On the up: What will higher interest rates mean for real estate investors in New Zealand and further afield?
The Land of the Long White Cloud is shaping up to raise rates and the country may well be a bellwether for the Australia...
In this episode of The Smart Property Investment Show, Phil is joined by camera man turned investor Jason Byron to discuss how his portfolio grew from a country side home to $20 million development properties, and how growth corridors are his way to success.
Tune in to find out how Jason implements his strategies when investing and developing, the steps he took towards building single to multiple dwellings, why he doesn’t buy anything from a 10K radius of the city and his tips to listeners wanting to get into property development.
In this episode, you also find out, how to determine if a strategy works, the effectiveness of the ‘JV Partner’ model and how to maximise your skill set.
If you like this episode, show your support by rating us or leaving a review on iTunes (The Smart Property Investment Show) and by following Smart Property Investment on social media: Facebook, Twitter and LinkedIn. If you have any questions about what you heard today, any topics of interest you have in mind, or if you’d like to lend your voice to the show, email [email protected] for more insights!
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Announcer: Welcome to the Smart Property Investment Show with your host, Phil Tarrant.
Phil Tarrant: Good day, everyone, it's Phil Tarrant here. Thanks for joining us at the Smart Property Investment Show, the podcast where we try and uncover everything there is around property investment, particularly the stories behind making people great wealth through property. We have all walks of life coming to the studio, from young couples who are just starting out in their property investment journey through to people who've had a go at property investment and been burned and are looking to reflect and analyse on how that went wrong.
We also like to get people into the show who have real success stories around property investments, so people who have actually taken the bull by its horns and really uncovered the secrets to creating wealth through property. We talk about it a lot on the Smart Property Investment Show.
It's not a secret that everyone needs to uncover; it's not a secret that is impossible to find. Investing in property is relatively simple if you do it the right way. It's not a get rich quick scheme. It's not become wealthy overnight. It's about hard work. It's about diligence. It's about surrounding yourself with the right people, and it's about getting the job done.
The person I have in the studio today I feel is someone who is going to help paint a story about how to go about creating wealth through property. When you think about what a lot of property investors dreams are, it's to create wealth to a point, in property, to be able to derive income from that property investment so they don't have to work anymore.
The guy we've got in the studio today, Jason John Byron, I think he's one of those guys. As an intro, we spoke really quickly off air, and I asked you whether or not you had a day job, and you went, "No, I don't have a day job. I'm essentially retired. What I do now is develop property." So you still have a job, but you see yourself as retired because you're probably doing stuff that you like doing. Is that pretty much how it works?
Jason Byron: Passionate hobby, hey. That's the way it feels, like I wake up every morning excited to walk down to the third bedroom and make some phone calls.
Phil Tarrant: So you're making a few bucks then out of property now?
Jason Byron: Yeah, yeah. But I got to a stage halfway through my journey, and that's when I knew hey, that there was no turning back, where I had so much choice. Did I want to keep working? Did I not want to work? And now it's just become so fun and enjoyable.
Phil Tarrant: So, why do you invest in property now?
Jason Byron: My investing in property now is for the fun of it, I think, at the end of the day. I just love the challenge of it and all the skills that you pick up along your journey. You suddenly realise, "Wow," you've got something very special here. I make wealth out of property now, sure, I do stuff that I make good profits out of, but it kind of got to a point now where I took care of myself and now I can take care of other people. That's really forced me to keep going.
Phil Tarrant: That's good. At the moment, you're developing property now, and you've showed me some of the collateral you have here around, some of the work that you're doing right now. It's pretty cool stuff.
Jason Byron: Yeah, it's cool.
Phil Tarrant: But let's go back to the beginning. Let's have a look at this journey. We've got about half an hour or so, so I think we could probably cover a bit of it during that period of time. You once had a job, right?
Jason Byron: Yes, I did
Phil Tarrant: What's the Jason John Byron story? Where did it all begin?
Jason Byron: It began when I was probably eight years old, and my father was in television, and he taught me how to be a cameraman. So, I was hanging around at North Sydney at one of these studios, kind of looking at what all the other people did, and then by the time I was I think 14 years old, I was out filming football on weekends. That was a real passion of mine, because it was something that he taught me, and it was good but it was very strenuous being in that type of job. I went straight from high school straight into camera work.
I was pretty excited about it at the time, but I didn't go to university or anything like that, so I kind of narrowed myself into, "Hey, that's my occupation."
Phil Tarrant: So, you're a cameraman, so a TV cameraman?
Jason Byron: TV cameraman.
Phil Tarrant: What sort of stuff do you do? Sport when you're a little kid, but what other stuff did you do?
Jason Byron: I made TV shows for Foxtel, and I did ... I trained people how to be television presenters and that type of stuff, because the cameraman always knows how you get the best out of someone. I enjoyed that, but I just found that as a subcontractor, not a full time person really, you're chasing every buck, and I just always felt nervous about that. I never invested in property or anything like that because I never knew how much money I was going to make.
Phil Tarrant: You only did sort of studio-based stuff, or was it out on location shooting, the whole kit and caboodle?
Jason Byron: A lot of it, I'd say 90% of the time I was filming football, so that ..
Phil Tarrant: Did you like football? Were you a football fan or just a little kid?
Jason Byron: I mean I'm a Manly supporter, you know. That's where I grew up. I loved the idea of football. I loved the idea of teamwork. I went to a military school, so it was like full cadets, and I love that whole teamwork type of thing, I've always been attracted to that, the discipline of it. But I wouldn't say I was a rah-rah fan. Being a cameraman, you don't actually watch the game, you're trying to film it. You don't get to enjoy it that much.
Phil Tarrant: I do a bit of stuff on telly, on Sky for the "Your Money, Your Call" thing, which is a Margaret Lomas show, so I do a bit of that, but I've obviously been a cameraman for years. It's all sort of done behind the scenes now, little box, so I imagine the game's changed quite a lot these days, right?
Jason Byron: Yeah, yeah. It does change. Well, when I got into it, the equipment was 50 times more than it was now. That was ... My camera was worth more than a Ferrari.
Phil Tarrant: Really?
Jason Byron: Yeah. The HD camera. The next day, it was worth about the price of a Hyundai after a year.
Phil Tarrant: Just gone.
Jason Byron: Yeah, so there was a lot of that type of money in it, but look, it was weekend work and it was getting rid of the whole week. I just found that I could make a bit of money on it, but it was all limited, like you hear that story, limited by the amount of hours you put in was going to be your wealth, so ...
Phil Tarrant: Yeah, if you're swapping time for money, it might generate cash flow, and cash flow you can use to potentially acquire some debt to buy property, that's a good thing, so you need to have a job in order to show the bank that you can borrow money, but if you think you're going to just get rich by working harder it's not the way the world works.
Jason Byron: I like that.
Phil Tarrant: So, a cameraman; when did you start investing in property? Was it while you were a cameraman, or was it...?
Jason Byron: Well funny enough, I'm a cameraman so I got taught filming football, so that's what I do. So I was really good at following plays on the field and then I was roped into doing conferences for the exact same reason that I was good at filming football; keeping someone in shot. I was good at keeping someone in shot walking on the stage. And I just saw a whole lot of property people and I just started listening to what they were doing and going "Wow! That person just made another $50,000 there and $20,000 there," and I'm like "Why don't I do that?"
Phil Tarrant: Did you listen to all those stories and just go "Ah, it's a bit of bullshit." Or did you think it was...
Jason Byron: Well, once I've been filming this for two or three years, I start going "Oh, hang on a second. This is real!" You know? I could see the results of it. But there's a lot of talk out there and all that type of stuff, but they only last so long, right? You know, you eventually hear what is working and what's not. And it just made sense the more I heard it. But I was pretty stubborn, to be honest.
Phil Tarrant: So before we get onto your portfolio, what were the three key things after three years of filming property people on stage, what would be the three... If you had to crystallise everything you learned in that period into three tips for our listeners, what would it be?
Jason Byron: I think it was just don't put limits on yourself just because you weren't in that occupation or born to be in that occupation, was the biggest thing. I saw people from all walks of life get into it. And I thought well that was the only training I ever had, property people must have been born into it, or friends, or had lots of money, and that's just not the case from what I kept seeing everyone from different walks of life get up there. That's what really made me do it. Go, "If they can do it, you know, I can't say I can't do it if I've seen someone else do it.
Phil Tarrant: So, number one?
Jason Byron: That's number one. Number two is, look I've always thought that I've got to balance up whomever I'm listening to and see how much of it are they just trying to sell me a brand new property, or how much are they trying to educate me about the structures and the systems that you set up and your own personal accounts versus...so if they are interested in me getting myself account ready first, or finance ready first, then that seems a little bit better than just trying to push you to the end game which is sometimes a property. Do you know what I mean?
Phil Tarrant: Mm-hmm (affirmative)-hmm yeah.
Jason Byron: And the third thing is, I think you've gotta just look at whoever you're listening to and see if you like what they're saying. You've got to develop a...you know, see if you do trust them or not. Everyone you can kind of listen to enough and you'll spot things you more you hear about them, you know? I fell in love with listening to your show because I'm just hearing it over and over again and I'm thinking "yeah, that makes sense." That's the type of person that I want to be as well and, you know...
Phil Tarrant: That goes back to my initial comments around property investment, it doesn't need to be hard, right? If you get it right, it's accessible to everyone as long as you can secure mortgage debts. It's getting a bit harder these days, but all walks of life invest in property. I remember I was down in Canberra for the budget this year and I can't remember exactly the stat, but sort of one in four coppers are property investors. And coppers don't get paid a lot of money same with teachers, teachers are big property investors as well. And unfortunately they don't get paid what they should get paid, they should get paid a lot more, but I won't get into that. So, all walks of life are investing in property.
I think the thing is having the passion to do so, and something that you've got in droves so let's have a chat about your portfolio. It's probably a bit complicated now because you are doing a lot of development stuff, but what's your portfolio look like?
Jason Byron: My own personal portfolio I cannot even remember how many properties we have. But I know the major ones that we did is that we started off in the country when we didn't have any money, so we started with an $89,000 loan.
Phil Tarrant: Yep.
Jason Byron: That was it. And purely because I was, I hadn't done my taxes properly in two years, I was still going through that, new job you know, subcontractor, but I didn't want that to stop me. And then from there we went into the city, and then we did joint ventures with people which were able to give me some more deposit after I'd made some more money in the country as well.
And then I did something really smart, which is the exact same thing that we do today, is we don't buy anything out of the 10k radius of the city. I just, we had the ability to have a nice rep to find those properties now. And now as you know, I build stuff now. That's where I've ended up.
But it seems that if I keep sticking with that strategy, I think that's going to be okay for me because I've never seen things go down where it's land lined.
Phil Tarrant: Yeah, it's true. So it's a portfolio, can you give us any idea of the value of your portfolio?
Jason Byron: Yeah, I don't know, probably 6, 7 million, something like that I'd say.
Phil Tarrant: Okay, and sort of that's your nest egg for the future that's allowing you to build wealth over time, but adjacent to that you're doing these property developments. So what's the rationale of the property development? Is it to build and sell, or build and hold?
Jason Byron: Build and sell.
Phil Tarrant: Build and sell the lot?
Jason Byron: Yeah, well now I want to get to a stage that I'm really good at building, that I can build it for the most economical price, and then I can actually hold onto it. But, my whole thing is that we built up our nest egg of properties through doing joint ventures with people, taking chunks, buying our own property on the side while doing and renovating, doing something to it while we were doing a J.V. with someone else.
Phil Tarrant: Okay.
Jason Byron: So, it's using their money; doing a deal with their money, but with my intelligence, and then doing a deal with whatever money I had on the side as well. So, what it ended up being is that every year we brought a property or two, but there were always, like we've got some in Enmore here, we've got two in Enmore, one in Leichhardt, we've got some up in capital cities like Brisbane and all those types of places, and they've gone up massively in value, but we've manufactured them as well.
So we have these key ones that are executive rentals, so they're just pushing out the cash flow, we're able to maximise the equity on them when we built them. I think that's...one thing now that I think stops people, and maybe you've seen this, is they try to use their own equity or their own money when you've got so much knowledge. And there's plenty of people out there that if you can prove it to them, will invest with you.
Phil Tarrant: So Jason tell me about this, you talk about J.V's, so can you explain to me what you do?
Jason Byron: Well, right now it's no different from when we started. We did our first property in the country of our own money. We ran out of money. Because that's all we could borrow at the time. But then I found a property up in Queensland, which was $575,000 and we knew that it would make money because it was one of those split-a-blocks, but the house was actually on one lot. So, it wasn't a hard task for us it was just split the title and sell the land off. I really wanted to do it, so did my partner. I was actually disabled at that time because I had an accident, so that stopped my camera career for at least a year. I couldn't walk properly. But at that stage we just said, "Hey, we've found a deal. We know this works." And then we put it out to the community that we were in at the time and had someone come along and fund the whole thing.
It's no different to what we do today with developments.
Phil Tarrant: So, you would find someone whose got a big block, and then you would say to them, Hey, look. We can stick a, we can slice this in half, put a house on the other one, sell it, and what? Then they keep their place and get an earn out of it? Is that what you do?
Jason Byron: Well, we give them options. We say, the whole idea is that we want to take a percentage for all our work that we do with it, but we don't put any money into it. Not a cent. So, we will do all the work, and we'll prove to you that it works, we'll show your our system; I'm very system based. I kind of learned that after doing so much military training. And my dad was very system-based in his business, so I'm the same. So people understand when I present them a deal. It's like a business plan, and very step-based.
And so the idea was that when I would find something, I'd just say to people, "This is exactly what we're going to do. At the end of it this is how much profit we're going to make. We will either split it - the total profit; sell the whole thing off - or else what will happen is that we'll get the value at the end and we'll get the equity, and we'll split that."
So they can hold it if they want.
Phil Tarrant: And is it hard to find people to do those type of J.V.'s?
Jason Byron: Not at all. I think it's...that's never been the issue with me. It's proving it to the person. To be able to sit down with them and say that you've done so much due diligence that this can't lose. And even if it did lose, what's your buffer? I mean that's why I do probably development now. That's why I'm just knocking down buildings, because you actually build the equity in the finished product. So that's a lot more risk-adverse for me than trying to do a reno and pray that someone's going to pay a big price for it.
Phil Tarrant: So if you find; well, how do you go about finding - just to stay on this J.V. type model - I'm quite intrigued by it all personally. So, would you go, "Hey. I'm looking at this particular suburb and I found a particular asset." Would you door-knock that person, and say "Here's an idea," or, how would you do it?
Jason Byron: Well, just like you know, you mix with people in different communities and different networks of, that love property.
Phil Tarrant: Okay.
Jason Byron: And you say to them, "Hey, you know this is…” I did, the first deal we ever did I made $160,000 profit. And it was always gonna make that, because I'm splitting off, it was 575; sell the house for 500; split the land and the land's worth 300 at least, you know. It was just so simplistic that it would work. I didn't have to shift the house or anything like that.
So, that was my first deal that I did on my own. That was the second deal I did with the J.V. The third deal I did with myself was the same thing; find areas where I would be able to get land value. That's the best way to convince an investor for me.
And then after I did three or four, and we did really well and it came out well and everyone was happy, word just got around. I thought it was just part of my job to do it, but other people were quite impressed by it.
Phil Tarrant: And were they the locations within the suburbs of a city?
Jason Byron: Yeah. I've always done that. Yeah, I've always liked that demand. I've always like the fact that people always are hot for that type of market. And I don't see that fluctuating at a big point as if it could fervour out. So I've never been worried about the actual value of the purchase because I've got someone always to be able to finance that for me, because I've got the skills. I can prove it. But at the end of the day it allows me to go into areas of higher value and always strike a win.
Phil Tarrant: And has it ever gone wrong for you?
Jason Byron: No, not really. I mean there's always things that are going to happen when you take something and then all the paperwork. Someone asked me this the other day and I said, "No, we're actually coming out pretty well the whole time." Because we've always had a system that knew what to do when we had any challenges. So, someone once said "What's the worst thing that ever happened?" And I'm sure other people will have had this happen to them before, and that's water coming out of the downlight. Because the roofer didn't do the right job. And then I've got people going to that property to inspect that property to buy it and there's water coming out the downlight, you know? But that's a simple, tiny little thing to fix.
So you're going to have little issues here, and builders you're going to have to just make sure you use your professionals. I think that's where people fall down, where I haven't. I've picked really good professionals, and I've found out who...I'm the person that gets twenty quotes for something. And I'm the person who gets twenty professionals to give me different opinions, so I'm not only making myself smarter, but also I've got people that I can find out who's the smartest.
Phil Tarrant: It's the smart way to go. Ask plenty of people and then get the information so that you can make an educated decision on these things. So that's good.
So, you've moved away from these sort of splitting blocks and putting a house on it and selling them or keeping them and swapping out some equity and taking some cash off the table, into more, I would say, traditional developments. Instead of buying trenches of land and putting multiple townhouses or apartments on it.
When you decide to make the step sort of outside building a single dwelling into multiple dwellings? Was that a big step?
Jason Byron: Yeah, it was five years ago. So I've only been doing it for four years. So these were renos and flips. And then doing some subdivisions and some builds. And then I also got so good at it I was finding people properties and I got a buyer's agent licence. Because sometimes I couldn't do 20 J.V.'s. I've done about three a year at a time. That's kind of what I liked doing.
And then it got to a stage that we did something in Leichhardt, and then we built this four-level townhouse; so two of them, this was a duplex. And then BoysTown bought one of them. Those are the people that buy the house and give it away as a lottery. It's called something different now. But that was a stage that we made 300,000 profit in that. And I probably the visited the site about 10 times. And that's when I really liked, I started saying "Hang on. I don't need to..." I love the fact that by the time we sold off the first one, because it was a duplex, I paid off so much of the debt, that it wasn't scary anymore.
And that's the thing, that's why I like developments now. And that's why I have so many investors wanting to invest with me as J.V. partners.
Because I remember situations where we've had a house before, because I've done lots of different things and we've renovated, we put it on the market but we waited six weeks to try and get that price. And then sometimes you think "Oh, do I reduce it or not?" And then suddenly we get the price.
But there's a lot of times where stuff sticks on the market and you get worried. And I like the fact that with the townhouses now, if I've got four of them, I sell off three of them. The debts paid off. So I can just kind of sit back because I know that my equity's in that last one.
Phil Tarrant: And you keep that?
Jason Byron: I haven't done that previously. I will do that now because I am getting smarter at building these. I wanted to spend four years maximising my skill. And now we're looking at that. But a lot of times I've taken that money, that chunk- cause I like having that chunk - and invested it overseas in different things. Cause I like to diversify my portfolio. Or else gone and bought something, just a land lot or something like that I might do in the future. That type of stuff.
Phil Tarrant: So, you're doing some larger developments right now. What's sort of...what's the scope of the stuff you're working on right now?
Jason Byron: So we've got 23 million in the works at the moment.
Phil Tarrant: Okay.
Jason Byron: So they're different lots. So we've got a 14 pack. I've got a 12 pack. We've got another, just a simple subdivision again; build two houses. Because some people think that now I don't do anything but just townhouses. But the funny thing is as a developer you get land sent to you all the time.
Like my job before was weekends going out looking at stuff, bidding at auctions, not getting the price that I wanted, getting… all that type of stuff. So much stress. Paying for pest and building reports. And I didn't get it. And so my whole thing was how do I save time and save money. And that property development, now I don't...I spend time with my daughter on weekends.
Because, and I actually don't go looking at any properties, they come to me. I haven't gone on realestate.com or any other domain for years.
Phil Tarrant: Well these larger pack developments you're doing right now, whereabouts are they
Jason Byron: So, the ones that we're doing right now are in Brisbane.
Phil Tarrant: Okay.
Jason Byron: Yep.
Phil Tarrant: Anywhere in particular? Would you like to give the location?
Jason Byron: Well, we like to do within 5k, so we make it even stronger. So the current ones that we're doing, we're doing one in Morningside and one in Ascot that we've been working on awhile. Then we've got two or three that are in the works. We're never ever not doing anything. So for the last eight years...
Phil Tarrant: So, you're looking at potential developments to start building in two, three years' time as well as in the process of building stuff..
Jason Byron: Yeah, negotiations.
Phil Tarrant: And how would you do, explain or describe the type of development you do? Is it fancy stuff? Is it high-spec stuff?
Jason Byron: It's good, yeah. It is at the higher end definitely. I think coming from Sydney and coming from living in Leichhardt and doing really nice level property and my partner Amy Tang, she's a designer, furniture designer, so she's got that natural skill to make things beautiful, and you know, kind of design it in that way. So, she's taken that on as her passion and put it into property for furniture design.
I'd say that the stuff we do is medium to high. Cause it's very different from high-end Sydney to high-end Brisbane, right? Cause you can't even afford some of the materials that you'd like to use.
But look the beauty, the reason I moved to Brisbane, cause I was doing okay in Sydney, was cause I wanted to have a baby and that type of stuff. I was getting to 40. I'm 42 now. And I hadn't seen my parents. Because they moved up to Gold Coast when I graduated. So, I hadn't seem them for like 10 or 15 years. Well, I'd seen them but not spent time with them. And they're getting, I can't really...I don't want to use the word "old," but you know. I didn't know.
I'm thinking, now that I've got all this property stuff and I've got choices, and I spoke to my partner. And I said, "Look, I know that we're Sydney people, we love Sydney," but I missed out my parents' life. You know? And that's when I said, "Look, we got the skill now. We can do it anywhere." And you can.
As a property developer, and I teach friends of mine how to do it, and I show them how to do it. I say "There's a certain thing that is much better being a property developer than just a normal property buyer. Because the areas that are there are laid out. So the government has growth corridors. And so it's going to be in every single state there's going to be a growth corridor. And all you have to do is get that growth corridor and have a look. And that's where they actually say to developers, "Hey, we need you."
And so it was...it happens in Sydney and it happens up in Brisbane, it will happen anywhere. And that's the beauty of it. So I can go somewhere.
So we moved up there so that basically for the next 20 years or 10 years, whatever I can get to see them, I've got a great relationship which I thought I'd lost with them.
Phil Tarrant: No, it makes sense. So, you're pitching the properties that you're developing sort of mid to high? So you know who your customer is? So you know who you're building for? And you're investing your building within that 5k of Brisbane CBD, so obviously people that probably commute into town or young professionals, or whoever they are. So, do you have problems, or are you concerned about the Brisbane market in terms of your ability to shift these properties once built, or are they pre-sold?
Jason Byron: I really like it because the market, all the media's kind of saying "Units, units, units; don't go into units."
Phil Tarrant: …like, you know in crisis in terms
Jason Byron: Yeah, it's interesting, yeah. And I worked in media for quite a while, and so I say that they are factual stories done on facts that they're finding. But are they the real story? Yeah, they're using the approvals that have gone on the air, and that's fine, but all of them are renting. So, it's funny when they finish them they don't have a problem renting them out.
So there is a demand there, but I'm not doing units. I'm doing townhouses. So this is the whole thing. I've seen there's a demand for people want to be in convenient locations. Remember Brisbane, if you've been up there before in the past and you cast your eyes back to five, six years ago, you went up there and it was the sleepiest town, nothing was happening. It was boring. And the council weren't active to allow areas to be developed. Then they lost all their talent to Gold Coast. And they suddenly, something happened, and they went "We don't have any young talent here anymore. We need to let people live in brand-new places." And that's when they started changing it all and giving the opportunity.
When I first moved up to Brisbane, there wasn't such a thing as a nice, brand-new unit to move into. And now there's hundreds of them. So, the demographics kind of catching up to them, and they're loving it!
Phil Tarrant: So the way that you're building them are you clubbing with a bunch of people who you know and you're building it on the basis that those people will be the owners of these properties once done? So you're not saying, "We're gonna do this development. I'll get you some finance to get it but I need someone to pre-sale..."
Jason Byron: You always get pre-sales and that's never been a problem. Our product is something that's in the area that people want to live and it's a high demand for townhouses. And our product meets the market now. I've been doing this, I've been doing quite a few developments now, and I've learned a lot about what to do and where to do it. And my whole strategy that I go to is, I look at the convenience factors and I go, "Why is someone living in a townhouse or a unit over a house?" And the things is there's two different scenarios. One is that they want the convenience factor, or else they can't afford a house in that suburb. But they want to be there cause it's a beautiful suburb and it's convenient.
And so, I look at those factors and I look at the demographics around and go, "Where is the nearest restaurant?" "Where is the nearest public transport?" "Where is the convenience factors of the cafe's and that type of culture?" And that's where I build my townhouses. And it always works. If I can hit it right and give them exactly what they want, especially in like the more expensive areas, because even myself sometimes I'd like to live in even I couldn't afford it myself, and you know I'm doing okay. But I still want to live in that area.
So if I can give that person a high-level product, high-level finishes, still give them the double garage, still give them three bedrooms and place them in a convenient location of that suburb, they're happy.
Phil Tarrant: So, you worry about, I imagine, the people buying your developments are either owner/occupiers or other investors, so it depends I imagine? Do you get concerned about...you know we talk a lot about off-the-plan apartments, you know buying off the plan on the Smart Property Investment Show, some people do really well out of it. Some people do horribly out of it. And the people that do horribly out of buying off the plan are people who decide to buy a place and sign the contract for a place, which essentially when it comes to when it's built and they've got to find the money for it, it doesn't value up. So they turn it into negative equity and they either can't get the financing or they get stuck. Does it concern you...I imagine you do a lot of this stuff and you're probably...so you're always thinking about this, has there ever been a point where your evaluations haven't stacked up at all?
Jason Byron: No, they've been fine. Because I'm not, I'm pretty realistic even in our feasibilities and people know that about me. But I want to see what happens in the medium-market sales on my feasibility instead of an over-inflatuated price. A lot of people kind of go, "Well what's the real estate agent say? We'll get you 700 something." When the realistic price is 650. In a market that could slow down. Now I know I am going to be able to sell that product because it's in that convenient area and I've matched it right.
But if the market does turn, does go down a little bit, then what's my buffer? Now a lot of my developments, cash-on-cash return is 50% and over. So, I've got a good buffer there. If something goes wrong, what's the worse that can happen to us? We break even. What's the worse thing that can happen to us? We have to hold one.
I mean those are the two scenarios that might happen out of it. Say even something happened and we, something went wrong and we'd have to hold all of them. They've still got value. It's a brand new product. I can still rent it. I can still hold it if I do an interest-only loan on it.
This is where I kind of won't turn back now. This is why I tell…
Phil Tarrant: So you've got plenty of fallbacks? You've got plenty of contingencies and you've thought about the contingencies quite a lot?
Jason Byron: I don't buy stuff like...I listen to your show a lot and a lot of the advice is fantastic and I agree with so much. You don't buy overpriced. You make sure that you use buyer's agency if you can that know what they're doing cause they're gonna hear all the different prices. You make sure that your sale price isn't too high that it's right at the top level, and you're not offering exactly something that matches that level, and the convenience is the number one thing for us.
Phil Tarrant: Yes, yeah interesting. And so for people, your...a lot of people who are listening to this Jason are probably thinking "Oh. That's the guy that I want to be. I want to be doing that, you know. Invest in property one day." Retire in quotation marks, and become a developer. A lot of people get development wrong and they get burned and I've seen a lot of people do their [inaudible 00:30:08], sort of developing when they shouldn't be developing. They don't have the skills to develop. They don't have the understanding of all the dynamics required to be a good developer. It's hard to be a good developer.
Jason Byron: It is...
Phil Tarrant: So I caution people all the time. Could I get into development? I probably could if I really wanted to, but have I got the time, the bandwidth? No, I don't have that, and it's not something I'm touching right now. I don't mind doing a granny flat or maybe even building a knock-down and putting a duplex on there. But to actually do what you're doing, as in start doing these 20 plus developments, it's a completely different world.
Jason Byron: It is.
Phil Tarrant: A completely different world.
Jason Byron: And that scared me when I first got into it. I had to make a big mindset change. But what really worked for me, and if I talked to anyone about it, and I teach friends and people all the time how to do this. And I say to them, "First off do something small." Just do a build. Don't go and try and do 10 townhouses or four townhouses or any. Just do a build. Learn the process of the building process. Cause that's a big step.
And then you've got to have some type of training which I kind of inherently had through running businesses myself, where it's project management. If you've already a good project manager in your job that you are now, you can do development. Because, like I said, it's phone calls.
So my life, my average day, someone rings me up and says, "Here's the deal." I get the numbers for the deal and I see what it is, and I do some checks on it. And then I ring my town planner. Then he says "Yes, it's okay." Then I ring my architect. He says, yes I can put this many on it, then I ring the agent. I say, "How many can I put on it?" So, it's all office work.
Phil Tarrant: Yeah.
Jason Byron: And at the end of the day, you have to have the right professionals on your team. But actually I find that it's a helluva lot easier than what I was doing before. Cause if I can get this run I can prove to myself that the end product. It's Warren Buffet. What does he say? You know, "Price is what you pay. Value is what you get." Cause he's saying, well if you buy something and then you manufacture it to point that at the end of it, when you finish that, it's actually valued more than what you bought it for... and that's what I go on.
Phil Tarrant: So would you caution most people, don't get into the development game?
Jason Byron: No, I'd tell them 100% get into it. Cause for me I wasn't using my full potential. I had already done five years of investing. And someone came up to me, it actually was a famous guy, L.J. Hooker came up to me. And myself and my wife, and said "What are you doing Jason? You just done a duplex there and made $300,000, it worked out perfectly. You have to keep doing this. You've got your system. You've got your structure. Keep going. Go bigger."
So I did. I went onto... my next one was a four-pack. The next one was a nine-pack. So if you've done this for quite awhile and you can see that you might not be using your full potential and you actually do it. You've gotta investigate it and have a look at it.
Phil Tarrant: Interesting. So what are the three things to get right? That is if you really want to get into development, outside of just being a good project manager.
Jason Byron: First off, you've gotta pick those growth corridors. And they'll be there on the council websites and the government websites. So first off, don't go anywhere. Just go to the growth corridor.
Phil Tarrant: Get the correct zoning.
Jason Byron: Well, that's where it will be the correct zoning. Because the beauty of growth corridors is that the government and the council say "We're going to put all our infrastructure there." And you know they do, they say "We're not going to build the stuff there for high-density. We need the developer." So they actually want you there. And that's where I've always found that being a lot easier.
And where I've seen people fail? Is they're just not doing it in those growth corridors where they're actually being begged to be there.
Phil Tarrant: So location, location, location?
Jason Byron: Location, yeah. And then you've gotta set yourself some rules. Like, I'm very system-based. And anyone that I try to talk to about doing what I do, I say "You've gotta have a system." If you don't have a system to follow, then you're gonna lose money. Because everything... it comes down to the system.
When I looked up famous businesses out there in the world and I tried to work out how do people...why were they so successful? I really chased success. I've never chased money. I've always just wanted to do the best I can at it. And then if you do the best you can at it and you educate yourself and you feel like you get to the highest level, then money will come.
So if I look at someone, you know like Pratt; makes recycled boxes, right? The boxes are the need. He has a system behind it. And the process is taking recyclable stuff and then turning it into something. Same with property development. That's what I like about it. You've got a need of people wanting those convenient areas to live in. They want to have a nice brand-new product. But then you've got to work backwards from there. The people that are successful have a system behind them to follow and the best thing about a system is I can repeat it.
And that's where I didn't...I can't do that with renovations. I tried to do it. Everywhere I went was a new...
Phil Tarrant: It's tough to scale it, right? It's tough to scale it because it's very different each time. You might be able to keep very similar products and paints and whatever else, but every project's a little bit different.
Jason Byron: Yes, and now I work out the land size. And I know what can be done on it purely because someone has done it before. So that's the next bit of advice. Don't ever go in and think that it's ever going to work in an area, just copy people. Look around that whole suburb. Do six months of checks to see what other people have sold it for, and don't kid yourself. That's what you'll sell it for, around that price range.
And that's why my people who invest with me love it as well. Because I can prove to them. Because if you're buying a brand...so if I said to you you're going to buy a brand-new townhouse in this particular suburb. They're normally within a certain price range, right? Because they're brand new. They've got a set limit of what they sell for. So that's a lot better on my feasibility, than saying "Oh, there's a range." That's the other marketplace.
Phil Tarrant: Well, you've got a much closer benchmark if you've got brand-new three-bedroom townhouses. So for this, you might get plus or minus a little bit of money.
Jason Byron: Yeah.
Phil Tarrant: You know.
Jason Byron: Isn't that better?
Phil Tarrant: It's good. Jason, I think what you spelled out property development is not sexy. Property development is process.
Jason Byron: Yeah.
Phil Tarrant: I think a lot of people get carried away with the idea of being a property developer, you know sitting on site with a pair of steel-toed boots sort of directing what's going on…That's a completely different game.
Jason Byron: The builder will hate you if you do that!
Phil Tarrant: So, it's about getting the numbers right. It's about getting the location right. Making sure that you're developing in the places which are going to be good in terms of positive price pressure on the property and people are going to live there. So, if you want to sell it to an owner/occupiers, great; there's a need for it. If you want to sell it to people who are looking to rent, you want to make sure that they... you know, it ticks all the boxes in terms of convenience factors.
Jason Byron: Investors love it because it's convenient. And owner/occupiers love it because it's convenient. I'm getting so many downsizers now it's not funny. And when I say downsizers, there's got to be another word for it, because they are between 40 and 50, or 50 and 60, they're not actually…
Phil Tarrant: Old people, right?
Jason Byron: No, I wouldn't consider them old at all. But I just...they are exactly what they are. So, I don't know what you call it when someone over 60 is moving into smaller places, you know what I mean?
Phil Tarrant: I think it's just the realisation that you don't need massive places. You don't need a five-bedroom house with 18 different living areas that you never use.
Jason Byron: The downsizer's work is as good as the owner/occupiers as good as the investors, because they want to be close to a medical centre. They want to be close to a coffee shop. They want to be close to a nice park. And they want to be close to public transport. So, it meets…
Phil Tarrant: So, it's all about location. It's all about location. Jason, thanks for coming in man. Enjoyed the chat. I am happy also you listen to the show. It's nice to meet people who are tuned in and, it's been immensely popular, the Smart Property Investment Show. So, we'll keep doing what we're doing and...
Jason Byron: Please.
Phil Tarrant: ...getting guys like Jason in to share his story and it's been an interesting one from cameraman at the footie from 14 to now developing property up in Brizzie. So, keep doing what you're doing and let's keep in touch. Let's see how you advance on when you start doing your 100, 200 developments. That will be different again. But another shift in mindset, but that's what it is about properties. It's about being fluid enough to realise opportunities and having the guts to actually back yourself to go out and capitalise on those.
So, that’s Jason's story. Thanks for joining us everyone. Remember to check out SmartPropertyInvestment.comtodayau for our latest news market intelligence. If you're not yet subscribing to our newsletter, please do; smartpropertyinvestment.com.au so you're the first to know what's going on every single morning in property investment in Australia. Remember to follow us on all the social stuff.
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