Property Options Masterclass Part 1: How to Control Property Without Buying It with Paul Vamvakaris

How do you feel moving from a lawyer to a real estate agent? Look, it's really, it's really, uh, surprising for me too. I thought working for a criminal law firm and a, and a commercial firm, and then obviously into land trusts, you're not on anyone's Christmas list. I turned into a real estate agent and my ego just dropped to the floor a bit because real estate agents, even today, honestly, it's not really a profession.

It's not just for the big boys, and I, I'm, I'm a little fish. Mm. Uh, and I'm relatively new. I'm, you know, three or four years into exercising options contracts. Let's start off with understanding what a call option is. Do you wanna run through that? Look, yeah, absolutely. So an option contract is o- is

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 there, viewers, and welcome back to the Andrew Wright Property Podcast. Today, I'm so excited to, uh, have a discussion with a new friend of mine, and his name is Paul Vamvrakaris. And just to set the background, I rang Paul about a site he was marketing in Cairns because I had a client who was, uh, looking for a, a property up that way for some hardstand, and I thought if I could find a tenant for the site, I'd buy the vacant land and plug the tenant in.

During the conversation, uh, Paul mentioned to me that he had a property under an option contract, and I was just fascinated straight away and said, "Oh, really? Have, have you bought... Is it, is this the first time that you've purchased a property with an option contract?" And he said to me, "Oh, Andrew, at the moment I have 11 properties under option contracts."

And I sort of didn't believe it at first, but when I drilled down a bit deeper, this guy is fair dinkum, and I immediately said, "Paul, can I jump in my car, drive for an hour to Brisbane, and come and learn your process?" And he was generous enough to give me his time, and I did exactly that. I drove down to B- drove up to Brisbane, and Paul went through deal after deal after deal of transactions that he's done to massively leverage his portfolio.

Paul, welcome to the podcast. Hi, Andrew. Thanks. Look, thanks so much for having me. I'm, I'm kind of humbled. Uh, certainly haven't done many podcasts before, so, uh, this is, uh, this is something new. I'm, I'm, I'm excited to be here. Good on you, mate. So look, um, I'm gonna talk Paul up a bit here because at, at my business I talk to a lot of people, and sometimes you meet people that are super, super intelligent, and that's great.

You walk away thinking, "Geez, that guy was smart." Sometimes you meet people who just have an unbelievable dream, a goal, a work ethic, and work nonstop to achieve their goals. But very, very rarely do you meet someone who's a complete package. And Paul, I've gotta say, uh, you, you are the complete package, and I am absolutely blessed to have met you, and you have taken away my excuses about scaling my portfolio.

Oh, look, uh, they're very kind words. I'm, um... Uh, look, it's just, uh, as I was saying to you in the meeting we had, I, I wasn't very good at my other jobs. Um, I was a, I was a builder and I, I worked for, for a law firm and, and I did a, uh, a heap of stuff in land trust, but I never really... I was always watching the clock.

So, um, when it came to this, it just became a, uh, something I fell in love with, and I found it as a skill that was transferable- Mm ... whether it be, uh, whatever state or whatever country you'd go to. Um, so yeah, I'm really, really lucky to have, to have a job I, I'm happy with. And your education, you have a Bachelor of Law.

Is that right? Yep, yep. I, uh, I started off with a, uh, with a, with a building, uh, apprenticeship or a carpentry apprenticeship, and then i- after the GFC, I didn't wanna move away. I'd gone to the Middle East to work for a company called Latens. Um, and a girl made mention that I should, you know, I talk, I talk a lot-

so I should be a solicitor. Uh, so I enrolled into, uh, James Cook Uni and, uh, then I undertook a law degree. Took a job in a law firm, uh, in my first six months, um, just through begging, uh, up in Cairns. And I was fortunate enough that that principal was, allowed me into every meeting, into every conversation, into every deal, and he was a very prominent, uh, prominent, uh, law firm.

So from there I got into land trusts- Um, and those land trusts are managing land for both the state and for, for parties formed through a board. And then that gave me some understanding of, you know, planning and looking at what other developers did, and then look at the use of land and look at m- particularly material changes of use.

You know, turning a rural block into a residential subdivision- Mm-hmm ... or turning a, um, you know, commercial bro- block into a retail block, yeah? And I, I started getting excited about that. And, uh, and then from there, upon my return to Australia My daughter got asked what Dad does, and she said, "Not much. And, uh, he mows the lawn and, you know, grows vegetables and, and, you know, does gardening."

To put that into perspective, you, you spent about, was it 15 years in building? I was. I was a, I was a builder for more than 15 years. I started in a, uh, my apprenticeship in an Aboriginal mission- Mm ... uh, called Aurukun. And then from there I went into, uh, work for Thiess and Leightons and Laing O'Rourke and Hutchies, and I never wanted to leave Cairns or, or the region, so I had to jump project to project.

And then I did H- HMAS Cairns, you know, Lavarack Barracks, um, Cairns Harbor Lights, uh, Cairns Airport. Uh, a lot of really good projects that you could get into and learn something from, from all those different parts. That's over a billion dollars worth of projects that you've been a part- It, it was a, it was a lot, yeah, a lot more than you realize until you add it up on paper.

Yeah. Yeah, right. Um, but yeah, and I held roles all the way from, you know, the laborer, you know, carpenter at the start- Mm ... all the way through to a project manager at HMAS Cairns. Mm. And then, um, got into estimation and, um, you know, QS work. And from there, uh, it was great, but unfortunately GFC- Mm ... um, changed everything.

Mm. And I thought, "I need something that's a little bit more secure." So I went, went and did a law degree and, um, to be honest, I, I wasn't a- any great lawyer or any great solicitor. I was, uh, I was always that guy that said, "Oh, geez- Mm ... this is not what I signed up for." Paul, you, you, we haven't talked about this, but you have something else in common with me, which I, maybe the audience might relate to a little bit.

But when I was, um, uh, in 2008 when the GFC happened to me, I left the f- financial planning industry, which had become a profession then, working very closely with accountants, and I turned into a real estate agent. And my ego just dropped to the floor a bit because real estate agents, even today, honestly, it's not really a profession.

Mm-hmm. It's just a sales industry. And you've become a lawyer and become a real estate agent. Like, you've gone through the same- Oh, look- ... transition. Now, there are rewards there to be had which make it worthwhile, but how do you feel moving from a lawyer to a real estate agent? Look, it's really, it's really, uh, surprising for me, too.

I thought working for a criminal law firm and a, and a commercial firm, and then obviously into land trusts, you're not on anyone's Christmas list. You know- Mm ... when you're in defense and, you know, you're representing some people who probably aren't, uh, uh, of the, of the finest nature. Then I found it like, "Oh, well, real estate probably can't be any worse," you know?

And then I found the opposite. I actually, as a... I'm not a s- service-based business. I don't do rentals or yields. I do performance. I say to people, "Look, let me get your property. Let me, let me value add to it. Let me do the planning on it. Let me get an understanding or give- Mm-hmm ... a, a group of buyers comfort- Mm

around the true value of an asset." And for that I've seen, you know, really great responses and I've had clients that I've ... To be honest, like, they're like family. Mm. Uh, it's, you get into a position where you're able to work together and make more money or, or not just the quick sale. I've enjoyed it immensely.

Um, it's, it's, uh ... I get, 'cause I have hundreds of cards, and you get bottles of wine, and you get, you get thank yous, and you get that genuine feeling- Mm ... that you're part of something with someone else. It's, it's, it's the ... If you like serving people and you like the- Mm ... the profession of service, uh, uh, based on performance, it's the best job in the world.

And you, you have added so much value to a lot of these people. So you've, you've had a couple of mentors during this time that's got you to your level of thinking now. Mm. Would you like to share some of your mentors? Oh, oh, look, I think some of them will be, are quite private people. But look, I think the number one would be probably Peter McDougall from State Land.

Um, he's been amazing. Uh, he's really Taking me under his wing and, you know, on a weekly basis, you know, he says, you know, "You're an idiot. What are you thinking?" Um, and that's really adjusted me to a position of, of understanding the mechanisms, not at a hype level, but at actually at a turnkey level where he's able to say, all right, let's look at...

L- look, give an example. He turned a cane paddock, uh, into an industrial lot, uh, a very large industrial precinct, and he bought it under option, which was just sort of the birth of my understanding of, of how really options work. But then he was able to provide enough evidence to council, uh, to be able to get that material change of use, um, and, um, e- evidence of, you know, on a needs basis, yeah, by reviewing the market and saying, "Hey, there's no industrial land."

Yeah. By understanding, hey, look, there's the traffic corridor, there was a new highway that was just built. So that was a major trigger for them saying, all right, now we've got industrial vehicles and trucks. We need a road that can take that kind of capacity or that kind of load. Um, and, you know, from the economist to the planner to the engineers, he rolled me through each one of them.

Um, and he did one in particular that, uh, was in North Maclean on Greenbank Road, and, uh, i- i-- the engineers couldn't get it up. You know, no one could have success on this, and the developer had bought a, let's say, a 25 hectare block, and he could only get a two hectare development envelope. So with that, uh, by happenchance, the engineer was in my office and Peter had turned up to give me my weekly or monthly, you know, kick in the pants.

And he, uh, I asked him a question and said, "Look, how do we possibly extend this developable area?" 'Cause it had a res- a tree, a protected tree called the Jimboomba tree that was on the property, and it had a large amount of overland flow and sheet flow. So they really restricted it. And Peter, within a few minutes, came up with a solution, and the engineer was like a really, really experienced 30-year plus engineer, um, looked at him and went, "Wow That's a great idea.

Then he turned around and said, "Is such and such still council's senior consultant in hy- hydraulics or in water?" Knew the person. And he said yes. And he says, "Well, why wouldn't you go to him and have him do the assessment on a detention pond to retain the water?" And Brooke, the engineer, looked at him and went, "That's genius."

And he said, "Yeah, council are never gonna reject their own consultant or senior, senior, you know, expert in that field. He'll give you an understanding of this is how much you need to detain, here's how you get r- the water discharged out to a, a lawful point of discharge." And subsequently, my client got 11 hectares as opposed to- Instead of two

two, and he made a absolute, uh... He really did very well out of it. I can't say how much 'cause I'll get shot. But, um, he really did very well by having that developable area. Typically, in that area, it's going for about 5, 5, 550 a meter. So when you add a 70,000 meters addition at 550 a meter Uh, by argument's sake, that's a $35 million uplift in the value of a property.

Uh, you've still gotta do the civils and create the detention pond- Yeah ... which is more onerous, but it was a absolutely genius move. And I think that that- Mm-hmm ... was a real trigger for me to go back and say, "All right. How can I work for free? How can I do something to return- Mm-hmm ... the exchange of knowledge?"

And Peter started in mid-'80s in Western Australia, and then he owns a company called Stateland. And then he really taught me that you've gotta leave something else, you gotta leave money on the table for the next guy. For the next guy, yeah. If you want the deal to go through, and if you wanna, if you wanna try and pinch every dollar, then you're never gonna sell it.

You know, it's gonna be very rare. Yeah. But if you're able to give comfort to the, you know, end buyer or the future purchaser that not only is the project, you know, valid and, you know, fit for purpose and able to be delivered, but there's margin to be made- Yeah ... then all of a sudden you have a swarm coming to it to say, "Hey, we wanna buy this."

And the number one question, weirdly enough, is, "Why doesn't he do it? Why doesn't the guy, landowner just do the project?" Mm. Well, he's become, you know, semi-retired, and his model is that of knowledge and applying processes and, uh, planning and development application that gets approved on land and selling it for an uplift.

Mm. So the last one he did was, was, uh, was one that I bought my first option into. And, um, yeah, I, I, I would walk on water for the guy, to tell you the truth. He's, he's, uh, he's genuine, he's honest. Um, you know, he is, uh, first class in every way. Yeah. So- Look, I, I could talk to Paul all day about these, uh, option strategies, but let me go back, viewers.

Um, I think, uh, it was just meant to be that I was to go and, and, and meet Paul because just prior to that I was listening to another guy's podcast, a mate of mine, Dave Hamilton, Everything Property, and there was a very successful gentleman on there called Mark Rolton talking about how he's expanded a property empire.

And David asked him a question. He said, "Look, um, Mark, if you lost everything, do you think it would be a good strategy to use options in the current market? Do they still work?" And Mark Rolton went, "What? Are you kidding me? If you wanna scale a property portfolio with volume, you have to use options." It wasn't an o- an optional thing.

He basically said, "If you wanna scale with volume, you must learn this strategy." And this podcast I'm doing now with Paul will hopefully change your mindset, because I've been using the excu- excuse recently that, oh, I need to save up a 30% deposit to buy my next commercial property, plus another 5% for stamp duty.

And in my little- thinking up here, I've got to come up with 35% before I can scale again. I went down to talk to this guy, and you can ac- acquire properties or control them with very, very little money down. And the opportunities, if you can grasp this concept we're going through today, can absolutely skyrocket and leverage your property portfolio.

I, I'm just so excited about this, Paul. Yeah, look, and obviously in, in episode two or in the next, in the next sitting we'll give examples that are non-speculative that we can, we can show people, and they can research it independently, which is always the, you know, it's always the best way, I feel. Um, what I understand is, is that if you look at any house and land package, if you look at all those, you know, expansions on the fringes or even on infill sites, the builder doesn't ever own the land.

Mm. Whereas he would have no cashflow. Yep. He would be broke. Yeah, he, he can't be expected to buy, you know, a 10 or 20 or $30 million block and then still have the cashflow to pay the trades and have trade coverage and payment. So essentially all... You know, it's everywhere in the market at the moment. Mm.

It's not a thing where this is innovative or this is like we've got some secret sauce. All the big players use it. All the big players use it, and unfortunately, um, what happens is, is that- The rarity. You got guys like, you know, Dave, you know, Mr. Coberts from Deal Corp. Yeah? He has been doing these for 45, 50 years, and he's become so in tune with what works.

And I, from that I thought, "Geez, how do I get there?" And then you meet people that say, "Oh, look, there's this site that's, you know, on a tram line," or, "There's this new highway that's getting built," or, "They're building a new school." And with the building of that new school or that new highway or that new trunk infrastructure, then they all say, "That's, that's gotta be developed."

And then they find, they have that conversation with you, say, 20 years later. They said, 20 years later, "That's all built out, and I knew it was gonna be built out." So people know. Mm. People know. It's just being able to provide them the tools and the, and the relative information so they can have the c- the comfort and the confidence to go forward with the transaction.

Mm. That's really, for me, the, the, the biggest benefit to, um, uh, you know, the podcast and, you know, i- information that's readily available on, look, how do we assess it? How do we measure it? Yeah? And, um, and I could go on for days, uh, about sewage and water treatment plants. Now, sewage and water treatment plants are one of the big triggers, um, and it's so boring to most people.

I think my wife falls asleep, uh, when I try and talk about this stuff. But at the same time, it really is a, uh, an ability or a mechanism that everyone can use to understand how to assess a property for its futures- Mm ... for its potential. Yep. Yeah? And, uh, it's not just for the big boys. And I, I'm, I'm a little fish.

Mm. Uh, and I'm relatively new. Um, you know, three, four years into exercising options contracts. But I wish I learnt them- Mm ... you know, 30 years ago. I wish I knew. I just always thought, hey, look, Glenwood Homes or Plantation or Coral or any of the big builders who are, or the big guys, um I thought they owned the land.

And, uh, and then you see the benefits for the landowner, and you see the benefits for the actual end user. Mm. Uh, i- it's actually a ... It's not a they've stolen it position. It's always a position where, like in any good negotiation, both parties have to walk away with a level of happiness- Yeah ... with a level of reward for it to work.

So, yeah. Awesome. Really, really good. Viewers, what we're gonna do is we're gonna have a, a two-part masterclass on these options. The first one we're going through today is we're, we're gonna go through and just explain the mechanics of the option process. And also in a second podcast, we're actually gonna run through some of the real deals that Paul's actually done.

And let me tell you, some of the sites he's controlling, I mentioned he has 11 properties under option at the moment. They're not 3 and $400,000 properties. Some of them are 10 and $20 million sites. So- I just can't wait to go through them. So Paul, let's, let's get started to the very, very basic. Um, we've got what is an option?

We've got call options and put options, but generally for a buyer and, and the, the scale, to scale a portfolio, let's start off with understanding what a call option is. Do you wanna run through that? Look, yeah, absolutely. So an option contract is o- is where you acquire the land under a set of rules or a set of terms.

So those rules have all the basic elements of, or benefits like, you know, you don't have to pay stamps. The, you know, you don't have to pay land tax, you don't have to pay the stamp duty until, you know, you're ready to break ground or, you know, till you've got your planning approval. Um, you don't have the holding costs and, and a whole heap of, you know, really straightforward benefits.

Um, the, the option contracts work in a number of ways. The majority of option contracts are what's called a put and a call. Yeah, a put and call. So the put is on the seller's side, where the seller h- can say to you, "Hey, under the terms of the agreement, there'll be a price and there'll be a period," whether it's three months or five years.

Um, they will say, "We're putting this to you now under the terms of the deal. It's the 5th of September 2027, we've gotta put it to you to buy it." And then from that notice, yeah, or the put notice, you have to buy it. Yeah? Then you have, uh, the call side, which is for the buyer's side. So the buyer, he might have a 12-month put and call contract.

At nine months, he gets his approval from council, let's say. At that time, he can exercise the call, yeah, as in he sends the, the seller, the landowner, a notice to say, "I'm calling this property in to purchase it at the rate we agreed when we signed the contract." And from there it proceeds normally under a settlement period of 30 or 45 or however many days.

So that's the main one in the industry, the put and call, because it gives the buyer and the seller security over the transaction. Effectively, each party can force the other one to purchase. Yeah? At the same time, if both, if neither party exercises, yeah, the put or the call, the contract is null and void and each party can walk away.

Generally that doesn't happen because they've spent money with lawyers and they've spent money in soft costs. Planning, you know, engineering, economists, you know, traffic, all the different, all, you know, it is quite expensive. Mm. Um, uh, on a $10 million industrial purchase that we did, we spent $360,000 on soft costs.

Yeah? So you're generally not walking away- Mm ... uh, at that point, and neither is the landowner 'cause he's pulled it off the market. So then you get the golden Call only. So a call only, the landowner cannot force you to buy. Yeah? But the buyer can force or command the seller, the landowner, to sell it under the call option notice.

Now, they're quite a, a fair bit rarer, and they are a lot more risky simply because let's say you own the land, you own 1 Smith Street, and I said, "Right, I'm gonna put a call option for you." Mm. You would naturally say, "Well, look, you've controlling it. You've got your hands on the steering wheel. I can't sell it to anyone else."

Mm. "And now you can decide in two years to not buy it off me." Mm. "Why would I do that?" Is what the landowner would say. Mm. So the buyer would normally come through, like I would normally come through and say, "Well, look, if I don't buy it within that period of a year or two years, I will give you all the planning documents.

Yeah? And I'll give you all the IP." Yeah? And $300,000 worth of IP is significant. Mm. But generally what we do is we say, we wanna give the seller comfort around that we are in fact genuine and going to transact on the property. So we'll often give them a deposit, but we'll also give them a burnable. So we'll say, um, let's say look at The Woodlands Rise, which is a residential subdivision I'm doing.

Um, with that one there I've said to the owner, "I'll give you $75,000 a year," yeah, for me to have a call option on it. You can take that 75,000, you can... Doesn't come off the principal purchase price. Mm. You can burn it, go on holidays, do whatever you like with it. That's saying, "Look, I'm paying for it. I'll pay your rates, I'll pay your water, I'll pay your land tax- Mm-hmm

and I'll give you 75 grand a year to walk away, to, to do whatever you like with it." At the two-year mark, if I don't get the approval, or if the market crashes, or something catastrophic happens, then I'm able to walk away and I've lost the land tax and the 75 grand a year. So it becomes a burden on myself, and it becomes a burden on, on m- me as the buyer, but at the same time, you have to reward the seller or incentivize the seller to say, "Hey, not only are you genuine, but look, I'm effectively trying to make money out of your property, so I need to be able to compensate you for that."

And that is the way it normally works. If people think they can get into a call only, which means you can force the seller to purchase, to sell it to you, with nothing, then generally they don't work. This is a really, really important distinction, and since I met you, uh, two or three weeks ago, Paul, you'll be pleased to know that I've taken action on your advice.

And yesterday I made, in writing, I made an offer on a 600 acre block, a $2 million site. Uh, I've had to offer a full 10% deposit because I want a call option only and a long two-year period- Mm-hmm ... to settle now. It seems to me from my early investigations into the- these strategies, is that if you can offer a, a seller, you know, 20% more than their site is worth now, you might get away with a $1 option fee up front, because you're gonna spend hundreds of thousands of dollars in soft costs increasing the value of that site.

And you can tell the seller, "Well, you wanna sign this because I'm gonna get you a whole lot more at the end once we've added value." Mm-hmm. But in this case- Case B, where I've made an offer yesterday, I'm not offering him a lot more than it's worth right now- Mm ... but I am giving 10% up front, non-refundable, 200 grand.

Oh, that's, that, that, that, that shows your mettle. That essentially gives the seller comfort- Yes ... that, hey, you're not gonna walk away from 200 grand. Yeah. Yeah, you're gonna, you're here for, to actually get it done. And what you've done is actually quite unique- Mm ... and it's actually quite rare. Mm-hmm. Most deposits go into trust, and then rarely will you release that deposit- Yeah

or allow what's called immediate drawdown of the deposit. And the only reason I'm prepared to take that punt is if I did have to settle, uh, I've made an assessment from the risk side that that site will be worth $2 million even without the subdivision approval- Mm. Mm ... and I won't actually lose on it. I might not make money.

Mm. But what's given me further comfort is I've now got town planning advice from a local town planner that believes he can subdivide it and actually get one more lot than the selling agent has advertised that you can probably get out of the deal. So if I can get one extra lot, there's a probably a pretty big uplift there.

But I don't wanna pay too much for the site because there's no absolute certainty that I get the absolute- Oh, you're taking, you're taking a risk, yeah. That's exactly right. And, and here's the other thing that, that, that is the second part of option contracts. So an option contract gives you that benefit of, you know, no, no holding costs, no land tax, you know, no stamp duty, uh, immediate stamp duty.

So you don't have all these forward costs, uh- Yeah ... until you get a planning approval. Mm. And then generally when you get a planning approval you'll have pre-sales, and they'll cover the con- cost of the purchase of the land- Mm ... and the construction cost- Mm ... the civil costs- Mm ... or the build costs. The other option is, which is what a lot of people do, and a lot of my, you know, mentors of late, uh, uh, do, is they nominate or assign.

Mm. So let's say you buy the property for $100 under option contract- Yeah ... a put and call. Yeah? Standard, standard sort of option contract Then you apply, you know, $30 worth of planning on there, and I'm using small numbers to just to make it, you know, conversation easier. So you apply $30 worth of soft costs on there.

So you then go to planning, and you get the approval, and you manage to break up this, you know, 10 hectare block into 10 one hectare blocks. So all of a sudden now you've increased the value. Yeah. Then you're able to actually sell that put and call or nominate a buyer. Yep. So then you say to a buyer, "Look, I want $200."

So you've made $70. You know, it cost you a hundred, 100 plus the 30. You've made... And your time, obviously, which you don't, you don't value, um, in a monetary sense. Now you're gonna nominate a buyer. So then Andrew comes along and says, "Paul, I really like that site. I think I can make, you know, I can make great margin out of it."

Mm. Um, and you say, "Great. Well, what I'll do is I'll nominate you as the buyer." So then I, it's called a nominee form. You nominate another party to effect the transaction. Mm. Yeah? Now, in that e-example, you as the original option holder don't get paid until settlement, and then you pick up the spread, the amount between the 130 and the, and the 200.

Yeah? Um, so that's your profit margin. The other way you can do it is by assignment. Now, it's a lot rarer, assignment, um, but with assigning it, essentially you don't have... You don't get paid at settlement. You don't have to wait and stay in the background until it all goes through, and in fact, the person you've nominated, uh, you know, gets finance or has the money to settle.

You take your money right there and then. Yeah? As normally a deed of re-nomination or a deed of nomination, uh, you, where you say, "Right, I'm assigning it to someone, and that assignment, you're gonna pay me the $70 now." Yeah. Mm. Today. Yeah? And they are, they are more rare, but e- and essentially you probably won't get as much money if you assign it- Mm

because the person's having to part with their cash before they've realised the settlement on the property, 'cause anything can happen at settlement. Mm. The seller can refuse to sell. The buyer can not get finance. You know, there can be a, there can be a, a, you know, a number of risks in there. But essentially people that, that, you know, some of the, you know, best models I've seen are people who never develop the land.

They actually acquire Take the risk- Yep ... do the planning and the soft costs- Yep ... put all that IP together, and they sell it to someone else at a slight discount so they can then make some money. Yeah. So I hope the viewers listen to the power. What Paul's basically said here is that you can actually go out right now and target sites where there is absolutely no chance on earth you could actually fund the settlement of them or get finance right now.

Correct. Correct. If you have the skill set around adding value through the town planning process, there is no limit to the size of the properties that you can target to acquire right now with an option contract. If you can add the value, you can, say the naughty word, flick it prior to settlement and get paid handsomely for adding value.

And- And you get paid for, you know, taking the risk, being able to negotiate between all those consultants and experts. Mm. Yeah? It's, it's, it's a... It's not a simpler case of one phone call. Mm-hmm. It is day in, day out, you know, contacting, yeah, engineers, planners, talking to council- Yep ... um, being able to understand, all right, what is the social amenity in the area?

What are the trunk infrastructure improvements- Mm ... that are going on? All these elements. Uh, it's, it's, you know, it's a reasonable level of effort that you have to put in. Yeah. So, so i- it... But it is true. On my first ever one, um, I did not have- $4 million to settle, uh, unfortunately, with, with four children and a wife and, you know, uh, I- That don't cost money, does it?

I drive a Mazda. So I, I didn't have, uh, a, a, you know, a big bucket of cash. Mm. So I had put a, a deposit down of $283,000. Mm. And that was, you know, most of my savings, and then I had to find a buyer to nominate. Mm. And then, so I realistically, I could have probably made a lot more money, uh, in settling on it myself, you know, having that planning approval done, and then settling on it, and then doing the civil cost, subdividing it up, getting titles, and settling to then lots of smaller buyers, which would have given me an uplift.

But I just didn't have the money. And you needed to leave a bit of fat in the deal for the next guy. I had to leave a bit of fat in the deal. Yeah. And I'm pleased to say on that one, he purchased it off me for $4.3 million plus GST. He has now gone on to sell it for $6 million. Good on him. Um, by ta- him taking the risk as well.

Mm. So I bought it for 2.8. Mm. I sold it for 4.3, and, uh, 2.8, 3800, actually two, 2.8, three million I bought it for, and I sold it for 4.3, and I didn't have to settle on it. I got my 283 back. I paid a dollar to exercise the call, and he then paid the deposit, gave me 10% discount, and then I, on settlement, picked up the spread.

So on that one, I made, uh, you know, $1.608 million, if I'm gonna be quite frank. And I know it's probably a little bit, uh, uncouth to talk about money. No, we need to talk money. But, but I think, I think if... Transparency. Everyone can handle the truth. Yeah. Everyone can handle, "Hey, look, this is what happened." Um, now that was, you know, it was me having to find a buyer, it was me having to undertake, you know, a whole heap of planning.

It was me over actually having, uh, to f- sales is a contact sport. Mm. If you wanna leave it online or you wanna put it up and you, that's all you wanna do, you're never gonna get the greatest result. Mm-hmm. You've gotta actually ph- you know, communicate to each and every party that's interested what are the benefits, what do the futures look like, and why those futures are relevant.

Mm-hmm. So for me, I was delighted. I was... I, you know, I think I checked my bank account six times a, a minute for about an hour just thinking, "Oh wow, this is, this really is true." Mm-hmm. Um, and then from there, that's what's really inspired me to go out and then understand land, assess, you know, future development blocks, learn what a PDA is.

You know? Mm-hmm. Really key things that are in the media right now. They're in the market, they're in the papers, you know? Mm-hmm. The priority development area, the Thornlands PDA, the Winam Creek PDA. Um, there's, there's, you know, there's 20 I could mention here- Mm ... bore the life out of you. So viewers, it, it, one of the things Paul mentioned before about a call option agreement is that you don't have all the holding costs.

So one, you're not actually borrowing money upfront and settling and then having to pay interest for a couple of years to the bank whilst you're getting the uplift with, through the town planning process. But the other thing too is, like this offer I made yesterday, I could well have just made a normal contract with the seller and had a two-year settlement, but the stamp duty of 5%, which is 100 grand, would've been liable in New South Wales in 90 days time.

Queensland, 30. 30 days after unconditional- Unconditional ... in Queensland, and 90 days, uh, a- after exchange of contracts in New South Wales. So I don't have a lot of money either sitting around the bank, and by doing it with an option, um, yes, unfortunately with this case I'm doing the full 10%, but at least I don't have to pay 100 grand stamp duty in 90 days.

I can actually wait until I enter into that contract in two years' time to pay the 100 grand. Now, that 100 grand- is gonna go a long way to paying all the soft costs of town planners and engineering reports for the proposed subdivision that I have. Yeah, and look, the main question I get asked is, why don't land owners do this?

Mm. It's because everyone has their field of specialty. Yeah. Whether they're a farmer, a teacher, a doctor, uh, hospitality worker, whatever it may be, they have that expertise- Mm ... and their time is taken. Mm. Yeah, and they may not necessarily have that interest. They also may not have an appetite for risk. Mm.

Yeah? And now it's not the capital risk so much, 'cause the numbers are so small. Mm. Like you said, we're not settling on it. We're not paying the holding costs. We don't have this big debt imposing on us. It's the risk of time. Mm. It's the only thing we can't buy. So- Mm ... by being able to say, all right, do I now go through another whole process?

Or, as a landowner, do I say, "Right, I'm got confidence in this team or this party- Mm ... that's gonna buy it off me to actually effect sale. And if I give him two or three years, I'm gonna exceed the market growth." So if the market's growing, let's say, in wherever it is, at 6% a year or 7% a year- Mm ... but over two years he's gonna pay me 20% more.

Mm. Yeah? And if it all fails, I still get the IP that I might be able to use later- Mm ... for an application that might be a little bit less aggressive. Mm. Instead of going for 20 blocks, you might wanna go for 15, and council will say, "Well, that's less impact on the roads. That's less impact on the infrastructure, so we'll give it to you."

But the landowner essentially is picking up, you know, 15, 10, 20, 30% more- Yeah ... by giving you that two years, which actually exceeds the growth in the area. Yep. So for him, it's a win-win. Absolutely. Yeah. And then what's even more amazing is if you look at the king, for me, uh, he's an absolute gentleman. He's a charitable, wonderful guy.

Yeah, he's... He owns a company called QM Properties, yeah, and his name's John Hassell. And he's, he's, for me, he's a genius. Yeah, he, um, he ma- he would have- Oh, I'd say he'd have no less than 50 or 60 options running at any one time. He's got, uh, 8,000 or so blocks for sale at the moment. He doesn't own any of them.

Yeah. But every landowner holds him in such high regard because he actually said to them, "Look, have you got a block down there on the back corner that you don't use? Or it's, you're not making any money out of it, or you don't have a, a, you know, it's scheduled into a futures program to hand over to the kids.

So allow me to, you know, let me impose on you to, to put a options contract on that block of land. I'll take all the risks. I'll spend all the time." Mm-hmm. "I'll convert that land into something more valuable, generally through a material change of use or a planning development." You know? Yeah. Going from rural or rural residential to residential or multi-res or- Yeah

MDR or district center, whatever it may be. So the landowner then says, "That'd be great," 'cause now the landowner's got potential of, of having, you know, a, a big lump of cash at the end that's greater than what he would if he just sold it off on the general market. Mm-hmm. I think it's the, one of the greatest resources, and Australia is one of the last bastions of options contracts.

Like if you go to Ireland and England, you can't do it. And Scotland. In Scotland, you can't do it. Yeah. They're not allowed, yeah? Mm. Um, for whatever reason. There's a number of reasons. I thought in England you could, but Scotland and, and Wales you can't, but- Oh, I don't think England you can ... okay, maybe. Yeah.

No, no. Um, um, I think, uh, I think they're b- well I know they're much more regulated. They're entirely different. They're, the terms- Mm ... are bound very tightly by the legislation. So, um, yeah, I think with, with, uh, the position of options, they're a win-win for all parties. Yeah. Um, tha- and that's what, that's what I love about them so much.

Yeah. Look, an interesting uh, conclusion that I've drawn from what Paul's just said, I, I've actually got another offer out at the moment, which I did a podcast on recently, about a lease purchase option, and the gentleman they're selling, i- both of these gentlemen are in their 80s, and you mentioned before about win-wins.

Why don't the sellers wanna go through with these uplifts? Well, some of them don't have the time. Some of them don't have the money. A lot of them are, have had farms that have been in their, their whole lives, but they don't actually have a lot of cash around, and some of them just don't have the inclination.

So if you can find a site that you can add value through a town planning process, you can help them by adding value, giving them more money than what their property is currently worth, and it is definitely a win-win scenario for- And- ... both buyer and seller ... and it happens on, at every level. It happens with Airbnb, it happens in eBay, happens in car lots.

Mm. It's called putting things on consignment- Yeah ... where you put it up for sale- Layby ... and someone else- Mm ... someone else takes a margin on that, on that, on that asset or that property. 'Cause you're not in the process of selling cars. You're not in the process of developing land. The other big one that we haven't mentioned is the risk.

They mightn't have the time or the money, but it's also the risk of their money, and saying, "Right, well, I know nothing about this. I'm about to do, uh, uh, a- go into a venture that I don't know anything about. Why would I spend a few hundred thousand dollars, um, and talk to people on a product I don't know anything about?"

That gives a great amount of fear to most people. So that, that's essentially a lot of pe- why a lot of people don't do it. They, they would all do it if it was no risk. Mm. But essentially it's having that o- party with the appetite to take on the risk to do the, to do the development application. Paul, a couple of questions.

Like, um, I'm just blown away. Like, I can go to ChatGPT and say, "Print me out a podcast template," and I'm gonna have Adam interview me about buying properties with option, and we can do a, in, in, you know, a podcast with education. But Paul has actually done it, and Paul has 11 properties under option at the moment, which, uh, i- is just so valuable to go through these questions.

But we talk about the risk, and even you, Paul, when I come to visit you a few weeks ago, told me that you made a mistake. And one of the risks came to reality for you where... Can you-- I've forgotten the, the story, but you told me you basically didn't get paid what you were entitled. Can you, are you happy to share that, that problem that happened there?

Yes. When you sold an option? Yeah. No, I- Or assigned it? ... I, I, no, I nominated a party. Mm. Yeah? And then so when I nominated them, they paid the deposit. Yeah? They took my deposit, got taken away and given back to me. They paid the deposit with the landowner. Yeah. And then they paid the remainder of the spread of the cash, in a deposit sense, into, into my solicitor's trust account.

And then the option contract I, I had, I had undertaken at the time was one of my first ones, and I hadn't put in there the ability to have a second bite of the cherry. So what happens is if the buyer that I'd sold it to did not settle- Mm ... yeah? Then I didn't get the opportunity to then settle within seven or 14 days after he failed to settle.

Right. Essentially what happened there was the land went back to the, to the developer or landowner. Gotcha. Yeah? And then the landowner, over that 24-month period, had seen a 100% uplift- Increase in value ... more, more than 100% uplift. It went from essentially $160 a square meter- Mm ... to $300 a square meter So the, the landowner, he was-- he virtually said, "Look, I'm a businessman."

Yeah. You get... You can keep the... I get to keep the deposit from the nomination, which was pennies on the dollar. Mm. Um, uh, and I get to then resell it. And if you wanna buy it back off me, you're now buying it at 300. And look, I gotta respect him for that. It was a business deal. I entered into the contract.

Mm. I supplied the contract. It was my failure by not being able to give myself a second bite of the cherry. Yeah, right. Whereas I should've had a term in that options contract that said, should m- the nominee, the person I nominate to buy it- Mm ... not settle on the date required- Yep ... then I will be afforded, you know...

Generally I'll ask for 14 days, and now in all my contracts it's minimum 14 days. I ask to then be able to settle on that or, or replace with an other nominee- Yeah, right ... who can settle in that period. Another thing I learned from our discussion about risk management with option contracts from you, Paul, is that when you were going through another deal, you actually mentioned to me that you'd structured it along the lines that if you hadn't got a development approval by the exercise date, you had the right to extend for another six or 12 months.

Mm-hmm. And in return, you would agree to pay a higher fee- Correct ... to the seller, so that if you went through two years of your life and didn't quite get the dev- DA uplift across the line- Yeah ... instead of the option expiring- Mm ... you had the automatic clause in there to extend a bit more. Correct. But you would pay an extra 5% To the seller Correct

which is just such important information because, look, I've got a site now that I'm working on, a very small one, and I bought it two and a half years ago, and my town planner sent me a three-month timeline to get an approval. Now we are two years down the track, and I still don't have that approval. Mm.

So what you're, what you've taught me there is gold, because if you have an option that expires, and all options have an exercise date when it'll expire, if you don't have a clause there to extend it, you've got a massive punt on your hands. Okay, do I settle this thing and hope it comes through, or can I walk away?

Yeah, and look, as you know, generally over time you get an uplift in your, in your value of your land. Mm. So it's crazy to not give yourself that opportunity to extend. And you, you're paying a penalty, so you're reducing your margin, but you're not throwing money away, and you're still making money. You're just not being greedy and then trying to...

Often people go into these litigious battles where you said this or you breached a term of that. In the end, no one gets anywhere. You end up spending a whole heap of money. You're better off saying, "Look, I'll pay you a penalty," and that penalty allows that developer or that landowner to pay their holding costs or their interest if they've got a debt on the, on the property or something.

Then it becomes a genuine transaction- Mm ... where both parties benefit. I think that's what needs to happen to be able to make it go forwards and have some efficiencies. Mm. So. Paul, is it fair to say that the majority of contracts you've entered into are actually put and call and not call only? Yes. Yeah, absolutely.

It's, it's only of the last Two or three that I've managed to exercise call options. Mm. Um, mainly because if it's Harry Triguboff, he comes to you and says, "I wanna buy this property off you," you're the, as a landowner, you're saying, "Harry, he's got all the money in the world." Mm. He can afford to settle. He, he's got the capacity- Mm

to settle, um, which gives comfort to a landowner. Whereas when it's someone like myself who started small and I've got a, you know, a real estate business in Brisbane and I do Cairns and Adelaide and Sydney and Brisbane, but, uh, I'm not a high net worth individual, uh, like Harry Triguboff. So the landowner will often look at you and say, "Well, mm, has he got the capacity to settle?

He's gotta get all these things right. He hasn't got a very long track history." Mm. He's, you know, he's in his first four or five years or three or four years. So you don't get the same leverage. Now, after completing a number of projects, I'm able to demonstrate those through titles and through the examples of contracts, uh, and what's seen on Google.

Um, and the landowner then can say, "All right, well, this guy has the capacity to undertake those works." Mm-hmm. "He can in fact get the DA up, get the uplift, and I'm gonna get paid." And essentially that's what the landowner wants. He wants the, the least risk and the least friction to be able to get paid. So now

And I've also, I've taken what, from, you know, Deal Corp, QM, Lancini, Stateland, BMD and Urbex, you know, uh, The Orchard Group, Harridons, Brent Haley, all these really smart, what I call superstars of the game, um, who are all really good people. Um, I've taken little bits from each one of them and I've said, "All right, well, what works?

What's really effective there? Um, let's, let's forsake a little bit of margin for a greater level of security." Mm. Yeah. And for a more cohesive relationship. So from there, that's when I've said, "All right, well, I really believe in this product or this property, and I believe I'll be able to get the development approval, and I believe I'll be able to, to, you know, go forward."

But it's a very large purchase at, let's say the one at, at, you know, Woodlands Rise. Yeah. It's a $20 million purchase, and then I pay CPI plus 2% for every year- I ex- I extend up to three years. Yep. So for me, I don't have $20 million. Mm. So I went and said, "All right. Well, I've got 75 a year. I'll give you $75,000 a year.

I'll pay your rates. I'll pay the land tax." Yep. So essentially it cost me about $180,000 a year. Plus soft costs. Plus all the soft costs- Yeah ... to be able to then go forwards and, and, you know, if in two and a half years the whole world comes to an end and we have another GFC, I've lost- Mm ... you know, I've lost 500,000 bucks.

But you've already had offers on that site to exit. I, I was very fortunate to have, uh, some great offers to date. Mm. Um, and I know I'm probably leaving too much on the table without the development approval. Yep. So essentially I bought it for $100 a meter- Mm ... and I got offered $140 a meter- Mm ... which gives me a 40% uplift without spending any more than that 75 in the contract.

Yep. Um, and, uh, I realise that ... You might get 200 down the track. I should get 225- Yeah ... um, down the track. Mm. Um, it'll cost me and it'll take a risk- Mm ... but I'm reasonably confident that the market, although we've, we've seen a flattening in some, uh, some areas- Mm ... I believe the market, particularly in Queensland, will continue to have- Mm

a positive growth. Mm. Um- And Paul, you're not, you're not just Queensland. You, you have real estate licenses in multiple states, don't you? Yes. I've, I've recently, uh, done New South Wales, and now I've just, uh, started a license in South Australia. And, um, I've done that because I'm s- I act for some of these, um, larger developers that have been kind enough to mentor me- Mm

um, and then place a bit of faith in me. So then they've asked me to sell their assets there, whether it be a shopping center or a hotel or a marina. Mm. Um, and, uh, yeah, I thought, well, look, if they've asked me, I, I respect the opportunity. For what it costs you to, to get a, uh, a-