mm
is success in itself. Yeah. But it's, it's interesting, you, you, you say you didn't get there, but you mentioned to me that you have a, an unofficial world record, uh, in a, um, a, a team event, swimming the English Channel. I find that incredible. And as a, as a, I'm getting old now, but I just think of that event 20 years ago, this lady jumping, uh, doing it five or six times, and I remember just seeing footage on the news as a young fella where they're putting Vaseline all over her body to protect her from all of the, um, the stingers and all the coldness of the- Yeah, yeah
the swimming the English Channel. Can you tell us a little bit about that? Uh, yeah. That's, that's an interesting story. Uh, when I got back into, uh, swimming in my 30s, mid-30s, I ran into a friend of mine from our club days when we were, oh, in primary school. It was just- Mm ... just one of those fortuitous things.
And he, we were doing some masters swimming, competing. We went to Rockingham to swim in the nationals and the state titles and things like that, and then he, he rang me up one day and said, "Oh, I'm thinking of putting a team together for the English Channel." And me being me, I tend to bite off more than I can chew, and then I've-
just got to chew like hell, and I said, "Yeah, sure. Tell me when, where, and I'll be there." And that's it, and I, I, I tend to do that sometimes, and I've got to catch myself on that. But he put a team together, um, and so we started training in 2015 to put, uh, our swim was July 2016. So it's actually 10 years ago this July.
And so we trained up for about eight months into it. We had to do cold water training. Uh, a- and we took it seriously. You, you can't not take something like that seriously. So we put a team together. It was Grant Hoskins, myself, Rachel Keown, uh, Simon Smale. And we all had pretty good, strong swimming backgrounds, but nothing prepares you for the English Channel, nothing prepares you for the cold, especially when our cold here on the Gold Coast gets down to-
19 or 20 degrees, and the English Channel is 12 or 13 degrees. So we, uh, we got over to Dover, put the, did the training, got the registration, booked the boat, got to Dover. Now, the, the, what makes it even worse is the, um... they often say in sport, the nervous energy, the, the, the burn- Yeah ... as a result of nervous energy.
Yeah. So you have a window of six days, and we were slotted second. So whoever books earliest is slot one, two, three, four. Mm-hmm. And if the first team doesn't go, the second team can't go, 'cause there's only one boat- Mm ... you're booked on. Yep. So it got down to about four days, and the first team went. I can't remember if they made it or not, and we only had two days left to say we're going or not.
So you're up at two o'clock every morning, nervous as hell, waiting to see if you're gonna get in the boat- Mm ... see if the pilot rings you and says, "Yep, we're on or we're not on because of the storms." Finally, the pilot rang at two o'clock in the morning and said, "If you guys wanna go, you can. Your window's closing.
There's a lot of storms around." And we said, "We just need to go. We just need to go." So that was... I'm, I'm getting goosebumps at the moment thinking about it. So we decided to go about 2:00 or 3:00 in the morning. Uh, got to the boat, got everything on deck. Storms, English Channel, if anybody's been to the UK, you know how the weather can change instantly too.
So we left in the dark. Uh, Grant swum first, and, and we swam hourly. So you got a pilot, two support crew. Uh, Nikki and John were on the boat with us, and the pilot, um, and Anastasia was the boat. Um, and We set off. So you swim every hour, but what happened was most of the crews and the boats pulled out, so only two boats left over that morning to go around to Shakespeare Beach and start the English Channel cross across to Calais.
Within, within two hours, the other boat had turned back and we were the only boat out there. So it's still dark at this point. And the English Channel, you've got, uh, you know, you've, you've got the tides going one way and, and, and, and going up the English coast and coming down the French coast, and you've got transition.
So you've got container ships, jellyfish, swimming at night, massive waves and everything like that. But we kept going. But the irony of the story is the storm that was coming down the English Channel swung around and actually then started pushing us towards France. So we started realizing that we're on fast-track time.
The world record for an individual swim is six hours, five minutes by Trent Grimsey in Brisbane, as far as I know, when we're doing this podcast. We were tracking about five hours and we were two-thirds across, so we weren't going for an individual record and everything like that. That's, that's outstanding.
Uh, and eventually we reached, uh, Calais, or just south of it, the Cape, at eight hours, 34 minutes, 57 seconds. And so that's a very fast crossing. We're the only boat out there, and we chanced it and we got there. So we swim every hour. And, and the swimming itself, you can swim for an hour and make 100 meters, and the next swimmer can swim for an hour and make five kilometers, okay?
It's the nature of the tides and the drift and the neaps and, and everything like that. So we got to the other side and we're just ecstatic and, and everything like that. It was l- it was something to be really proud of, of the team, of the crew, of the boat, of the parents and everybody that backed us in Australia and, and all that.
Mm-hmm. And, um, we subsequently found out later, we knew it was a fast time, but We, we call it an unofficial world record because they don't classify a mixed team, male and female and four swimmers in a, as a category. They only classify, like, a six-member team- Okay ... as a category. Right. So, um, on their records we don't hold any world records, but on our records we have an unofficial- Yeah, right
fastest crossing for a mixed team, f- mixed four-member team. It's funny how the world changes, but you also mentioned to me over coffee, no, tea and coffee- ... that, um, you weren't allowed to put that grease on your body to protect yourself from the jellyfish because of insurance on the boat or something.
Yeah, that's it. People ask about, um, shark cages. No, no shark cages, no jelly, no grease because of health and safety. You're allowed to wear swimmers or, or jammers, a cap and goggles, and that's it. Yeah. Wow. So because it's, it's very traditional. That's why there's probably no four-member relay because it took six or eight or- Yeah
10 members to get across 100 years ago. Yeah, right. But all of those r- things are, are gone now. And one other funny thing is, and this is very English, the pilot at the time used to smoke in the cabin, so it's, like, outside it's freezing, it's storming, you have to go inside and change, and you're going, "Oh, my God, I'm trying to swim in a couple of minutes," and the captain, the pilot's up the front having a cigarette.
Wow. So it's just- Oh my goodness. And you've got the diesel from the, from the engine. The smell makes you seasick, doesn't it? Yeah, yeah, yeah. So you- Oh my ... you wanna stay close to the boat because- Mm ... you're in the, y- you're in the bow wave for some protection, and it's also dark, so you're, like, wondering what's coming up for you there.
Mm. But you also wanna be away from the engine, too. Mm. So i- it's, it's a real test of endurance. Anybody that's made it, not made it, teams, individual, it's, it's an incredible, incredible journey, uh, for a lot of people, that's for sure. Yeah. No, that's an amazing story. And, and, and, and, and the greatest thing is we, we got to the other side.
And you have a lifelong bond with those other three people- Yeah ... for sure now- Yeah, yeah ... doing something like that. That's it, July 13th this year was 10 year, 10 year anniversary. Yeah, amazing. We're gonna catch up at Christmas. Amazing, mate. Property. Yes. Now, you have been fortunate because you have really focused on the hottest asset class of the last 10 years at least, which is industrial property.
So that's- Yep ... been a, I guess you'd call that a, a tailwind, uh, which has helped you become very, very successful. Um, we're gonna talk today about, uh, some of your, your projects and also how you've actually got involved with joint ventures to scale up to larger projects that you probably- Yeah ... couldn't finance by yourself, which is, um, which i- which is fantastic.
How did you get into property and industrial property? Oh boy, that's a journey in itself too. I, uh, very early 20s I was working at, uh, ANA Hotel here on the Gold Coast. ANA, All Nippon Airlines, I think it was owned by the Japanese out of the '80s. Yeah. And, uh, the BRW B- Business Review Weekly magazine used to come down from the rooms and we- and the staff were allowed to take them home after they clipped the corner.
And I, I researched and studied where people made money. Mm-hmm. And, um, it came down to stocks and shares and financial planning and, and, and the really three or four key things. Even though we live in the internet boom and everything, I still think there's some key areas someone can start with nothing and, and, and, and be successful, and property was one of them.
Yeah. So I worked out how to, how I, to put a s- strategy in place so I could get into property. And, and it wasn't ... And what, and I wanted commercial industrial property to be specific, not residential. Why? I think a lot of my friends went to uni in those days, and there's a course called Building Studies, uh, at Queensland Institute of TAFE in Queensland.
That changed to Queensland, uh, Queensland University of Technology, and it became Property Economics, and that's where a lot of the valuers went, construction management, and everything like that. It was all focused on commercial, so that's where I wanted to aim. Okay. Even though I was on the Gold Coast, I thought, "You know what?
If, if you're going to go large, you might as well go in the large sector too." Yep. So I, uh, I realized I didn't have the scores out of school to get into property economics, so I went back to TAFE for a year, did business marketing to get my scores up- Yeah ... and then I got into QUT, and then I spent three years at QUT and graduated with a bachelor's in, uh, applied science, property economics, and that was mid se- uh, mid-'90s at that stage.
Okay. And your first investment was, like most people, it actually was a residential play. Yeah. Yeah. Tell us about that first deal that you actually did. Yeah, that's an interesting one. W- I'd been, I'd been working as an agent for a lo- about 10 years. I was an ag- commercial agent for 10 years working for developers, and then I became a developer myself, just doing the same thing really, finding blocks of land, putting groups together, building the building, selling and leasing it.
So the market was quiet in the early 2000s, and after the global financial crisis, there was two real dips in the commercial so that- Mm ... if you're still in development, you've got to develop. So I found a residential block in Brisbane, and I kept going back to this site going, "No one's bought this in over a, over a year."
It was on the market for a year. And they wanted about 600,000 for it. It's in one of the third or fourth best suburbs in Brisbane, so it's a good location, but it's a terrible house. Lead paint, heritage listed, um, burnt out Valiant underneath. It hadn't been lived in for probably two decades, an old family house or something like that.
Uh, asbestos ceiling, paneling. The, anything that could be wrong with this house could be wrong with it, and everyone turned it down for that reason. However, what I did or what I found out was it was a battleaxe shape block. Now, it's a very busy road through, uh, on the front of it and a side, side street, and there was a battleaxe.
What people didn't realize, there was a triangular block of land here, 136 square meters. Yep. And this was 900 square meters. In heritage listing, uh, lots in Brisbane at the time, you needed 950 square meters, and this lot was only 900, so you couldn't subdivide it. Gotcha. But if you bought this block of land and amalgamated it- Yep
it took you over the 950. Gotcha. So I, and so I, uh, researched who owned it. It was owned by Council Roads, I believe At the time, I, I remember th- there is roads, which is, uh, state roads and then there's council roads. I believe it was council roads. Yeah. So they, I approached them and said, "Will you sell this?"
And they said, "Well, there's no adjoining neighbors. It's 136 meters. Yeah, we will. But we need to run around all the authorities," and that took about three or four months, and then they came back to me and said, "Yep, all the authorities, Energex, Main Roads, QUU, have all said, 'No, we don't need it.' Um, but we don't know how to value it now.
So give us an offer and we'll take it to our valuers and, and, and go like that." So I did a reverse appraisal for them. You know, I obviously smashed the hell out of it and came up with- Yeah, yeah ... $33,170 or something, and they got back to me and said, "If you go to 34,000, you can have it." So I started the project with $160,000 to buy the house, 37,000, uh, 34,000 to buy the land, and then, um, it all- when I amalgamated, it l- then allowed me to split the block.
So the house was- Okay, but did you have the courage to buy that first site before- You'd seen the potential of that block of land, or did you s- buy it subject to buying this other block next door? No, I approached them when I didn't own it. Okay. Because I knew no one was looking at it. It had been on the market for a year.
So I approached them and said, "Oh, there's a block of land here." And they said, "Do you own it?" I went, "Y- yeah, I kind of do." I was moving towards putting under the contract. Yeah, okay. But the three months for them to get back to me, um, I- You could've lost that house ... I, I could, yeah, I could have lost the house.
Yeah. So I did put the house under contract, and I did have to go on condition. I probably settled on it because- Yeah ... you, you get a feeling v- v- government budgetary- Yeah ... y- y- you know, if it's excess properties and it's not of their use and, and the, and the, the premier or the lord mayor at the time is saying, you know, "We need to cut costs," and everything like that- Yeah
I had a fair idea that they were, they were going to- Yeah ... sell it to me, and they ended up doing that. So it was a gamble. Yeah. But sometimes when you're trying to start off and do things, y- you gotta risk everything- Yeah ... really. And that, that turned out to be really profitable for you. Very profitable. I mean, the timing was perfect.
I eventually spent about 800,000 raising the house, refurbishing the house. Always build new, don't refurbish. It's always a lot more expensive to refurbish in residential, I find anyway. But not with a heritage, you're not allowed to. Well, you, it's, that's why it's so much more expensive. Yeah. You can't knock it down or anything.
Yeah. That's, that's why it's so much more expensive. Yeah. And probably a build contract on a house can be from, I'm looking at having one done on the s- vacant block of land at the back of it at the moment, 'cause they haven't done anything for years on it, and can be anywhere from 6 or $800,000, but the refurbishment of this existing house was about s- 800,000 all up.
Wow. Um, however, the land that I bought, the other land, all the costs, subdivision, it was a sloping block. It, it just, everything was wrong with it. Mm. Eventually got valued, uh, like 2020 at about 2 million for the land. Sorry, 2 million for the house at the front, and the land at the back was 800,000. And I got a re- I refinanced the house in 2023 for two and a half, in 2026 for three, and revi- refinanced the land- Mm
for 800, 1.2, 1.5. So that 150, 165,000 plus the purchase plus costs through- Yeah ... has allowed me to pull out Close to two million in equity- Yeah ... over those years. Good on you. So, so when people say negative gearing or there's not enough in it or- Mm ... you know, they're worried about capital gains tax changes and legislation changes- Mm
and self-managed super fund changes, and I'm not g- not giving you any advice here, I'm just saying from my own experience- Yeah, yeah ... you forget about that. Mm. Find the project that can work- Mm. Yeah ... and if the w- market moves in your favor- Mm ... it can be very successful. And if it doesn't, you just gotta hold it.
Yeah. That's the beauty of residential. You can just hold it for a long time. Yeah, yeah. Good on you. But- So- ... you thought outside the box and no one else- Yeah ... saw what you saw. Yep. And you went and did it. I'm, I'm doing a similar one now on a property that I'm supposed to have under contract. We started negotiating six weeks ago.
Similar situation, the council owns a little bit of, uh, land there, which I've already spoken to the council about- Yes ... because it w- it's, the, one of these lots is actually landlocked. Mm-hmm, mm-hmm. And if I can buy this little bit of land- Yeah ... it'll, it'll increase the value. I'll just say something. I know of a, in, a, a industrial block in Brisbane where there's a gazetted road down the side- Mm
which doesn't go anywhere anymore. I said to a business partner of mine in Projects, I said, "If we had two years up our sleeve, I'd buy that and I'd buy the land next door, and council would probably sell it to you." So those deals are out there is what I'm saying. Yes, they are. You just gotta look at the, the site and then everything around it.
Take us back to your first significant industrial deal. Five years to save $80,000. What, what does that mean? Well, it took me as an agent to save to, to, through commissions early, very early 2000s again, about five years to save $80,000. A- and a friend of mine, and I was working in Brisbane, a friend of mine rang me on the Gold Coast and said, "Oh, there's a block of land down here in industrial estate."
And I said, "Oh, you know, I'm from the coast, I know it fairly well." And it was out of my area and, and where I operated and everything like that, but I said, "Let's have a look at it." Mm. And it, it might be hard to believe, but the block of land was $300,000 for 1,500 square meters, okay? That same block now is probably- 2 million.
Yeah. So that's how much the market's changed since early 2000s. Anyway, I said to him, "I've got $80,000 but I need to borrow 100 off you at 10% for 12 months and you put 180,000 in," so that's 360. And we'll go to the, one of the developers I was working with and, and, and, um, this is subsequently a developer I've done about 40 projects with and he said, "Listen, I'll help you guys get going.
Buy the... Give him the money, have an agreement out the back, he'll buy the block of land." And he did buy the block of land and he bought the land with cash so he could borrow 100% of the construction cost to build the building. Yep. So knowing our knowledge and everything, um, our combined knowledge, I designed the building.
I didn't do the sales and leasing business on the Gold Coast. We're in Brisbane. The agent down here did a really good job and we turned it around in about 12 months and we all made about 150,000 profit. Yeah. Wow. So we nearly made 80% return on investment- Mm ... in that 12-month period from a $80,000 start.
Now, the friend of mine was a, a good friend of mine from school. He trusted me. You know, we knew each other for years. And it doesn't matter that they're small numbers because at the time that was the going rate, uh, for, to, for land and everything like that. So- Mm ... uh, 12 months time, took me five years to earn the 80, $80,000 or save it and took me 12 months to make 150.
Once you can get going, you can get going. Yeah, but more importantly you started a relationship with a joint venture partner, Dave. That's it. That's it. And that, that investor's been still investor with mine, uh, mine and the developer. We're still doing work together. Okay. So these stories are, are still relevant, uh, to developers today and, a- and everyone starts out not having enough money to do their own projects.
Mm. Or, or, or they might be able to do one but not two or three and you've done, even right now, Dave, you're doing multiple projects at the same time because you've got- a joint venture partner with deep pockets that can, uh, can help fund your developments. Yeah. Yeah, that's exactly right. I, I saw a lot of the problems coming out of the '80s with a lot of developers and high net worth families and, uh, going, going under.
And a reason a lot of the time that happens is, is they put all the eggs in the same basket. Mm. I know that's a common cliche, but it's actually quite true. Yeah. And it's happened more recently too. Some very experienced developers have been caught out. Mm. You know, thing, things not work- working out, and if not going bankrupt, they're very close to.
So I decided my company would be facilitator of the project. So even though I've got, at the moment, 12 projects going, I've got different arrangements or different capital partners in each one. And some of them, some of them's just myself and a business partner and the bank. Yeah. Mainstream bank. Another one might be, uh, the, a business partner, and he funds it himself because he's retired, and he's just looking at getting a return on, on his, his money instead of in the bank.
We have some arrangement at the back so he gets a return. So that- Yeah ... actually happened during COVID. Um, I decided to go ahead with buildings because I saw the opposite happening in COVID. I saw massive demand on online sales, especially resources, mining. Any- anytime- Mm ... the, the economy goes bad, I've seen industrial slightly get better and better and better over the years.
I know I'm segueing a little bit, but during, when GST came in and there was a massive slowdown in the '90s, there was about 40 buildings vacant in, in Yatala here on the north side of the Gold Coast or south side of Brisbane. When COVID came along, there were no vacant buildings. Yeah. So it's a completely different market.
So we went ahead and started building, and it's Courier Mail printed an article about us, uh, betting against COVID and winning. Now, the reason, the reason we did, we couldn't get any funding, no banks were so, but one of my partners said, "Listen, I've got... I've sold my business. I've got some spare cash if you think it's worthwhile we work an arrangement."
Mm. So we had our funding group for the land, and then we just had a, a private arrangement for, for the funding for them to, uh, fund the project. And we did. We got it off the ground. We sold it before it was completed, leased it out, and, and the owners still love it, and I still manage it. Wow. So. So your business is called The Castle Property Group, and you're a commercial real estate agent.
I'd imagine that has some extra efficiencies when you're doing developments with all these, uh, people who contribute the capital, because you can do leasing and you can do sales yourself through your own businesses. Is that a fair chunk of your real estate agency work that, looking after those projects that you're actually developing yourself?
Or is it just a very, very small percentage? It's, it's got a lot smaller these days. Uh, I, I'd, I'd say I'd categorize us as a developer, but I followed a Gold Coast residential model of if you walk into Broadbeach and you've got the shops with the, with the tower model in there and everything, they've got a salesperson in there promoting their own stock.
So what the model I ran was to be the developer but really push our own stuff- Yeah ... by having someone in the office that controls or just talks to the agents. And this is also coming out of the global financial crisis- Mm ... when you had to put that into place. Okay? It's been running hot now for seven years.
You haven't had to do a lot of that because a lot of the s- the stock is moving quite quickly. So there was that aspect of my company that we did do the sales and leasing, but it wasn't in competition with the other agents. I'm always loyal to the other agents, always pay them straight up as much as required and everything, because without the agents, you get the deal.
And being an ex-agent, you understand that. A lot of developers don't understand that. Yeah, yeah. So we don't want to be in competition with them, but I do have someone that promotes and pushes our projects in conjunction with the agents. Yeah. And the agents get all the fees because my staff are on wages and things like that.
That's right. But it's a slightly residential concentric model. Yeah. And honestly, I'm seeing Dexis and Charter Hall and, and, and, you know, Centennial and some of the big companies not follow us, but do that also where they have- Mm ... their internal people on the marketing as well as the external agents. Yes, I've, I have seen that.
It keeps, yeah, it keeps the external agents a bit more honest too when, when, you know, if, if they're not acting, you know, we'll put someone else on it and, you know. It, it, it's, it's a good model. It's a good model. Yeah. So multiple income streams is, is, is good for my company, yeah. Yeah. Very, very good. So you have done most of your stuff, like, within an hour of Brisbane.
Yeah. What, what, what do you see happening n- now, particularly in Brisbane industrial real estate? What's the market up to, mate? It's quite extraordinary. I think- I personally believe we've had our run of profit. You know, we started building freestanding 1,200 square meter buildings in, in 2000. We were selling for 2,000 a square meter, now we're selling them for 4,300 a square meter.
Mm. Construction costs have gone up. Everyone knows that. 30 to 40% on steel and, and, and, and, um, uh, concrete and that, and, and the finishes have gone up 100%, you know, the, the trades and everything, mainly because of lack of labor. But the values have gone up too, so that's, that's where that's at. So I believe we've seen most of the profit come out of this, um, cycle.
Yeah. But being in Southeast Queensland and Brisbane and Queensland, within Australia, within Asia, within the world, I think gives us- Mm ... a fair few layers of macro to micro cushioning to any- Mm ... any- anything that happens. Uh, uh, on a global stale, scale, you know, between US and China and Europe and things like that.
Mm. I think, I think it's going to remain quite strong. Brisbane itself has got the Olympics coming up, so that's, that's positive and negative at the same time. Yeah. I just, uh, I'm not sure that this is a correct statement or not, but I just wonder whether what you're saying has been the catalyst for a lot of the industrial developers to do these little A 100 to 150 square meter concrete panel, uh, man cave things- Yeah
as opposed to the bigger 1 to 5,000 square meter sheds because they can get more density and maybe there's a little bit better return. Is that, is that true or not? There seems to be a, it's almost becoming a saturated product now. In fact, I've just- Yeah ... listed some for sale. Mm. Um, there seems to be a lot of those, uh, that type of stock around.
Yeah. And it's been very popular up till now. I'm just wondering whether that business model will work going forward. It does. It does. It's been, it's interesting times, and I've seen this happen three times. You know, early 2000s, after the global financial crisis, and, and now. Mm. What, what happens is you get the true industrial developers that are in it all the time- Mm
and they, we predominantly do freestanding buildings, but even at the moment we're doing three unit complexes because we've ma- finished most of our freestanding buildings. These projects are taking two or three years. The reason we do freestanding buildings predominantly is we're in and out, okay? 10 unit complex- Yeah
you can be in, and in, and in, and still in three years later. Yep. So we have a th- we have a, you know, theory that it's better to take 60 or 70% return out of a site by doing a freestanding building, get in and out. Also, if the market changes, you wanna be in and out quite quickly. Whereas if a developer does 10 or 20 or 30 industrial units- Mm-hmm
they can be stuck with the last five or eight still there. Mm-hmm. And that's where all the profit is. Yep. And if there are some corner units that are designed wrong, it's an absolute nightmare, and they can, they can have the profit tied up for years. Mm-hmm. So, so that's half of the answer. The other half of the answer is w- when a market takes off like it has over the last five or six years, you get a lot of people jumping on board.
There's a lot of money coming up from Sydney and Melbourne. There's a lot of residential developers. The amount of residential developers that are segue into commercial is incredible, you know. We're all sitting back going, "We've been doing this for 20 or 30 years. Now everybody- Yeah ... realizes." Yeah. Um, and well, it's, it's been good for us and other people in our sector.
Now, what, what happens is because they're not Overly knowledgeable in the sector that they're not seeing that, yeah, they think on paper, they'll go, "Yeah, I'll de-risk it by doing 10 units instead of one freestanding- Mm ... building," or something like that. But it's actually not, because everyone in the suburb or everyone in the industrial estate's thinking the same thing.
And there's a couple of pockets around, like you're saying- Yeah ... that have, um, too much, way over supply of industrial units. Yeah. David, what, what prompts developers like you to do concrete tilt panel instead of just Colorbond? Where in your feasibility have you analyzed th- those two options and said, "Oh, we gotta go the, the higher quality concrete," which is more- Yep
expensive to build, but you're obviously getting a better margin. Why is that, and how does that work out when you have a look at the, doing Colorbond steel roofs and, uh- Yeah ... and, uh, the whole thing, just metal instead of a, a big giant thick concrete build which is much more expensive? Why is it more profitable for you to, to do the concrete ones?
The, the concrete, one, it's really accepted in the market. You, you- most, most tenants, most owner occupiers, most companies- Mm ... want th- the tilt panel. Okay. Now, that's only to a certain level. Um, some builder, some, uh, estates have building covenants on there which say you can only build in concrete anyway.
You, because of fi- there's a whole lot of reasons. Uh, fire, um, fire requirements, you can build to boundary or just off boundary concrete. With other you can't. Mm. The only reason, and, and also, but you can only build to about eight or nine meters in concrete tilt panel because the panels can be, you know, 150 to 195 mil thick.
If you start building higher, they can go to 220, which means you got to double mess, so your costs are going up 30% straight away. So that's why all industrial buildings are usually around eight to nine meters for freestanding, or seven to nine meters, and about five to six meters, or six meters for industrial units.
You don't need much more height than that. A lot of the big guys in town will go much higher, 11 meters, 15 meters, where they'll do three meters of tilt panel and the rest will be Colorbond. Gotcha. And then it's usually portal frame with, with columns inside. And that's, they- they're the Amazons and the, all, all, all the very big warehouses and facilities that they do that.
So there's a reason for that. But they'll also put sprinklers in too, which will kinda negate some of the fire requirements and everything like that. Mm. But in our area, it's accepted. The valuers want it that way. The demand wants it that way. And once, I, I, I call industrial sometimes, um, four walls and a roof.
Mm. You know, you're not dealing with 50 apartments and 50 toilets and 50 ensuites and everything like that. 100% agree. A lot easier. So once your crews understand it, it's just, it's just like Lego. It's not like Lego, but it's just like Lego. They'll build the same. The panels beds, the, the, the panel beds are the same.
The panel drawings are the same. Mm. Uh, the plumbing's the same. Everything, you just don't change it once- Yeah ... the crews understand it. David, one thing I find fascinating with what you do in they, these industrial little sheds is, um- 10 or 15 years ago, um, when, when I looked at, uh, industrial properties, uh, usually a valuer would value how many net- the net lettable area of a, a little shed.
Mm. And then if there was a mezzanine, they would apply a lot lower valuation on the square meterage of the mezzanine upstairs. But these days, developers like yourself, and not, not having a go at developers- Yeah ... but the market in general- Mm-hmm ... seems to almost apply the same rate per square meter for mezzanine.
Yeah. Um, and- Yeah ... and it seems to be maybe a big opportunity for developers. If you've got a 70 square meter shed but you build 50 of mezzanine up there- Mm-hmm ... all of a sudden you've got 120 square meters instead of 70. Can you just talk in very basic terms about the maths there? Is what I, what I said there, is that true?
Like, you're almost getting the same rate? Yeah. Yeah. It, it is, absolutely, because it's, it's looked at it in its entirety these days. Mm. Because you've also got car parking requirements. People forget some of the value- Mm ... is the exclusive car parks. Yeah. Um, I'll just go back a bit on, on that, because it also answers a bit more of your question previously.
La- it's the land cost. If you can get land at f- $400 a square meter, you can do a big freestanding building. Mm. If you're paying 2,000 a square meter, which the market is now in some Gold Coast properties, uh, we sold one of our properties, uh, in Brisbane for about 19, uh, 1950 a square meter. We bought it at 700 a square meter five years ago.
Now, the only way you can make a project stack up is to do units. So this gets back to now answering your question just then. Years ago, the market accepted and land was cheap, so you just did concrete units. That was it. Nearly like storage units. Yep. But then land got more expensive, so to get a return out of it, you started having to add in things.
You had to start, add a kitchenette, you had to a- add toilets, uh, exclusive car parks, uh, natural light, air conditioning in the office. Then the mezzanine was up there. Then the mezzanine got bigger, and then bigger, because it's the only way you can make them stack up. Now, having said that, the market's also changed where a lot of people that were running businesses were usually running them at home or in the backyard or their garage and things like that.
So the offices and the mezzanines, and I'll... The office or storage mezzanine, there is a difference, uh, has become quite important. So in a way it can be seen that the developer's actually, you know, just being a bit cheeky and getting the floor area up and they've gotta pay for it. But they're not, 'cause there is demand for it, hence why, to answer your question, it's, it's now valued its in entirety.
Yeah. You don't just go... They used to look at it, a valuer used to look at it maybe from a, more of a quantity surveying point of view- Mm ... going, "Well, that concrete's X amount a square meter, and those bolts are X amount, and that mezzanine's only $15,000 worth." But now they gotta go, "Well, the land's 2,000 a square meter or 1,000- Yeah
a square meter," and you look at its in entirety. Well, why, why I'm a little bit confused about it all, David, is when I have a look at the other side of the coin how a valuer would usually value a commercial property- Yep ... they, they work on a cap rate, and they have a look at the amount of rent you can achieve.
Now, typically, still I think, and I may be wrong, um, you don't get as much per square meter for the mezzanine as you do on the ground level. So I think these days it, it ends up being a blended rate as, you know, you don't sign two leases, one for the bottom- Yeah ... one for the top. It ends up being- Yeah ... a, a blended rate.
But usually you wouldn't get as much rent per square meter for the mezzanine as just the ground floor if you were to separate those amounts. And that's where I'm a bit confused how- Mm ... all of a sudden people are paying, uh, the same amount for, for the mezzanine area, uh, as the bottom. And what's even worse, and some people still get caught out, is when they buy really older ones and the mezzanines are not even approved by council- Yeah, yeah
and, and they might not be compliant. Yes. And you're paying for something that is not, not, uh, legal. That's exactly right. To answer that one quickly, you, you do need to do the due diligence. It needs to be on the, um, body corporate survey plan. Mm. It needs to be a registered area. Yeah. Uh, and, and it needs to, a buyer needs to also look into if it's approved for storage or approved for office.
What happens is a lot of pe- companies will buy a unit that's approved for office, uh, storage, storage mezzanine- Yep ... but not put- Uh, but then put the office in and then be selling it as office down the track, and it's not actually approved of that. Now, there's a lot of properties I would say have some form of unimproved mezzanine.
Mm. It's not a negative in, in itself because you can build in more mezzanine as long as it's certified and you can add a car park to it and everything like that. It's just a, a change of the building approval, basically. Yeah, right. But h- you were talking about the blended rate. In warehouses or big warehouses years ago, they used to say, "Okay, 500 square meters of office, we'd put 125 square meter on the office, and 3,000 of warehouse, we'd put 80 of warehouse."
Mm. That was the old methodology. They s- they still will look at it like that, but it's got to be its entirety- Mm ... because you're now applying ... And they used to be on big blocks of land, and the land was never included. Yeah. But now you, you do have a calculation for concrete hardstand- Yeah ... for container hardstand- Yeah
uh, for access, for freight, all those type of things. Mm. So again, it's more of a blended rate and the, the, the entirety of the property they've got to look at. Mm. The valuers will break it all down, and agents will break it down from an appraisal point of view. Yeah. But the methodology has changed over the years, and especially strata units, you, you do need to look into if it's approved mezzanine and what type of approved mezzanine- Yeah
for sure. David, I've got another question that just came up- Yeah ... and you're not expecting this. But every time I, um, do my tax return with my accountant, um, I, I, I see a difference with resi and commercial 'cause anything I do on my commercial properties- Mm ... I claim the GST straightaway, but on the resi I can't.
"Oh, no, Andrew, that's residential. You can't claim- Yeah ... GST on all the s- all the improvements that you make to the resi site." Um, I, I think that that's, surely that's gotta be some small little advantage to a commercial developer as opposed to a resi too, because you can- Yeah ... claim all the GST- Yeah ... uh, whenever you're doing stuff with commercial, which is one eleventh you're getting back on your cashflow.
Yeah. Um, do you agree with that? Like- Oh, a- absolutely, absolutely. We, w- when you, when you're planning a project, you can have the normal BAS periods, but once you get into the project, you need to s- Mm ... s- s- uh, switch to monthly BAS. Yeah. Because- W- we usually pay cash for our land, uh, and then we've got to pay GST on that, but we'll get the GST back.
Mm. So hypothetically, 2 million for the land, 200,000 in GST. We'll get the GST back, but then that will cover the costs of the professional fees and charges- Soft costs, yeah ... and council and soft costs, holding costs- Yeah ... council charges, everything through the project. So effectively, once a project's up and running, you don't need a whole lot more money.
Yeah. As long as everyone agrees and that's what goes in. Sometimes you need a top up. Yeah. But everything, everything, all the construction costs, all the agency fees, all the end fees you can claim back. Mm. And that is actually a cashflow because when you have building drawdowns- Mm ... from the bank, the bank will give you the money f- to the builder, but they won't give you the GST component.
So then that money is then used to pay the builder. Mm. He pays the ATO, you claim it back from the ATO every month. Yeah, right. Very, very cashflow and you've got to be pretty strict on it. Yeah. David, I, I follow a podcast in America, um, industrial property, a guy called Chad Griffiths, and he had one the other day.
You're not expecting this question either- ... but he, I just love listening to this industrial nerdy stuff. Mm, mm. A lot of people would not be interested but, you know, over the last few years, he's talked about the changes to industrial, um, development and how they, a lot of tenants have required a lot hi- a lot higher clearance on the roller doors at the front- Yeah
and some need loading docks. And, uh, when you get to a certain size of shed, there are added compliance complexities around whether you need to put in sprinkler systems. Yep. He talks a lot about the height of the actual sheds themselves for how many pallets of racks you can put in there for storage.
Yeah. And now the big thing in America, and I'm, I'm guessing it's probably going to be the same here, is it's a massive thing for these larger scale tenants to have enough power in the sites because power- Yeah. Mm, mm, mm ... and the access to so many watts of power is becoming the big thing, and if you, you can't provide that power- Yeah
they just won't lease the premises. Are you seeing that as a, a big demand driver from the tenants of these industrial properties? Yeah, yeah, absolutely. That's 100% accurate. I mean- Mm ... the- We, in the past, just to give you examples of our sites, if we've needed extra power, you get a transformer, right? Mm-hmm.
So we'd pay for the infrastructure, the pad and everything. Energex would gauge how much power is required, and they'd supply the transformer. Now they don't supply the transformer, so we've got a 29-unit development up in Brisbane at Seventeen Mile Rocks. We sold 22 units, which is good, but we had to put a transformer on there, 270,000 plus GST.
Two years ago, we didn't have to incur those costs. So the authorities aren't keeping up With power requirements on any level. Now, that, this isn't a, a conversation about that at the moment, but- Mm ... every single person we deal with now is talking about power. Yeah. And it's going to get worse because the data centers, and I, I, I am not an expert on the data centers at all, we don't deal with, in that area at all.
Mm. But I was at a conference in Sydney last week, and the power requirements of those data centers, uh, is, is extraordinary. Mm. And that means the estates it's going into, it's drawing away from the rest of the estate. And we've got a 22-lot subdivision on the north side of Brisbane industrial, and we've, we've gone from no transformers to possibly two transformers at the moment.
That's probably $500,000 there. Wow. I might introduce you to a gentleman I interviewed yesterday, uh, Paul Van Vacares, and he's just told me that he buys these electrical transformers from Vietnam- Yeah ... and they do the job, and he gets them a whole, whole lot cheaper- Yeah ... than, uh- Yeah ... buying them in Australia.
Yeah. Well, that's- He's got some contacts there ... that's the beauty of a free market, really. Yeah. Like, the roadblocks are put in front of us, you just need to work out a way to get around it. And that's why mezzanines have increased in ef- in area. That's why- Yeah ... car parking, that's why there's so many units.
Mm. You know? It's, it's just something's there, you just gotta work a way around it. Yeah. You know, I've always wa- I've heard about prefabbed industrial and everything for a l- you know, 20 or 30 years. I haven't seen too much of it happening. Not yet. So some of these ideas are good. Yeah, not yet. Not yet. Not yet.
Um, but some of these ideas are good, uh, but a h- a lot of the time it's, they're, they, they're early days. Okay. I mentioned before, David, uh, y- you, the market's been on your side, particularly industrial. Industrial's just had an awesome decade the last decade. Yeah. But there are many, many types of asset classes, uh, in commercial real estate.
So for someone listening who wants to become a developer- Yep ... is industrial the way going forward, or do you think there are other asset classes that, that offer equal opportunities for new developers coming into the market? Yeah. The... When people talk about commercial property, I think it's important for your listeners to understand what commercial property is.
Mm. Commercial property is really an umbrella. Under that is the sectors. So the main sectors are industrial, retail, and office, okay? They're the main three. People live in residential, they shop in retail, they might work in an office, so they understand it to a certain extent. Not a lot work in industrial buildings.
But under that, or not under it, aside from that is build to rent, childcare, medical, tourism, data centers. Uh, th- there's 10 or 15 other sub-sectors or, or, or other... You know, there's fast food- Yeah ... uh, things like that. Even marine and ports and, can be classified as a, as a sector within themselves. Sure. And if someone's- Familiar with retail, they're probably always thinking, "Oh, I'd like to get a little strip shopping center or, or a retail shop or something like that."
Mm-hmm. Or if they work in an office, they probably understand office. Even residential buil- uh, multi-unit projects like a six-pack or an eight-pack are usually classified under, uh, commercial lending terms or something like that. Sure. Not residential loan terms when you can get- Even a rooming house.
Yeah, yeah. That, that's exactly right. Yeah. So, um, y- again, that's why commercial I think is good because you can't borrow as much as you can in resi, so you kinda don't get yourself so hung out there there if anything changes. But they're all a, a lot of the sub-sectors, and the industrial is what I've known in now for 30 years.
That's what I'll talk about. I don't really focus on the other areas too much and can't comment on them. But industrial is certainly, um, certainly become the, the golden child where we used to be the second illegitimate forgotten son of the property sector, if you know what I mean. Yeah, absolutely. You know, we used to be the, the rusty sheds when everybody loved the, the Wes- Yeah
you know, the, the, the Costcos and the Westfields and everything. But now the industrial buildings are, you know, six-star energy rated. Yeah. You know, they're really, really great asset class. And so, uh, you know, it's been an interesting journey to be on, that's for sure. Yeah. Fantastic. Dave, let's talk about as a developer, um, I, I guess, uh, from a risk profile point of view, uh, it would have to be a lot safer to build a shed if you pre-lease it and you got a tenant ready to go, um, versus a speculative build where you're building a number of, uh, sheds and you haven't, haven't leased them yet and construction might be, you know, 12 or 18 months and you haven't got a tenant ready to go.
Can you tell us about that as a developer? How do you assess that risk, and do you take that risk or do you pre-lease these bigger ones in particular? Do you- Mm ... do you only build a big shed if you've got it pre-leased? Depends where a developer chooses to park themself in the sector. Mm. Okay? Because they, within one sector, industrial, there's multiple.
Th- there's the funds, the trusts, there's family offices, family money. Mm. There's individual developers, there's speculative developers, there's pre-commit developers. Um, uh, you know, a whole spectrum, very wide spectrum actually. We've positioned ourselves on purpose as more of a speculative developer. Uh, having said that, the last 10 buildings we've built, uh, have all been pre-committed- Okay
because the market's been so hot. Yeah. And I have finished a building in Rockhampton, and that was a 10-year lease to a client we know, and we're finishing a Brid- uh, Bridgestone building up in Chermside. That was a good relationship we built, and that's a 10-year lease. So they are legitimate pre-commits.
Yep. We have pre-committed our other buildings, but most of the time, uh, I, I have a saying, "If you design it right, build it right, price it right, it's gonna sell and lease itself." Yep. So, and when you're speculative building yourself, you don't have the tenant on your shoulder all the time changing things and wanting to change things.
So if you designed it right and you start building, it's usually gonna lease and sell itself, and then you don't have the hassles, and you can start the project when you want. Soon as the, soon as it's approved and your DA and BA and operational works is ready and your funding's in place, you just bang, go.
Yeah. Especially if the market's rising, you don't wanna wait. Having said that, we stick between 1,000 square meter, uh, freestanding warehouses and probably up to 5,000 square meters and, and unit complexes and a bit of, a bit of, uh, pre-committed stuff. But we don't go into the space of the Charter Halls and the Dexus and the, uh, everyone like that because they've got bigger teams.
They can wait two years on a site to get a pre-commit. We can't. We wanna go. Okay. Let's go into a couple of examples of stuff you've done. The Rode Road estate, and, um, you don't know this, but I actually went to primary school in West Chermside at a little school called Craigslea Primary School, and I lived in, I think it was 41 or 42 Benn Street, West Chermside.
Yeah. I used to walk as a kid up to Rode Road and play the pinball machines there on a weekend. So there was a shopping center there. No, well- We, I identified this site in about 2000. A, a developer had bought it- Mm ... and they were splitting it up into six lots, and I d- identified this. Now what happens, my experience has taught me over the years that niche markets often outperform the bigger markets.
So in Brisbane itself, Underwood, Springwood, Tingalpa, Mansfield, Chermside, these smaller, little, little niche markets will- Mm ... actually do quite well. Because people that live around there, they don't want to drive to Geebung or Zillmere or Brendale, Shorncliffe or on- Mm ... the south side, Yatala and everything.
They'll pay more t- to stay near the kids' school, to stay near the house and everything like that. So we ended up purchasing, we purchased three blocks, and I put another block onto a p- business partner of mine, and he bought it outright and I project managed it for him. And, um, the problem with that was obviously the years 2000, uh, 2020, sorry, uh, 2021, we got COVID and things The, it took three years for them to finish the project, so that's leading up to 2023, '24.
So that was really... It's, that's the worst thing when you've gotta depend on someone else to, um, finish their bulk earthworks. But eventually we settled. We, uh, put 46 units into the big block that I was project managing, sold them pretty well all before completion because the market was rising. This is '24, '25.
What sort of lots were they? 46 what? Uh, 46 strata industrial units. Industrial units. Yeah. Same thing, the concrete- Yeah ... filled panels. And, and keeping them all small and everything too. Yeah. So, and, and this is the work store, the tradie units that everybody talks about. And there was ma- I knew there was massive demand in that area for it, just through research, just through being in, being, knowing that market for years.
Mm. We also did a freestanding building, which has now been leased. And the interesting project there to talk about is Lot 6. We bought this block of land and designed a freestanding building on it, but we found out that the demand wasn't there for freestanding buildings. So that cost us a year in approvals.
We stood on site and said, "We need to get rid of that 300 grand, write it off, and do strata units," because the 46 units next door had just nearly all sold out, even though this is under construction. So this is about flexibility. Yep. And we desi- redesigned it for 10 units. That took us nearly another year.
So three years the main developer was building the lots, and then two years u- uh, s- freestanding building and a unit development. By the time we got the approval, the land had gone up so much- Mm ... we just actually sold it. So we actually sold it to an owner-builder who can make the project work, because he builds for himself.
Yeah. It was getting so hard, we couldn't really get a builder to price it right. So we'd made just as much out of the land increase in value than we had- The market was on your side. Yeah, it was. 1.45 we paid for it, plus costs, we sold for 3.9, five years. Mm. Three, two, two and a half years of ownership. So that's 100% return on investment and, um, you know, about 56, 6, 56% annualized.
So that was another project, and we've got a Bridgestone and a cafe being built right now. Panels are going up next week at the front of the estate. I value a lot of my own commercial properties because I'm always trying to get some equity. I, I run out of money all the time. I'm always broke, so I, I gotta always revalue them- Mm, mm
and try and get a deposit. But one thing I can say, I, I do have, most of my properties are sort of lower-end commercial properties with small mum-and-dad tenants, but I do have a couple of properties that have larger scale tenants. And the v- the cap rates are a lot lower on those, and the valuers love high-quality tenants, national tenants- Yeah
or government tenants. Yeah. Mm. Working with Bridgestone, that obviously provides a big capital uplift on the value of a shed that you're building because, uh- Um, it- it's just a national tenant. Yeah. What do you, what do you think about the quality of the tenant with all of these industrial properties from an investor point of view?
Now, if Bridgestone pay you to build their own site, you're not gonna benefit from that uplift. No. But as an investor- Mm ... if you were to build a shed and find a national tenant to go in there, it's certainly gonna provide a big uplift. The Bridgestone deal's r- a real eye-opener because as I said, we, we mainly do speculative buildings, but they're a good company to work with.
The, they don't pay much rent though, and I've told them this to their face. It's okay. They, they know that. But the strength of the company means the cap rate is a lot lower- Mm ... than industrial. Yeah. So KFC's, Collins Foods, companies like that, if they're in a freestanding building, drive-through or something like that, you know, the, the, the capitalization rate or the yield can be 4% to 5% even when the bond market at the moment's, I think just over 5.
Yeah. And that's incredible. Why, why is someone seeing Collins Foods more secure than the government? Mm. But the fact is, it's a 10-year lease. Yeah. It's a known tenant. It's a known asset. You're buying the land. It's a 10-year lease. You can redevelop the land. It's probably 10 plus 10 or 10 plus five or something like that.
So the same has occurred with the Bridgestone. So even though the rent's low, I call them levers really, the rent's low, but the cap rate's lower. It's no use having a great rent if it's a $2 company because the cap rate's gonna be much higher- Yeah ... and the value's not gonna be there. 100%. So they know that.
That's why they can keep their rent down on their buildings- Mm ... because of the strength of the company. And then, you know, the levers are then for funding and finance and construction costs and your land costs, you know? R- they're really what I call the five levers in a project. Yeah. One or two might not work in your favor, but as long as the other three are working in your favor and they can- Mm
compensate the one or two weaker ones, like a lower rent, by having a s- lower cap rate, which means it's worth more- Yep ... it works out. David, you mentioned before you're, you're currently right now working on 12 projects. Yep. Um, that, that's a lot. Um, and you're not just a passive, uh, investor in these things.
You're actually doing the project management- Yeah ... yourself. Mm. So how important has it been for you to have these joint venture capital partners, some older fellows with a bit more coin in their pocket to fund these things? And you're, you're, they're getting well rewarded. I mean, you're, you're sharing the profits with them, but- Yeah It's fascinating, like as a, a small developer, I've tried to do deals myself, but there's always the option there, or should I do more projects and get other people to throw in some money and we share in the profits?
Mm-hmm. Mm. Y- y- you've done that. You've, you've had these people with plenty of, plenty of money. I'm not gonna say they're, they're rich or whatever, but th- they funded a lot of your projects and you've shared the profits with them, and you've obviously grown a lot quicker by doing that. Tell us about that philosophy.
Yeah. 'Cause every developer can do a little, one little thing themself- Mm. Mm. Mm ... or do multiple projects and share the profits with JV partners. That's exactly right. Yeah, exactly right. To, I, I just call it leveraging. You know, you need to leverage what you can. Sometimes that's knowledge. Uh, that might be the city you live in.
Mm. Uh, the, the, the, the sector and the property, y- you know, which sector you work in. Might be stocks and shares, financial planning, what- whatever it is. But it's leveraging to that next level. Yeah. And, and the first level for me was saving $80,000 over five years- Yeah ... and then leveraging in with a friend that- Which took a long time.
Exactly. I know, I t- I don't recommend that, but sometimes you got no choices, you know, if you don't have other funding. So that was one project, and that worked. Mm. So we leveraged another one, and we got into another one, and then another one, and then we did three or four buildings around that, uh, that estate and some other ones.
And then when, in my development years after the agency years, that's when I build a lot of relationships in those 10 years. It's relationships. And then it's circling back and going, "Well, you know, we've worked together. I've now got my own company. You know, why not put a bit of money into a project, see how it goes?"
You know, everyone's a bit like this, but y- Mm ... you know, o- o- oftentimes if, if the capital partner is experienced in property, it helps. Um, as long as they don't want to be too involved because I, I, I have often said if, if, if you want the responsibility to be on my shoulders, you can't tie one hand be- behind my back, you know?
Mm. You don't, y- success doesn't really come from committee in a way. It's got to be one or two people leading the charge, and that's what we do. But the capital partners, every project that I've been involved in has just a, a completely different arrangement, and they're all separate from each other, different entities, different lending- Mm
and everything like that. So if one slows down in council, which these days is pretty well guaranteed- Mm ... can take two or three years, it doesn't slow down other projects. And the capital partners can be a, a, a, a bank if you're doing it yourself- Mm ... or with one partner. Uh, it might be a family office, might be private money, wholesale investor, or something along those lines.
I'm very conscious of ASIC and, and everything like that, and that's why we only have a couple of partners in all of my projects. Mm. Now, I've been able to leverage up where I'm now going in the reverse direction of trying to limit partners and do them all myself because the problem is when you've got the partners, you are giving away the profit.
Yeah. A, a fair chunk of the profit. Mm. Now, you can structure it for bonus and water- waterfall schemes and everything like that and, and I always recommend that because you do put the hard work in there. When I say there's 100% return on investment and 56 return on, you know, annualized, you're talking we paid 1.45, we made 1.5, and you're giving away, you know, 60, 70% of it.
Mm. It's actually, you stand there and go, "Is this really worth it?" Yeah. But to get to that level- But if you've got 12 of them on the go, it's okay, though That, that's exactly right. That's exactly right. Not having 12 of them all in one pile, that slows down- Yeah ... for three years or something like that. Yeah.
So in the meantime, while the Chermside one's been a bit slow, our, our ones down at Acacia Ridge and Elges where we built nine freestanding buildings have, has been, you know, two buildings a year. Yeah. Two or three buildings a year. Yeah. And, and so the capital partners is important, very important, but it's based on the relationships and- Mm
and, and the roles and responsibilities, and everyone having a clear understanding at the beginning. Mm. I often say all relationships, personal and business, is set up at the very beginning, and that's how they're gonna, how they're gonna flow. Yeah. It's hard to halfway through a project go, "Ah, guys, uh, you know, we need to change this and change that."
Though you do need to have the flexibility to be able to do that. Yeah, so it sounds to me like one of the message that you've just detailed there is you, you want a capital partner, but you don't necessarily want them too involved in the day-to-day operations- Yeah ... and questioning everything you're doing.
Yep. Ab- Trust me. Give me your money, but trust me- Yeah, yeah ... I know what I'm doing. Well, give me your money. I've got my money on the line, too. Yeah. So, you know, you gotta have skin in the game. Yeah. And, and, and it is the relationships and trust. And by having higher net worth people than yourself in it, they can usually look after themselves if the global financial crisis comes along or, or GST introduction in 2000 and, and these little things.
Yeah. Uh- So one, one of the scenarios in which you probably do need to get involved with your capital partners is when you're, you're into a project and, and something changes and you can't actually follow the plan. You've gotta change the plan. Presumably you've gotta go back to those capital partners and say, "Hey, um, the feasibility's gone wrong here now."
Yeah. "Something's changed." Have you got any examples where you've, you've had that come across and things didn't go to plan? Well, uh, yeah, Bridgestone would be a classic example. We, we had them signed up, uh, heads of agreement on one of our south side s- southern Brisbane projects. Mm. And it was 3,500 square meters of land.
They have a 545 square meter building, so they need about 1,000- To, o- of land to have a exclusive car parks and everything. A busy road, corner exposure. It took so long for them to sign the heads of agreement and not even get the lease back to us, but the market had changed in that period, where units, industrial units had gone from 4,800 a square meter to 6,500 a square meter sale and, and sale value, sale rate.
And we're just like, the feasibility was just going nah, nah, nah, and then, then units are going yes, yes, yes. So we had to turn around and say, "Listen, y- sorry guys, you've missed the boat on this one." Right. And type of thing. And they've actually, they've turned around and they were good about it and they said, "In the future, if our rent doesn't work, just tell us if the rent doesn't work."
So that's why it's great to deal with companies like that, that understand the process and that. But they win some, they lose some, so do we. But that's, that was about halfway through the project going, you know what? We, we need to, we need to change course here because the feasibility's not stacking up anymore.
That's another point. The, with the interest rate rises over that 12-month period, the yield was going up. W- you could've put a yield of low threes on a, on a asset like Collins Foods or Bridgestone or something, Repco and all of those t- two years ago. But since we've had the increases in, um, the interest rate since then, that means the cap rate also goes up too.
So the rent was set and we had a, the feasibility cap rate there, but then it was going like this, which means the, the valuation was going, the value was going like this. So we just went, "This ain't working anymore. We need to work out something else." And that's where we did industrial units, and they're under construction.
We've got, you know, three or four of them sold already. Yeah. David, um, we talked before, I, I love sport, and we talked about your, y- you know, intense, uh, commitment to different sports. Th- that discipline that you developed there, do you think that's really contributed to your success in, in real estate? I mean, you, you work pretty hard, don't you?
Yeah. Yep, yep. It's- I've often thought that w- we are only given one life and, and some people want to really give it a shake-up, and, and I do. Mm. I, I love what I do. It gives me the free- financial freedom. It's a financial freedom thing. Mm. I, I, I won't, you know, get into personalities and egos and things like that.
I've always wanted the financial freedom. I probably wasn't a very good employee, you know, my way or the highway or something. But the financial freedom this gives you, so that's one thing. But the sport really, really trains you, especially early, you know, and, and, and, and trains you for commitment and perseverance and setbacks.
Setbacks is the hardest one. Mm. And, and the only people that make it really talent... The amount of talented rugby players at Ipswich you would've seen, you know- Mm ... we've talked about a couple of the guys in your year previously, and the talented rugby players, and talented swimmers, or talented businesspeople- Mm
or the ducks of the school or something that don't go on to do things. Yeah. It's really the perseverance- Yeah ... and the ability to get knocked down, as Rocky would say, and dust yourself up, and dust yourself off, and get up and, you know, get on with it. Yeah. And that's it, and that's what sport teaches. And I probably lost a lot more games and a lot more races than I ever won, so I got a bit used to it in a way.
Okay. And you're mainly an industrial guy. What, what are you looking for now in a good industrial site? What are you looking for, given that- Mm. Mm ... the, the rates per square meter are so extremely- Yeah ... high in this corridor between Brisbane and the Gold Coast? I mean- Yeah ... I'll be honest, I, I can't see value there.
I- Yeah. But, but you're f- you're 100% committed to that sector there, and mainly in that corridor, Brisbane to Gold Coast. How do you find a site that makes money? It's the... The way I look at it is, you mentioned the strata industrial units that are everywhere at the moment. Mm. That's quite true. Mm. There's a site, um, we're looking at on the south side of Brisbane.
It's only 2,600 square meters, but it's got an approval for a 1,600-square-meter building. Everyone else would be looking at doing units there. Yeah. But one of my partners is an owner builder, so we can build cheaper than other, other people. So all around the area, people are building units, so go against the tide.
Yeah. So I haven't seen a site we've been able to develop for a while, but this particular one, if, if we went ahead with it, um, or not, it- I think we'd go a freestanding building. And as I said earlier on, I'd rather get 60% of the profit, you know, instead of, i- instead of zero by doing units or not doing a project at all.
So they're the ones we're looking at at the moment. We do have some land at Coomera, um, which we'll settle next year, and that's projects. And we've got some on the north side of Brisbane. Uh, but at the moment, yeah, the market's pretty hot. We're being pretty selective. We're winding down rather than building up.
Yeah. That's for sure. Good advice And for a young developer, uh, that's, or a first-time developer, have you got any advice for them that maybe they don't have a capital partner but they wanna get involved? Because let's face it- Yeah ... I mean, the majority of people's assets at the moment are in resi property.
Mm. Mm. And the, the market going up and doing all the heavy lifting is probably unlikely over the next few years, and they're wanting- Yeah ... to get a better return, they might wanna add value through property development What, what do you think are the best, uh, areas that they should focus on, David? No one knows, of course- Yeah, yeah
but your, your opinion. No, we can't crystal ball. It's, it's really about educating, education of yourself- Mm ... and also the relationships with other people. Mm. And, and it's, it's being patient. I, oh, boy, I see a lot of, lot of companies really trying to jam through as much as possible, and the market's- Mm
booming. We've got to take on as much as we can and- Mm ... and, and then everything like that, and it usually, you know, usually doesn't end very well. But if, if they're young or older and they're looking at becoming a developer or an investor, you can start with, um, something like repositioning a property.
Buying an older warehouse or something and, and, and fixing it all up. But sometimes, as I said before, residential, it's better to knock it down and start again type thing. But it's knowledge and the relationships and time. Don't be forced to do something. I mean, it took me five years to save $80,000. Yeah.
You know how frustrating those five years are. But that's 20 years ago now. Mm. And I'm where I'm at with my partners and, and my staff. Uh, and, um, I've been through tough times. There's going to be tough times again. Mm. So that's hopefully the knowledge and the education side of it. And being patient, and some of it is timing, unfortunately.
Mm. But I won't say, you know, the luck is the meeting of opportunity and preparation or something. Mm. But y- y- you, starting a career... Well, I, I left school in 1987, showing my age. We had the stock market crash four days later. Unemployment for under 19s was something like 45% or something. Like, none of us could get jobs.
Mm-hmm. You know? It didn't- there was no jobs, that type of thing. I, I finished it the same year- Yeah ... and, uh, there's a special bond there between, uh, GPS schools. Yes, yes. Oh, there is. Something to talk about. There is, but the Gold Coast in that era was a, a forgotten backwater. Yeah. It was, it was kicking on.
The Japanese- Yeah ... were here and- Yes ... it's a great lifestyle and everything. Yeah. But there was no money to be made here. Mm. You couldn't get work. Mm. We, we used to do laboring in Brisbane. Six of us used to hop in a car and drive up there and drive back every single day. Mm. That type of thing, just to get ahead and everything like that.
And, and eventually everybody did. That's the perseverance, and that's- Mm ... that's not private, public school, anything like that. Mm. It's really a commitment to persevere- Mm ... and, and educate yourself, and, and have good people around you. You know, r- r- rising tide floats all boats. You can't have the negative people around you in, in your personal life or your business life, really e- even family- 100%
in, in a way. You really need to be a, if anything, isolate yourself a little bit- Mm ... uh, to, to keep focused, keep going like that, and then bring the good people in the- Mm ... into you that you can talk to as older mentors. And I've been- Mm ... very proactive on the mentor side of things, both in personal life and business life.
Mm. Alexander the Great didn't get on a horse at 30 and conquer the known world. You know, he had Aristotle and, you know, uh, Parmenion and, and all of the great leaders from Philip of Macedon, his father. Mm-hmm. So you gotta take the same approach. Don't be embarrassed at 20 or 30 or 40 or 50 to go, "Listen, I'm not sure what to do here."
Ask someone that you trust, uh, someone that's got runs on the board, and things like that. So the younger person or any budding developer or investor, just knowledge and ask questions. There's n- there's never any bad questions to ask. Mm. Another value that we share, David, as old fellas born in 1970- ... is that we both have a commitment towards personal health and fitness- Yeah, yeah
which I believe is going to- Mm ... g- give us a lot longer working life. Yeah. And therefore, viewers, if any of you have any opportunities, particularly around industrial development- Mm ... get in touch with David, 'cause he may well be doing this for another 30 years, and he's got plenty of experience to share.
Yeah. His business is called The Castle Property Group, and we will leave his contact details in the notes to the show. David, uh, I'm fascinated to learn about all of this industrial development that you do. You've, you've done a fantastic, uh, job, and I look forward to hearing more. In another 12 months, we might do-
another update on some of these big projects- Yeah, yeah ... that might start coming to fruition, some of these 12 projects. Mm, mm. Yeah, absolutely. Thanks for doing the podcast. And, and if anybody does wanna reach out, you can. You can contact me on the website, because a lot of people have helped me out. Mm. And you circle back around, you pay it forward, whatever you wanna call it.
Mm. And to get going and things like that, it's, it's interesting. And, and you make, make the friendships, and the clients and everything, and, and we all help each other. And I think, I think we all need to help each other a lot more. For some reason I've always put it down to we seem to wanna act individually all the time- Mm
but we should be helping each other out, uh, a lot more than we are. So thanks very much for having me on your show. Great show. Great, you know, congratulations on the success of it all, and, uh, we'll be talking. Thanks, David. Thanks, Andrew. Thanks, viewers. Thanks for listening to the Andrew Right Property Podcast.
This is all about building a community of like-minded investors who can share real-life stories, experiences, and collaborate with a view to helping each other. Join us. Get in touch through the link in the show notes. I look forward to you joining me on the next episode.