4 Industrial Property Deals That Made Serious Money with Johnny Leary

My favorite asset class, and I just absolutely love talking about them

I love everything about commercial, industrial specifically, and, um, you know, I've made a, a business around, um, teaching others how to get into shed investing.

You've bought a property with a 10% deposit when a bank would've required a minimum of 30%.

You've actually converted an industrial shed to residential. Tell us about the deal.

People say to me, "I can't believe how lucky you were to buy that, that block." And I was like

I reckon one of the main reasons why there's so much better rental return from commercial property in general is the tenants get a tax deduction for paying the rent.

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 listeners, and, uh, welcome back to the Andrew Wright Property Podcast. I'm super, super excited today to have Johnny Leary here from the Shed Investor Academy. Johnny, how you going?

Yeah, I'm going great, mate. Thanks for having me on.

Look, the reason I'm excited is, um, over the years of investing, residential, office, retail, uh, sheds, industrial property is easily my favorite asset class, and I just absolutely love talking about them.

Johnny, you've built a business around, uh, industrial property, and clearly you have the same passion for that asset class.

Yeah, mate. I, um, I actually have. I, I, uh, my whole background is residential. I'm a carpenter by trade, and, uh, I probably only properly got into, um, industrial property about probably seven years ago.

And yeah, it was a game changer. So, um, it sort of reignited my passion for, for property in general. And yeah, I just, I love everything about commercial, industrial specifically, and, um, yeah, I've made a, a business around, um, teaching others how to get into shed investing.

The... I just wanna say some of the reasons why I love sheds, um, and hopefully, uh, you'll agree with me.

But first of all, uh, from a construction point of view, they are the easiest and fastest buildings to construct. They're basically just four walls. They're the cheapest buildings to insure because they don't have all the big expensive fit outs and, uh, heaps of plumbing and roofing problems that most, uh, residential and retail properties have They also require less maintenance than residential and retail properties.

They're generally on large parcels of land, and if you're of the belief that land values are likely to double every 10 or 15 years, then you wanna be in an asset class where you hold lots of land. And finally, most of the leases are three to five years long. And they're five of the reasons why I absolutely love industrial sheds.

Yeah, no, I, I echo your sentiments there, mate. Um, I I'll add to that, that there's no real emotion attached to these, um, industrial sheds. Like I really, um, the, the emotional side of residential construction and building and having clients and stuff was, um, sort of really took its toll. Um, and then when I got into the industrial side, I, I realised that it's just a purely black and white investment, like the numbers don't lie.

Um, and then, yeah, throw in the added advantage to be able to, um, build these sheds for, um, reasonably, um, cost-effectively. Um, obviously you got the red tape involved with council still, but I found that my building and development skills just transferred beautifully across to industrial sheds. And yeah, it's like property stripped back without the emotion and yeah, I, I really do love it actually.

Yeah. I've, I've just written down a few notes here too about, uh, why, uh, I think there's a lot of potential, particularly with industrial property to increase value. So, uh, for the listeners, uh, unlike residential property, the big way to get an uplift in value with industrial property and commercial property in general is to increase the rents.

And I just, before we got onto this call, I just scribbled down a couple of notes here as to ways that you can actually increase the rents with industrial. Uh, one is to actually create extra net lettable area from thin air by building a mezzanine level, which is basically just some steps and a little office if you've got a high enough ceiling in a shed, and you can automatically charge more rent to a tenant.

Secondly, if you've got spare parts of industrial land, typically industrial land parcels are a lot bigger, and when you buy them, a lot of them have a very low site coverage. So the second way to increase rent is to actually build additional sheds. Thirdly, breaking down larger sheds into smaller tenancies, you can actually increase the rents per square meter because a smaller tenant will pay more rent per square meter than a larger tenant Fourthly, you can also, this is, uh, not as common, but I've personally done this one, is you can actually change the use of a shed from a normal storage shed to a cold storage facility, which doubles the rent.

And finally, I've written down here a note from a personal experience renovating really old sheds simply to increase the rent. And the way, the way I've done that before, in Ipswich I picked up a site which was actually a retail coffee shop at the front But it had a massive rusty old 500 square meter shed at the back, which I basically got for free.

I spent 300 grand renovating it, and then I got a 10-year lease to a gym at $70,000 a year. Now 70 grand a year on a $300,000 investment is 23% rental return, and that extra 70 grand a year rent at a cap rate of 7% adds 1 million bucks to the shed.

Yeah, no, that's awesome, mate. And, and all of those, um, strategies are, are the way that I look at property now, um, from an industrial point of view.

Like I'll be looking at how can I implement one of any of those ones that you've just mentioned. Um, and I especially love the, the extra land bit, like I call it free land. Um, you've already paid for it, uh, but it's just being underutilized. So if you can buy a shed with a big yard attached and then, um, sometimes double the size of that shed or even put in e- um, two or three extra sheds, you can utilize that, um, free land to then either get more rent or on-sell those new sheds.

And so, um, with a, a subdivision put in place, then you can do, uh, a, I guess a myriad of those strategies depending on what the property is and, and how you, uh, assess it when you first look at it.

Agreed, John. It-- Before we go into... We're gonna go into four deals that you've personally done for yourself, where you've added a massive amount of value, and also, uh, you've actually creatively financed them, which is super, super impressive as well.

But before we go through these four deals, um, can you tell the audience here about the, uh, service you provide or the, your mentorship? You have a, a, a business, if you like, called the Shed Investor Academy. Can you just spend a couple of minutes telling the audience what service you provide there?

Yeah.

Thank, thanks, mate. Thanks for the opportunity. I, um, I used to get home from these shed deals, and because I'm a builder, um, I'd, you know, be pretty hands-on with, with some of the value-adding that I'd be doing. Um, and I'd get home from these shed, um, sites, and I'd say to my wife, "I can't believe more people aren't investing in industrial property."

And I really feel, um, strongly about the fact that the media and the government are dictating terms on especially, um, first-home buyers or people that are getting into the property market, and they're being told that they'll, um, unless they buy a million-dollar house and land package, they, they've missed the boat, and they'll never get their foot into the d- in the door of, um, residential or, um, property in Australia.

Now- I used to get home from these sites and say, "This is such a great strategy. More people should be doing it." And so first of all, I decided, um, I, I knew nothing about the online space, but I decided that I'd, um, put a book together to show people how it's done. From there, that's evolved through to I've put together a, a, um, a community and, um, uh, we, we actively with live sessions every week teach other people how to implement these, um, these skills that I've learned along the way to find, buy and then add value to industrial property.

So, and that can be ei- either to onsell it, um, to then roll the cash into the next deal, or just to start growing a portfolio before they worry about getting into the housing market because I think, um, getting a cash flowing asset going first, then second can be, um, a property that you live in. Um, and that, that was the way that I sort of, um, first envisaged it.

And from there we've put together a community of over 100 people and yeah, it's pretty exciting. Everyone's learning the, the ropes and, and doing some great deals and yeah, I've really enjoyed it for the last probably 12 months now. And, um, it's, it's very rewarding seeing others getting into this space and, uh, enjoying, I guess, the fruits of, uh, of what I'd learnt along the way in, um, adding value to industrial property.

Mate, it's such an awesome asset class. I mean, I, I, I wrote down a few things there that I mentioned before as to why sheds are the best investment asset class of all in property, but I forgot to mention another one, and that is how easy it is to manage. And I've got, uh, six sheds up in Hervey Bay, uh, that, that I own.

And you know what? Several of those tenants, I have never, ever even had one reason to any communication from them about any maintenance or any problems. I've, I've never even met them, and the rent just keeps ticking over every month and the CPI, uh, increases and the leases come in, and it's just so easy to manage.

Now that place in Hervey Bay's four hours away from here I don't even need a property manager. It's that simple to manage

A- and that is, it's fantastic. And w- when you think about it from, from their point of view, like your tenant's point of view, they're running a business out of your premises, and so their livelihood depends on, um, them k- uh, taking good care of your property and also paying their rent.

And so, uh, I love that. I, I was lucky enough to have a mentor when I first got into this, um, and not only did he show me the numbers behind the actual acquiring and, um, uh, running of these, uh, sites, he also showed me how to, um, simply set it up so that it's virtually, um, time free to manage these properties and, you know, the invoices go out every month and they pay their rent and exactly the same, like you're 99 times out of 100, you don't even hear from these, um, tenants.

It flips property around from when it was, um, a residential and there'd be a block toilet or, you know, they'd want to get-- I had one property in Melbourne and they wanted to get a Labrador in a one-bedroom apartment in, in And, you know, all these little, um, wants and needs that the residential property market, um, tenants will give you, and then, yeah, flip it around to industrial and it's like you just don't hear from them.

So it's just, um, yeah, it's like night and day.

Uh, 100%, mate. Look, I, uh, many, many years ago I thought I'd go down the path of owning a whole heap of, uh, rooming accommodation, boarding houses, and I built one just down the road from here, eight bedrooms, eight bathrooms, and yes, it, it does cash flow very, very well, but luckily my staff here are only 100 meters away because it requires so much management that I honestly don't wanna scale a rooming accommodation business.

I would much rather just own a whole heap of sheds. It's just so easy.

Yeah. And I looked at all that stuff as well, and I kept circling back to the same thing. Like I, I, um, built a heap of apartments in Melbourne. I, I went through that, that phase of my investment journey. But yeah, um, typically you're dealing with, you know, um, needy tenants, to put it plainly, and yeah, the industrial asset class just doesn't give you that, which is awesome.

You know, another thing that I don't hear talked about on podcasts is, um, the, the... I reckon one of the main reasons why there's so much better rental return from commercial property in general is the tenants get a tax deduction for paying the rent. In houses, they don't do that, so all commercial property, not just industrial, you know, the rents go up and the, the rental yields are so high.

And I honestly think part of the reason for that, the reason they can afford to pay higher rents is you're allowed to claim rent as a tax deduction. So you don't hear people talk about that, but it's one of the reasons why our yields should always be really high with commercial property.

It, it's in their best interest to keep that rent, um, getting paid, but they also really, um, uh, like, they take pride in their, in their premises as well.

Like, I drove past a couple of my sheds last night, just, um, happened to be going past and, and one is a gym, um, and I looked in and the place was immaculate. Um, the owners are in there running their business and, you know, it gives you a, a great sense of pride because they are taking great care of it as well, and then you're like, you know, "I built that place," and, and yeah, it's, um, uh, yeah, it's very rewarding.

Well, the other, the other beautiful thing about that, Johnny, is when you have a gym as a tenant, uh, there's a lot of goodwill associated with the location there because if most of them are 24-hour gyms and people know where it is, they go there, they go there, the gym is never going to wanna move because all of the 2 or 300 members that go to those gyms, they know where the location is and your tenant's never gonna wanna move.

No, that's right. And they spent quite a bit of money getting it all set up with their fit out, and so they can't just up and leave tomorrow, you know? So that's, um, that's very, uh, heartening or reassuring for me to understand that, that, um, for them to move would cost them significant capital outlay. And so you get that long lease by default, I guess, because it's just such a hassle for them to up and leave.

Yeah, absolutely. Johnny, let's go into four of these deals that you've done, and, um, I, I'm really excited to go through them because there's a quite a diverse range here. But the first one, you've given me four of the deals that you've done here. The first one I'm fascinated by. It's an industrial to resi conversion where you've actually converted an industrial shed to residential.

Tell us about the deal.

Yeah, so this one was in Northcote in, um, in Melbourne. Uh, and it was actually a 500 square meter brick warehouse, and it was completely vacant. Uh, I got to know it because my landlord, who I actually got to know quite well, um, he had run a vacuum repairs business out of there for 20 or 30 years, and he'd since retired, and he'd kept the, um, he'd actually kept the warehouse and he just used to go there and tinker.

And so I got to know him, um, and finally, you know, wondered where he was heading every day and he said, "Oh look, I still head to the warehouse to get away from my wife." That's

a normal relationship, isn't it?

Yeah, that's right. Yeah, yeah. Um, so I just showed some interest and went around there and had a look at it with him, and then eventually plucked up the, I guess, the courage to ask him if he'd ever considered selling.

Um, and so that sort of started the conversation. Uh, and in the end he ended up saying, "Yeah, I would sell it." Um, and he had a price in mind. He was an old Macedo- Macedonian guy, so what I realized very early on that, um, the price was the most important thing to him, which was about market value. There was no issues there.

Um, so there wasn't one bit of negotiation on, on a dollar down. He wouldn't, wouldn't even entertain the idea. But what he was open to was, um, uh, settlement terms, and so I really honed in on that. So what I ended up doing was I, I got the property, um, under contract f- um, for his asking price, which was 1.7 million, and he agreed to my terms, which was 18 months settlement with 5% down, 5% down, um, as a deposit, and then full access in that 18 months.

So that meant all, um, access to, to do any cleanup, um, to do-- get consultants in to measure up for plans and permits. And so that it meant by the time that I'd gone through the whole, um, uh, plan and permit stage, I still hadn't owned the property yet, which was a big thing for me because that kind of development can take a while to get through council.

Well done. And, and you decided not to do a DA flick there and just sell with the development approval quickly after settlement. You actually went through and built those ones.

Yeah. Yeah. And you know, in hindsight, um, it, it was a, it was a grueling project because me and my brother we're, um, we are builders, and we got in and, and did the whole project ourselves.

Just to give you a little bit of an idea of what it was, um, so 500 square meter brick warehouse. Uh, and basically we cut the, the roof off the warehouse and built eight townhouses within that, um, that existing warehouse shell. And so, um, there's, there was two one-bedders on the ground floor with car parking at the back, and then you go up, um, stairs onto the first floor, and then there's, um, six three-bedroom townhouses from the first floor up.

Um, all on 500 square meters of land. Uh, so, and they're actually quite spacious because they're over, um, three levels. So yeah, we, we literally got in there and we dug the footings all the way through to, um, pouring the, the, the slab at the first floor and then built these, um, timber constructed townhouses on top of that.

So yes, very, um, very intensive, um, project and maybe we're a little naive, but, you know, we've still got, um, a unit in that, that, um, block today and very sort of proud of what we've achieved in that, that project.

So you sold seven and, and kept one?

Yeah, my brother and I kept one each, and so we on sold, um, the others.

And yeah, so it was, um, it was a great, great project to learn what was possible. Um, and especially on quite a small block, um, with some good consultants and good planning, then you can, um, achieve some really good, um, results and a, and a good end product, um, by thinking a little bit outside the square. The, the, the actual site could have been knocked down and, um, 21 bedroom apartments put on it.

Um, that was beyond our, our price point at the time. And, um, uh, but the end result was, you know, eight really, um, well-designed townhouses that, um, yeah, that, that they're a really awesome product now.

Johnny, I'm just curious, um, what was the loan- the zoning of that land when you purchased it? Was it industrial or was it resi?

No, it was actually, I, I was lucky that it was general, um, general residential. Um, it was in an old pocket of Northcote in, uh, in Melbourne, which was, um, and th- these original factories were set up to make the bricks. Um, and they had brick kilns inside them to make the bricks for that whole region. Um, so there's quite a l- lot of industrial, um, sheds or warehouses in and around Northcote, Fitzroy, Collingwood, those areas, and they, um...

But some of them are still in residential pockets. So that was one of my first checks, and even though it wouldn't have been beyond getting, um, resi put into these, uh, if they were industrial, it made that one step a little bit easier. Yeah,

I was gonna suggest, uh, it would probably, uh, extend the, um, timeframes if you had to try and ask council for a change of zoning from industrial to resi.

Yeah, and I've never gone through the re- um, rezoning process. I've tried to avoid it. Um, but yeah, that m- may not have stopped me on this, but it probably would've added a year to the planning, uh, process, I suppose.

Mate, that's a, uh, a great deal, and one of the reasons why you pro- probably increased your profits there is, uh, you guys are builders.

Yeah, that's right. Um, and you know, that's, that's helped and hindered us along the way, mate. Like, um, we're, we're from, um, a farming family, and we're, we're always taught that, you know, um, time means nothing. You do everything yourself. Um, and so maybe, you know, nowadays I'll, I'll get people in that are, um, faster and better at carpentry than me.

But yeah, back, back then, and that's probably going back 10 years for that project, uh, my brother and I just rolled up our sleeves and, and did the whole lot. So we learn a heap along the way and, yeah, I, I'd do another one of those again, I think, because it, that, it was such a, a cool project.

Yeah. Wow. You almost want me to jump on RP Data now and do a m- a map search of that area and duplicate your strategy.

That's awesome, mate.

Yeah, yeah. I'll, um, I'll send you a, a, a link to a video I made up of the site, but yeah, it's, um, it's, it's a pretty cool project and, and as I said, yeah, if I, if I find another one, um, yeah, I think it'd be a good one to redo.

Yeah. Fantastic. Deal number two, Johnny, we've got a joint venture and, um- Tell us about this one.

It's a, a pretty, pretty big project and a really interesting story as to how, how the opportunity panned out. Tell us about the, uh, the joint venture deal with the Pet Stock store near Bunnings.

I tell people that I manifested a Pet Stock store out, um, next to the Bunnings in our town, and it sounds unbelievable, but it's actually true.

I hurt my back on that, um, that warehouse conversion site actually, and it was sort of like the beginning of the end, I thought, for my building career. Um, so I got completely out of, um, uh, building for a while and I actually opened up a rural supply store, um, which sold a lot of pet food. Um, now I set it up in an old shed that my mate bought right in town.

Um, but what I was, um, trying to do was establish myself because I always knew, I said, "I've got to get this business up and going because soon enough a Pet Stock or a Pet Barn will come and open up right next to Bunnings and it'll put me out of business." And so that was always my, uh, my plan. Um, there was no blocks available out there to, for me to build, so I was like a little bit at the mercy of the gods with that one.

So I built up this business and then one day I had a, um, a secret shopper came into the store wanting to buy my business. Uh, and it turned out that, um, he had a heap of Pet Stock stores in, uh, Melbourne And so I, I told him my vision of, "No, Pet Stock can't be here in, in this old shed in town. It needs to be out next to Bunnings out, out on the highway."

And he echoed the same thing that I'd said. He said, "Well, there's no blocks available out there." He, he said, "Well, I wanna buy your business and open a Pet Stock." Um, and I said, "Well, I, I wanna own a Pet Stock." So within that negotiation, um, he said, "All right. Well, if you can find a block out near Bunnings," he said, "let's go halves and we'll build one out there."

So that was me. As soon as I had that little spark of, you know, possibility that I could, could get into this deal, I found out who owned the, the land behind Bunnings. At that stage it was pretty much just empty paddocks. Went and f- found the developer that was actually gonna put blocks in there and, uh, asked him basically if, uh, the one right beside Bunnings was for sale, which it wasn't.

But I kept circling back to him, and after a couple of months I went and saw him one more time and I said, "I really want this block. Um, is it, is it for sale?" And he said, "It's your lucky day. If you, if you wanna buy it, it's all yours." So I bought the block, um, right beside Bunnings for 338,000, um, and then hence did the deal with the Pet Stock guy, and now we own-- we built a brand new shed out there with, which is 750 square meters of retail space for our, our Pet Stock store, which we own together.

And there's also another 350, um, square meter veterinary clinic that, um, we added to the, to the shed in the build. Um, total outlay for that whole, um, project was about 2.4 million, and now just the, the building on its own is worth about four, and the business is worth anywhere from a million to one half million on top of that.

And you've got next to no tenancy risk because you've got your own business in the larger shed, and you've got multiple income streams with a second tenant in there as well. That is awesome.

Yeah. So, um, our Pet Stock franchise pays, uh, a bit over $100,000 a year in, in rent to our property, um, trust. And then, um, the, the veterinary clinic pay another 85,000 for their space.

Um, so it's wildly cash flow positive on, on the outlay and yeah, that's just paying itself down to, um, to zero over the next few years. Um, now on top of that as well, as I said, it was just a paddock when, when I bought the block, um, and only a Bunnings was sitting out there. Um, so we were very patient with this one, but, um, in the last 18 months now our Pet Stock store faces a brand new f- uh, $50 million Coles, um- supermarket, and then there's an out-- brand new Aldi sitting beside that.

So it's become a real retail hub and our, um, Pet Stock store is, um, front and center, which is awesome

You made a couple of, uh, bits of, uh, great wisdom there that I, I just want the viewers to pick up from what you just said. First of all, um, if you can trust Bunnings' research on a location that might stack up for business purposes, you work out pretty quick that if there's a Bunnings there, even if it's a, a small rural community, if Bunnings is there, it's a pretty safe bet that you can buy next door and do all right.

Secondly, you bought that site off-market. It wasn't advertised online. You went and chased the deal. And thirdly, you basically pre-leased a development site. You had a tenant, which was your, your own business there ready to go in, which completely eliminated the vacancy risk.

Yeah, for sure, mate. And I say this to, um, people in our community, um, all the time, like Bunnings don't arrive by accident.

Um, and as you mentioned, like they've done all of their research Australia-wide to understand the, the towns that are, are gonna be able to support their business. And so when I could buy a block of land, I actually bought two blocks at the same time. So I bought the corner block right beside, um, Bunnings.

That was 338,000. And then there was a, a 1,000 square meter block right beside that, um, for, and I bought that for 150,000. And now that's the, the, the block that I've built the shed and there's another re- uh, sorry, the, the gym shed and there's another retail premises, um, in that same, uh, development as well.

So yeah, so two blocks for $150 a square meter they were at the time, right next door to Bunnings. Um, yeah, uh, and that's why I always say if you can find something like that and, and they are around, you just gotta have your ears, ear to the ground and it doesn't necessarily have to be an advertised for sale, you know, on realestate, uh, .com or whatever, whatever that is.

Um, if you see land there, just go to the effort and find out who owns it. And yeah, I, I literally walked into this developer's office and we did a handshake deal. I can still remember it. It was in a No- it was in November of, of that year, and we did a handshake deal and there was no contract signed till about March, which made me a bit nervous, but this guy was pretty old school.

And we got the deal done and yeah, the rest is history. And I will say on top of that as well, mate, um, people say to me, "I can't believe how lucky you were to buy that, that block." And I was like, "There was no luck at all." I, I put myself out there, went and found it, and then took the risk to buy and, and build and do all that stuff.

And so when people say now it was lucky, then I, I just have a bit of a laugh to myself.

You, you make your own luck and, uh, people won't see the, uh, number of people that you approached with other deals that you just flat out got rejected or Got through so many nos to get a yes, but, um, mate, I, I've, I've done the same thing.

You put in the work and the deals of a lifetime will appear.

That's why it's important to remember as well not to get too, uh, emotionally tied up in, in deals and, you know, that, that deal of a lifetime, it'll come around again. So you've just got to be patient and, and make sure that when, when it does come up, you've got your ducks in a row and, and you, you can find a way to buy it.

Mate, uh, deal number three, um, another awesome creative strategy, uh, vendor finance. Can you tell us about the vendor finance shed?

Yeah, so, um, this one was out of necessity. I'd never really needed to get a shed for a business before. Um, uh, as a part of, um, the pet stock move, I, I needed to find a, a, a new shed to house a small business of mine and did a ring around town.

There was nothing available at all Um, and I kept asking around until one person mentioned that there was a, a disused shed out on the other end of town, uh, the Melbourne entrance into our town. Um, and it was, it was a little bit worse for wear, but I, um, found out who owned it, same sort of thing. He was an out-of-towner, so I had to wait till the week- a weekend that he was up, um, from, from out of town, and actually met him on site.

And so-- and this is a really, um, crucial thing that if you can, uh, and it won't always work out like this, but if you can meet these people on site, the owners of the properties, you get to build a rapport and it's a, it's more of a personal touch rather than just a phone call and a cold call, which sometimes people can be not hostile, but just a little bit impatient with you.

So got to meet this guy on site, um, and we did a walkthrough and basically he had made all of his money from, um, hiring out equipment. And his idea, because it was such, in such a great area as you're coming into town, he was gonna do a full equipment hire business out of there. But on top of that, he was in his 70s and there was a heap of work that needed to be done, and he basically told me that he, he'd lost interest and he didn't think that he was gonna pursue that, that, um, avenue.

And so during that probably hour or more that we spent on site together, I went from, um, uh, asking if I could rent the place off him. Um, eventually I realized during our conversation that he, he was actually more open to selling if that was a possibility. So I asked him straight up, "Would, would you consider selling?"

Um, which he did, and we, we got down to a price which was $600,000 for this shed. Uh, and then at the very end, just to be super cheeky, I just threw in, "I was wondering if maybe you might consider, um, vendor financing it." And we had a talk about that for a while, and by the end of the conversation, um, he'd agreed to sell it to me for $600,000, um, with 10% down, and then he would vendor finance it.

So essentially he would become my bank. So that's the way that, um, we financed that deal. I gave him the 60,000. It was all signed in through, um, uh, we did full contracts of sale through a solicitor, and so the title actually transferred to, um, to my name, but he held the mortgage over the title. And so we did that all through the solicitor and my, uh, interest payment was a monthly interest payment to him, interest only, and that interest payment was less than if I had have been renting a shed from someone else.

So it was win-win for me, for sure.

Johnny, that's awesome. Now, may I ask, uh, some more personal questions there? What was the actual interest rate?

So at the time, and this is about COVID time, before all of our interest rate heights, hikes, I think it was about 3.5%.

Unbelievable. And what was the duration of the vendor finance agreement?

Was it a three-year loan or-

So it was a three-year loan. Exactly. So I had an agreement there to pay him out within three years, which I did. I actually, um, sold one of the sheds in the... It-- Just to add to the story, this one big shed happened to be sitting on two titles, and so it meant that I could sell off one shed and then own the other one, and so that's what I ended up doing.

And yeah, then I got to pay out the, um, the vendor, which he was happy. He actually rang me and thanked me for, um, uh, you know, making it such a- an easy transaction. He-- And, and this sort of comes back a little bit as well to finding out, um, what the needs are of the vendor as well as yours. Like, I, I really do believe in, in win-win situations.

Um, I don't wanna walk away being the victor and he feels like he's been, um, stuffed over. So, um, for one reason or another, he didn't want $600,000 hitting his bank account, um, because he, you know, he had concerns around his super and he was, you know, trying to maximize that. He was trying to get advice around how to actually make this sale, and so delaying the payment and just doing 60,000 up front and doing an interest-only, um, monthly payment was just perfect for his situation.

And so, yeah, as I said, he rang me up after I'd paid him out and just said, "Thanks so much. It was a, it was a great experience."

Johnny, I, I did a vendor finance deal earlier this year as well, and just to go through for the audience to let them know what a great deal you've done there for both parties.

First of all, the seller didn't have to pay a real estate agent 3% commission, which is on 600, that's 18 grand plus GST. He didn't have to spend $5,000 advertising on the internet. He didn't have to spend three months of his life allowing people to inspect the property. You've bought a property with a 10% deposit when a bank would've required a minimum of 30%.

You didn't have to pay 1,500 bucks for a valuation on the property because you didn't use a bank. And you've got a cheaper interest rate than the bank would've earned, and he's getting the same amount of money as if he had have put that money into the bank in a term deposit. You've got three years to get the uplift before you need to get the bank finance.

Unbelievable. Mate, that is an awesome deal.

Yeah, no, it was, it was great. And, um, and you know, I... Same sort of thing, I just had to roll up my sleeves and, and clean the place up basically. Uh, and you know, it wa- it backed onto an old grain bunker, so there was a lot of ra- um, rats and mice in there, and possums and all sorts.

And, but I just got skips in and cleaned it up, and it took me a bit of time, but yeah, it was just elbow grease and, and effort and, um, yeah, by the end of it, I, I had a really, um, great shed.

Yeah, mate, unbelievable. Uh, super impressive. Let's go to the last one now, the, the fourth deal here. You've got a, uh, a shed that you've purchased with an 18-month settlement, which allowed you 18 months to add value before you had to settle.

Can you tell us how that deal happened, Johnny?

Yeah, so I call this, um, this deal, um, the Hoarder Site deal. It was, um, uh, I, I, I knew of a business that wanted to move into this area in, in, uh, a separate town to mine. It was a town, um, just over the river from where I live. Uh, and I was trying to find a block of land or a shed that they could move into.

And I kept driving past this one old hoarder site, and when I say hoarder site, it, it was literally covered in every bit of building materials, old cars. Like you, you couldn't even walk in the front gate. Um, and it was kind of like a joke in town. Everyone had, you know, mentioned this site to me, but no one had ever tried to buy it.

Um, and so yeah, I, I same thing, I cold called the owner, found out who, who it was, met him on site, and then when he unlocked the front gate, I thought we could just walk in and go and have a look at the site. And he was like, "Oh no, we can't get in." It was like a wall of, um, of junk. So we had to walk down the, the driveway of the next door, um, property, and then he, he lifted up the fence and he had a little goat track that went into the, into the shed from, from there.

So that was how I got to inspect the place. Um, it was a 5,000 square meter block, and on that block sat a, a about 1,100 square meter shed. It was a huge, big thing. Um, but, um, yeah, you could not see the, um, the forest for the trees, I suppose, 'cause there was just so much junk there. So same sort of thing. Um, I asked him if he'd sell.

I let him, um, come up with the price and I roughly knew what it would be worth. Uh, we agreed on 750,000, um, with a 10% deposit, and he wanted 12 months, and this was his, um, request, 12 months because he wanted to, um, to clean up the site. Um, and so that was the deal, 12 month settlement, 10% down. Um, and same thing, access to, to do DAs and whatnot in that time.

But he ne- in the end, he actually took 18 months to clean it up. So there was no settlement until that 18 months was done. He actually bought a block in another town and took every single thing from that hoarder site to a new block and dumped it there. A- apparently he even had like nieces and nephews with magnets on the end of sticks, and they were picking up, um, uh, screws and nails and putting them into buckets 'cause he couldn't throw a single thing out.

So, um, yeah, so it took him 18 months, but in that time the, the shed was built by himself. He was an old builder, but the shed was built in 1999, but he'd never completed the DA. So that 18 months' time for me meant that I could reactivate the DA, have new plans drawn up and approved, um, to all the modern standards and regulations, and then as soon as it was clean, then I could get in and, and complete the works, which was, um, pour a, pour a slab inside the, the shed, uh, and complete all of the offices and amenities that he had standing there framed up for 20-plus years.

And so I went through and did all that. Um, got it tenanted af- straight after completion, and then on sold it, um, from there for 1.6 million.

What was the profit margin there, Johnny? I didn't do the maths then.

Uh, so after costs it was probably a- around about 400 grand profit.

And in what-- So the total time took you 18 months to settle, and h- when did you sell it?

So I owned it for 12 months after, after settlement.

Beautiful deal Beautiful deal, mate. And when you got that DA, uh, because it was an older shed, 25 years old or whatever, did you have to comply with the current building codes around fire sprinklers for a shed over 1,000 square meters and things like that?

100%. So, and this is all a part of learning a- and I guess my building and development skills work perfectly in, in the industrial space because it, you, you get to understand the process because subdivision and building doesn't change that much in industrial, but you do have to know the steps. And so what I did was I rang the local planner at council and got them to come and do a, an actual site walk with me.

And during that time, I had two of the planners on site and we walked through and discussed what had been approved originally, what was gonna be, um, needed to complete from there. And then that gave me a, a game plan to go through and pretty much go through their requirements in order to get the DA first approved and then, um, completed.

And so as a part of that, I had to get a fire, um, engineer on board. Uh, and I, a- as a, I had to get the, the meter, the water meter upgraded. I had to get a, a fire hydrant put inside the built- the, um, the shed, and then hose reels put at certain spots throughout the, the existing shed. Um, and to understand that process, I guess you, you need to get the right consultants in, um, early, but then, um, collaborate with the council and so that then you're all on the same page throughout the process.

Man, that's fantastic stuff.

Yeah, yeah. No, it, it's, it's, it's really, um, I, I really do enjoy it. So yeah, it's, it's a process and, and the, the council side of it, whether you're doing, um, resi or industrial, it's, yes, it's frustrating and I used to get, um, quite impatient about that. And now I just understand that it's a part of the process, um, and you just need to, um, make sure-- my rule in all of this is to make sure that the council's never waiting on me.

So if they ever send back a, an RFI, request for further information, um, I'll make sure I get onto my consultants to get the changes done as quickly as possible so that, you know, you can complain all you want about the council being slow, but I never want them to be waiting on me, so I make sure that I, I'm in control of at least that side of it.

Mate, there's four incredible stories. Uh, Johnny, how can viewers get in touch with you if they want your leadership and maybe wanna put in place a game strategy to go out and do one of these deals themself? And if they want your assistance through that process, how can they get in touch with you?

Yeah.

Thanks, mate. Um, if they wanna, um, if they wanna get in contact, um, I've got an Instagram account, Shed Investing, and, uh, you can jump on that and send a message on that, or you can go to just shedinvestoracademy.com.au and check out the website there and see what we're about. But yeah, we've got over 100 and, I think, 30 people now in the, the community, and everyone's learning from each other.

So that's probably, um, a part of this that I didn't realize was gonna be, um, so rewarding, is the interaction with the community. We've got, um, students doing, um, joint ventures with other students. Um, I'm actually doing a couple of projects with some students as well, so, um, everyone's learning together.

And, uh, yeah, so if you want to find out more, just, uh, jump on one of those two, two spots.

Johnny, I love sheds. I love sheds probably as much as you do, and I, I think we need to get you back on the podcast and share a few more deals in the future. Thank you so much for sharing your wisdom, and, uh, they're four incredible deals there, mate.

Well, good on you. Well done.

Andrew, thanks so much for the opportunity. It's great to chat, and we have chatted, um, quite a bit before, and I, I really appreciate, um, jumping on here with you. And, and yeah, we're, we're like-minded property nerds, I, I guess, and yeah, we've, we've... Uh, I've found a niche within, within the space that I love, so yeah, I, I love, um, the opportunity and, and I thank you for that to jump on here and talk about it.

Thanks, Johnny, and, uh, we'll, we'll get you onto another podcast

soon. Nice, mate. Thanks very much.

Thanks for listening to the Andrew Right Property Podcast. This is all about building a community of like-minded investors who can share real-life stories, experiences, and collaborate with a view to helping each other.

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