How I Bought 10 Acres of Industrial Land With a $1,000 Deposit

Andrew:: I managed to buy that site, 10.3 acres of industrial land in a three-way joint venture to help my kids out. We bought it with $1,000 deposit. We're going to get a DA approval for a massive uplift and skyrocket my kids' net worth.

Hi, I'm Andrew Wright, principal of Professional Southport, and this is the Andrew Wright Property Podcast. I've built a multimillion 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.

Adam:: Hello and welcome back to the Andrew Wright Property Podcast. Now, today's episode is a fascinating one. Andrew has secured a 10.3 acre industrial investigation zoned site in Longreach in a three-way joint venture with his two children. Now, what makes this deal unique is that there is no bank finance. There's only a $1,000 holding deposit, vendor finance at 5%, environmental and infrastructure constraints, a development application that requires state government approval. And if you listen to our last episode, you'll know all about what that means. So this is a creative finance structure and strategic value-add thinking deal in regional Queensland, and I can't wait to unpack it with you, Andrew.

Andrew:: Awesome. I'll tell you something that's even more exciting than that, Adam. I just last week inspected this billionaire's house that he's just listed with our office, and I'd love to just insert a little one minute video of that, that my son took when we were down there just last week having a look. 44 acres of land right on the private banks of the Coomera River, a monstrosity house, 10 bedrooms, 11 marbled bathrooms. Indoor swimming pool, gym, sauna, unbelievable equestrian facilities, boating access to the Broadwater — it is unbelievable. Can we just insert that? This is a property podcast, has nothing to do with my deal, but it's —

Adam:: Wow.

Andrew:: Unbelievable.

Adam:: Can I ask a couple of questions? Because I've never — what price are you listing it at?

Andrew:: There's no price on it, but expectations are that it'll probably be worth around the $30 million mark.

Adam:: Wow.

Andrew:: Paid $6.8 million for it quite a few years ago, and that gentleman, he's a billionaire. Everything he touches goes to gold. It wasn't that long ago, a few years ago, he bought that part of Marina Mirage at Southport for 30 million. Sold it for 60 million a couple of years ago. He bought the original site of those three Jewel towers in Surfers or Broadbeach. He doubled his money, flicked it on to some other developer who went broke building them, but everything he touches turns to gold.

Adam:: Can we get him on the podcast?

Andrew:: He doesn't speak English, not a word.

Adam:: Can we use AI for translation?

Andrew:: Well, my employee speaks his lingo, so I could possibly ask her because she translates everything to him. She speaks five languages and she's one of my part-time sales agents.

Adam:: I will talk to you about this more, but so, okay, that would have to be a record if you achieve anything even in that zone of 30 million.

Andrew:: I don't sell a lot of prestige houses, but I'd imagine that it'd be close to the highest price for a residence. Probably be higher than all the Hedges Avenue ones I'd imagine. I don't even know what the highest price on the Gold Coast is for a house, but —

Adam:: Okay. So it's up there. So if anyone's listening and you're in the market for a —

Andrew:: If you've got a bit of pocket change lying around.

Adam:: And you're looking for just a, you know, a little holiday home on the Coomera. Well, you may — who knows if you could subdivide that into ten one-acre blocks of waterfront land, it could even be an investment. It's not necessarily just a billionaire's residence.

Andrew:: Here we go again with your — this is how your brain works. I'm sorry, isn't it?

Adam:: Okay. So if you're a developer out there. Alright, well look, I'd love to put that video in. So if you are listening to this podcast, jump on YouTube. There'll be a video of just a little handmade one done on the phone of what a serious prestige property looks like. But alright, let's get to this week's deal. So I've set the scene — $1,000 holding deposit.

Andrew:: Yeah.

Adam:: Vendor finance at 5%.

Andrew:: Yeah.

Adam:: Industrial and environmental and infrastructure constraints. Development application that's gotta go through the state government.

Andrew:: Yeah.

Adam:: Alright, so what exactly did you purchase?

Andrew:: Okay, so it's 4.1 hectares of land, 10.3 acres of land. The zoning up there is called industrial investigation zone. So what that means is, once again, the council need industrial land up there. So they've designated this rural site to be future industrial use. But you have to actually — you can't just use it. You've actually gotta fill in a form, pay some fees, get consultants involved and lodge an application for a material change of use. And that's what we're going to do.

Adam:: Okay. So it's up at Longreach? Where the hell is Longreach? Like, I have no idea.

Andrew:: I know it's out in the middle of nowhere. Never been there. It's in the middle of nowhere.

Adam:: It's Queensland. Qantas museum or something there.

Andrew:: I believe, but yeah, there is a real possibility that I may never go there.

Adam:: Alright, but has it got highway frontage?

Andrew:: Yes. So the address of the property is lot 151, 10311 Landsborough Highway, Longreach. So that's the address of the property.

Adam:: So if you're driving past, have a quick look, send a photo to Andrew because he'll probably never go there.

Andrew:: Yeah, no. Well, you know, we joke about it, but you know, you can't — it's too far away, isn't it?

Adam:: Okay, so what was the purchase price?

Andrew:: $285,000. Advertised at $350,000. But once again, sometimes when you have sites that have challenges, no one else wants to buy them, and certainly in this case, no bank would lend money on it.

Adam:: Why is that?

Andrew:: Well, there's no income. In fact, you're not even allowed to get income on the property before you spend a year going to council and getting approval to generate an income. So no one's gonna lend you money on something that has no cash flow. Especially in a regional area. If it was in Brisbane city or Sydney, banks might be happy to lend on it, but not out in the sticks.

Adam:: Okay. So you've put down only a thousand dollars deposit. This was done back in December.

Andrew:: December, yeah.

Adam:: Due to settle in March.

Andrew:: Next Thursday, March the fifth.

Adam:: Okay. And so how have you financed it?

Andrew:: Well, as I said, $1,000 deposit, 90-day settlement, and because I couldn't get a bank loan, I educated the seller's agent and said, listen, if you wanna make a commission on this, you need to educate your owners that no one else is gonna be able to get a bank loan to buy this. How about you ask them if they would consider lending me and my two kids the money so that we can finance it.

Because at that time, I actually three months ago didn't actually have any money in the bank. I couldn't finance it. I said, how about you lend us money? And they came back and said, we'll lend you $205,000, but the sellers need $80,000 because they're moving out of town and they need to buy a house. They need $80,000 as a deposit to buy their next house.

So I said, okay, we'll give you $1,000 now, and in three months time I'll give you another $79,000. And you lend us $205,000 for three years at 5%. They came back and said, we'll only lend you for two years at 5%. I said, no problems. Two years should be enough time for me to get approval, an increase in the valuation, and then go to a bank and say, this site can now legally be used for this. It's worth a lot more money. Lend us some money.

In the meantime, I'm gonna teach my kids a whole lot about property development. Help them make a heap of money because the only reason they're doing this is because for the last two years they've been saying, dad, can you find us a house to buy on the Gold Coast to live in? Find us something that looks like a good deal. Haven't been able to find a good deal. It's also expensive. And even though they've saved $50,000 each deposit, my finance broker hasn't even been able to get them a loan anyway because their serviceability.

Adam:: Yep.

Andrew:: Even though they got the $50,000, they can't get a loan.

Adam:: So instead of them waiting five years, I wanted to help them out now. And instead of doing this deal myself, I've asked them to — I can, it's less money I have to put in too. My kids are putting in $45,000, I think. Not all of their savings, but most of it.

Andrew:: And we go a three-way joint venture.

Adam:: Okay. And you've structured this a little differently, haven't you? You've gone with a unit trust, a corporate trustee, and splitting the units three ways.

Andrew:: Yeah. Well that's not different to any other joint venture that I've done, for example, with my brother and my ex-wife. I've done a couple of these. But if someone's going in a joint venture with you, then they need a certain fixed distribution of the profits, and that's where a unit trust comes in. So the viewers can talk to their accountant and talk to their lawyer about all this sort of stuff.

But generally in a JV, most of the time I would set up a unit trust. My kids each have one-third of the units and I own one-third of the units as a corporate trustee there. And the other benefit of doing it that way — I specifically wanted to do it that way and not jointly with my two kids — is in Queensland, if they buy a commercial property in a unit trust, they can preserve their entitlements to qualify for the first home owner's grant.

Now, if I'd have gone in and helped my kids buy a townhouse or a duplex on the Gold Coast, and we go a thirds each in their name, or an investment property in their name, they wouldn't then be able to go and qualify for the first home owner's grant for themselves later because they've already previously owned a property. But by doing it through a unit trust, it's perfectly legal to buy a commercial property in a unit trust and tick the box ethically and truthfully, saying I've never bought a residential property in my own name and qualify for the future first home owner's grant.

Adam:: Very smart.

Andrew:: So I'm protecting that interest for them.

Adam:: Very smart. Fantastic. Alright, let's talk Industrial Investigation zone. What does that actually mean and what does it allow you to do?

Andrew:: I dunno. I still haven't even employed a town planner, Adam. I've spoken to one town planner, three or four phone calls. I've rung the head of town planning at the Longreach council twice and had some discussions with him. But basically, like the name implies, they want it to be used for industrial use, but the purchaser needs to apply through a development application to use that site for something. And I'm now thinking about what that something is and I've got a couple of things in mind which we can discuss.

Adam:: Yep. Today for sure. So you're talking about an MCU then? A material change of use.

Andrew:: Yeah.

Adam:: What are your ideas? What do you wanna do with it?

Andrew:: Well, it's right near the highway and —

Adam:: It's gonna be truck parking, isn't it?

Andrew:: Truck parking was my first thing, which that's my sort of passion at the moment, and it is right on the Landsborough Highway. Now, my understanding, and I may not be a hundred percent right here, is most of the trucks that go from Brisbane and Townsville right up to Darwin actually go through Mount Isa and they don't actually go through Longreach, but about 20 or 25% of the trucks do. So there is still quite a few trucks that go on that Landsborough Highway.

Yes, I did find out how many per day, but I've forgotten. But there are trucks that go on that route up to Darwin. The biggest challenge with that site at the moment for using it solely for truck parking is that the highway has a speed limit of 100 kilometres an hour. And for a truck to slow down and turn into a truck parking depot is a problem because it messes up all the traffic.

So my architect has told me that I will probably need to spend $200,000 by building what he calls a deceleration lane and on the other side an acceleration lane so the trucks can speed up to the 100 to merge in. And that's $200,000 extra money that's gonna come off the bottom line. So I don't know if a truck parking depot is going to be the best way to go.

Adam:: Can I ask a question? Because we've done a lot of episodes around truck parking depots being that that is your big thing at the moment. Now, this may be a bit of a silly question, but why would you want to be parking trucks way out in the middle of nowhere? The driver's gotta get somewhere. They've gotta stay somewhere. Why do they even have truck parking in the middle of nowhere? And where do the drivers go?

Andrew:: As we've discussed on a couple of podcasts, the key for truck parking facilities is that the truck parking depots need to be either close to a port or close to a major highway, which is where they travel. So the answer to that question comes down to compliance with legal requirements. Of course, they'd rather stop in at the Gold Coast and go to the casino for the night, but once they travel so many hours or so many kilometres, they legally in their log have to sign off and say, I'm now having a stop.

So if that route to Darwin from Brisbane is so many hours, they've gotta stop. Driver safety. They're not allowed to go and crash because they fall asleep at the wheel.

Adam:: So they're just gonna have to stop. They're gonna jump in the sleeper, have their rest break and then just keep going.

Andrew:: Yeah. Look, this is how sick I am. I was actually listening to a trucker's podcast the other morning in the gym because I'm trying to learn myself the answers to these questions you just raised. And the trucker was talking about a current two-year litigation battle from a trucking transport company where one of his drivers actually killed someone through an accident, and it was alleged that he was driving too many hours and wasn't stopping in time, and he was falsifying his logs.

And the accusation was that that employer is guilty of misconduct because they didn't check up on their driver and the driver was driving too many hours without a rest. So these are the reasons why truck parking depots —

Adam:: And I guess with your gates and your codes and cameras and things, you are able to actually verify to employers that these guys are actually stopping and having the breaks when they need to. It's verifiable.

Andrew:: Yeah, that's exactly right.

Adam:: Great. Alright, so if this doesn't turn out to be a truck parking depot, what other plans could you possibly have?

Andrew:: Well, the first thing that comes to mind, and I've sat in my boardroom with my two kids to explain this, is that 10.3 acres — trying to spend money fencing that and putting hardstand — is a multi, multi-million dollar project. So my first thought with my kids is that we can't afford to do that, or they can't afford to chip in one-third each. They're 19 and 21.

So my first strategy with them is I said, look, why don't we explore just keeping half of this site, five acres for a truck depot? Why don't we get a development approval for a roadhouse service station? We won't build it. We'll just get approval for it. Because people pay way too much for service stations with a 4% cap rate, 4% net returns. I don't wanna build it and hold it because the returns are too low, but why don't we get development approval for a roadhouse and we'll flick it? We'll subdivide the site in two, we'll flick it, make a heap of money, and that money can help us pay for building the truck depot.

Adam:: Love it.

Andrew:: That's my plan. That's plan one. Now, since then, I've had a discussion with the manager of town planning at the Longreach Council and he said, oh look, Andrew, someone else has already come to us with that idea five or six years ago. And the constraints of that site are that possibly you might be forced to extend the main water supply all the way out to that site because if you build a service station, petrol is flammable. Therefore the firefighting requirements might need a heap of water to be able to combat a fire at a service station.

So it could be — back in those days, he said they actually had a quote, it was $600,000, five or six years ago to extend the mains water there. So it may well be that that's not feasible, unless there can be an alternative solution proposed by the engineers with a whole heap of water tanks or something like that. It may not work.

So my next plan to minimize risk, I'm now leaning just in the last couple of days — I'm actually thinking maybe I might just break up that 10-acre site into five two-acre parcels of industrial outdoor storage or truck parking depots and break it over five stages if the council allows it. So I'll just do a two-acre truck parking depot initially in stage one. And then if I find a tenant who'll rent out another two acres, I'll build a second one, a third one, a fourth one, a fifth one, and stage it over a period of time when we have the guaranteed rental income to justify the expenditure.

And over that period of time, my kids will develop a higher capacity to borrow some money and put in one-third each. If not, I'll lend it to them and help them out over time.

Adam:: Yep. What hurdles do you think you could potentially come up with, you know, with the state government approvals? I mean, we did talk about this a lot in the last episode, and they can throw some curve balls.

Andrew:: Yes. So I have no idea, but I have identified two already and the first one is exactly what the manager at the Longreach Council told me about the likelihood that you'll need to provide mains water supply in the case of fire.

Adam:: Yep.

Andrew:: So the firefighting department can get out enough water to put out a fire if the underground petrol tanks at a service station blow up into a big fire. So that's the first thing. But the second thing, which is going to be more an absolute certainty I'll have to overcome, is the 100 kilometres an hour speed limit on that state-controlled highway.

So there is no doubt that we'll have to get a traffic report done on how trucks can safely slow down to turn into this site without affecting the other traffic. My understanding is the department involved is called TMR, which is the Department of Transport and Main Roads. And my understanding is that initial discussions with them five or six years ago from a previous developer came to the conclusion that they probably would agree to reduce the speed limit to 80 kilometres an hour because it is actually coming into a 60 kilometre an hour zone a little bit up the road coming into the main town. This is only a kilometre out of town.

So they've already agreed to reduce it down to 80, but that may not be enough. It might need to come down to 60 to safely allow those trucks to come in and off. So I either need to build a deceleration lane on my land — like have a little turnoff where they can come in and slow down and an acceleration lane — or we need to argue that it will be sufficient to just widen the existing road a little bit so that the shoulder is wide enough for them just to pull off a little bit and then slow down without having a massive long additional road.

Adam:: Sure.

Andrew:: So I don't know how that'll pan out. It'll be engineers, it'll be town planners, it'll be negotiation. And worst case scenario, if we can't sort that out with compliance and also make it feasible financially, we may have to change the use of that site. It could be just storage for smaller vehicles. It could be for plumbers and electricians. It could be just to store boats, mobile homes, shipping containers or something. Maybe not big trucks that take a long time to slow down. So there might be an alternative use we may need to consider.

Adam:: Just in my own mind — I haven't been out to that part of this wonderful country either and probably never will just like you — but I can't imagine there being a whole lot of traffic on that road.

Andrew:: No, it's mainly trucks. Look, the population there — we probably didn't cover this, but I've Googled the population, it's 4,000. It's actually four times bigger than Helidon.

Adam:: Okay. So there is a couple of people there. If they're travelling out of town or into town, they must be going somewhere a fair way away. It's not like they're just heading to the next suburb or something like that.

Andrew:: Adam, I forgot one of the constraints you talked about. There is one other one and that is that we've talked about the Contaminated Land Register on some previous podcasts. Now this property is actually — it's not on the Contaminated Land Register, but it's on the Environmental Management Register.

That doesn't mean that there's a problem with this site. What actually happened here is that this parcel of 10 acres was actually subdivided from another larger site and that larger site, which extends about a kilometre up the road, actually had some underground fuel tanks there, and therefore that site was automatically put on the Environmental Management Register.

When they subdivided this 10 acres off, because the parent block of land was on the Environmental Management Register, this one inherited it. And the advice that I've got so far from the Longreach council — I chatted to this gentleman again only yesterday on the phone — is that unless I was proposing to build houses on there or something, if it was only for industrial outdoor storage, then it is highly unlikely that they would force me to spend hundreds of thousands of dollars with soil testers to take it off the Environmental Management Register with all the soil reports to say it's not contaminated.

If it's just industrial use, there should be no problem leaving it on the Environmental Management Register. You won't have to remove that. But again, you can see why that may have scared off other buyers for this site.

Adam:: Yep.

Andrew:: So people steer away from that sort of risk. And I'm attracted to risk because I like to overcome problems.

Adam:: Yep. I think that's come through very clearly in this whole series, mate. Alright, talk me through your ideal timeline for the next two years with this, if everything fell — if all the pieces fell the right way — what does that look like for you?

Andrew:: Well, I dunno, but what I can say is that I could only get the vendor finance for two years. So if I can't get this resolved within two years, I'm gonna have to tip in another $205,000 cash in a couple of years. And I don't like — I like to minimize the amount of cash I put in deals because I like to refi and go and do other projects.

So hopefully within two years I can get the development approval to turn it into five two-acre industrial outdoor storage facilities or truck depots.

Adam:: Yep.

Andrew:: There's still a small chance I might go with plan one and have a five-acre truck depot and a five-acre roadhouse slash service station, but the five or $600,000 they quoted five or six years ago to extend the mains is probably a million bucks now and that scares the hell outta me.

So I think I'm gonna be leaning more towards perhaps five two-acre ones so I can stage the costs. And I minimize the risk. I can have five different tenants there instead of one big one. It'll be a lot easier to find smaller tenants than one big one. And it also means if one or two go empty, I've still got two or three tenants paying some rent to minimize the risk.

Adam:: Perfect. Alright, so what made you decide to do this with your children, and do you think more families should be investing together intentionally? A lot of people tend to shy away from it.

Andrew:: I'm not sure that I can answer that question. I mean, it's fair to say that every family is different and I can say that — even though one of the goals of this podcast is for me to meet like-minded people to do joint ventures with — I must say I am very, very fussy going into joint ventures due to previous business experiences. And every other person listening to this should also be very, very picky about who they go into business with.

So if your mother, father, or brother has a passion and skillset around property, then you should definitely consider going into a joint venture. But if they're not in that mindset or skillset, maybe you shouldn't.

Adam:: Sure, sure. So I want to give a final takeaway to our listeners, Andrew. What's the biggest mindset shift do you think that's required for someone when they can't get traditional finance from a bank? Because you've done it multiple times.

Andrew:: Yeah. I'd say step one, try and go in perhaps with another family member or close friend, so that collectively your capacity to borrow money from the bank is there and you can get bank finance.

Secondly, if that doesn't work, go to the bank of mum and dad and ask them for a loan, which I did in 1993. I borrowed $15,000 from my dad at 10% interest rate to buy my first house.

Thirdly, go through the numbers, put in the work, and ask 20 different sellers if they will consider lending you the money. Exactly like I did because I got 20 nos before I finally got a yes to offer me vendor finance on this property. Put in the work.

Adam:: Fantastic. Another perfect example of thinking beyond traditional lending and beyond metro markets. So look, a great story of creative finance, strategic structure, infrastructure diligence and development approval as a real value unlock with this particular deal.

So look, if you have enjoyed this episode, please do give us a follow, give us a comment. Hit subscribe so that you don't miss any other episodes. As I've said previously, this is all about creating a community of like-minded individuals who want to invest in property, are investing in property.

If you'd like to be a guest on the show, if you are a property investor, please reach out to Andrew — [email protected]. And of course, that's the same domain for the website as well.

I dunno what to say. I just love every episode that we do.

Andrew:: Thank you, Adam. I'm learning so much. I'm sure all of our listeners actually are, and I can't wait to unpack another deal with you on the next episode.

Adam:: Well, thank you Adam, and I'm truly grateful that you have actually offered to drive up to Longreach next week and take some photos of that site for me. I really appreciate it.

Andrew:: Fantastic. No chance.

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. Join us. Get in touch through the link in the show notes. I look forward to you joining me on the next episode.