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Property development playbook - tips from an insider · The Money Puzzle

• 0:09
  Speaker 1: Hello, and welcome to today's episode of The Money Puzzle.
• 0:12
  Speaker 1: I'm your host, James Gerrard, standing in for James Kirby
• 0:16
  Speaker 1: this week. Today, we've got a special episode planned, which
• 0:19
  Speaker 1: is going to be all about property development. But not
• 0:22
  Speaker 1: your 50-story high-rise skyscraper. We're talking about property development for
• 0:26
  Speaker 1: the average mom and dad investor. So if you've ever
• 0:29
  Speaker 1: considered diving into the world of property development, this episode
• 0:33
  Speaker 1: is for you. We'll be breaking down the basics, sharing
• 0:36
  Speaker 1: tips and tricks, and discussing the ins and outs of
• 0:38
  Speaker 1: property development. So grab a notepad and get ready to
• 0:41
  Speaker 1: learn how you can start your property development journey. And
• 0:44
  Speaker 1: to help us with this special episode, we have an
• 0:46
  Speaker 1: equally special guest, Daichi Samahara, property developer at national buyers
• 0:52
  Speaker 1: agency firm, Property Buyer. Welcome, Daichi.
• 0:55
  Speaker 2: Hello, James. How are you?
• 0:56
  Speaker 1: I'm doing well. Thanks for coming on today. So let's
• 0:59
  Speaker 1: jump straight into it. Okay, so opening the lid on
• 1:03
  Speaker 1: the world of property development, it's estimated that only 2%
• 1:05
  Speaker 1: to 3% of all property investors engage in development activities.
• 1:10
  Speaker 1: Why do you think that's the case? There's a lot
• 1:11
  Speaker 1: of people that buy investment properties, but not many people
• 1:13
  Speaker 1: that actually develop them.
• 1:15
  Speaker 2: Two reasons. One is that investment and development, they're completely
• 1:20
  Speaker 2: different approach. So property investment is more passive and you're
• 1:25
  Speaker 2: targeting mid to long-term returns, whereas investment property development is
• 1:29
  Speaker 2: more proactive and short to medium term form of investments. Now,
• 1:36
  Speaker 2: availability is another reason why there's only one or two
• 1:42
  Speaker 2: properties out of every hundred sites that go up for sale.
• 1:45
  Speaker 2: So just from the start, there is not many sites available.
• 1:49
  Speaker 2: So that puts a limit on to how many people
• 1:52
  Speaker 2: can actually make money as a developer, if that makes sense. Yeah.
• 1:57
  Speaker 1: And when you say a site, what do you mean?
• 1:59
  Speaker 1: Is that like a raw block of land? Is that
• 2:01
  Speaker 1: a house with a land that's conducive for development?
• 2:04
  Speaker 2: Yeah. Yeah. So look, if you have a thousand square
• 2:08
  Speaker 2: meter lot with a small house at the front with
• 2:11
  Speaker 2: a little space on the side, that's a potential subdivision site.
• 2:16
  Speaker 2: If you see just another house down the road up
• 2:18
  Speaker 2: for sale on realestate.com, that's really run down, but potential
• 2:22
  Speaker 2: for renovation is That's a site. So, yeah, we call
• 2:25
  Speaker 2: these properties sites in general.
• 2:28
  Speaker 1: Got it. And we see in the media almost every
• 2:32
  Speaker 1: day about another construction company going under. And, in fact,
• 2:35
  Speaker 1: 2,000 have gone bust over the past three years. So
• 2:39
  Speaker 1: I'm just wondering, is property development still a profitable business?
• 2:42
  Speaker 1: And what's changed in recent years to cause all of
• 2:45
  Speaker 1: these liquidations and bankruptcies?
• 2:47
  Speaker 2: Look, Short House is, yes, is a very still profitable business.
• 2:51
  Speaker 2: for certain products in certain areas, you're just going to
• 2:53
  Speaker 2: be more careful what to pick now compared to 10,
• 2:57
  Speaker 2: 20 years ago, because the building cost is sky high.
• 3:00
  Speaker 2: So whether you're building a house, duplex, unit, townhouses, they
• 3:04
  Speaker 2: only work in the areas with mid to high median prices.
• 3:07
  Speaker 2: So if it's going to cost you, let's say $ 500, 000
• 3:09
  Speaker 2: to build in one suburb where the resale is a million,
• 3:14
  Speaker 2: but the other suburb you can sell it for two mil,
• 3:16
  Speaker 2: naturally you will go to million dollar suburbs. So I'd
• 3:20
  Speaker 2: go as far as Castle Hill to the west and
• 3:23
  Speaker 2: Epping to the south. And if you're in that, that's
• 3:26
  Speaker 2: if you're targeting north of Harbour Bridge. But if you're
• 3:29
  Speaker 2: in the south of Harbour Bridge, I'd say you go
• 3:31
  Speaker 2: as far as Strathfield to the west and Burlwood to
• 3:34
  Speaker 2: the south. And generally speaking, you want to be targeting
• 3:38
  Speaker 2: only suburbs with median price above $ 2 million. Outside of
• 3:41
  Speaker 2: these areas, resale values just don't stand. So I guess
• 3:45
  Speaker 2: that's how you pick which areas to... to start your
• 3:50
  Speaker 2: project and to make sure that you make money.
• 3:53
  Speaker 1: Got it. And so folks, which is a term, which
• 3:56
  Speaker 1: James Kirby would say, Daichi is talking about Sydney. And
• 4:00
  Speaker 1: we do have listeners from all over the country. And
• 4:02
  Speaker 1: in fact, I know all over the world in places
• 4:05
  Speaker 1: such as Dubai and Singapore. So we'll try and cover
• 4:08
  Speaker 1: other markets as well. But at this stage, it was
• 4:10
  Speaker 1: Sydney that you were speaking about it. And that's where
• 4:13
  Speaker 1: you're based. So why did you get into property development?
• 4:18
  Speaker 2: Um, I've always wanted to become a developer just simply
• 4:24
  Speaker 2: because of the lifestyle choices that you will have. So
• 4:28
  Speaker 2: my job is not nine to five, it's really 24 seven,
• 4:32
  Speaker 2: but I get to choose when and where and how
• 4:35
  Speaker 2: I want to work, especially post COVID. Remote work has
• 4:40
  Speaker 2: been very popular, but even before that, I was able
• 4:44
  Speaker 2: to live my lifestyle. So that's how I got into it. Well,
• 4:49
  Speaker 2: that's the reason why I got into it.
• 4:51
  Speaker 1: Got it. So I'm imagining Red Ferrari pulling up to
• 4:55
  Speaker 1: a construction site, you pull out with your chinos and boots,
• 4:59
  Speaker 1: wearing a hard hat, pointing, telling people what to do.
• 5:02
  Speaker 1: Is that sort of the lifestyle of a property developer?
• 5:04
  Speaker 2: Almost true, except not Ferrari or Lamborghini. I'll drive a
• 5:08
  Speaker 2: white Hilux. I've got to look the part as a developer.
• 5:12
  Speaker 2: So I'll drive a ute.
• 5:14
  Speaker 1: Good, good. Very, very practical. And what about education? Is
• 5:18
  Speaker 1: there anything in particular that you have done that helped
• 5:21
  Speaker 1: prepare you to jump into property development or anything with
• 5:24
  Speaker 1: your career that helped move into property development?
• 5:27
  Speaker 2: I think a lot of developers have one particular profession
• 5:32
  Speaker 2: of their own. Otherwise, you know, you can't really get
• 5:36
  Speaker 2: ahead of everyone else. My case is I started as
• 5:41
  Speaker 2: a real estate agent. So I was working for Ray White,
• 5:43
  Speaker 2: First National. Did it for a few years. Made some
• 5:48
  Speaker 2: seed money, but it was mainly getting that practice and
• 5:52
  Speaker 2: also experience in the real estate environment. But some other people,
• 5:58
  Speaker 2: they could be a builder or any kind of tradie
• 6:02
  Speaker 2: to have that sort of knowledge ahead of everyone else.
• 6:05
  Speaker 2: You could be a banker or an accountant who will
• 6:07
  Speaker 2: know the numbers really well. So I think as long
• 6:11
  Speaker 2: as you have that one particular profession, it doesn't have
• 6:15
  Speaker 2: to be this particular profession, if that makes sense.
• 6:20
  Speaker 1: Yeah, got it. That absolutely makes sense. Understanding where your
• 6:23
  Speaker 1: personal strengths are and then applying that to property development.
• 6:27
  Speaker 1: So next, I'm curious about what type of average investors.
• 6:31
  Speaker 1: So we're talking about mum and dad investors. what sort
• 6:34
  Speaker 1: of characteristics or traits do you think they need to
• 6:38
  Speaker 1: get started in property development? Do they need to have
• 6:39
  Speaker 1: a high level to tolerate risk? Do they need to
• 6:45
  Speaker 1: have certain experience? Do they need to have a certain
• 6:46
  Speaker 1: amount of backing behind them? So who's sort of suited
• 6:49
  Speaker 1: for property development?
• 6:51
  Speaker 2: I think someone who is proactive and wants more control
• 6:55
  Speaker 2: over the course of their investment, and often in the
• 6:58
  Speaker 2: shorter turnaround time. So if you invest in a property,
• 7:03
  Speaker 2: you know two bedroom unit for example there's not much
• 7:06
  Speaker 2: you can do to you know control this due course
• 7:09
  Speaker 2: whereas property development it's all about you know making sure
• 7:13
  Speaker 2: you control it really well so that it doesn't go
• 7:15
  Speaker 2: wrong so i think the approach if you enjoy that
• 7:19
  Speaker 2: proactive approach i think you're suited to be a developer
• 7:23
  Speaker 2: and and also that that you need to have really
• 7:26
  Speaker 2: thick skin on the face you know and also just
• 7:29
  Speaker 2: tenacity to go for you know one after another So
• 7:33
  Speaker 2: a go-getter.
• 7:33
  Speaker 1: Yeah, interesting. So interesting about the comments about the thick skin.
• 7:37
  Speaker 1: So what happens in the world of property development that
• 7:43
  Speaker 1: requires you to have a thick skin? Is it dealing
• 7:45
  Speaker 1: with people that you're buying the properties from? Is it
• 7:47
  Speaker 1: dealing with the builders that you're engaging? I'm curious about
• 7:51
  Speaker 1: some of the stress points.
• 7:55
  Speaker 2: Look, you deal with a lot of people. They... I
• 7:59
  Speaker 2: personally love going direct to vendors instead of going through
• 8:02
  Speaker 2: agents because I get quality sites that way, or at
• 8:06
  Speaker 2: least I believe that. When I go door knocking and
• 8:10
  Speaker 2: people usually don't like people knocking on your door, so
• 8:12
  Speaker 2: you've got to have thick enough skin on your face
• 8:15
  Speaker 2: to have the door slammed in your face every now
• 8:17
  Speaker 2: and then. But also just talking to builders, they could
• 8:23
  Speaker 2: be really rough. And they're good people, but they come
• 8:26
  Speaker 2: across very aggressive sometimes. But so you just got to
• 8:29
  Speaker 2: deal with it. Not all of them, by the way.
• 8:32
  Speaker 2: But yeah, generally stress tolerance level. That's very important. So yeah,
• 8:38
  Speaker 2: the thicker is better, I think.
• 8:41
  Speaker 1: I understood. And for someone who's wanting to get started
• 8:44
  Speaker 1: out in property development, is there anything that you had
• 8:46
  Speaker 1: come across that would help? Any websites with useful information?
• 8:50
  Speaker 1: Any YouTube courses? Are there template spreadsheets out there? Is
• 8:54
  Speaker 1: there anything to sort of kickstart somebody who wants to
• 8:57
  Speaker 1: learn more about this?
• 8:58
  Speaker 2: Yeah, yeah. Look, I mean, there's not any particular course
• 9:02
  Speaker 2: that you want to enroll yourself into. It's not necessary. Like,
• 9:05
  Speaker 2: all the how to develop property 101 types of videos
• 9:09
  Speaker 2: are all over YouTube. So... Just watch something that's, you know,
• 9:13
  Speaker 2: well edited and it makes sense to you what you enjoy.
• 9:16
  Speaker 2: But I think practicing running fees is better than any
• 9:23
  Speaker 2: other training that you can get off these videos, to
• 9:25
  Speaker 2: be honest with you. So start with a simple renovation job,
• 9:29
  Speaker 2: compare the buying price to the resale value and see
• 9:32
  Speaker 2: if there's enough margin in it after considering not just
• 9:36
  Speaker 2: build costs, but GST, levies, interest. You can find these
• 9:39
  Speaker 2: on domainrealestate.com.au. And yeah, once you get used to it,
• 9:45
  Speaker 2: then you can do one for new build, then duplex,
• 9:48
  Speaker 2: then maybe two to three lots subdivision. And even if
• 9:51
  Speaker 2: you have no idea about anything now, trust me, once
• 9:55
  Speaker 2: you have run a hundred fees, and read through a
• 9:58
  Speaker 2: few LEPs, DCPs, you will start feeling more comfortable in
• 10:01
  Speaker 2: what you're doing and move on to considering the first
• 10:04
  Speaker 2: real life projects.
• 10:06
  Speaker 1: Perfect.
• 10:06
  Speaker 2: Yeah.
• 10:06
  Speaker 1: So step-by-step start with renovating a bathroom and then work
• 10:10
  Speaker 1: your way up to doing a 10 subdivision lot development somewhere.
• 10:15
  Speaker 2: Yeah. If it's just practicing fees, it's free. You don't
• 10:20
  Speaker 2: lose any money. So that's the best way to learn.
• 10:23
  Speaker 1: And it's a good point. Looking in your own backyard,
• 10:26
  Speaker 1: pun intended. So looking in your own property portfolio and
• 10:30
  Speaker 1: seeing if there's any scope to improve the value of
• 10:33
  Speaker 1: existing properties you have. So I suspect that you could
• 10:36
  Speaker 1: have a look at things like, can I build a
• 10:38
  Speaker 1: granny flat in the back of an investment property? Do
• 10:41
  Speaker 1: I have enough land to subdivide is it worthwhile doing
• 10:45
  Speaker 1: a knockdown and rebuild or a knockdown and building townhouses
• 10:49
  Speaker 1: on the site or is it just worth maybe doing
• 10:50
  Speaker 1: a renovation and as you said Daichi looking at the
• 10:54
  Speaker 1: the cost to do the renovation and then afterwards what's
• 10:56
  Speaker 1: that uplift in value of the the property and if
• 10:59
  Speaker 1: you find that that worked well on your own portfolio
• 11:03
  Speaker 1: then maybe you can get started and looking for other
• 11:05
  Speaker 1: sites to purchase.
• 11:07
  Speaker 2: Not so much your own portfolio. You do your practice
• 11:11
  Speaker 2: rounds on looking for sites for sale on realestate.com or
• 11:16
  Speaker 2: domain.com.au because usually your portfolio is not necessarily suited for
• 11:24
  Speaker 2: property development. For the development project to work, you've got
• 11:28
  Speaker 2: to get it right from the start at the buy-in. Okay.
• 11:32
  Speaker 2: If you already have an investment property portfolio, chances are
• 11:35
  Speaker 2: it wasn't bought for development purposes. So you don't often
• 11:38
  Speaker 2: find something profitable within your own portfolio. You just got
• 11:41
  Speaker 2: to start from the number one, step one, which is
• 11:44
  Speaker 2: to find and buy the site.
• 11:45
  Speaker 1: Got it. So your suggestion is to be purposeful with it.
• 11:49
  Speaker 1: Don't look at what you have and try and make
• 11:51
  Speaker 1: a triangle fit into a square hole and develop your
• 11:55
  Speaker 1: existing asset. Just start from scratch. Correct, correct.
• 11:59
  Speaker 2: The expression that I use always is that no matter
• 12:02
  Speaker 2: how well you cook a rock, you can't make it
• 12:05
  Speaker 2: taste like a steak. So you just got to, yeah,
• 12:09
  Speaker 2: the property, the site has to be right from the start.
• 12:12
  Speaker 1: Yeah, that makes sense. All right, well, talking about property
• 12:15
  Speaker 1: developments and the different types, can you run us through
• 12:17
  Speaker 1: what the different types of property developments are that maybe
• 12:19
  Speaker 1: an average mum or dad could consider? So I'm thinking
• 12:23
  Speaker 1: about things like buying a vacant block of land? Is
• 12:26
  Speaker 1: that maybe better to do? Should you buy something in
• 12:28
  Speaker 1: an established area with an old house on it? Should
• 12:31
  Speaker 1: you be looking at subdivisions, knockdowns? There's a lot of
• 12:35
  Speaker 1: different options or spectrum of options when you say the
• 12:38
  Speaker 1: word property development. But for the average sort of mum
• 12:41
  Speaker 1: and dad investor, can you run me through some of
• 12:43
  Speaker 1: the more common types of developments that they might be
• 12:45
  Speaker 1: able to get involved in?
• 12:47
  Speaker 2: Yeah, look, everything you mentioned, renovation, new build, duplex, subdivisions,
• 12:52
  Speaker 2: they're generally a good place to start. Because there are
• 12:56
  Speaker 2: less factors that could go wrong. This is important. Because
• 12:59
  Speaker 2: if the project does go wrong for some reason why,
• 13:02
  Speaker 2: you have less to lose. It's actually, in fact, very
• 13:05
  Speaker 2: hard to lose money as long as you're only developing
• 13:08
  Speaker 2: one or two keys. Because if you're only building one
• 13:12
  Speaker 2: or two keys, the potential debt can be managed on
• 13:17
  Speaker 2: the personal level. Whereas if you have like five, ten
• 13:19
  Speaker 2: keys going at the same time, then quite often that's
• 13:22
  Speaker 2: enough to bankrupt you. Okay. That will be where I'll
• 13:25
  Speaker 2: start if I was just starting out today. Okay.
• 13:28
  Speaker 1: And then with choosing a builder, which is central to
• 13:33
  Speaker 1: development if you're knocking down and you're building stuff, over
• 13:37
  Speaker 1: the years, how have you found a knack at picking builders?
• 13:42
  Speaker 1: What are you looking for with the builder themselves or
• 13:45
  Speaker 1: through their company to have the best chance that they're
• 13:48
  Speaker 1: going to complete the build in the timeframe, in the budget,
• 13:51
  Speaker 1: in the specs that you want?
• 13:54
  Speaker 2: Look, I would be looking at not the cheapest. First
• 13:59
  Speaker 2: of all, I'll run a tender always, at least three.
• 14:02
  Speaker 2: But I don't necessarily go for the cheapest builder. I
• 14:06
  Speaker 2: would go for someone that can justify what they're charging
• 14:13
  Speaker 2: for and how much. Because at the end of the day,
• 14:17
  Speaker 2: if you find a builder that is way cheaper than
• 14:20
  Speaker 2: everyone else, chances are they are trying to collect as
• 14:23
  Speaker 2: much cash as possible before they fall, for example. So
• 14:28
  Speaker 2: you look at, if you want to be very, very
• 14:31
  Speaker 2: diligent about it, you want to be just tracking how
• 14:33
  Speaker 2: many jobs they have. You can even, you know, try
• 14:37
  Speaker 2: to find out how much asset they have to assess
• 14:41
  Speaker 2: the risk of them going bankrupt, which is probably not
• 14:45
  Speaker 2: a silly thing to do in this market right now. Hmm.
• 14:49
  Speaker 1: That's a good point. All right. Well, moving along to
• 14:52
  Speaker 1: different budgets for property development, some people listening might have
• 14:56
  Speaker 1: $ 500, 000 to invest into a property and the development. Others
• 15:00
  Speaker 1: might have $ 5 million. So could we maybe break it
• 15:03
  Speaker 1: down to a few different price points and say less
• 15:06
  Speaker 1: than $ 1 million, then maybe $ 1 to $ 3 million, and
• 15:07
  Speaker 1: then $ 3 million to maybe $ 6 million. And if we
• 15:12
  Speaker 1: could open up to around the country as well, rather
• 15:14
  Speaker 1: than just focus on Sydney, what type of property development
• 15:18
  Speaker 1: would you suggest for each of those three sort of budgets?
• 15:20
  Speaker 1: And again, this is not advice to anyone. It's more
• 15:22
  Speaker 1: just sort of ideas of where might be attractive with
• 15:28
  Speaker 1: regards to the different types of property development that you
• 15:31
  Speaker 1: could potentially do. So to recap, less than a million,
• 15:34
  Speaker 1: second category, one to three million, and third category, three
• 15:37
  Speaker 1: to six million. Sure, sure.
• 15:39
  Speaker 2: Look, Your borrowing capacity and cash in hand are two
• 15:42
  Speaker 2: different things. So I'm going to talk very generically here
• 15:45
  Speaker 2: because that million dollars could mean anything. So say if
• 15:48
  Speaker 2: you had $ 200, 000 cash saved up and then you can borrow,
• 15:51
  Speaker 2: let's say 60% LVR, that's 300K, you can buy up
• 15:55
  Speaker 2: to half a million dollars in property. But if you
• 15:57
  Speaker 2: can borrow up to 80% in metro area, you can
• 16:00
  Speaker 2: buy up to a million dollars in property. But I
• 16:04
  Speaker 2: spoke about having the minimum threshold for meeting prices earlier on.
• 16:09
  Speaker 2: If we spent the whole 200K that you've saved up,
• 16:12
  Speaker 2: you have no money left to even run a DA.
• 16:14
  Speaker 2: It should be your first step. So when you have
• 16:17
  Speaker 2: less than, say, half a million dollars in cash, you
• 16:19
  Speaker 2: can't really fund purchase of the property and pay for
• 16:22
  Speaker 2: the DA on your own. So until you surpass that benchmark,
• 16:27
  Speaker 2: you should really team up with someone. Otherwise, you just
• 16:29
  Speaker 2: can't get that traction you need. But once you hit
• 16:32
  Speaker 2: that sort of half a million dollars mark, then.
• 16:35
  Speaker 3: I would be looking at, so the simple way to
• 16:41
  Speaker 3: probably look at is if you're targeting its minimum $ 2
• 16:46
  Speaker 3: million median.
• 16:48
  Speaker 2: Price suburb, and then if you have, let's say, less
• 16:51
  Speaker 2: than a million, let's say your first category, half a
• 16:54
  Speaker 2: million dollars to a million dollars, that will be enough
• 16:57
  Speaker 2: to buy yourself, let's say, a million to one and
• 17:01
  Speaker 2: a half million dollars property in for subdivisions. So you
• 17:05
  Speaker 2: could be targeting, where would that be? Earlwood would have
• 17:11
  Speaker 2: that around sort of just or under $ 2 million mark.
• 17:15
  Speaker 2: So you would probably pick up a potential, maybe a
• 17:19
  Speaker 2: knockdown rebuild site in Earlwood to build one extra key
• 17:22
  Speaker 2: or maybe two. But if you have one to $ 3 million,
• 17:26
  Speaker 2: then you can start running four different keys, let's say
• 17:31
  Speaker 2: more than four keys. So you could be, running a
• 17:34
  Speaker 2: project that could let you build four townhouses in a
• 17:38
  Speaker 2: medium sort of average area. Or you can choose to
• 17:42
  Speaker 2: run eight in a cheaper area. Or you can choose
• 17:45
  Speaker 2: to run two, let's say, very expensive duplexes in more
• 17:50
  Speaker 2: like eastern suburbs or lower North Shore. When you have
• 17:55
  Speaker 2: $ 3 million to $ 6 million, then you, and if this
• 17:59
  Speaker 2: was cash, not your borrowing capacity, once you have $ 3 million,
• 18:03
  Speaker 2: $ 6 million, you start moving on to sort of do
• 18:09
  Speaker 2: you really want to be putting that $ 3 million to
• 18:12
  Speaker 2: $ 6 million to run your own project? You could be
• 18:15
  Speaker 2: better off maybe teaming up with a bigger developer and
• 18:18
  Speaker 2: you go in as a potential equity partner to have
• 18:23
  Speaker 2: them deliver, let's say, 20, 30, 40 townhouses units. And
• 18:28
  Speaker 2: then you can leverage off their, their profession experience and capabilities.
• 18:35
  Speaker 2: So does that make sense? You, uh, up to about
• 18:39
  Speaker 2: three mil, you, you will be, you, you'll, you know,
• 18:42
  Speaker 2: if you're a novice developer, then run your own project.
• 18:45
  Speaker 2: But after three mil, you'll, you know, you want to
• 18:48
  Speaker 2: be working with bigger guys. That's how I feel.
• 18:52
  Speaker 1: Yeah, that makes sense. And for everyone who's not in Sydney,
• 18:55
  Speaker 1: Earlwood is a suburb that's sort of about 10, 15
• 18:58
  Speaker 1: kilometres outside of Sydney, CBD. Did I hear you say
• 19:02
  Speaker 1: something about keys? I think you said eight keys. What
• 19:05
  Speaker 1: do you mean by that with regards.
• 19:07
  Speaker 3: To property development?
• 19:07
  Speaker 2: Yeah, look, everyone, people say it differently. I say keys,
• 19:12
  Speaker 2: but some people say sites per site or dwellings, but
• 19:15
  Speaker 2: it's a number of literally a key down to open
• 19:19
  Speaker 2: the door. So if you say I'm doing eight keys,
• 19:22
  Speaker 2: that means I'm building eight dwellings. Or some people might
• 19:26
  Speaker 2: just say, oh, I'm doing eight dwellings. If I say
• 19:29
  Speaker 2: four keys, I'm building four houses or units.
• 19:32
  Speaker 1: Got it. That makes sense. There we go, everyone. We're
• 19:34
  Speaker 1: starting to learn the property development lingo, keys. I haven't
• 19:38
  Speaker 1: heard of that one before.
• 19:39
  Speaker 2: Keys are usually used to describe hotels and motels, but
• 19:44
  Speaker 2: I started using this because a lot of people understand
• 19:47
  Speaker 2: keys more than when I say sites. Yeah, no.
• 19:50
  Speaker 1: That makes sense all right well before we get into
• 19:52
  Speaker 1: the nuts and bolts of the property development process let's
• 19:55
  Speaker 1: take a pause for a break Hello and welcome back
• 19:58
  Speaker 1: to The Money Puzzle. I'm James Gerrard, writer, contributor to
• 20:02
  Speaker 1: the wealth section of the Australian newspaper and also financial
• 20:05
  Speaker 1: advisor with financialadvisor.com.au. And this week on the show, I
• 20:11
  Speaker 1: have Daichi Samahara, director, property developer and from buyer's agency firm,
• 20:17
  Speaker 1: Property Buyer. So now let's have a chat about the
• 20:20
  Speaker 1: development process. But before we do that, I just want
• 20:22
  Speaker 1: to remind everybody that what we're discussing is general advice.
• 20:25
  Speaker 1: It's not personal advice. So please don't go out there
• 20:28
  Speaker 1: and start buying properties and getting shovels and developing stuff.
• 20:32
  Speaker 1: Go seek advice from a qualified professional before you do anything.
• 20:37
  Speaker 1: All right, Daichi, let's jump into the development process. So
• 20:40
  Speaker 1: can you sort of run me through what a typical
• 20:42
  Speaker 1: development process would be from the beginning stage to the
• 20:46
  Speaker 1: finishing stage and then some of the common challenges that
• 20:49
  Speaker 1: you would face in that? And let's maybe work off
• 20:52
  Speaker 1: the example of, let's say a Sydney or Melbourne thousand
• 20:56
  Speaker 1: square meter property with an old house on it. The
• 20:59
  Speaker 1: local environment plan from the council is conducive to be
• 21:01
  Speaker 1: able to knock down the old house and subdivide it
• 21:05
  Speaker 1: and build two townhouses on separate titles there. So can
• 21:09
  Speaker 1: you run me through from, we've found the property, we've
• 21:12
  Speaker 1: agreed on the price. How do we get from that
• 21:15
  Speaker 1: point through to the keys, having these two townhouses and
• 21:19
  Speaker 1: selling those off for a profit?
• 21:21
  Speaker 2: Look, If I was to really broadly just order the process,
• 21:29
  Speaker 2: that would be acquisition, which you just mentioned. You get
• 21:32
  Speaker 2: offer and acceptance, exchange, settlement. Now you've got the DEA process.
• 21:39
  Speaker 2: So that's your development application. You want that approved by
• 21:43
  Speaker 2: the council so that you can build those two houses.
• 21:46
  Speaker 2: Now you then move on to CC process, construction certificates.
• 21:52
  Speaker 2: So DEA is an approval to build, the plan to build.
• 21:58
  Speaker 2: The construction certificate is an approval to actually start building
• 22:03
  Speaker 2: what's on the plan.
• 22:04
  Speaker 1: Got it. And what about the private certifier? Would you
• 22:08
  Speaker 1: typically try and go through a private certifier process or
• 22:11
  Speaker 1: development application through council?
• 22:14
  Speaker 2: Yeah, yeah. Look, you know, if you're, what you're, a
• 22:18
  Speaker 2: trying to get approved is all compliant to the council rules,
• 22:22
  Speaker 2: you should definitely go through private certifier. Saves a lot
• 22:25
  Speaker 2: of time and money. But then if you want to
• 22:28
  Speaker 2: do anything that is beyond the permissible rules or parameters
• 22:35
  Speaker 2: that the council give, which you want to be doing
• 22:37
  Speaker 2: to turbocharge the value, yeah, you have to go through DA.
• 22:41
  Speaker 2: But yeah, if you're just looking to subdivide your backyard
• 22:44
  Speaker 2: or renovate, yes, private certifier.
• 22:46
  Speaker 1: Perfect. All right. So we're up to construction certificate, which
• 22:49
  Speaker 1: allows you to construct. And then what happens from there?
• 22:52
  Speaker 2: So once you have that construction certificate and paid your
• 22:56
  Speaker 2: section fees, levies, you get to the first drawdown, we
• 23:01
  Speaker 2: call it, which is when you start. This is when
• 23:06
  Speaker 2: everything starts. You can't go back. You've borrowed your first
• 23:10
  Speaker 2: dollar from your construction financier and the construction starts.
• 23:15
  Speaker 1: Now, Okay, and sort of how long would that be
• 23:17
  Speaker 1: from the day you've settled the property until you start
• 23:20
  Speaker 1: to draw down that loan to construct? How long roughly
• 23:22
  Speaker 1: is that approval process for a typical townhouse site in, say,
• 23:27
  Speaker 1: Sydney or Melbourne?
• 23:29
  Speaker 2: Look, the last subdivision that I've done two lots out
• 23:34
  Speaker 2: in Kuringai area, that took me four months. So in
• 23:38
  Speaker 2: another suburb in Beagroft, that took me four months. So
• 23:42
  Speaker 2: two lots subdivisions... it doesn't take as much as long as,
• 23:46
  Speaker 2: you know, it's compliant. So you're looking at four to
• 23:48
  Speaker 2: six months for, um, the DA. Now you've got three
• 23:53
  Speaker 2: months CC. Then after, it depends when you settle, you
• 23:56
  Speaker 2: can settle anytime. You can, you can choose to settle
• 23:59
  Speaker 2: on DA approval or on CC approval, but, um, but regardless,
• 24:04
  Speaker 2: you want to be spending, um, as little as possible
• 24:07
  Speaker 2: from the time of settlement. So you start building because
• 24:10
  Speaker 2: every day your interests, um, added daily so look i
• 24:16
  Speaker 2: would be targeting no more than a month if i
• 24:21
  Speaker 2: had you know if i have to settle on the
• 24:22
  Speaker 2: property then start subdivision work so yeah and then once
• 24:28
  Speaker 2: the building is complete then obviously you've got your marketing
• 24:32
  Speaker 2: you can choose to market your property before construction is
• 24:37
  Speaker 2: finished so off the plan um this really helps you
• 24:41
  Speaker 2: obtain um Well, at least you can set your price.
• 24:45
  Speaker 2: You can sleep at night knowing that it's all sold,
• 24:49
  Speaker 2: but some people choose to build, finish complete building first,
• 24:53
  Speaker 2: then sell because it has that wow factor when it's
• 24:57
  Speaker 2: presented to the market and you can often get higher
• 24:59
  Speaker 2: price for it. If your finance allows you to build first,
• 25:04
  Speaker 2: then you should, in my opinion. But if you're just really,
• 25:08
  Speaker 2: really leveraging your a very high amount, you might as
• 25:13
  Speaker 2: well just get it done and sell before it starts
• 25:17
  Speaker 2: complete and just cash in. Then once it's sold, you
• 25:20
  Speaker 2: have your settlement and that's your normal, typical process of
• 25:27
  Speaker 2: doing something like this.
• 25:29
  Speaker 1: Understood. Sounds like a piece of cake, but sometimes it isn't.
• 25:32
  Speaker 1: So what can go wrong or what have you found
• 25:36
  Speaker 1: can go wrong typically in that process that you've just described?
• 25:40
  Speaker 2: Um... to be honest with you, what could go wrong
• 25:46
  Speaker 2: or unforeseen problems, you know, they're unforeseen because I can't
• 25:51
  Speaker 2: think of it now, right? So you always assume that
• 25:54
  Speaker 2: there's going to be a problem, right? I haven't seen
• 25:56
  Speaker 2: a single development that didn't have one problem, right? So
• 26:04
  Speaker 2: you want to look, We spoke about the acquisition process.
• 26:08
  Speaker 2: You said at the start of this conversation, let's say
• 26:11
  Speaker 2: we agreed on a price, yada, yada, yada. But personally,
• 26:14
  Speaker 2: I feel that the process starts, majority of the development
• 26:18
  Speaker 2: process is in the purchasing stage. Because there's a saying
• 26:23
  Speaker 2: in the industry that in property development, the profit is
• 26:25
  Speaker 2: earned on the purchase, not the sale. So if you
• 26:28
  Speaker 2: don't pick the right project from the start at the
• 26:30
  Speaker 2: right price, it's already game over. And you want to be.
• 26:36
  Speaker 2: Making sure the building escalation contingency, project contingency, you want
• 26:44
  Speaker 2: to put in about 10%, 15% of the total project
• 26:49
  Speaker 2: cost towards your contingency. Otherwise, you just don't have enough
• 26:54
  Speaker 2: to deal with those problems that is guaranteed to arise.
• 26:57
  Speaker 2: But as long as you have that contingency, you're always safe.
• 27:00
  Speaker 2: That's how I would mitigate my risk.
• 27:03
  Speaker 1: Got it. And do you micromanage each project? So for example,
• 27:06
  Speaker 1: if the, I'm not sure what they call the, the
• 27:09
  Speaker 1: concreter person who lays the slab, if they say the
• 27:12
  Speaker 1: slab's meant to be, you know, X number of inches deep,
• 27:15
  Speaker 1: but they do it Y number of inches deep, which
• 27:17
  Speaker 1: is not deep enough and it needs to be rectified.
• 27:20
  Speaker 1: And then that causes delays and stuff like that. Do
• 27:23
  Speaker 1: you try and inject yourself into each of the development
• 27:25
  Speaker 1: to sort of be there to to oversee and make
• 27:28
  Speaker 1: sure people are doing the right thing or do you
• 27:30
  Speaker 1: have to employ someone uh i don't know what they
• 27:33
  Speaker 1: call a site manager.
• 27:34
  Speaker 2: Site manager project managers yeah look i when i was
• 27:38
  Speaker 2: starting out i was trying to save every dollar um
• 27:41
  Speaker 2: i had more time on hand so i was still
• 27:43
  Speaker 2: trying to trying to do everything myself from getting ta
• 27:48
  Speaker 2: um for renovation new build subdivision work but you get
• 27:51
  Speaker 2: to the point where that's probably where you don't want
• 27:54
  Speaker 2: to be spending your money on and Also, the biggest
• 27:58
  Speaker 2: thing that I've learned was if you pay someone and
• 28:01
  Speaker 2: get the professional to do it for you when there's
• 28:04
  Speaker 2: a problem you actually have, you can legitimately blame, point
• 28:07
  Speaker 2: a finger at that person and blame it on him.
• 28:10
  Speaker 2: It's his insurance. It's his responsibility. It's not you. That
• 28:15
  Speaker 2: is very important. And if you can get that responsibility
• 28:19
  Speaker 2: and potential liabilities, risks off your back for the cost
• 28:24
  Speaker 2: of 30, 40, 50 grand, you might as well pay it.
• 28:27
  Speaker 2: So you weigh up how much enjoyment you want to
• 28:32
  Speaker 2: get out of managing it yourself to, okay, really, how
• 28:35
  Speaker 2: much risk should I be mitigating?
• 28:38
  Speaker 1: Yeah, good point. All right, well, before we get into
• 28:42
  Speaker 1: the million-dollar question of how much money can be made
• 28:44
  Speaker 1: from this, we're going to take a pause here and
• 28:47
  Speaker 1: stop for another short break. Hello and welcome back to
• 28:51
  Speaker 1: The Money Puzzle. I'm James Gerrard, contributor in the wealth
• 28:54
  Speaker 1: section of The Australian and also financial advisor at financialadvisor.com.au.
• 29:00
  Speaker 1: And today I have Daichi Samahara, property developer and director
• 29:04
  Speaker 1: at buyers agency firm Property Buyer. Okay, so as discussed
• 29:08
  Speaker 1: before the break, let's chat about the numbers. Let's get
• 29:12
  Speaker 1: down to the nitty gritty. Like I've heard that an
• 29:15
  Speaker 1: average property development, a good rule of thumb return is 30%. gain.
• 29:20
  Speaker 1: Is that sort of the industry rule of return in
• 29:22
  Speaker 1: terms of how much it costs you to buy the property,
• 29:25
  Speaker 1: all of the associated costs like stamp duty, all of
• 29:28
  Speaker 1: the construction costs, interest on the loan, agent's fees to sell?
• 29:32
  Speaker 1: You should end up with about a 30% return?
• 29:36
  Speaker 2: Yeah, look, 30% sounds great, but first you need to
• 29:40
  Speaker 2: understand the difference between your profit margin and return on investment.
• 29:44
  Speaker 2: So profit margin is, that's probably what you're talking about,
• 29:47
  Speaker 2: is the ratio of the net profit over the total
• 29:49
  Speaker 2: cost of the project. But this includes your cash and
• 29:52
  Speaker 2: the loan you get. So whereas ROI, on the other hand,
• 29:56
  Speaker 2: is the ratio of net profit over the actual cash
• 29:58
  Speaker 2: you spent. So for example, if you make 200K profit
• 30:01
  Speaker 2: by spending a mil to buy a site and build,
• 30:03
  Speaker 2: including a loan, your profit margin is 20%. However, if
• 30:07
  Speaker 2: you only spent 200K of your own cash and borrowed
• 30:10
  Speaker 2: the other 800K, your ROI is 100%, right? So to
• 30:15
  Speaker 2: answer your question, James, that 30% is good if it
• 30:19
  Speaker 2: was a profit margin, but as an ROI, it's probably not.
• 30:22
  Speaker 2: Because if you put your cash in the bank term deposit,
• 30:24
  Speaker 2: you get 5% per annum. If you put it in
• 30:27
  Speaker 2: debt funds, you'll get 5% to 10%. invested in equity funds,
• 30:31
  Speaker 2: you should earn about 16% to 18%. But if you're
• 30:33
  Speaker 2: not just risking your cash but taking on debt, project risk, everything,
• 30:37
  Speaker 2: you want to be clearing up at least 60% per
• 30:40
  Speaker 2: annum on your cash. So that's 60% in ROI.
• 30:43
  Speaker 1: Just to be clear on that, it sounds like to
• 30:46
  Speaker 1: maximise the profits on a property development, you should minimise
• 30:50
  Speaker 1: your own cash that you put in and borrow more
• 30:53
  Speaker 1: from the bank so that the return that you get,
• 30:55
  Speaker 1: the gross profit as you put it, is enhanced due
• 30:58
  Speaker 1: to the level of leverage or gear that you've had
• 31:01
  Speaker 1: over that investment slash development is that correct.
• 31:04
  Speaker 2: Slightly different topic but it is correct in a sense
• 31:07
  Speaker 2: yeah look if you can borrow more yeah you know
• 31:09
  Speaker 2: you you should borrow more um but if you don't
• 31:12
  Speaker 2: have to borrow more if you have enough cash you
• 31:15
  Speaker 2: um you know you don't want to borrow more there's
• 31:17
  Speaker 2: there's um pros and cons but i was more talking
• 31:20
  Speaker 2: about the the perception of that 30 that you've mentioned
• 31:23
  Speaker 2: so As a profit, so let me finish explaining. So
• 31:28
  Speaker 2: profit margin, right? This assesses the feasibility of the project itself.
• 31:32
  Speaker 2: And the target profit margin ranges anywhere from 15 to 35%.
• 31:37
  Speaker 2: And this depends on the length of time required to
• 31:40
  Speaker 2: complete the project. So if you're only building a house,
• 31:44
  Speaker 2: which takes 12 months to complete, then you're okay with
• 31:47
  Speaker 2: 10 to 15% profit margin. But if you're building multiple
• 31:51
  Speaker 2: keys and it takes 24 months, you want to be
• 31:54
  Speaker 2: aiming for 25%. If you're a land sub, that takes
• 31:57
  Speaker 2: three years, you want to be targeting 35% or more.
• 32:01
  Speaker 2: So probably the best way to measure your profit margin
• 32:08
  Speaker 2: if it's above the board is you want to clear,
• 32:11
  Speaker 2: let's say 12.5% per annum would be a good benchmark
• 32:15
  Speaker 2: to clear for your profit margin. So if it takes
• 32:17
  Speaker 2: two years, 25%.
• 32:20
  Speaker 1: Perfect that's great and then adding in the the capital
• 32:24
  Speaker 1: structure of cash versus debt what would be the the
• 32:29
  Speaker 1: typical mix so from say let's just pick some random
• 32:33
  Speaker 1: numbers a million dollars property purchase for the the site
• 32:38
  Speaker 1: how much of that would be typical from a developer
• 32:41
  Speaker 1: to put in his cash how much would they borrow
• 32:43
  Speaker 1: of that and then when you come to the development
• 32:45
  Speaker 1: let's say it's You're going to build two townhouses on
• 32:48
  Speaker 1: the site and they're going to be $ 500, 000 each. So
• 32:51
  Speaker 1: for that second million dollars for the development cost, who
• 32:55
  Speaker 1: pays for that? Is that from the developer pays part,
• 32:58
  Speaker 1: the bank lends all of that? What's the typical cash
• 33:00
  Speaker 1: versus debt ratio in that example?
• 33:02
  Speaker 2: Okay, very broadly speaking, you're fueling the metro area. Banks
• 33:07
  Speaker 2: are generally happy to lend you up to, let's say, 75%
• 33:09
  Speaker 2: of the value. So if that million dollars was in
• 33:14
  Speaker 2: Sydney Metro, you'll put in 250 of your own cash
• 33:18
  Speaker 2: and you'll borrow 750. Whereas if you're in a rural area,
• 33:22
  Speaker 2: let's say you're out on Lake Macquarie, banks will only
• 33:25
  Speaker 2: give you 60%. So you'll have to come up with
• 33:28
  Speaker 2: $ 400, 000 of your own cash instead of 250. And yeah,
• 33:33
  Speaker 2: that number sort of stays the same from mortgage to
• 33:39
  Speaker 2: construction finance. So that will be your rough deposit or cash,
• 33:46
  Speaker 2: I should say, that you should consider setting up.
• 33:49
  Speaker 1: Okay. And then on the construction side of things, correct
• 33:52
  Speaker 1: me if I'm wrong, but using the same metrics, Sydney Metro,
• 33:55
  Speaker 1: say 70% or 80% loan, because the property today is
• 33:58
  Speaker 1: only worth $ 1 million, as is, the banks are taking
• 34:01
  Speaker 1: a view that after the two townhouses are on the site,
• 34:04
  Speaker 1: it's going to be worth, I don't know, $ 2. 5 million.
• 34:07
  Speaker 1: So they'll lend the construction loan based on the completed
• 34:10
  Speaker 1: value of two and a half and lend 70 or 80%
• 34:12
  Speaker 1: of that for the construction finance, but at a higher
• 34:15
  Speaker 1: interest rate compared to the first loan to acquire the property.
• 34:17
  Speaker 1: Is that correct?
• 34:19
  Speaker 2: Combination of both. So if the resale value, gross revenue,
• 34:24
  Speaker 2: we call it, is you said two and a half mil, yes?
• 34:28
  Speaker 2: So if it's two and a half mil, then, and
• 34:31
  Speaker 2: let's say if it's in Sydney metro area, the banks
• 34:34
  Speaker 2: will probably lend up to 80%. So They'll go, yep,
• 34:39
  Speaker 2: we can lend up to $ 2 million. But then they
• 34:42
  Speaker 2: also look at how much cash you have put in
• 34:47
  Speaker 2: compared to that $ 2 million loan. So they go, well, look, 80%
• 34:50
  Speaker 2: of gross revenue, 2 mil, but of that, how much
• 34:54
  Speaker 2: have you put in? Have you put in $ 200, 000? No,
• 34:59
  Speaker 2: that's not enough. I want to see, let's say, 30%
• 35:02
  Speaker 2: at least. So they'll probably ask you to put in,
• 35:05
  Speaker 2: let's say, $ 600, 000 cash. So to figure out how much
• 35:10
  Speaker 2: you need to come up with, you have to calculate
• 35:14
  Speaker 2: from both angles. And typically, you know, you can only
• 35:18
  Speaker 2: borrow the lesser figure of the two.
• 35:22
  Speaker 1: Does that make sense? Yeah, no, absolutely. That makes sense.
• 35:25
  Speaker 2: All right.
• 35:26
  Speaker 1: Well, last question overall is what are some of the
• 35:30
  Speaker 1: tips and tricks that you've learned? Is there anything that
• 35:32
  Speaker 1: through your experience you would, you go, geez, I wish
• 35:35
  Speaker 1: I knew that my first development that you've only learned
• 35:38
  Speaker 1: over experience over time and anything else that you have
• 35:40
  Speaker 1: to say to anybody who's interested in doing a property development?
• 35:44
  Speaker 2: Look, there is no particular suburb or product you're guaranteed
• 35:49
  Speaker 2: to make money on, but if you muster up the
• 35:51
  Speaker 2: diligence and method to do the volume, you're guaranteed to
• 35:54
  Speaker 2: find one or two potential opportunities for every 100 sites
• 35:58
  Speaker 2: you assess. So whether you do this for yourself or
• 36:02
  Speaker 2: pay someone to do it for you, know that this
• 36:04
  Speaker 2: is the only way for most people to break through. Otherwise,
• 36:08
  Speaker 2: you just waste too much time dwelling on property or
• 36:12
  Speaker 2: sites that don't even stack up. But because that's all
• 36:15
  Speaker 2: you have, you go, oh, look, if I reduce the
• 36:18
  Speaker 2: build cost by 10 grand per square, would it work? See,
• 36:21
  Speaker 2: that's the common trap that a lot of people, newbies
• 36:23
  Speaker 2: fall into. um just just that that will be uh
• 36:27
  Speaker 2: my number one comment but um also getting started isn't
• 36:32
  Speaker 2: hard it's not different to committing yourself to going to
• 36:35
  Speaker 2: the gym so i'd actually go as far as saying
• 36:37
  Speaker 2: succeeding on your first project is not that hard because
• 36:40
  Speaker 2: most people are sensible enough to only take on projects
• 36:43
  Speaker 2: that can go that can't go wrong even if the
• 36:45
  Speaker 2: profit margin is very small but So usually the second
• 36:49
  Speaker 2: or the third project that slows you down or worse,
• 36:52
  Speaker 2: knock you out of the race completely if you don't
• 36:54
  Speaker 2: have the right guidance from someone with experience. So I've
• 36:57
  Speaker 2: seen too many people ruin their what could have been
• 36:59
  Speaker 2: a brilliant property development career by getting comfortable way too
• 37:02
  Speaker 2: early and making silly but fatal mistakes. So where they
• 37:06
  Speaker 2: to your business partner or consultants or business coach, work
• 37:10
  Speaker 2: with a mentor who can guide you through the first
• 37:12
  Speaker 2: project with you, not just the first one.
• 37:15
  Speaker 1: Very good tips and advice. And thank you, Daichi, overall
• 37:19
  Speaker 1: for everything that you've said today. It's been great to
• 37:22
  Speaker 1: open the lid and look inside of the property development
• 37:25
  Speaker 1: world and hear it from somebody who's actually doing property
• 37:28
  Speaker 1: developments and been successful at it. So Daichi Samahara, property developer,
• 37:33
  Speaker 1: director at Buyers Agency Firm, property buyer. It's been fantastic
• 37:37
  Speaker 1: having you on. The insights have been great. And I
• 37:39
  Speaker 1: hope our listeners have learnt a lot about the basics
• 37:41
  Speaker 1: of property development. Thank you again for coming on.
• 37:44
  Speaker 2: It was my pleasure. Thank you, James.
• 37:46
  Speaker 1: No worries. And to our listeners, thank you for tuning
• 37:49
  Speaker 1: in to today's episode of The Money Puzzle. Send us
• 37:51
  Speaker 1: your questions and Mr. James Kirby will be back next
• 37:54
  Speaker 1: week to answer them. But you'll have me again for
• 37:57
  Speaker 1: the next episode. We'll be having an accounting end of
• 38:00
  Speaker 1: financial year tax session with an accountant to get the
• 38:04
  Speaker 1: inside scoop on tax planning and also have a chat
• 38:07
  Speaker 1: about accounting and tax advice that you might hear at
• 38:11
  Speaker 1: over the barbecue or at a pub or from a
• 38:13
  Speaker 1: the back of a taxi, and whether or not those
• 38:15
  Speaker 1: things are accurate. We'll run through some common situations and
• 38:18
  Speaker 1: get whether they're true or false. You can tweet us
• 38:21
  Speaker 1: your thoughts. Just use the hashtag TheMoneyPuzzle, or one word,
• 38:25
  Speaker 1: or email us on themoneypuzzle at theaustralian.com.au. Until next time,
• 38:30
  Speaker 1: I'm James Gerrard. Talk to you soon. Thank you.