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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
I love it when the bank won't lend me money. That's when I start getting creative about buying property that no one else can fund. There's gonna be a massive, uh, explosion, in my opinion, of residential investors showing more interest in buying commercial assets which have three times the net income.
Why do banks say no? Because of their restrictions, you just can't get a loan, but why do investors give up so early? If you find a really, really good deal, you've gotta, instead of saying, "I can't get a loan," you've gotta start thinking, how can I finance this deal- Yeah ... if it's a great deal? So one of the creative financing strategies I used was I went to my ex-wife If there are two really, really important skill sets you need to have, one is you need to be able to find a great deal and secondly you n-
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
Hello, and welcome back to another episode of the Andrew Wright Property Podcast. Now, today's episode is gonna be incredibly valuable for anyone who's ever found a great deal but then hit the wall with the banks, uh, or, you know, any institution that just won't lend you the cash. Because when banks say no, that doesn't always mean the deal is dead.
It might just mean the structure needs to change, or you have to think outside the box. Andrew, welcome back to the podcast. Thanks,
Adam.
Good to have you here. You've done a number of deals recently using joint ventures, private funding, vendor finance, and strategic negotiation, so I do wanna start there.
But before that, hot topic of the, this particular week is, uh, is the budget. Um, can you give me your, your take on, on that? 'Cause there's been a lot of commentary around it.
Yeah, I haven't spent a lot of time analyzing it, but, um, probably two things that I would point out is, first of all, I think, um, from an asset class point of view, the big winner's definitely commercial property.
I mean, at the end of the day- Residential investors are not gonna get a, um, cashflow boost from the government subsidizing negative gearing going forward. So there's gonna be a massive, uh, explosion, in my opinion, of residential investors showing more interest in buying commercial assets, which have three times the net income.
And, uh, they won't- they'll just struggle to get residential loans, because a residential, uh, mortgage broker use a serviceability calculator, and the, they, uh, have the, uh, negative gearing tax benefits from the government helping to fund it. But what we're gonna find is, with interest rates going up and, um, no cashflow incentive from negative gearing, that people's borrowing capacity for residential property is just gonna go down.
It's gonna be harder for them to fund, and a lot of those investors are gonna move towards commercial property, where the net returns are three times higher, and they're not negatively geared anyway, so it's just not gonna impact commercial property investors at all. It'll, it'll actually be a blessing.
Yep. So a, a really good point to make. If this is the, the first episode you, you're listening to of, um, you know, The Andrew Wright Property Podcast, so many of the episodes have been around commercial deals- Mm ... and how to, um, you know, how to think differently and how to, um, put things together that you've probably never, never thought of before.
And with the, uh, the changes around negative gearing, uh, looking at commercial, uh, property and deals i- is definitely some- something worthwhile doing. Go back. Listen. W- this is episode number 20... What are we on? 26? 26, I think. 26, 27. Yeah. So much good stuff there. But look, let's, let's
get into- Let's go to the second thing I wanted to say there, Adam.
From a, a structuring point of view from the budget, I think what people will find going forward is that their accountants are probably much more likely to continue to recommend a self-managed super fund and structure, because, uh, a 0% tax in a pension in a super fund-
Mm ...
15% maximum in a super fund in accumulation phase, and only still 10% capital gains tax for assets held longer than 12 months, 'cause I don't think- that there was any proposal to change that.
And secondly, we could just see trusts not being used very often at all going forward because accountants are probably gonna recommend people set up a corporate entity. So companies and trusts are both proposed to be taxed at the same 30%.
Mm-hmm.
Um, there's no real point going to the extra expense of setting up a trust.
Uh, I think going forward, accountants will probably recommend a corporate structure. And companies, uh, when you pay 30% tax in a company, um, they keep a franking credit, and directors of a company can distribute a fully franked dividend down the track, and you can actually claw back some of that, uh, company tax paid.
So I think the use of companies going forward are probably gonna be the preferred entity to use, uh, when purchasing property.
Fantastic. All right. Well, let's get on to, uh, to, it's actually very topical, you know, now that we are talking, um, financing today. Why do banks say no?
Well, all of them have their risk management parameters, and, uh, I think for a lot of people, particularly when you've already bought a couple of properties that have been negatively geared, they just do their serviceability calculations, and from a risk management point of view, they, because of their restrictions, you just can't get a loan.
But there are plenty of great deals out there that, um, are very, very good investments in their own right, even when the banks say no, and that's what I wanted to cover today. In fact, I bought, I think, seven properties last year. I don't think I used one bank loan.
Yep. There are other ways to do it- Yeah
aren't there?
That's right.
Yep. Because I think, um, you know, I, one of the notes I've got here is why do investors give up- Mm ... so early? It's, it's, it's- Mm ... basically 'cause they don't know that there, there are other ways around it.
Well, I'll give you a classic example, uh, Adam. Uh, three days ago, the day before the budget, I just bought two more industrial properties.
And on that particular deal, I sent all of the details to my finance broker and he came back and said, "Andrew, I'm sorry, there is no way any bank is going to lend you the money on these two sheds." Now, 99% of the viewers here and 99% of investors in Australia, if you found a property you wanted to buy and your broker said, "We can't get you a loan," you would walk away, wouldn't you?
You'd- And you'd give up.
You'd give up.
But you've got to have the mindset, if you find a really, really good deal, you've gotta, instead of saying, "I can't get a loan," you've gotta start thinking, "How can I finance this deal?" Yep. If it's a great deal, and that's what I've done, uh, six or seven deals in the last 12 months.
I've done them where I couldn't even get a bank loan, and I've done the deals anyway. So if we go into this first example, which these two sheds I've just purchased-
Yep ...
uh, three days ago. They're number 4 and number 6 Driftwood Court in Urangan.
Mm-hmm.
They're two sheds right next to number 8 and number 10 Driftwood Court that I already own- Mm-hmm
that I purchased some time ago. The, uh, replacement cost of those sheds is well over $2 million. Um, I've just signed a contract to purchase them for 1,025,000, so about, uh, $1 million below replacement.
Mm-hmm.
I couldn't get a loan on them, Adam, so what I've done, and we'll go through it now in detail- Can't,
can't wait to hear this.
Yep ...
I couldn't get a loan for it.
Yep.
But I didn't give up. I thought, "How can I finance this?" Now, option one would've been just to go and get a private loan.
Mm-hmm.
And I could have paid a 30% cash deposit and got a private loan, which usually means a higher interest rate.
Yep.
So instead of doing that, what I've done is I've entered into a contract with the seller to have a seven-month settlement.
Mm-hmm.
So our settlement date is 30th of November. So- I've also put in there a special condition that this contract is subject to and conditional upon the seller Entering into a brand-new lease for the front shed at that property at a minimum of $48,000 per year, plus $8,500 of outgoings
Is it ... Are you saying that they need to find-
They need to find me a good tenant
Right And- Not, not them being the tenant themselves
That's right Right So the reason I couldn't get a loan on this property is there's a five-year lease on the back shed, but the front shed, there's just a month-by-month lease there at under market rent somewhere.
So I couldn't get a lease doc loan because they need a minimum of two or three-year terms
Yep
So instead of giving up on the lease doc term, I thought, well, if I can get a seven-month settlement, that'll give us seven months to find a decent tenant for the front shed that will sign a, a long-term two or three-year lease at least, and then I can get a lease doc loan when it settles in seven months' time
How do you know that you're going to
Have you ... I- is that just your level of experience knowing that, that getting that tenant in under a lease of that length will allow them to, to tick off? Is there risk there that, that they still, you know, won't, won't give you a, a loan- No ... at that point?
No, no. The banks, we know, the c- you talk to your broker if you're listening about, uh, what a lease doc loan is, but the banks have a black and white policy on lease doc loans, and if you meet the, um, multiple of the income by a certain amount and the rent is high enough- Yep
and the lease period is at least two or three years' time, they will lend you. It might be either 60% or 65 or 70%, depending on the actual income of the property. They'll, they'll lend you the money. So I know for sure if this owner goes out and finds me a great tenant on a two or three-year lease, I will be able to get a bank loan in seven months' time
Yep
And if he doesn't, well, I can pull out of the contract because it says in there that this contract- And-
is subject to and conditional
So he's highly motivated to, uh, to get this, uh, this new
tenant Yeah, and if he gets a good tenant, guess what? He's making a massive capital gain on that property to my benefit-
Yeah.
Yep ... because if I get a good quality tenant on a long-term lease, the value of that property goes up, and I don't
I benefit from that completely Now, just let me ask the question here, and I, I'm,
I'm assuming you're all covered here. If he goes and f- so if I, I, I wanna look at this at helicopter view
Mm. Mm
Great opportunity, um, to buy two sheds at a, at a, at a good price. What effectively was stopping you getting finance is the lease on the, on the- Correct
on one of them
Correct
Okay. So as soon as that lease is put into place and you get that, you're able to borrow, you're able to buy it at that price. Why ... Uh, but and you've put, and you've put the onus on the seller to find that-
That's right ...
tenant. Now- Why wouldn't the seller look at this and go, "Hang on.
Once- if I'm going to go find this tenant, won't this be worth a lot more and I could sell at more than what he may have a- just agreed on purchase price with you?"
Well, we've just settled on a purchase price subject to $48,000 plus outgoings on that front shed- Yep ... in addition to the current rent of 35,000- On the other,
yep
plus, plus, uh, outgoings on the back shed. So we've already factored that into the price. Um, he, um, uh, you know, he had an agent come up and tell him just recently, "Oh, I, I can get you $1.3 million for this shed." I mean, the end of the day, in last week's podcast, we talked about the opportunity right now for buyers of property to go to owners a- and use a carrot of locking in a 50% capital gains tax discount-
Mm-hmm
prior to the budget I do what I say. I said to the owner, "How about we sign a contract on the 11th of May because tomorrow there's a budget, and it's possible that they will eliminate the 50% capital gains tax discount?" Now, it so happens that they've actually given them another 12 months now to do it, but that was my tool- Well, yep
to help the seller lock in those 50% capital gains. So he entered into a contract on the 11th of May to protect his family-
Yep ...
to make sure they get the 50% capital gains tax discount.
Sure.
So all of this is part of the negotiation and, um, you know, that property is- Yeah ... right next door to the other four sheds I own next door.
Yep. And to me, it's a very important acquisition. It's worth more to me than anyone else because it adjoins- The other- ... my site next door. Sure. Sure. 3,169 square meters- Yep ... of land. Yep. Property land value $750,000.
Yep.
750 square meters of shed, and the front one is cold storage. So the replacement costs well over a million dollars just for the sheds-
Mm
plus 750 for the land. Good deal, $1,025,000. It'll be an 8% net cashflow once that tenant is in the front shed. Great deal. Great deal. Now, 99% of people would not have done that deal because their broker said, "We cannot get you a loan." No.
See, banks don't lend on potential, do they? They lend on numbers.
That's it. Um, now the potential was always there with, with this one- Mm ... but you had to work a, work out a way for that, that potential to turn into numbers for, uh, for a loan. And I think a really key point to take away from this is think about the deal you structure with the seller, the win-win we've talked about in- Yep
in other... This was a win-win for, for b- I mean, I, I would i- imagine a lot of our listeners don't ever think about long term settlements.
Mm.
They, you know, they think of it in terms of 30, 60, 90 days- Yeah ... and that- that's where their, their limiting belief, um, would, would end. But you've done a number of deals-
Yep
um, where it's
even up to 12 months. Uh- Yeah, so it's a, it, it is a great deal, and I'll just say that it w- it is my, was my second preference. I actually asked the owner if he would provide seller finance or vendor finance, but he is in his 80s and he said his family doesn't want the hassle of going to refinance it in two or three years' time from a bank.
So I did explore the vendor finance. It didn't suit them.
Mm-hmm.
I could have gone down and got a personal loan, but then I would've had to pay higher interest.
Yep.
So this one was the next best option for me, was a seven-month settlement. You increased the value of the property for me in the meantime by getting a better lease on that front- Yep
shed.
Yep. And he's motivated to, to do
it. Yeah, you, you lock in your estate planning and you got all the money there for your kids, and, uh, you lock in your 50% capital gains tax discount.
Fantastic. Fantastic. All right, let's look at another one. We've got the, the Roseneath JV deal. Tell me about that, uh-
Yeah, so when we did a, a podcast on, uh, truck depots and industrial outdoor storage, I, I briefly mentioned this one, um, uh, $340,000 purchase, uh, 42 grand a year rent, 12% rental return.
Now-
Wow ...
when it comes to financing, like, I didn't have one cent to put into that deal. The banks wouldn't lend on it. There were month-by-month, three month-by-month leases with three different yards with industrial outdoor storage. I didn't have one cent to put into a deposit. So one of the creative financing strategies I used was I went to my ex-wife, and I bought her a beautiful penthouse, cash, when we separated.
"How about I introduce you to my finance broker and you get a little line of credit or loan there? Can you get the loan and we'll put that as a deposit for this property up here paying 12% rent?" I promised her that I would give her a guaranteed cash flow benefit by borrowing money at 6.5%.
Mm-hmm.
And I promised that our new entity would pay her 8% interest.
So she's borrowing at six and a half, I'm paying her eight. She's got a guaranteed 1.5% profit there, and we'll go 50/50 in whatever capital growth we get in. We'll buy it in a unit trust, 50/50. And now what, what happened at that time is because the bank wouldn't lend it, I got a mate of mine to lend us 75% on that property.
She put in 25%. I think it was about 85 grand or something she had to cough up.
Mm-hmm.
I'm giving her a guaranteed preferential return where she's making a guaranteed 1.5% cash flow, and my mate's lent us 75% on that property. Now, it's nine or 10 months down the track now. He wants his money back next month.
Yep.
So what I've just done is I've just gone to the three tenants, and I now have signed up three-year leases for all three of those tenants, and now the banks will do a lease doc loan I've paid $1,700 for a valuation, and the valuation just nine months after purchase, or 10 months, it's come in at 440.
So we bought it for 340. The valuation, which as you know quite often conservative, has come in at 440. Mm-hmm. So as well as giving my ex-wife a 1.5% profit on the money she's borrowed, we've just made $100,000 from thin air, putting in not 1 cent of our own money into a deal. We've just made 100 grand with no investment whatsoever.
We get-- the bank will lend us 50% on the new valuation of 440, which is 220 grand. I've got to cuff up- cough up another 35,000 cash to pay out that private lender, 'cause he lent us 75%. Mm-hmm.
Yep.
So all I've got to come up with is 35 grand now, and we'll be paying 6.5% interest on a property.
That's, that's-
We've just gone up-- We've just made 100 grand from thin air with $0 of our own money into it, and we're getting 12% gross rent.
We're paying 6.5% interest going forward.
Wow. Wow.
99% of investors would not think creatively enough to do that deal. I didn't put 1 cent into that deal.
Yeah.
My wife didn't put in 1 cent either. She borrowed the 85 grand. We've picked up over 100 grand with not 1 cent of our own money-
Yeah ...
into the deal.
I've got a couple of things to say, but the first thing I wanna say to our viewers or our, our listeners out there, I wanna challenge you. If you think you've got a deal out there that you cannot finance, talk to Andrew.
Mm.
Give him a call. This is what all this is, is actually about. He'll be able to think creatively.
You-- I, I know there'll be a lot of you out there thinking, "Well, how the hell am I gonna think up a, a scheme like, like that? How am I going-- I don't have the, the knowledge, the experience, um, the creative thinking to be able to come up with ideas like that." Well, guess what? That's half the reason why Andrew wants to do this podcast, because he wants to talk to people.
He wants to share his knowledge. There may even be a JV there. Um, how would you like to be doing a JV with this guy who can think like, like this? So, uh, I challenge you, if you're out there with, with deals that you don't think can be done, give Andrew a call. Secondly, I wanna push you on Let's call it rich mates who have money to lend privately Mm.
How did you f- how do you f- how did you find these people? Mm. Are they set up to, you know, are they openly out there telling people, "I've got money that I'll lend to people I trust," and put in, and put in, put in all the right paperwork- Mm ... with, understand that it's not just a, you know, here's the money, a handshake, I, I want it back.
It, it's all done under legal, proper paperwork. But a lot of people will be thinking, "Well, A, maybe I don't have rich friends," or, or, "B, I do, but how, how would I ever go and ask them to- Mm ... to, to borrow money?" So I want you to explain how that's come about, and how someone out there who may have someone who's got money-
Mm
on how to approach them and how to bring that up.
Okay. Well, there's gonna be a mixture of private money lenders, uh, out there that you can use. Now, some of them are in the business of private lending. That's what they do. But most of the people there, uh, are not, uh- Mm ... in the business of private money lending.
This is
what I'm interested
in. The first, if we go to the next deal when, when we go through it, I'll, I'll talk to you about, uh, two deals that I've done with a mate of mine who I knew had previously lent someone some money to purchase property. So I knew that he had done a private money loan before.
That he was
open to that.
I k- I knew, I had a very strong relationship with him. He used to be a real estate agent. He understands property, which is probably a very good starting point for someone who might Be willing to lend money. If they've got a good understanding of property, it's probably a pretty good start, and the people that have lent me money are real estate agents, mates of mine who understand property.
Now, there's probably a plenty of wealthy people that aren't in the real estate industry that would be happy to do private money lending, but for me, my network of friends, a lot of them are in real estate, and that's where I've, I've sourced my loans from. Now, it's just very important that you learn how to sell private lending to these people so that they trust you on a deal.
So first of all, obviously they're getting 4 or 5% in a term deposit, and if you can offer them 8, 9, 10% interest, they're gonna double their returns. You need to overcome the fear factor of losing money, so if you can educate them that you will offer them a first mortgage security just like a bank would have to protect themselves, um, the benefit there is if y- and you tell them, "If I miss one payment, you can go and sell the property on me and get your money back."
That's what you can do when you've got a first mortgage payment.
Yep.
Now, it's not quite that simple. You might have to give a, a notice or two to say, "You're in arrears, and hurry up within 14 days or I'll sell it on you." Yeah. But if you got the first mortgage, you're protected. Secondly, I'm going to sign a personal guarantee so that if, whatever reason, you don't recover your funds, I've got a personal guarantee you can sue me for the difference.
And by the way, I'll contribute up to $2,000 of your legal fees for your lawyer to prepare the personal guarantee and the loan agreement, so that's not gonna cost you anything extra to get all this, uh, documented. All,
all of... Yep.
If there's a dwelling on the site, I'll give you further security by taking out an insurance policy and list you as the interested party on the insurance policy.
So if that building burns down, you'll be paid out, and you're gonna be covered from that perspective. So you've, you've got all bases covered.
Yep. But, uh, that... And that's great information to have. So you're, you're giving them the security and, and, and explaining all that to them so- Mm ... their risk is minimal to, to none, and that's what they, they're looking for, and they can make more than, you know, what it would be in a, in a term deposit.
But what I have worked out through you explaining how you've used these, they're, they're usually much more time-sensitive deals, aren't they? They're shorter term. Mm. Usually short term based on what you're telling me-
Yes ...
in order to bridge a gap to get to a, a, a more, um- Yeah,
that's
exactly right
standard, um-
That's, that's exactly
right ... institutional loan.
That's exactly right, because as a borrower, I don't wanna be paying higher interest rate than what I need to. I wanna get a deal done. If I, I see a great deal, I wanna buy it, I need to fund it, I'm happy to pay a little bit higher interest for a sh- a short time, usually 12 months, and then- Make sure that I get a bank loan at the end of that 12 months so I can revert back to the lower 6.5% interest rate
I'm gonna use a term that people probably do know, um, but this is effectively what you're doing with a private person.
You're getting a bridging loan
That's exactly right
It's a bridging loan- Yeah, it is ... to, to, to, in order to get a whole set of things, whatever that is- Mm ... um, happening within a certain period of time. They make money on it. You get to a point where you can finance it through a, a, uh, a- A bank ... a bank, and, um, you've, you've just explained how you give them the security, um, of, of doing that.
So, uh, incredibly valuable advice to, um, to anyone out there who thinks they, you know, uh, uh, where the bank says no
Yeah, well, we did another podcast, Adam, if we go onto a couple of other examples, where I bought a, an empty church, um, a couple of years ago. Yep Same thing, bank would not lend me the money-
Mm-hmm
and I got a mate of mine to lend me 75% of the value of the church, and then I later flipped it for a couple of hundred thousand dollars. Um, that same mate, uh, used the proceeds of that and lent me money on 1 of 90 Lawlers Road, Helidon, which is a 15,800 square meter industrial land site, which I could not get a bank loan on.
The bank said, "No, Andrew, there's no income from that property. There's no lease there." It's a development site, and I couldn't get a loan. But because I knew it was a great acquisition, I didn't use the lack of finance as an excuse not to proceed. I said, "How can I finance this?" So I went to that same mate who lent me on the church.
I said, "Hey, will you lend me 70 or 75% on this industrial block of land? I'm going to get a development approval for a truck parking depot or industrial outdoor storage facility, then I'm gonna rent it out. I'm gonna go to a bank, and they w- they will then lend me at least 50% loan on that, uh, development once I've built it and got a A grade tenant in there."
Now, that one year has just expired, and unfortunately my town planning team have not been able to get a development approval in time, so I have just extended that loan with my friend for another 12 months, uh, because he was in a position to do that. Um, and the town planning process has been a lot more painful than I thought.
Um, and when I do get that approval I'll build the truck parking depot, I'll rent it out, and I'll go to a bank. Now, if my friend hada said, "Oh, Andrew, I want my money back"-
That's my next question ...
like he, like the other- Yep ... mate did with this- Yep ... um, one up in- Yep ... Townsville, then I woulda had to go to another private lender, uh, and refinance it or come up with some cash to pay him out.
Okay. But you've got your confidence that you can, you can do that. Mm. How, how do people get a network or, or how do people source these private lenders, you know? Th- there'll be people listening thinking, "I don't have any rich mates."
Well, it's an interesting philosophy. Like, there is some, um, uh, one-liners, uh, in real estate, uh, development and investing along the lines if, if you find a great deal, the money will come.
Yep, love it.
Sort of true, but it's actually a lot easier and a lot more comforting if you build relationships first. Go out, talk to people, and say, "Look, this is what I do. Will you lend me money on this? If, if I find another deal in the future, uh, will you lend, lend me money on a 12-month loan if I find the right deal?"
If you've got those relationships there, and I have a, a handful of very trusted relationships there that I can call on because I've built those relationships over time. So-
Yep ...
my advice is don't rely on that statement, if you find a good enough deal the money will come, because usually you've got a short 21-day finance clause or something along those lines to secure that finance.
Yep.
And you wanna make sure that... I, I've got people now, if I found a, a $10 million property tomorrow and I had no money, if the deal was good enough, I've got friends I can call now that would say, "Yes, Andrew, we'll work out a way to fund it."
Yep.
Because I've, I've built the relationships. Yep. Yep. They've gotta trust you that you're good at what you do, you know what- Yep
you're talking about. And they'll look at the deal itself. They're not gonna look at my ability to repay.
No.
If the deal stacks up and it's strong enough-
Yep ...
there'll be someone there to lend you the money, but it's best to build those relationships now.
Yep.
Don't just hope that someone will lend you the money.
At the, at the time. Well, that brings me onto the next way of looking at things. That's obviously, you know, private, um, uh, private finance, but what about vendor finance? A lot of people don't think about, you know, what opportunity, uh, uh, are you talking to, are you talking to the person- Mm ... selling the prop- selling the, the asset?
Yeah.
Uh, uh, are you ex- have you looked at what, what they're trying to achieve? Mm. Um, you know, are you... If banks aren't lending to you to buy it, they're not lending to anyone else to buy it, and guess what? The seller still wants to sell, don't they?
Yeah.
Think about that for a minute. And you've, you've, you've utilized that many times.
Well, I've, I've bought potentially- 10 to 12 businesses using vendor finance, getting the seller to lend me the money, and I pay them off over two or three years. In real estate, um, I- it's less common, but it's definitely doable. Um, I tried that approach with the, uh, property up at, uh, Hervey Bay, uh, three days ago, but the gentleman didn't wanna go down that track.
But I did do it just three months ago on another, uh, 10 acres of industrial land up at Longreach. Yep. The owners of that property were moving out of town, young, young couple, and they desperately needed $80,000 so that they could use that as a deposit to buy a house in the other city they were moving to.
They were moving right now.
Sure.
They needed $80,000. Yeah. So they had this industrial block of land that was empty. Banks won't lend on empty industrial land that's not leased. And I said to them, "Well, look, how about I'll give you your 80 grand? I'll fix your problem- You can go shopping for your house right now, which is the most important thing in your life for you and your young family.
Yep.
But you lend me the balance of the money, and I'll pay you back in three years' time. Once I've built this industrial truck parking depot and got a tenant, I'll go back to a bank and I'll give you the rest of the money in three years' time." Now, they came back and said, "Well, we'll do it if you can pay it back in two years."
So I agreed on a two-year vendor finance, and I said to them, "Well, look, you're only gonna get 4% in a term deposit. I'll offer you 5% interest."
Mm-hmm.
And they agreed. 5% interest, it's cheaper than a bank loan for me.
Yep.
I don't have ... I've got two years now to get a development approval.
Yep.
And that uplift there, I'll either sell the site or I'll tenant it out and go and get a bank loan.
And again, 99% of people would not have bought that property because they couldn't get a loan for it, unless you got the cash to buy- No ... 10 acres of industrial land. No.
And again, we're, we're looking here at a win-win, which is what I think, uh, y- you sell yourself short on, Andrew. Mm. Your ability to think-
Yeah
of these, um, scenarios and how it actually works for, for everyone, and you've just turned into ... Y- you've just created a deal that's given them exactly what they needed, and you a far better deal than it would've been had you been able to go to a bank.
Well, the interesting thing is most people when I talk like this will probably think, "Well, why would s- a seller agree to lend you the money to buy this property that they're selling?"
Now, I can tell you now that a seller will never lend you the money unless it's in their interest as well. So you've got to find out what their needs are, and if you can help them, vendor finance is on the table. And I'll tell you what, going forward for the next few years, it's gonna become more and more useful as a strategy because it's gonna get harder and harder to get a bank loan with, in this increasing interest rate environment.
Absolutely.
No negative gearing Private money lending and vendor finance, uh, is, is, is an increasing opportunity in coming years.
Yeah. All right, let's, let's pull this all together. I mean, these strategies are powerful. They're, they're, they're, they're incredible really when you, when you, when you think about them and, and-- But what are the risks?
What do people need to get right before, you know, attempting to get finance from anywhere else other than a, the, the standard institutional loans?
Well, the most important thing is you really, really need to be educated and back your own ability to locate a good deal. If there are two really, really important skillsets you need to have, one is you need to be able to find a great deal, and secondly, you ne- need to learn how to creatively finance a great deal so that it doesn't slip through your fingers.
Now, they're my greatest skillsets. I'm not very good at many things, honestly. I can hardly change a light bulb. I don't know anything about mechanics. I'm not very good at a lot of things, but I can sniff out a good deal and I can-- I know how to think creatively about financing them.
Yeah. You, you're strategic in your thinking- Mm
uh, well, not only finding a good deal- Mm ... but h- then how to make it happen.
Yes.
They are your two superpowers.
Yes. You need to be able to add value and, and get that property to a point within 12 months where you can refinance it.
And that's your, that is your superpower.
Yeah. There's no point paying 10, 11, 12% interest on a private money loan for a property that's generating three, four, five, six, seven, eight percent rent because you're running at a loss.
So-
Yep ...
private money lending, vendor finance is typically, in most cases, a short-term arrangement until you can get long-term funding.
Yep.
But if, if you just walk away, I, I, as I said, I bought six or seven properties last year, none of them with a bank loan.
Yep.
And let me tell you, every one of them are deals of a lifetime.
Yep.
Every one of them And most, 99% of people would walk away because their broker said, "We can't get you finance." And even my broker said, "Andrew, you need to stop borrowing money. You can't get a loan anymore." Even my broker said that to me.
Yep.
But I don't listen to the broker. No. I go out and find a way.
But what's interesting to me, Andrew, is that they are deals of a lifetime because other people can't get them done.
Exactly.
That's what makes them the deal- Exactly ... of a lifetime.
Exactly.
Um, and that's what makes you so, so incredible in what you do. So a few takeaways here for, for anyone listening to this.
Um, lender relationships. Absolutely. Make sure you start talking to people.
Absolutely.
Um, build relationships with, um, with people who are in the same... Which is what this podcast is actually all about. Mm-hmm. Um, jump on. J- put your email in, get the, the newsletter. Um, talk to Andrew. He wants to meet people who wanna, wanna do property deals, who are in property deals.
He loves this stuff, as, as if you couldn't tell. Lender relationships, all right? There's one sitting right next to me, okay? Mm-hmm. There's, there's the first bloke you should actually be creating one with. Okay. Uh, legal structures. Have a good accountant, have a good lawyer- Mm ... um, who can put together, um, the, the, the documents that would allow private funding to, to take place.
Exit strategies and buffers.
It's all there.
It's all there. All right. I'm gonna give you a rapid fire finish off here, um, to finish off this ep- e- episode. Best negotiation lesson from this episode?
Don't give up when the bank says no.
Perfect. Most underrated strategy that's out there today
Private money lending, it's more, uh, it's more likely than vendor finance.
I'd say private money lending
What creates more wealth, buying well or structuring well?
That's a tough one, but I think buying well
Okay. What deals excite you right now? What's the best asset class to go after?
Look, uh, uh, in all honesty, I'm gonna turn that around. It's not the asset class I'm chasing.
It's always gonna be commercial property, but-
Yep ...
I love doing the deal that no one else can do, and the vendor finance one is a classic. People go, "Oh, you can't do that, Andrew." I just did it.
Yep. You've done it before. Yep And as you said, the key takeaway there is- Mm ... working out how it works for them.
Absolutely.
Um, i- it's all tied in, and I've, I've absolutely loved this episode- Mm ... because you've, you've, you've blown my mind. It, it's... Well, guess what? If the banks aren't lending, they still wanna sell. Mm. They're not gonna lend to anyone else. You're, you're actually, there is the deal. There is the op- the opportunity right there.
The minute you can't get finance on something-
That couple would be renting now. Yeah If I didn't go to them and say, "Hey, why don't you, uh, offer me vendor finance?" Yep, yep ... they wouldn't have been able to buy their family home
The minute a bank can't lend, there's the opportunity. Mm. There's where the deal of a lifetime can suddenly spring up, because you can work with the seller who wants to sell, um- Absolutely
or a private lender and, and suddenly, bang, you can, everyone can walk out, um, you know, making, making a good quid.
Yep.
Fantastic.
Creative, creative financing just is, uh, gives you the opportunity to buy properties where there's problems that other people can't solve.
Yep.
It might be an empty commercial property.
It might be a development site with no income. It might be just that you can't get a, a, a personal loan from a bank. Um, creative lending allows you to buy deals that other people can't buy-
Yep ...
and helps sellers sell a property that otherwise they can't sell.
Yep. Fantastic. Look, this has been one of the most practical episodes we've done.
It, it's actually probably one of my favorites to be, be absolutely honest, because we've done a number of other episodes where Andrew has explained that he's gotten private finance. He- he's used the term, "Oh, mate, lend me some money." Now, I think a lot of people might have thought, "Well, I don't have rich mates."
Well, guess what? This is the one where we've broken all that down and explained exactly how it's done and, um, and why it's such an amazing idea to do to create opportunities and to create the deals of a lifetime. When the banks say no, it doesn't mean the opportunity is gone. In fact, it probably means the opportunity is better than ever.
It just means you have to think differently and h- and work on how to structure it, and guess what? Here's a man that can help you do it. If you've got value from this, 'cause I know I certainly have, please do like the show, subscribe on, um, on YouTube, watch the other episodes, reach out to Andrew. Uh, um, I think it is hello@andrewwrightproperty.com.au is the email.
You'll find his phone number there. He's open to talk to, to anyone. This isn't about selling courses. This isn't about, um, you know, uh, anything other than creating a community of like-minded investors who want to, uh, work to- together, help each other, advice, maybe even JV deals. Who knows? But, uh, Andrew, a cracking episode, unbelievable value you've given to people there.
Thank you so much.
Uh, the other thing I forgot to say, Adam, before, is I hate going to banks for a loan. There's so much night- nightmare with paperwork and torture and questions, and it's just so difficult and so stressful dealing with a bank. So a lot of these strategies, you, you also avoid that.
Yep.
A lot of these private lenders, they'll t- make a mind up within two days-
Yep
instead
of two
months. Yeah And just get the right paperwork in place- Yeah ... and away you go.
Yeah, it's so much easier.
Fantastic.
Mm.
Fantastic. Andrew, thanks very much. Thanks, Adam.
Thanks for listening to the Andrew Wright 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.
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