Making $1,570,000 From a $120,000 Block of Land

Andrew:: So I bought the site for $120,000 two years ago, and the projections for the development include a profit of $1.57 million.

Andrew:: Hi, I'm Andrew Wright, principal of Professional

Andrew:: 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.

Andrew:: 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.

Andrew:: The message from today's episode is blunt. You have no excuses. Welcome back to the Andrew Wright Property Podcast, and once again, I'm joined in the studio by the one and only Andrew Wright. And today we are going to be unpacking a deal that happened in a small place known as Hedon Hedon. I was gonna say Hidon.

Adam:: So where, firstly, where is Heli? Uh,

Andrew:: it's the same suburb where I bought that four acres of industrial land in pod podcast number six. So it's, uh, 15, 20 minutes away. This side of Toowoomba.

Adam:: Right. Okay. So rural again. And this, this is a small place, massive

Adam:: population of about a thousand people.

Adam:: Thousand people.

Andrew:: Yeah. Wow. I can't even imagine a place that, uh, that small. All right. So let's, um, let's. Well for why look at a place so small. I think a lot of people listening would

Andrew:: probably think I, I don't even, I wasn't targeting it, but I look at every listing and it just came up and I thought, well, geez, that's cheap Now, there was a reason why it was cheap, because it was out in the sticks.

Andrew:: It was zoned, uh, commercial land and. Any businesses that have been set up in that town have gone broke. All the shops are closed down with such a small population. Um, you can't build a retail shop there and expect any massive number of customers flying through your business. And, uh, that's why the property was considered worthless.

Adam:: Okay, so what was the property?

Andrew:: 2089 square meters of commercially zoned land in the main street, the local. Uh, Gatten shi planning scheme, zoned it as a local center plan or something like that. Mm-hmm. Um, local town center plan and with each, um, town planning, uh, town plan, if you like, they actually have a list of uses that are consistent with that type of land that they want you to, to sort of develop.

Andrew:: Yep. What you need to do when you have a look at those sites is you go through the list on the council website and think, well, can I see any value in this land by complying with these different areas that they'll let you build on there and determine whether you can make any money. So the particular guy selling it was a real estate agent.

Andrew:: He owned the property himself.

Andrew:: Mm-hmm.

Andrew:: His plan for the site was to subdivided into two because there was a road on either side with two street frontages.

Adam:: Okay.

Adam:: He thought he'd subdivided into two.

Adam:: Yep.

Adam:: And after going through the list of. Consistent uses under the town plan. He believed the best use of the site was to build a shop.

Adam:: A caretaker's residents attached to it. So a little shop at the front.

Adam:: Okay.

Adam:: There's a door at the back of it. You open it up and the person lives just

Adam:: behind. Lives behind it. Yep. You see that a, you know, fair few years ago, don't you? Usually with the little one above. The little above

Adam:: or behind is the legislation.

Andrew:: That Right. Is typical with most councils. That's correct.

Adam:: Yeah. Okay. So that was what he had planned to do with it. Yep. He, he had, uh, why didn't he? Progress with,

Andrew:: oh, he, I don't believe he had the money to actually progress it any further. He didn't have council approvals. Um, he had a, just had a hard operation himself.

Andrew:: Mm-hmm. Wasn't making a, a lot of money in business because he wasn't working very hard and he needed to get rid of the site. He wanted to sell it quickly because, um, he was almost unemployed. He wasn't working much as an agent because of his health issues.

Adam:: Okay. Now, when was this, when was this that you started to look at this?

Andrew:: Just under two years ago. I purchased it February, 2024.

Adam:: Okay. And what was your purchase price?

Andrew:: I purchased that site, uh, in a joint venture with my ex-wife for $120,000.

Adam:: Okay. Now was your plan the same as his?

Adam:: No.

Adam:: Okay. What?

Andrew:: No. So part of the due diligence, which I did all within a couple of days, was I logged onto the.

Andrew:: Uh, the, the council website and I read through the list of consistent uses and he'd been looking under a, um, a code that he thought was the best use. But I saw when I went through the list, there was another one that sparked my curiosity and it said multiple dwellings where constructed above or behind a commercial property, similar to the caretakers one, but instead of.

Andrew:: When I looked into it, instead of having a door at the back of the shop opened up to a connecting one bedroom unit for the caretaker leave, it didn't actually define that it had to be attached to the shop

Andrew:: to stay behind.

Andrew:: Yeah, exactly. So I, I explored that and I thought, well, if I buy this block of land, would that block of land be worth a lot more If I could build multiple, separate.

Andrew:: One or two bedroom or three bedroom units on separate title behind the shops not even attached to it.

Adam:: Right.

Andrew:: And that's where I thought, well, maybe this land isn't worthless. Maybe it can be worth something if I explore the different,

Andrew:: so as long as you, so you are thinking, as long as I have a shop on one side, which ticks the box that it needs to have.

Andrew:: Yep.

Adam:: And then on the other side, so on an on the on facing the road.

Andrew:: Facing the road had to be shops. So he had some plans drawn up on both roads. On one road he had three shops and a little caretaker thing attached. On the other side, he had two shops with the door in it, so there was five. He, he'd proposed five separate dwellings on there.

Andrew:: Oh, so, okay. So it was going to be

Andrew:: five shops and five little caretakers units behind it. A task drawer. But each was gonna be. Five, only five properties. But they're actually like one little shop with a one bed.

Andrew:: Yep.

Andrew:: With a door in between and one A

Adam:: and one one and bright. Okay. But you are thinking,

Andrew:: I had plans drawn up for 19 units.

Andrew:: Wow.

Andrew:: Yeah.

Adam:: Okay. How many, how many levels was was that?

Andrew:: What I did was I approached, I'm not experienced as a developer from ground up construction. Yep. So I rang a town planner. I arranged for what they call the pre lodgement meeting with council. I spent a thousand dollars or whatever it was, paying the town planner to come with me.

Andrew:: We sat and spoke to the gentleman at the council and we quizzed him on what multiple dwellings would be allowed on there, and I was very surprised that he basically said, you can build as much as you like. Behind those shops. They don't need to be attached provided you comply with our car parking requirements for each unit.

Andrew:: And provided that you don't go above two levels in height because all of the other buildings in this town are only two levels. Right. So, and we don't want some tall, we don't

Andrew:: want big, some big high rise in the

Andrew:: middle of the

Adam:: middle it down. Right?

Adam:: And that excited me. I straight away thought, well, hang on, there's an opportunity here.

Andrew:: And so what I did was, um. Yeah, I, I paid an architect to go ahead and prepare plans. Um, this is about 90% of the story. There's another 10% we'll get to in the moment, a hiccup that we came across.

Andrew:: Sure.

Andrew:: Um, but I, I've got plans lodged already with council for 19 units on that site.

Andrew:: 19 units plus the shop.

Andrew:: That includes the shops,

Andrew:: that's includes the shop. So I've, I've actually only got three shops.

Andrew:: Yep.

Andrew:: Four one bedroom units.

Andrew:: Yep.

Andrew:: And 12 two bedroom units.

Adam:: But all, all together, 19 all crammed in but with only, with only two levels?

Adam:: Correct.

Adam:: Okay, so does that means some of the units were on top of the shops?

Andrew:: Yes. There were two one bedroom units above the three shops and two little one beds behind the shops.

Adam:: Right, okay.

Andrew:: Then that's building one, and then in building two there are 12 two bedroom apartments. And again, I've done this application. Requesting that they be done in two stages, so that if I can't afford, the bank doesn't trust me to lend me the money to build the whole lot.

Andrew:: Whole lot. If I can only qualify for lending for stage one, I only have to pay infrastructure charges on the first building. And if and when I do the second building, then I'll pay the six figure, whatever the amount is for the infrastructure charges for building two.

Adam:: Sure. Okay. So you've put all the plans together?

Adam:: Yeah. What happens

Adam:: next? Yeah, so we got rejected by the council. Um, and the main reason we got rejected is because the state government wishes to acquire or reclaim part of that land so that they can expand the wargo highway that goes to Toowoomba.

Adam:: Right. And you had no idea about

Andrew:: I had no idea because I made a mistake when I bought that land.

Andrew:: My solicitor asked me if I would like to employ him to conduct further searches, to go through his checklist to make sure I wasn't making any mistakes, and I thought I'd save 500 bucks by not paying him to do it.

Adam:: Right. You thought? No, we're in a tiny little town.

Andrew:: I'll be right. I did the checks. Most of the checks, it's not in the flood zone.

Andrew:: Yep.

Andrew:: It's zoned correctly for what I wanna do. There's no easements there. There's two road frontages there. It's cheap as chips. I can't go wrong. Don't worry about it. I'll save the 500 bucks.

Andrew:: Yep. But that would've, would've brought this to light.

Andrew:: Yes, it was. And, and, and the seller did not disclose that he had received a letter from the state government saying, we wish to purchase part of your land in the future.

Andrew:: Um, so I wasn't told, and these days. Buyers would be protected from that because now we've introduced from one October last year, a seller's disclosure statement in Queensland where a seller's lawyer needs to prepare a document and they need to tell you if they

Andrew:: anything they know.

Andrew:: But at that time, two years ago, that legal requirement didn't exist and I got caught out.

Adam:: Right?

Adam:: Mm-hmm.

Adam:: Okay. So where did that leave you then?

Andrew:: So what's happened now is we've had to write to, uh, an entity called Sara a, whatever that stands for. It's part the state government, um, entity that, um, looks after the, the public roads or whatever, and they've confirmed that they do want to buy part of that land o off me at some stage to expand the highway.

Andrew:: Now, part of the intricate. Process with that is, I can't say, well come and buy it now because I wanna do a development here, but this

Adam:: is what I wanted to explore with you. Yeah. Does that just leave you in in limbo? Yeah. Yeah. You can't do certain stuff there that you want to, but you don't know when. And are they, are they even obliged to actually, go

Adam:: ahead.

Adam:: They're not obliged and so

Andrew:: all it is is a roadblock.

Andrew:: Yeah. I could be sitting there for 10 years and I still haven't got any money back from them for, uh, buying the land. So. The process that I educated myself on and I didn't know, and for the first time I found out is that to, you need to trigger an event, which forces them to buy that land off you now.

Andrew:: And one of the triggers or the main trigger is I need to lodge an application to say, I'm gonna build on that land and you need to tell me no. To prove that I've gone down that track and now I can force you to make an offer to buy that land from me.

Adam:: Right. And

Adam:: that's what we've done.

Adam:: That's what you've done?

Adam:: Yep.

Adam:: Wow. Okay. How did you get that advice? Where did you,

Adam:: well, the town planners had done it before,

Adam:: right?

Andrew:: Because they're buying land. Obviously from multiple other properties along that wargo highway between Ipswich and Toowoomba.

Andrew:: Mm-hmm.

Andrew:: They're obviously gonna expand it, a couple of lanes or something, and they need a bit more land next to the highway.

Andrew:: Yep. Okay. So this, so you've put in your, your, uh,

Andrew:: development application

Andrew:: Yep. And that that's forced their hand.

Andrew:: Yes. And the council has said. Look, we can't consider this until they haven't said yes or no. They've said, we can't consider this until the state government

Andrew:: comes back,

Andrew:: gets involved. The state government has now come back and said, no, we're not gonna let you do it.

Andrew:: So I still don't have approval. Only two days ago, the state governments has finally come back and confirmed which exact proportion of land they wanna buy.

Adam:: Right

Andrew:: now. I've gotta go through another process of employing my lawyer to represent me. To fill in some forms to go to the state government and say, we want you to buy this land office and give us some money for that land.

Andrew:: And I'm now at the same time, independent of that, going back to the uh, Lockyer Valley Council with amended plans for 15 units, not 19,

Andrew:: which will be on the new parcel of land you have once.

Andrew:: It's the same parcel of land, but the back unit where there was the back building, the second building with 12 units will be cut down to eight two bedroom units and steel

Andrew:: 12.

Andrew:: Because, because you've lost that land.

Andrew:: Because they're cutting off a bit of the land,

Adam:: right?

Adam:: Yeah.

Adam:: Okay, so in order for this to go ahead

Adam:: mm-hmm.

Adam:: Um, does the state government have to have bought that land?

Andrew:: No. So I can proceed now. With the local council now that the state, 'cause they've

Andrew:: told you

Andrew:: Exactly.

Andrew:: Defined, they've defined what? It's, they defined land I can't build on.

Adam:: Okay.

Adam:: Now that puts the, uh, the local council in a position where they can approve a development application on the other land that the state government doesn't want.

Adam:: Right.

Adam:: So that's all happening this week. Like we're just about to re lodge the plans on 15 units, not 19 units.

Adam:: Okay.

Andrew:: I don't have approval for that, but my architect and town planner. Based on discussions with the local council, I extremely confident that I will get that approval for the 15.

Andrew:: There shouldn't be any reason Now, if that's the, if the only blockage was the state government and what they needed. Uh,

Andrew:: yes.

Adam:: And you've already spoken to that counselor?

Andrew:: Yes. There, there has been several changes from the council where they've come back and said, oh, that turning circle in the car park is not big enough for the rub rubbish truck to come and collect the rubbish. You need to move this over here. And, and they had to, they had

Andrew:: to tweak it.

Andrew:: Yes.

Andrew:: Yep. But, um,

Andrew:: yep.

Adam:: Okay. So, um, is it too early for me to ask numbers on, on this, on what it's gonna look like?

Andrew:: It's a big guess. And, um, part of the reason it's a guess is, again, this is a. Would be normally considered a high risk development as far as, there are no similar examples of property developments done in that city.

Andrew:: People live in houses there.

Andrew:: Yep.

Andrew:: I mean, even when you go to Ipswich, which is a much bigger city, I can count on my hand the number of unit developments that I've seen in Ipswich. Yeah. Everyone owns a house there.

Andrew:: Yep.

Andrew:: And he. I don't, I'm not, I'm not sure that there is even a unit complex that exists.

Andrew:: There's probably a co, there's some duplexes, but I don't even think there are units. So this is what normal developers would say is a high risk pioneering thing. 'cause there's no proof of concept. No one's actually built units before and made money. But my belief is if I've bought the land for next to zero, um, which is usually a very, very large component of the cost.

Andrew:: Um, I think that it's worth a punt to be a pioneer, right? And my initial calculations at the moment, and I've verified this with no concrete evidence, but with chat GTP typing in and doing some numbers for me that I think I could flick that land for $900,000 once I get the approval for 15 units, sorry, 900 includes I sell a bit of land to the government.

Andrew:: And with the rest of the site, with an approval for 15 units, both of those sales there should. Kept me around 900,000. We bought it for one 20. Yeah. We've spent possibly 60 or $70,000 paying architects. Yep. And town planners, let's say it's cost us 200.

Andrew:: Yep.

Andrew:: I've turned 200 into 900,000 in two years, which is a $700,000 profit without picking up a shovel.

Andrew:: Yep.

Andrew:: Without anything.

Adam:: Is that the plan or do you want to actually build

Adam:: yourself? The last six months I've been thinking I'm too busy now in my business. To be driving to Helen at everyday supervising builders. And I have been thinking, wow, what an easy $700,000. I've dealt with all these problems. I've dealt with the problems with the land acquisition from the state government.

Adam:: I've done all the drawings up and I've gone through all this hassle.

Adam:: Yep.

Andrew:: Um, maybe I should just flick it and pocket the $700,000, but I've now been playing around with some building cost. Estimates.

Andrew:: Yep.

Andrew:: And even though building costs have risen substantially, um, my forecast shows, uh, a profit of 1.5 to $1.6 million in total if I actually go ahead and build those 15 units.

Andrew:: Keeping in mind, I don't intend selling any of them. So we talked about a bucket list of six property strategies we did in the last episode. Yep. And strategy number one is I wanna build those 15 units and I wanna keep them and I wanna rent them out, and I want my kids to inherit them.

Andrew:: Mm. So there's, there's, that's the

Andrew:: plan.

Andrew:: There's your opportunity. Okay. What, what can I ask? What, um, rental vacancy rates are in the

Andrew:: very little? So I did, as part of my due diligence ring a couple of local agents and properties there rent very, very quickly. There's very limited, there's hardly any new land supply of residential land in hedon.

Andrew:: And town, uh, not Townsville. Uh, Toowoomba is only 20 minutes away and the houses there rent very, very quickly. So I've actually plugged through the numbers and, and sp out what I think the market rents will be there. And at the end of the day, the whole lot, there's about 270 grand a year of rent that'll come in.

Andrew:: Yep. From that development, which my family will keep every year. Um, I'm not gonna sell them, but. One of the other decision making processes I've had to make with this development application, which I may not have put in those little notes I sent you to talk about, is when you do a development like that, you need to decide, are you gonna put it all on one title if you're keeping it?

Andrew:: Most developers sell everything, of course, so it has to be on separate title, 15 separate titles. I could have kept it on one, but I've decided to build these things so that they can be on 15 separate titles just in case I get in trouble and I need to sell a few.

Andrew:: Yep. Good idea.

Andrew:: If I get in trouble and also.

Andrew:: What you'll find is if you have them on separate title, when you go and get it valued, a valuer will probably value them a little bit higher. If they're actually each independent properties with their own water meters and all that type of stuff, they're actually worth a little bit more on a valuation as opposed to 15 properties on one title,

Adam:: right?

Andrew:: That might allow me to successfully get finance approval. A lot easier because the valuation will come up a bit higher, come, come up. Now it may well be once I finish the thing that I don't sell any and that's my goal.

Andrew:: Yep.

Adam:: But having a higher valuation there, um, will hopefully make it easier for me to get the finance.

Andrew:: Wow. Another incredible, incredible deal the way you think. And I'm just really enjoying, um, you know, how you go into. Things with one idea, but, uh, but pivot,

Andrew:: yeah.

Adam:: Um, to get the, the, the best deal. So what's the timeline on this now then? You've, you, you've said you've just resubmitted the um,

Adam:: yeah, well we've just, um, got the letter.

Andrew:: I think, um, when I was in Townsville yesterday, I sort of come up on my phone. So yesterday Sarah's come back and said, yes, Andrew, we have now defined the land we want. You may proceed. To go back to council and, you know, re amen your plans.

Andrew:: Sure.

Andrew:: So we haven't sent that to council yet. The architect will finalize those drawings in the next few days.

Andrew:: We'll send it off and then hopefully the Laier Valley Council gives us within a month or so we'll say, yes, Andrew. Um, you can go ahead with these 15 provided due to these 25 things.

Andrew:: Yep.

Andrew:: Um, and then we're set to go. And at that point in time, I will employ what's called a quantity surveyor. The same guys type of guys that do those depreciation reports to say, well, what should it cost me to build this?

Andrew:: Mm-hmm.

Adam:: And then I've got a metric, if you like, to go out to tender to two or three builders and say, please provide me a quote to build stage one and stage two.

Adam:: Yep.

Adam:: And then I can have a look at the profitability there and go to the bank and say, will you lend me money based on these building quotes and the quantity surveyors reports?

Andrew:: Um. In theory, if that land is worth 900,000, I have no loans on that. That's my deposit for the construction loan. Now, instead of putting in 900 grand cash, I've got 900 grand worth of land there. The bank takes the first mortgage. I don't have any loans on it now.

Andrew:: Mm-hmm.

Andrew:: So the bank will have that $900,000 of land of security, and hopefully they'll lend me most of the money required to do the building.

Adam:: Yeah. What would you be hoping for? What sort of percentage from the bank?

Andrew:: Construction lending rates will be slightly higher. Um, I haven't even gone down that track. Um, I dunno. But one thing I can tell you is that it's completely different structure of the interest. So when you do a development like that with construction finance, it's what you call capitalized interest.

Andrew:: I don't have to pay interest every month.

Andrew:: Yep.

Andrew:: I've got no money coming in. When you're building, it's just money going out. So what they do is they'll let me. Pay that in 18 months time when it's finished.

Adam:: Right.

Adam:: So it doesn't matter if it's a little bit higher, it will be higher. I dunno what it is. I haven't lodged it with the bank yet.

Adam:: Yep.

Andrew:: Um, but it will be higher, but I'll capitalize it so I don't have to pay the interest for 18 months until the project is finished.

Andrew:: Sure. Mm-hmm. Sure. And, um. How then do you, so you've obviously done your numbers on what rents could look like. Yeah. What your rental return Yeah. Will look like. Yeah. On that.

Adam:: And that will easily, um, cover the, uh, cover the finance and be, and be the cash flow positive from, from day one.

Andrew:: Yeah. The cash flow looks good. Um, it's not as good as a commercial property, as, as you know. Yeah. Uh, rental yields are a lot lower and, yeah. I have been very tempted for the last 18 months just to flick this site for that reason.

Andrew:: My preference is not to hold a lot of residential property because of the lower yields.

Andrew:: Sure.

Andrew:: But when I have a look at the, the potentially one and a half million dollar markup on building this thing, I don't particularly want to go down the track of paying tax on a one and a half million dollar profit.

Andrew:: Yep.

Andrew:: I'd rather just diversify my commercial property. Portfolio and have another 15 residential, oh, there's three commercials there and 12 resis. I'd rather just keep them and have an asset there, which doesn't cash flow quite as well as my commercial, but at least it diversifies my portfolio a little bit and I'm not gonna go and pay hundreds of thousands of dollars in in tax.

Andrew:: And remember, when you're doing development, there's no such thing as a 50%. Capital gains tax for holding an asset longer than a year. It's, it's a business. You're in the business of developing.

Andrew:: Yep.

Adam:: And you pay full corporate tax rate of 30%.

Adam:: 30%.

Adam:: So I don't wanna do that.

Adam:: Sure. So what's the, what's the repeatable checklist here for people, for people listening to this, um, if someone wants to, to copy this type of deal?

Adam:: Mm-hmm. What are your, what are your learnings from this one?

Andrew:: Oh, look, I, I think, um.

Andrew:: Number one, I could, I can give two. Don't skip the search. Don't

Andrew:: searches, don't skip the searches. Yeah, I tried to be a bit tight, um, and save a bit of money on the searches. I mean, I reckon that, that I'm 99% sure that guy knew that the state government wanted to buy that land.

Andrew:: He had to have known, um, he made money out of it. By the way, he bought that site for $70,000, I think, and I bought it off him for 120, but because of all the problems associated with. The government buying some back because any business set up in the main street of town in that city's gone broke the idea of buying some commercial land, going through the has of building a commercial property, trying to find a tenant and hope they don't go broke.

Andrew:: That's why I was considered almost worthless.

Andrew:: Yep.

Adam:: But using, going through, making the effort to see, well, is that really the highest and best use of that site? Going through what the local council. Thought were consistent uses for that land under the town planning scheme.

Adam:: Mm-hmm.

Andrew:: I saw another opportunity there to use it, a higher and better use.

Andrew:: I basically had land there that I didn't have to pay for, to build a whole heap of extra units that weren't attached to the front shop. I get a lot more yield out of the, the land and I, I basically, again, made a deal happen by doing, thinking outside the box. The previous guy obviously didn't go through that process.

Andrew:: He didn't think that that was the best, uh, opportunity. So even if I don't build this, I could still change my mind tomorrow if I don't have the energy to do this.

Andrew:: Sure.

Adam:: And I can just flick it. And if I don't get 900 and I only get 600, who cares? It's cost me 200.

Adam:: Yep.

Adam:: I've tripled the money in two years.

Adam:: Mm-hmm.

Adam:: And I've paid my wife back a little bit of that money that I lost by selling her house. Uh, at,

Adam:: if you dunno what we're talking about, listen to the last episode.

Adam:: That was why I went and enjoyed a venture with her. I want to help her make some more money, you know? I'm

Adam:: sure.

Adam:: Yeah.

Adam:: Alright, last question.

Andrew:: You're pretty confident about your, um. Your residential tenants.

Andrew:: Yeah.

Andrew:: But you did mention just then that most of these shops Yes. Most of the businesses on the main street have gone broke. Yes. Are you concerned about getting tenants for your three

Andrew:: shops? I am, and this is a another reason why that land was close to worthless is because who's gonna set up a business there when every other business in the street has gone broke.

Adam:: Now when you drive there, it's a ghost town.

Adam:: Yep.

Andrew:: There is one IGA convenience store there. There is one pub. I think every other business in that street has just closed down,

Adam:: right? So they're empty.

Adam:: They're, they're empty. So,

Adam:: so who's gonna, who's gonna rent your shops?

Andrew:: I don't know. But once again, in real estate, sometimes if you wanna make money, you have to take a punt and take on problems that no one else is prepared to take on.

Adam:: How I'm minimizing my risk is when I saw the plans from the original owner, he had. On the main street of row three big shops starting here, and it goes all the way back here with a little tiny one bed unit behind it. What I thought was, why don't I bring this shop all the way back here and make these things?

Andrew:: I've got three little tiny 40 square meter shops at the front, giving me more room to put more resi behind. Resi on top, resi behind. So what I'm doing is I'm allocating the majority of land on that site For resi.

Andrew:: Yeah,

Andrew:: because I'm not confident. That the commercial will work,

Adam:: do the numbers stack up if those shops remain vacant to keep all the properties and you'd still be able to service your, your finance?

Andrew:: They will, because I have a backup plan that I can invest some additional money perhaps putting in a business for myself. A credit card operated laundromat.

Andrew:: Yep.

Andrew:: So if no one else will run a business in there. I can whack in three or four washing machines, three or four dryers, put in a security camera, have a uh, thing out there where you use your credit card.

Andrew:: Yep.

Andrew:: And I'll make, I'll make it work. Um, I'm pretty sure that if I put in a $30,000, uh, grease trap, that someone will run. A coffee shop there, because I've had a chat with one of the locals and they're saying that everyone in the town says we have to have a coffee shop in this. There's a thousand people there, there's no coffee shop.

Andrew:: Surely that would go, okay.

Andrew:: I think that'll go away. And the third one, I'm thinking, surely we can put a, a, a, uh, a bed there and someone can run a massage business or, or something like that. Um, we'll make it work.

Andrew:: Yep.

Andrew:: Yeah,

Andrew:: well I'm really looking forward to seeing how this one, this,

Andrew:: and just on that too, like my intention is because I'm still shit scared of, uh, making leasing those commercial ones.

Andrew:: As soon as I get this approval, uh, one year in advance, I'm gonna be advertising these three shops on real commercial and commercial real estate forthcoming. Retail shops for lease expressions of interest. Email me if you're interested in running a business from these three shops. So I got a year to try and find a tenant, which there's still no certainty of it, but at least it's gonna gimme the best chance possible to rent those properties out.

Andrew:: I don't wanna build a laundromat.

Andrew:: No. So if anyone's listening and you wanna open a shop in, uh,

Andrew:: please.

Andrew:: And bring me, Andrew, if, if you're referred from this podcast, we there will be, there will be. Um,

Andrew:: oh, without that problem. There's no multiple dwellings behind. You're not allowed to just build residential there.

Andrew:: No. So you some has to take apart. Well, I love, and

Andrew:: I'm glad I, I, I pushed on that because, um. I, I wanted to, to see and, and sort of pull out of you that yes, let's, let's make the shops as small as we possibly can.

Andrew:: Yes.

Andrew:: Just to tick that box.

Andrew:: Yes.

Andrew:: Um, so that we can make, build it, build the stuff that does make money.

Andrew:: Mm-hmm. That's

Andrew:: exactly right.

Andrew:: So, um, no, fantastic. Well, look again, as we've mentioned a few times with, you know, a lot of these episodes, we are going to do follow up episodes as these, uh, as these things progress. So I, I look forward to, um. To seeing this one, uh, this one play out. And, um, mate, I'd love how you take a risk.

Andrew:: Um, and, uh, most people would not even look at a thousand person town.

Andrew:: Yes, it's a risk, but let's, let's have a look at the results there. If I pull the pin now we've turned 200 into 900. Like

Andrew:: you can't, like

Andrew:: Yeah,

Andrew:: you can't, it's, it's how much more risk you want to take on. Yeah,

Andrew:: that's exactly

Adam:: right. From, from here.

Adam:: That's

Adam:: right. You've done, you've, you've gone. Thrown 120 at it, and it then just started jumping through all the red tape. And it looks like you've gotten to the point where that's going to, to all be cleared away. And now you've got your, your options and you've made money there. Even if you wanted to pull the pin here and as, and now it's with how, what is your appetite now to take the next step?

Andrew:: Your analysis in all of these podcasts is surprisingly good, Adam, because you are, you're not a developer. Something like you, you're actually, I'm learning mate. I'm learning. You're summarizing things very well, but. When I summarize that, I think of, uh, property development metrics. These days, most property developers will not take something on unless there's about a 20% profit margin in it.

Andrew:: I have a look at that. Over two years, there's gonna be two or 300% profit over two years. You divide that by half, it's 150% a year profit margin, maybe because it was more risky than a normal development, but the numbers have turned out okay. Ah,

Adam:: really good one. Excellent. Well, look, um, please do, uh, do hit subscribe on, uh, on this podcast and, um, give us some, give us some comments, give us some feedback.

Andrew:: We'd love to hear from you. Jump onto www. Andrew Wright property.com au Chuck in your email address there so you can stay up to date with, uh, whenever we, we release an episode and we are gonna be putting more and more, uh, valuable, uh, content, um, to, to our subscribers. So please do join, uh, join the mailing list there.

Andrew:: And, um, as always wanted to remind you that the purpose of this podcast really is to, to educate, but also to create a community. Of, uh, of like-minded, uh, property investor individuals that can collaborate, help each other and, um, ultimately, potentially even do deals to together. So, um, please do jump in there.

Andrew:: Uh, we'll be starting Facebook groups, all sorts of things as, as we, uh, progress. But look, thanks so much for joining us, uh, on this episode. We look forward to joining you on the next one. And Andrew, thanks once again.

Adam:: Thank you, 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 Join us.

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