From Sand Dunes to $1M Profits: Beachfront Success with Gus Vella

 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.

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Hello and welcome back to the Andrew Wright Property podcast. I'm thrilled that you're here and I'm pleased to say that I've convinced my good friend Gus Vella to come back into the studio for part two of his story. Gus, welcome to the podcast again.

Thanks for having me back, Andrew.

So, last podcast, we talked about four or five deals that Gus has done, uh, including one where he profited over $5 million.

Uh, if you miss that episode, please scroll back to the last episode and have a read and listen to that. Uh, before you go through this episode, Gus, um, we've got a four more, four or five more deals here that we're gonna talk through. And, um, I've written down the addresses of the properties and if you can explain to the audience the strategy behind them and how you finance the deals and what sort of profits.

Uh, were generated by each of these deals and the first couple are actually beachfront properties. And when I think as a real estate agent or a real estate investor about scarcity of property,

yes.

Uh, there can't be anything more scarce than beachfront land.

True? Yes.

Um, the first deal that we're gonna run through is number six, Surfside Crescent in Pottsville.

Talk us through the deal, mate.

Yeah. Well, um. When I was, I think I was about 30 years of age, I, uh, was looking for an investment property for myself, um, as such, and, uh, searched long and hard, drove up to the Sunshine Coast, even further north up to, um, rainbow Beach, all these areas thinking, you know, where's a, an area that has got potential, not something that's already happened.

Were you chasing beachfront in particular?

Well, as close to the beach as possible. Okay. Depending on, okay. Price. You know, I had a budget, you know, I had finance approval, you know, I could go to a certain point. Yep. Which, which was $200,000 at the time, which doesn't seem like a lot these days. Gee,

whi it sounds so cheap,

doesn't it?

But, um, so I had a look around and um, and I thought, well, I'll, I'll go the other way. I'll go south. And I went down the coast up, down this far as sort of Byron Bay, sort of keeping it somewhere within, you know, a couple of hours of, uh, where I live. Yeah. Um, and, um. I came across this area called Pottsville, um, down the Tweed Coast, which wasn't that far away from the Gold Coast.

When you look on the map and take a drive, it's even closer. Now, with the better infrastructure, the roads are much better. Um, and I investigated the area. It was a high level of unemployment, which was a down point, but that's what kept the prices down. Um, but going further south, places like Byron Bay.

Were taking off. Um, and that didn't have a high employment rate either. You know, there's a lot of

true

people that weren't exactly working, living in that area. Yeah, I

remember that was the, that was the stigma of Byron Bay come down for some marijuana and chill out and

that sort of thing. Yeah. So I looked into it.

I'm going, well. This area's got potential a as do other areas in that tweed coast area.

Mm.

Came across a property opposite the beach. Mm-hmm. Um, two story. Brick, brick, brick and tile house.

Mm-hmm.

Um, three bedroom with a rumpus room, double garage. On a corner block opposite the beach. Like the, the sign to the beach was right in front of the property across the road, but it was all, um, reserve and approximately a 50 meter walk or so.

So we won't call that one beach front. It was like beach side. Beach side. 'cause there was a bit of a, a park in front of you sort of thing. Okay.

Yeah. But there was nobody built between me

and the beach.

And the beach. Gotcha. So, um, yeah. Yes. But people could park that, park their car in front of my house.

Yeah.

Purchase price.

Um, that one I purchased for one 95,000. Yep. Um, fully furnished. Um,

was it under asking price or you paid full price?

I played just a little bit below, but yeah. Close to the asking price. But, um. I negotiated it a bit, but yes, it was a, it was a good deal. I thought well priced and in, in a good location.

And what did you do with the property and how long did you hold it?

Um, well, I, I, the idea was to, to rent it out and maybe to use it ourselves. I, I had a young family at that stage. Mm-hmm. Um, I had one, one child and another one not long after. So we were somewhere to go on holidays, which wasn't that far away, but predominantly renting.

So the day we settled, which I think was um. Just prior to Christmas, like within um, yep. A couple of days before Christmas. Um, and we had, I had the same the day after we, we, we settled, I had a, I had tenants in there paying $600, $600 a week, which was an equivalent to today would be a lot more, um, through the holiday period.

So that, for that six weeks,

was this short term rentals?

Short term, yes. Yeah. Uh, but through, through the agency that, um,

yeah,

that I bought, bought the property through in, in, in Pottsville and they said we could rent this out 'cause it was furnished. It was ready to go, um, for $600 a week.

600 a week. That's, uh,

that, that's for those

30 grand a year if it was rented.

A hundred

percent. That's for that. So every, every school holidays I could get that. And yeah. And they could also find me. Um, tenants in between. Yep. Um, paying on a more permanent basis. Yep. Which was more closer to the two, two $50 a week. Okay. But I mean, I had it fully rented all the time.

The, the

cash flow was

all

right.

I struggled to get it, to use it myself because naturally everyone else wanted it. Everybody else wanted it, you know, being where it was. Um, and I did nothing to it. It was as is where is, um, situation. Yeah. It

And what triggered you to sell it? Gus

Well. Again, an agent approached me like down the track and said, 'cause I, what I did do to the property was I.

Pulled, looked at the carpet and it was getting a lot of wear and tear and uh, looked underneath and there was some nice, um, timber floorboards there, which I thought would come up well if I, um, had 'em, um, polished and sanded. Polished stain. Yeah. Right. You know, and, um, did wonders to the place. It just brought it to another level.

Even the agents were surprised. Yeah. Um, and they said, you know, you could, you could get some big money now. And I'm thinking, you know, well, only just. Bought it up. This is after seven, seven and a half years after we purchased it. And, um, did very little to the property apart from that. Um, and they suggested we could.

We could get somewhere, you know, around $600,000. And I said, really? But nothing much has changed here. It's all still high unemployment still is, yeah. But yeah, but land, land near the beach, you know, it's coming, becoming more popular these days, you know? Um, and, uh, people are paying more for it. So, uh, we put on the market and we did sell it for $600,000, um, at the time, which wasn't.

What I bought it for, but I wanted to see what else I could do with the money down the track. But I mean, we, we, we made that, that capital gain out of the, um, out of the house. Yeah.

Okay. So all you did was rip up some old carpets, polish the beautiful timber flooring, which some buyers will pay a premium for.

Yeah. So we spent maybe a couple of thousand dollars. That's all we did.

And you tripled your money,

tripled it

tripled 200 to 600 in, uh, seven years.

Yes.

Um, another, another great story.

Well, yeah. That was, uh. A, a good, um, result considering, um, I wasn't expecting that. You know, it was something I can't say I was smart and in, in knowing that I was gonna triple my money in seven, seven and a half years.

But certainly position in this case is very important, was very important in getting a good result.

And that result has, obviously this is seven years later, you've kept that same mindset with your, your next sort of project there. You've gone beach front again. And, um, I'll just make, look at my notes here.

So you've looked, you've gone, gone and bought two properties at North Point Avenue in Kingscliff, known as the SALT Development. Yes. Uh, talk, talk, talk us through that. Deal. Number two, Guss.

I had a close friend of mine who was a, um, a building designer, um, slash you know, architect, um, who, um, we talk socially and amongst other things.

We were both. Football coach, rugby coaches at at TSS at a, at a private boys school and became good friends. And, um, he, he saw that I was going down there a bit on holidays and things with my family, and he mentioned that they, they were gonna be building, developing an estate down that way, um, in the near future.

So that triggered some interest that I wanted to have a look at what they're, what they're proposing. And, um, I was quite taken back thinking. What I just achieved at Pottsville, and this is actually in South Kingscliff, so not that far between the Gold Coast and Pottsville. Yeah. Closer, closer to the coast, gold Coast.

Um, and they had a master plan and it looked fantastic, you know, with, uh, a commercial precinct and, um, some absolute beach fronts and beach side and a lot of, um, nice amenities, um, in a, in a really nice community, you know, fe nice feel about it. Um, and it, but when I looked at it. It was just sand dunes.

There were no roads. Right? It was all proposed. Mm-hmm. Um, so I, I got wind of it and, um, like I said, my, my, my building designer friend told me about it and I went for a drive. He said, you should have a look, go for a drive one day. So I went down, had a look around and asked a few questions. They had, they had a, they had a display office in, um.

In, uh, Kingscliff itself. Yep. Um, to start things off early on. A

mobile home or something.

Yeah. That

sort of thing. Little, little thing. Open the sliding door and walk in and there's these plastic displays and what it's gonna look like. That's

it. Yes. Yes. It's all proposed. It's, this is in, you know, in the next couple of years this is gonna happen.

Yep.

And when you look at it, you, there was no road to go in there. You had to just, you know,

you had that vision,

vision, vision is a very big word Yes. For this. So I, I saw the potential having experienced it, and, uh. And yeah. Had a look at it and they showed me the site and I thought, how close can I get to the beach?

And I, there was a road called North Point Avenue, um, at the time, which, um, on one side of the road was absolute beachfront, but they'd all gone because friends of the developer had already gobbled them up. Gotcha. Um, people that he knew.

Yep.

Um, and, um, I had to be on the other side of the road, but, you know, depending if they built a house or not, you could have.

Water

view.

Yeah, yeah. That sort of thing. Yep. So I, um, I sizzled up a couple of blocks, um, next to each other, um, in that location. And, um, while I was there, even the person who, who told me about it, mm-hmm. He, um, he was one of these people that missed out a lot of opportunities in the past would tell me, I could have bought on the Sunshine case before this happened.

I could have bought. Down at Byron Bay, or I could have bought up here. And, um, I thought, well, why don't I put a deposit, you know, help him out, put a deposit down on one of the properties similar to mine, just next block, same location, um, and, um, surprise him, you know, and, and do that sort of thing. And, uh,

this was a, just, uh, a, a favor to one of your mates.

Yeah. Yeah. You're just trying to help out.

Yeah. Well, you know, he, he was sort of person that needed. You know, and needed some encouragement, some be pushed. 'cause it took a lot of convincing, especially his wife, to, to, to get him to go through with this, you know, because I just kept on reminding him, remember those stories?

He kept on telling me about the opportunities you missed out. But you gotta, if it's meant to be, it's up to me. That sort of philosophy. Not, not, it'll just happen. It won't happen. You have to make it happen. So I, I sort of encouraged him 'cause he asked me, not long after that, he said, uh, did you go down, have a look at that site?

Mm-hmm. I said, yeah. I said, what'd you think? I said, yeah. I bought a few blocks, you know, put a deposit down and actually I'll put one down for you too. He goes, he was, he was taken back going, what do you mean? I'm going? Mm-hmm. What you told me about, you told me it was a good thing. You thought it was gonna be a good thing.

Well, I, I, I, I made, made it happen, you know, like I put deposit down just to, just a small deposit to keep it put

your, so just to clarify this, um, your motivation there was not to tie up a site and flick it at a profit to your mate, you're actually. Putting that third one in his name just to help him out as a mate.

Is that what happened?

Yeah, yeah. Yeah. Okay. Well, he was a good friend of mine.

Yep.

Um, no, no commissions. Yeah. Nothing like that.

Yep.

Um, and yeah, even when I was, I'm not sure if you remember, but I was a school teacher back in the day and uh, yeah. The person I went through went to same school and we went.

Spent time living together at uni. Um, while we were going to uni. Um, he was also quite taken back that I was looking in that area. 'cause his dad, his dad had retired and moved to Pottsville and, and saw what I did down there.

Oh yeah.

Um, and took a bit of interest into, um, what I was doing and, and, um, might have mentioned to him over a social function, how, you know, where I was gonna buy and all that.

Mm-hmm. Um, told him about it and he was obviously. Sparked some interest there. Um, he, um, in his lunch break one day, he, he grabbed me and he said, what do you wanna do? He says, take me for a drive where, where this land's gonna be or where you bought. 'cause I'm merely interested, you know, so anyway, we went down.

Same thing in this case. He, we actually went to look at it together. Yeah. I took him to the office and just showed. So I just pointed in a direction that's where it's gonna be over those sand dunes over there, because we weren't gonna walk through some sand dunes, but that's where the estate is. And he says, well, can we go and find the best possible block that's available?

Now, this was a few weeks later, so he didn't, he couldn't get the same blocks but not far away. Yeah. You know, we're talking a hundred meters further in. Um, and he, he bought it then and there. He bought a block, he said, he said if, and you've definitely bought that. He said, I bought those two. Um. My mates bought that one, you know, and all that.

And even the, A guy I knew in the finance industry, he bought the block next to that. So all, a lot of people that heard I was buying in there got got something, you know, they, they felt positive that. This was something that could happen and go well, so he, he also then bought a property, which, and he was the first house to be built in the solar estate and got publicity all over the news first house built, and that was my, my school.

So Gus, before we go through the numbers on the two that you bought, how did you make go with that investment?

Yeah, well, approximately 12 to 18 months later, when the land got developed and there were titles mm-hmm. To, to the land, um, he. He wasn't as, it was, it was hard to convince him to buy the block of land.

So he wasn't gonna go, he wasn't a risk taker. He wasn't a risk taker to go and build on it. Um, and, and further develop it. He, um, he decided to unsell it, unsell the block of land, and, and, um, spoke to a, a local agent to, to unsell it. Um, and came, come settlement time. Um, he did a. Simultaneous settlement with somebody else who showed interest to buy that block of land.

So the day he actually settled on the block of land, um, a contemporaneous

settlement,

contemporaneous aous settlement that would, he settled the same day and doubled his money on the same day. So whatever, I think the blocklin was around 2 90, 2 85 to two 90.

Yeah.

And. He got closer to 600,000.

So a hundred percent profit one day.

One day. And he didn't even have his money tied up?

No, because he actually put a, he, he, um, did he buy you

a

drink afterwards to say thank you, Gus?

Yeah, he did a couple of things like that. Um, he, um, actually got a, a deposit bond, so he didn't have the funds to get a deposit, so he got a deposit bond, which might've cost him a thousand dollars or so to hold it for that.

Say 12, 18 months thousand

dollars to make 300 grand.

Yeah.

Yeah.

So he had a better story to tell. 'cause he, that's all had to put, that's leverage. It's a, it's a, that's a good return on your investment. So that was a good friend. That's what he, and we, we are, funny enough, we are friends for life now and, um, a few years later, um, I had my 50th, um, birthday party and um, he actually got on stage.

To thank you. Yeah. Yeah. That's, that's a beautiful story, mate. Yeah. Those emotional things, like when you're on your deathbed, you remember those sort of things. That's, that's awesome, mate. So good on you. Okay, well let's go through the, um, the numbers on your two now. So I've written down here that number nine and number 11 North Point Avenue in Kingscliff.

Yes.

Um, in a nutshell. You've bought the land and you've, you've actually done the ground up construction. You've actually built houses on both of them, and you've sold them both at a combined profit, just under a million dollars and a 50% profit in, in what period of time? Gus, tell us the deal.

Well, um.

Having both blocks of land next to each other. Uh, one was a corner block number nine North Point.

Mm-hmm.

That was a, a bit bigger block. Um, I think it was around 660 odd 62 square meters. And the, um, number 11 was next door. Um, 602 square meters.

Mm-hmm.

Um, purchased the corner one for 334,000. And the one next to it, similar to my friend's block, um, that was at I think 288,000.

Mm-hmm. Um. So I built the corner block, corner house first.

Yep.

Used the same builder and then staggered it and 'cause I pre-sold that one and started on the second one next door.

So to mini, is that just purely to minimize risk or because you couldn't raise the money to build two at the same time?

Yes. I couldn't do two at the same time.

Gotcha. Yeah, it was, yeah, it was limited on too. Too expensive. Yes. Yeah.

Okay.

Because they were quite good quality homes. So the, the house on the corner, for example, was five bedroom, three bathroom, three garage. Media room, um, study, you know, quite a substantial nice home. Mm. Um, it cost to build the, uh, construction cost for the house was 600,000.

Okay. I know it's hard to believe, but that's what it cost to build a house. Then, um, so with the, with the land, um, was, you know, somewhere in the vicinity of. $934,000. Um, then I added on a pool on top of that. Um, and you factor in some interest. You know, it, it would, it would be close to the million dollar market, cost you

a million

pull up

and you sold it for

1.5 million,

1.5.

So 50 I had, I had a buyer before I finished it.

Yep.

Wanting, wanted me to dealing direct, so I sold it myself.

Yeah.

1.5 million. Um, and I actually. Try to delay it as long as I could. So I put into the new financial year. So the actual sale went through on the second or 3rd of July. So, so deferred tax for another year?

Just for another year. 'cause otherwise would've been paying for a lot sooner. Gotcha. So that's, that's, that was that, that, so that one was sold for 1.5, the one next door. Um, I sold that one as well myself. So I was doing open houses and doing that sort of thing myself. It was a bit of a traveling, but yeah, it's quite an enjoyable place to be by the beach.

Um, so I sold that one for, uh, 1.23 million. Um, to a person who, uh, from Queensland, from a place called Sovereign Islands, he, um, he, he sold his house on the Sovereign Islands. Familiar with that area? Yeah, yeah, yeah. I heard of that area too. Um, and he, he, he bought his house, um, and moved from, um, paradise Point to sold.

Yeah. So, so

at one point, uh, two, three, what did that one cost you to build?

That one cost me all up around the seven 80, so I. I think it was around the 500. So 500, it was a smaller house,

so you made a 50% profit

on one. Still made a good profit, similar profit, but it, it, it was a smaller block of land. Bit cheaper land, cheaper build.

Yeah.

Um, and obviously I sold it for approximately $270,000 less.

And one of your strategic benefits with your. Ground up construction, Gus, is that you save a bit of money in real estate commissions when you're selling the, the land because you're actually an agent yourself. You

Yep.

Had a real estate license.

I'm just curious. Uh, I can't sell property in New South Wales 'cause I, I've actually only got a Queensland real estate license. But I guess if you're selling property that you own in New South Wales, you don't have to have a license, a real estate agent's license. Is that

That's correct. Yeah.

I, that's

the deal.

I, I, it's not like I was, um. Developing an estate or, or Yeah. Being an agent for a development. I, I, a big development. I was only on a, on a small scale, you, it's fine with your selling, and I wasn't coming across as a real estate agent. I was more or less coming across as, as an owner.

Yeah.

So, um, yeah, because I, I was practicing in Queensland on New South Wales, like you said.

Yep. So I could certainly, um, do that. Quite, yeah. Quite legally. And, um, yeah.

What sort of, um, entity did you use to purchase those properties in Kingscliff?

Oh, I just had a private company Okay. That I put the properties in the name of.

Okay.

So, yeah, that's fine. Yeah. Not, not through a trust or anything like that.

So it's just through a company.

Yeah. So the re the reason I asked that, um, for the viewers, uh, I'm certainly not an expert, but an another friend of mine. It got stung really, really badly, uh, several years ago by buying a property in New South Wales in a family trust. Please check with your accountant and lawyer on this one, but he, he was charged double stamp duty and every single year he pays double the rate of land tax because his trust aid of his family trust allowed for profits in that discretionary trust to be sent to a international.

Non-resident of Australia and in his particular circumstances, the, um, the, the state government in New South Wales, uh, treat him as a foreign resident, uh, his entity there, and they therefore charge him double the rate of stamp duty and land tax. So if you are buying stuff in another state that you're not familiar with, it's just very, very important that you understand that land tax thresholds and different structures that you use can make a massive difference on the rates of land tax.

And stamp duty that you pay. So just make sure you get advice if you're buying stuff in another state. Now, Gus that, um, obviously you've had a pretty good run here with these beachfront properties and, and that sort of mindset, uh, led you to buying another couple of beach or Beachside properties. Um, golden Ford Drive and Pacific Parade in Bellinger.

And we won't go into the numbers in a, in a big way, but. Just, uh, the opportunity cost there. You ended up buying them, making a bit of money. You sold these, you sold a block of units, uh, right on the beach and a house behind for about 4 million, which would probably be worth maybe 12 million now. And yeah,

that's it.

In, in hindsight, that's just one of those things that, you know, you wish you had a held, but you. What triggered you to sell that?

Well, well, your circumstances dictate sometimes. Um, what, why you have to sell properties, um, whether it be financial reasons, uh, matrimonial reasons or, or business opportunities that come up.

Yeah. In my case, um, I was going through a, um, matrimonial matter with my, um, my ex-wife. Yeah. And, um, I needed to. Sell those properties. Yeah. Um, at that time. Uh, so I held them for a short period of time. Mm. But I had a block of three, um, apartments with a basement car park on, um, Pacific Parade in Binga.

Yeah.

Opposite the beach. So Nice beach, ocean views. Um, and I also purchased, um, the house behind it, which I rented out. Well, everything was rented anyway. Yeah. The house behind it.

Yeah.

Uh, on Golden four Drive. So in total it was like a thousand, over a thousand square meters. Back, back to back. So I, um,

wow.

I, um, I, I thought of redeveloping that at some stage, but obviously 'cause of what I was going through at the time, personally, I had to, um, sell the properties. I still made money. Um, but not, not what I could have made, like you said, today,

you'd be 8 million

richer if you held on it. So still made money, but, but, uh, not as much.

It just, it just fascinates me. The southern end of the Gold Coast. I mean, uh, some. Uh, relatives of yours appointed me to sell a property about a year ago down at Palm Beach, which we sold for, uh, just under $4 million. And it was nowhere near the beach. It was way back in Palm Beach, but it was zoned for multiple dwellings and sold for nearly $4 million.

And it was just a, a couple of old knockdown, one knockdown house, and a couple of duplexes. So all of that land there from Burleigh down to Palm Beach is just incredible. Uh, the valuations down there at the moment, and I feel sorry for us poor locals and sovereign islands like our houses just haven't gone up the same amount as in percentage terms as down there.

True. So, uh,

yep, I agree.

Next deal, Gus, um, putting your, your property developer hat on. Um, 23 to 25 Blake Street in Southport. A couple of 1,214 square meter. Blocks of land that came up for sale around the same time. So two different sites totaling 2,428 square meters. Where did you see the potential to add value to those sites?

And talk us through the deal, what actually happened.

Yeah. Well, at the time I started doing some developments, which, which we'll talk about soon, um, where I was, um. Buying land, um, either knocking down a house or, um, or rezoning the land or whatever, whatever, depending on the circumstances. Um, and, um, building predominantly three bedroom townhouses on these properties.

Yeah. Um, on this land. Um, and selling them myself as well through my office. So, um, I saw an opportunity there where. Um, individually, which they were individually purchased, um, but they were side, side by side. Um, and they, um, individually could take four townhouses each with the, with the RD reside residential reside density zoning.

Yeah.

So that was, which would, was one property per 250 square meters. Yeah. So being roughly 1,214 square meters each, you could, um. Assuming you do the right ratios and design structures and, and allow for everything, you could put four townhouses in each one.

Yep.

And with what I was at the time, paying prepared to pay to make the formula work for us, we would pay $30,000 per site.

So, and it, it was that I paid $120,000 for each property individually, which had a, a basic three bedroom brick house on it, but that which was rented, um, for that site. And times two, so we bought. Also the other property next door, um, for the same price, 120,000.

Yeah.

Um, and then went through a town, through the town planners that we knew, um, and get, get 'em rezoned and get 'em approved.

But the, the, the one benefit I looked into, which, um, once I amalgamated the sites, was assuming you had a 20 meter frontage, um, and a block of this size, you could put four townhouses on, um, individually. But if you amalgamated two like that. Um, and you had at least a 25 meter frontage.

Mm-hmm.

Which we did.

We had roughly a 40 meter frontage. Um, you could, the ratio would change the residential density zoning to a to four and you could go one per 200 square meters. Um, so technically you could go from building four and four, eight total of eight, yeah. To potentially 12, um, on this land, which would increase the profitability.

Um, you, you value add scenario of the site. By having, uh, amalgamating the two sites together.

Yeah. Right,

right. Um, as long as there's no issues easements, which there weren't, you know, in between, um, and, uh, yeah, you design something appropriate.

So if I, if I just go through those numbers so the viewers, uh, understand.

So in the, these days, they just have the zoning of medium density or low density or high density. But back in those days, in Southport, there was RD three, which was one dwelling per 250 square meters. A little bit higher density zoning was RD four, which is one per 200. So each of those sites, 1,214, it would've needed to be 1,250 square meters to get five, but it was just under 1250, so you could only get four.

Yeah.

But by merging it with next door. Um, you saw the value add where you could get a higher yield, more density on the site,

or potentially you get 12,

get potentially

get 12 from eight to 12, which,

yeah.

And that's only because you, they haven't been next door to each other. Yeah. If they'd have been across the road from each other or you couldn't do it, or two blocks away, you couldn't do that.

So, um, I, I saw an opportunity and, and, um, made, made it happen. I guess because we were dealing with two separate owners. The agents separate agents weren't. Weren't advertising this one site, if you know what I mean. Yeah, right. And they could have realized more for their, for the vendors, I guess. Yeah, right.

If they had a But the average real estate agent doesn't look into 10. So you bought

them what, within a few weeks of each

other, or, yeah, yeah. Very close timing. Within the same month, um, for, for $120,000 each, because they weren't rezoned, I had to go and get 'em rezoned. Uh,

so 120,000 for each block. So it was, uh, uh, 240,000.

Purchased for both sites.

Yes.

And then you went the, with your town planners and your, your architects and you actually went and got a development app application approved with the council for 11 dwellings.

Well, we, we, um, the potential was 12 mm. But after having spent some time with my building designer, architect.

To make it work properly. You know, with car parking visitors, car parking, we, we, we come up with 11 being the best possible scenario to, to, to make it work. So yeah, we, we, um, we got it approved. So

yeah,

the council weren't happy with 12. They were happy with 11. So they, they approved, um, 11 three bedroom, two story townhouses with single garages and, and visitors car parks outside.

So

potentially you might've got the 12 if. Instead of building three beds, you might have, um, made a couple of two beds and then less car parking requirements or whatever. Possibly. Yes. But you, you worked out that the best way to go would be to the 11 three

beds. We had a formula. We had a formula with what investors were looking for.

Yeah.

Um, for renting and all that. And three beds, um, didn't cost much more than the two bedroom. Yeah. So it worked out better in that respect. So we, uh, it. We got council approval, um, for, um, three bedroom townhouses.

And you, you didn't build that site. You didn't go on and build the townhouse?

At the time?

We, I was doing other projects. Um, I was doing this on the side to get it ready for another development to do down the track. Um, an opportunity came up with a, uh, a person that I knew in business, um, a person in the finance industry, um, and he wanted something ready to go. Mm-hmm. He wanted. Get his hands on something straight away.

Yeah. And I said, well, I've got something here happening. Um, and his office was in Southport. The properties were in Southport. And he's, he had, he dealt with a lot of investors, um, and he, he was closely aligned to a builder, so he had, he could go, he, he wanted something ready to go, didn't wanna wait nine months to get it rezoned and get it approved.

And you already had the approval

Yes. At this stage. Okay. Yes, we had it all approved, ready to go.

Yeah.

Um, and um, he offered us. A price, which at the time we thought, well, this is in the late 1990s. Um, we were struggling to find builders at the time mm-hmm. Because there was this thing going on in Sydney called the Sydney Olympic Olympic Games, and all the workers were on the Gold Coast.

We were heading down south. Yeah. Sydney making, making a lot more money than they were making on the Gold Coast.

Yeah.

So we were struggling to get, um, all the trades here, um, at the time. Mm-hmm. Um, with our other developments we were doing. Um, and um, there was even a bit of concern around, there was also this thing called GST coming in.

Oh yeah. And there was a bit, there was a bit of, a lot of big question marks being asked. And around that nine,

nine, that's exactly when GST came

in. Yeah, yeah. All all happening around that same time with the Olympics and that, and what, what's gonna happen when it clicks over to the year 2000? There's all these negative, the world's gonna end.

All these things are gonna happen. So we thought, well, we said, would you sell it? Yeah. We look, we'd sell it if we get somewhere around. Around 500,000. Yeah. 'cause it, it's, it, it owed us roughly two 40 for the land, for the acquisition. And by getting it rezoned, um, and all that, it was approximately $20,000 in cost.

So, um, around the two 60 mark and we came, we agreed on a price of 495,000 and he could take it over. So this was a, a nine month transaction

that,

that

happened. Okay.

So you nearly doubled your money in nine months?

Yeah. Yeah. Without the risk of,

yeah. Without pulling

a

shovel out

and digging any holes, no.

Without having to sell. Anything. And it was a private, again, it was somebody we knew. We didn't engage a real estate agent or anything. It was something done privately.

Mm.

Um, and, uh, it was a quick transition, like a quick, quick settlement. And he, he was happy. And we also had another, there was another site nearby in the same sort of street, which we were working on, same thing.

And he acquired that as well. Not as big, but similar, you know, same, same thing. So he built, I think it was 20 properties in the street, uh, 11 there, and nine in the other one. Yeah. And, and similar, so I'll just

back, I'll go back a step for the, for the listeners, Gus. So you, uh, had the skill set to put those two blocks of dirt together so that you could increase the density of the site and had a, an uplift in the value of the land.

And because of that skillset, you had the local. Knowledge of what the town planning laws were with the zoning you used your skillset to do. Once you made some money on that one, you bought another one just up the road in the same time.

It was all happening around the same time.

Corner of Ann Street and Blake Street.

You bought another site and you leveraged your skillset and knowledge because you knew the numbers.

Yep.

And you made money again on another site, just up the road doing exactly the same thing.

That was all similar. Exercise similar.

Yeah. Yeah. So,

so yeah, it was a worked out, it was a sort of a, what I call a win-win situation.

'cause he, he had a builder ready to go. We, we were struggling with builders. Um, and, um, yeah, he, he, he was ready to go and he sold them and, and, um, had to pay a selling commission, which we didn't have to because we, we would sell 'em ourselves. Um, but yeah, it, it still worked. It was a win-win situation.

So there's two deals that you did in quick.

Quick, uh, time, just, uh, buying vacant land, getting a da, yeah. Getting a value uplift and flicking it on.

Yeah.

Uh, next deal. Gus, um, ground up construction, uh, six Burley Glen Court, burley heads. Um, this is your, uh, uh, joint venture with, uh, your, your friend, Jack.

Jack.

Um,

well, the other ones I just spoke to you about.

They were also with Jack.

Okay.

They were, um, especially the one on the corner. The corner site was predominantly Jack and the other one was between us, was we were in the twos and frozen between developments and getting some land rezoned. Rather than buying something ready to go, we were also acquiring raw land and rezoning it.

Trying both. Both. In some cases it was already zoned and ready to go. Already buying it approved. Yep. In some cases, not. So,

uh, six Burley Glen Court was that already had a DA on it. Yes. And tell us about the deal. 1,282 square meters of land. And you built five townhouses. Can you remember the numbers roughly?

Um, um,

yeah. The, the, um, the land was, um, $150,000.

Yep.

Um, we, we, again, we had a formula of. Paying $30,000 per site.

So five times 30 for the land was one 50.

Yep. Yep. And then, um, the, the building cost was $350,000, which was $70,000 per, per three bedroom en suite townhouse with a single garage.

Yep.

Um, so that was seven 70,000 times five.

What's 350,000? So, okay. So approximately, well, $500,000 was the, um, the cost of, uh. Building, um, the properties and acquiring the land.

Yep.

And, uh, the interest factor, I think, came to around 30, $31,000. So that, that was our all up cost. Yeah. 5

31, eh.

And then from a selling point of view, both Jack and I sold the properties ourselves through our, through our, through our, um, our with your

real estate

license, my real estate license through our office.

And, um, you know. Uh, taking in inquiries and selling the properties ourselves. Um, and we, we sold them between, um, uh, 1 62, 1 60 $3,000. That was the sale prices. We, we, we, we achieved. So, so that was about a total of,

just, just go back there. So you've

found $811,000 for, for the five properties.

Okay. 811. And it cost you 5 31.

So you made about, uh. About 50% profit again on that, on that deal.

Yeah. Yeah. And this is in the late 1990s,

which

1 97

would've been a lot more money back then, but definitely in terms of percentage terms, the, the message I want to get across is it's 50% return, not, not a 20% developers' margin. And,

and we sold those properties, um, may, June, July, like they were all in the same.

2, 2, 2 and a half months timeframe. Yeah.

Right. They sold

quickly and we sold them all quickly ourselves. And um, yeah.

And for that reason, because of the success, you went to another site, which is our next site, four to six Kari Court, burly heads where you've. Scaled it up a little bit and you did the same thing again with 10 townhouses.

Same thing, like I said in my, in, in your previous podcast. Start small. Yeah. Um, that was our, our sort of my first development being five.

Yeah.

Um, with some, with, with a a J joint venture. Um, and. And, uh, this, this one you mentioned just now is, was probably my last one I did with, with Jack.

Mm-hmm.

And 'cause there were other, several other developments in between, including those blocks of land we just talked about in Blake Street and all.

Oh yeah. Yeah. So they're in between the two. Yeah. Um, and that one was just a naturally, a larger site, um, and ready to go with the DA for 10 town, ten three bedroom townhouses. Mm. So we just did the similar exercise, similar formula. Um, just after in the new millennium in 2001.

And, um, I don't wanna put words in your mouth here, but I've just scribbled down here that you made 50% profit margin on those 10, 10 houses as well.

Similar, yeah, similar money again.

Yeah. And just, um, like talking about the leverage effect here of property, like, you've done five, you've done 10, and at that time too, I, I believe you, um, you, you are living in southward in Wild Ash Street and. Even though that's not a property development, you picked up one and a half million tax free on your principal place of residence there during that time as well.

So when you're stacking all these different sites and you're getting that compound growth, it's just showing the viewers and the listeners the power of property.

Mm-hmm. Absolutely. Yeah. Yeah. I certainly, um, believe in it. And you know, like I said to you in the previous podcast. Especially with an investment property, if other people are helping you pay it off, be it the, uh, the tenant and also the taxation department that you're normally paying your, you know, where you're paying your income tax and reducing it.

Um, what a great system. What a, what a great scheme. And it's all legal, you know, um, yeah, guess, uh, your home's even better 'cause it's tax free. But then you've gotta obviously pay that off as fast as you can because it's not. Tax deductible, but certainly, um, it's tax free when it comes to selling as well.

Yeah.

Yeah. Guss, I'm thrilled that you agreed to come back for part two and you, we haven't covered all of your, your property deals by any stretch of the imagination, but there's so much knowledge there that our viewers can learn from, and I really appreciate your time and thank you for coming in for part two.

Thank you. Thanks for having me again.

Thanks, Gus.

All the best.

Cheers. Cheers buddy. Thank you once again for tuning into the Andrew Wright Property podcast and we look forward to you joining us on the next episode. Thank you. Thanks for listening to the Andrew Wright Property podcast. This is all about building a community of like-minded investors who can share real life stories, experiences, and collaborate with a view to helping each other.

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