With huge success, Fayad and his brother Remon have tackled development projects with over 15,000 units. Join us today as we discuss the inspiration behind Fayad’s accomplishments, the mistakes he made with the Hilton Group in his early career, as well as the plans to kickstart his long-standing goal: Conquering the Hotel Industry.

Timestamps:
7:22 | FAYAD PASSION IS HOTELS, BUT IT’S A TOTALLY DIFFERENT GAME TO WHAT HE’S USED TO.
11:06 | IT WAS HIS FATHER WHO PUSHED HIM TO INVEST AS A YOUNG MAN.
12:21 | THERE ARE SO MANY RESOURCES AVAILABLE TO HELP YOU INVEST.
18:55 | HIS FATHER AND UNCLE BALANCED EACH OTHER OUT IN A BUSINESS SENSE.
21:18 | BUYERS ARE WILLING TO SPEND MORE TO BE PART OF THE STORY OF AN ELLERSON DEVELOPMENT.
26:39 | YOU’LL NEVER BE TRULY READY.
31:48 | FAYAD HAS BIG PLANS FOR THE FUTURE.
34:26 | LUCK DOESN'T PLAY MUCH OF A PART.

Resources and Links:

Transcript:
Fayad Fayad:  23:12  

You know, I mean, I often get asked— sometimes seriously, or as a joke— people ask me, 'are you an architect or a developer?'.

This is Property Investory where we talk to successful property investors to find out more about their stories, mindset and strategies.

I’m Tyrone Shum and in this episode, we’re continuing our discussion with  

Fayad Fayad, co-founder of Ellerson Property. The Fayad brothers have impressively developed projects with over 15,000 units. Join us as we discuss the inspiration behind Fayad’s accomplishments as well as his long-standing goal of building a hotel. 

Fayad built Ellerson Property from the ground up with his brother Remon with great success, but it hasn’t always been a smooth ride. He tells us about one of the mistakes he made in collaboration with the Hilton Hotel group. 

Fayad Fayad  1:33  

So I was on holiday with a few friends in the Gold Coast. And I mean, it's not our backyard, but we were there for a holiday, and the Hilton Hotel was getting built at that time. And it had an arrangement where you could buy the apartment and then put it back into the hotel pool. So it's kind of like, you buy it, but then you offer it back to the hotel, and then they run it. It's still running now. 

2:01  

But I guess it was like an impulse buy. I didn't do my homework. Put down the deposit. Paid a little bit of money for it. And right now, 10 years later, it's probably worth the same as what I paid for it. It took a backward step, and then came back in. And it's not a good reflection on the property space in general. This was bought in the middle of the boom, it was holiday hotel branded, it was kind of pumped up a bit. So that was my worst, and today it's still worth the same value. So in terms of being worse in property it means kind of staying where you are.

Tyrone Shum  3:19  

Yeah. You lost opportunity costs there.

Fayad Fayad  3:22  

Yeah. So it's kind of... if that's the worst in property, property can't be too bad.

Tyrone Shum  3:45  

What was it that attracted you? Was it because potentially you could have gone up and used it in your spare time? Or is it because it's a branded type of apartment there that you could rent out? What was the attraction to purchasing that investment?

Fayad Fayad  3:57  

I think it was a bit of both. At the time, I was buying a few apartments in different areas, like one in Sydney CBD and one in the Northern Beaches. And it was kind of at that time where I was looking outside of our nine to five business, I guess, and just investing in different aspirational apartments. The one in Queensland was what made me do it. I have a passion for getting into hotels, I still do now. And I think being part of a hotel sort of environment— it was an opportunity to be there but not be there. So just get a flavour of it. So buy an apartment, and you're actually part of a hotel. So it's kind of like you're thinking that maybe this is my way of getting into hotels. 

4:24  

So yeah, I do have in the back of my mind, I've always loved to get into hotels and eventually own hotels, either through Ellerson or through the family. That's a dream of mine, to get into hotels, and I saw this as an opportunity to one, have a place for holidays when I wanted to, and two, also to be part of a hotel environment, hotel business, I guess.

Tyrone Shum  5:36  

So you've had a lot of experience and built thousands and thousands of apartments across... actually, has it been mostly in New South Wales, that you've built apartments in the past? Or has it actually gone into other states as well? 

Fayad Fayad  5:52  

We've invested interstate. We've been partners with other developers, but we let them do the role, because it's their backyard. Yeah. But our nine to five and where we get our hands dirty is in Sydney.

Tyrone Shum  6:09  

So over that period of time, you've obviously built a lot of apartments, was there actually an opportunity to potentially convert one of them into a hotel? 

Fayad Fayad  6:23  

Yeah, I mean, structurally, it's fairly similar. It's just that property, it comes down to zoning as well. So we buy a lot in the residential areas. So it doesn't tend to lend itself to hotel builds. But the more we get into Parramatta CBD, like at the moment we're working on a complex where it's a combination of three towers, so two towers are actually residential, and one tower is a hotel. So it's been approved. So now we're just looking at ways to pre-sell the apartments and potentially, we're looking at the hotel structure, whether we engage a manager to run it, or do we sell the actual hotel structure to an established hotel operator. 

7:22  

So it's funny you mentioned that because at the moment we're there. But I guess what I mean by 'my vision to be in hotels' is to actually be in the operation. So not so much as owning the building and then renting it out to, like, a Marriott or a Four Seasons, it's actually being that Marriott or being the Four Seasons. So that's where my passion is. That's a totally different business, I guess. And it could be another step in the door, the first step was the apartment in the Hilton on the Gold Coast. And this one might be developing and constructing the building as a landlord and then have a Hilton, or someone similar to that, being the tenant and operating a hotel out of it. 

Tyrone Shum  8:17  

Wow. It's amazing. You are living very, very close to your dream now construction-wise.

Fayad Fayad  8:22  

Yeah. I can see it, it's on the horizon. I don't do things half-heartedly. So if I want to get into hotels I'd have to really know my stuff, and not just be a developer turned into a hotel operator. It's just a totally different ballgame. And I don't want to stuff it up.

Tyrone Shum   

Fayad’s ‘aha’ moment happened when he was working on his first development, which actually started as an investment property. 

Fayad Fayad  9:46  

I purchased a $500,000 four bedroom home on a block of land, a typical suburban home, cottage, I guess. So yeah, that was in my early days, a couple of years out of school. So I guess the 'aha' moment there was... I don't want to say how easy it is, but getting onto the property ladder... it definitely wasn't easy, but it was easier than what I thought. 

10:29  

On the construction sites I was building for the company, but then at the tail end, I'd see people coming in and moving in and then I'd think about 'where are all these rich people coming from?'. So I'd see like, three or four, at the time, they were probably $400,000 apartments. I didn't know much about property investing at the time, and the banks and lending and all that stuff. And I just think people would come here with a $400,000 cheque, pick up their keys and move into them.

11:06  

And I’d go, like, 'how many of these sorts of people are there? I don't know these sort of people. Where are they coming from?'. It wasn't until I got into it myself, like a few years out from school, where the property I was talking about came up for sale in our street. And my father said, 'I think you should get into property. You know how to build and I guess the next natural step is, it's a good way to invest some money'.

11:39

And I said 'Yeah, Dad, but how do I do it? I don't have $500,000'. And he goes, 'What do you mean?' And I said, 'I want to buy it, but how do I get into it?'. He goes 'No, no, no, no, no, here's what you do'. At the time, the banks I think were lending 90% so you needed a 10% deposit. We happened to know the people, so we kind of structured the deposit until settlement, and got 90% from the bank. And so that whole journey was like, 'Hang on, I could get a $500,000 home with $50,000'. 

12:21  

And even that $50,000, the way I got it was a little bit of saving, and then talking to the vendor about the structured way to come up with that $50,000 at the time. So I got a little bit of help from Dad and the plan with the vendor, a little bit of savings, came up with the $50,000. But I guess why it became an 'aha' moment is because actually there's so many resources around that actually want you to invest and help you to invest. 

12:55  

So I'd be there sitting, before this time I'd be sitting there or I'd be driving past the for sale sign, $600,000. That's nice, but how do I get there? Like I'm gonna have to wait to earn $600,000? And how are people doing it daily? And once I got into that process and then worked out that there was a $50,000 investment and then the bank came up with the rest... the big question mark, in my mind for the property development industry was 'How widespread is it? How many people can come up with these $300,000 and $400,000 cheques?'. 

13:47  

So then going through my experience and then working out 'Well hang on, these $300,000 or $400,000 apartments actually really only cost people maybe $30,000 and the rest were relying on banks or other ways of getting funds'. And so I kind of said 'Well hang on, this property space, it's for everyone then'. So experiencing that journey firsthand really was a real standout moment and a real eye opener and a door opener for the industry in my head.

Tyrone Shum  14:22  

Does that mean then you go 'wow, instead of just buying one of these properties, I could buy, say, ten of these properties'?

Fayad Fayad  14:26  

I actually developed that property into a duplex. It sat there for a little bit, earned some rent, got a DA on it, went back to the bank, got a bit more money, started building. And me with my background in building, I did a bit of it myself. So kind of helped with the costs there. It's my first investment and an investment I still have today.

Tyrone Shum  15:19

So I'm assuming that you also spend quite a bit of time as well looking at investing in properties, or do you mostly focus on property development at this point in time?

Fayad Fayad  15:26  

I'm a bit of both. So at the moment, we deal with real estate agents in the property development space, so we get offered a lot of development sites for sale. So in those conversations, you actually come across some good investments, whether that be a newly built or completed office tower that's come onto the market. So although we're predominantly property development, and turning a piece of land into finished apartments for the end user, we do do our own investments. As a by the by I guess, like in the actual process of property development, you get offered opportunities to become a property investor as well. 

Coming up after the break, we learn about the mentor who inspired Fayad’s vision. 

18:55  

So I guess a good balance between my father and him was that he was very pushing the boundaries, which was good for the end user.

Fayad reveals his plans for the future of the company. 

31:31

We've spoken to a lot of hotel operators in the past that are wanting to, as I mentioned earlier, potentially rent our buildings.

He shares the best advice he could give to young investors and developers.

29:28

That's one thing that I think I've only really embraced in the last couple of years. And if I'd done it earlier, I think it'd be a lot better.

And that’s next. I’m Tyrone Shum and you’re listening to Property Investory.

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Growing up around the property construction industry, Fayad learned alot from his father who helped him to get onto the property ladder. But aside from that, who else did he turn to as a mentor?

Fayad Fayad  17:06  

I'd like to say my late uncle, he was a great mentor in my early days. He passed away 10 years ago now. So he was very inspirational and, I guess, a life coach growing up. So he was the guy who's very young, so it's kind of like a big brother sort of model. So he was my mentor, he was in the property business, in the company with my father as well. So that little bit younger, closer to my age. And I guess we had similar interests in property and in construction. I'd like to say where I am today, his pathway kind of led me to where I am today, following his path. So yeah.

Tyrone Shum  18:11  

So the reason why he also inspired you and was like a mentor to you was because he also accomplished what you have wanted to achieve as well?

Fayad Fayad  18:21  

Yeah, from a business sense, I guess he always aspired to build great properties. So he would never skimp on design or quality or finishes. That's from a construction sense. He put everything at his building centre, so often have conversations with cost effectiveness or maintaining the budget, but from his sense is that no, this building, I need to build it as if I was living in it. And I want to build as if it's my home. 

18:55  

So I guess a good balance between my father and him was that he was very pushing the boundaries, which was good for the end user. But from a business sense, my father was always there to kind of keep it a little bit balanced. That was a good blend of two. And my style is more like him in that sense. So he actually allowed me to think the way I think now, which is that property development and the delivery of construction projects isn't... the success is based on the profitability of it. 

19:39

But at the end of the day, there is some room to move to make sure that the end product isn't just about spreadsheets and numbers and a page, it's actually putting out a building that you're proud of and that your end user could always thank you for, that they can enjoy living in, rather than just saying, 'Okay, well, thanks for putting a roof over our head' and that's it. We'd like them to actually enjoy and be proud of the building that they're in.

Tyrone Shum  20:10  

Fayad shares the differences between the residential units they’ve built in the past compared to what they are building for the future.

Fayad Fayad  20:43  

The nature of our buildings now are very, I guess, mixed use in that they could be... again, you'd have retail spaces at the bottom, you'd have a few levels of office space, and then you have your residential above. So you could kind of live in that whole complex, whether you need to get groceries down at the stores downstairs, work in the upper levels, and then live right at the top of the tower. 

21:15  

And I guess, one thing we want to keep in mind is that we want people one, not only people will be sure they're looking for the best price at the time, but people are willing to pay that little bit more just to have that best to live in the best building in the street or the best building in the suburb. So there is that. 

21:18  

And then what I find that makes your job more, I guess, fun, more interesting too, to be able to put something up that you're proud of. And then there's also buyers coming on board that are willing to spend that little bit more, just to be part of that tower, that story. And it's the way the whole building operates. You can't charge more just because the building looks better. That's the way the whole thing works.

23:12  

You know, I mean, I often get asked— sometimes seriously, or as a joke— people ask me, 'are you an architect or a developer?'. I'm definitely not an architect. But I like to have that vision. A typical developer wouldn't be more focused on some way a building looks. It's more about the waiting. The building performs in terms of profitability and all that. Whereas I'm a blend of both, I'd like to think. I probably competed with myself that time.

Tyrone Shum  

Fayad discusses further his mindset and motivation.

Fayad Fayad  24:07  

I love my documentaries. And I'm big on listening to podcasts. The one that gets me up and going every morning is, I listen to the GaryVee Experience every morning. And whenever I can, if I'm driving to sites, it's always on in my car. And that really just breaks things down and it just cuts out a lot of smoke and mirrors. It just really makes operating business a lot more practical.

Tyrone Shum  24:57  

Gary's awesome. He's just one of a kind. I've met him once and speaking to him, he’s so down to earth and genuine and he just has that kind of inspirational part about him. And when he gets up on stage, man, he gets the crowd fired up.

Fayad Fayad  25:15  

And he's so, so genuine. So authentic. I've met him a couple times face to face and he's very humble and very interested in what you're doing, rather than just showing that he's interested. He's really interested.

Tyrone Shum  

He reveals the advice which completely changed his mindset and fast tracked his success. 

Fayad Fayad  26.02 

The best piece of advice I read once is from Richard Branson, where he would explain, and he'd been through it in the past, that if you're presented with an opportunity, and although you don't have all your ducks in order to take on that opportunity, but it's an opportunity that you want to get involved in, you should just take it and then work out how to work your way through it, not to turn it back, as it may never come back to you, the opportunity. 

26:39  

So I guess, if it's an opportunity that you're looking for, and you said, 'Well, I might not be that ready for it, come back to me in a few years time, and when I've built this, and I've ticked that box, and I've done this course, and I've done that'. I guess that probably holds you back. If you're getting everything perfect, one, the opportunity may never come back to you again or you get into a point where you're continuously making it perfect, and you never actually get the job done. 

27:07  

So I guess that's one real big piece of advice that stuck with me in establishing Ellerson Properties. If it were up to me, and if it was about getting all my boxes ticked, and everything set up, Ellerson Property wouldn't exist until probably another 10 or 15 years time. But it's more 'opportunity came, let's do it. Let's get it done, and then work out how to do it'.

27:45  

A big part of working out how to get things done is the teamwork around us, that's helped us to get there. And they've appreciated the fact that although we know how to build, we know how to develop property, but setting up our own business? That's something new. And that's where their support is, and they appreciate we're in that space at the moment. And they're helping us along. So it's a good team.

Tyrone Shum  

Drawing on the advice from Richard Branson, Fayad thinks about what he would tell his younger self if he could go back in time. 

Fayad Fayad  29:10  

You don't need to make sure everything is perfect, and have everything 100, if not 110% right, before you go and embark on something. If it's almost there, get it. Just grab it, do it and then it'll work itself out. That's one thing that I think I've only really embraced in the last couple of years. And if I'd done it earlier, I think it'd be a lot better.

Tyrone Shum 

I ask Fayad where he sees himself and the company in five years time. 

Fayad Fayad  29:53  

The vision that I have and God willing we get there is, I like to see pretty much what we do at the moment, but on a larger scale. So right now we have X amount of projects under our management, I'd like to see a combination of family projects growing. And also having third party developers who don't quite have the functionality of developing a building, they may just be landowners coming on board, coming on our journey and providing that service for them. 

30:37  

So I guess one, an expansion of what we're doing now, two, having some more landowners coming in on the journey, enjoying our service, so we can develop their buildings. And three, like I mentioned earlier, I'd really like to get into hotel space. So I know five years may be a bit too early, but maybe 10 years.

Tyrone Shum  31:01  

10 years sounds like a good timeframe. What would it take to actually build a hotel? I've never delved into that space to have a look. But what actually do you need?

Fayad Fayad  31:11  

I think the building side, we've got that covered. It's more about the operational and making sure that the numbers stack up to get the right mix, where to put the hotel, how many beds you need. We've spoken to a lot of hotel operators in the past that are wanting to, as I mentioned earlier, potentially rent our buildings. So we build the shell for them, they come in with their builders, they'll fit out to make it look like a hotel, and then they'll operate it. 

31:48  

So in talking with them, there's a lot of things that I couldn't quite understand. I understand how to build the thing for them, and how to sell the structure to them. But what makes their business profitable? That's something that I'd like to spend the next few years trying to understand. And then I can work out, if I've got that sorted, can I then go and delve into that side of things as well.

Tyrone Shum  32:17  

It's a completely different world out there.

Fayad Fayad  32:18  

It is different, it's totally different. It's a different role. Like I've mentioned before, I don't want to pretend I know it just because I've built a couple of structures before and had hotel operators in and around me. I don't pretend that I'm a hotel operator. I have built hotels, but I'd like to know the point two and point three of that journey I was explaining earlier, before I set foot into that. That's definitely on my radar.

Tyrone Shum    

So how much—if any—of his success is determined by luck?

Fayad Fayad  33:08  

I think luck is a funny word in property development. Some people say you're lucky that your apartment doubled in price in five years, or you're lucky that you got a good deal on your apartment. But that'd be put down skill, as well as in buying at the right time, knowing the market, working out what's about to boom, what train station's just about to be built. So you know to buy an apartment there. 

33:48  

So, it depends on the way you look at it in property. People who don't acknowledge that you need to know a few things or be smart about the property space will call it luck. Because it's very hard to differentiate. It's not like you can prove why your apartment or your home increased in value. You can't prove it. But you just knew it was the right time to buy before it went up in price. 

34:26  

So I guess because you can't prove it, someone might say well, it's luck. And you kind of have to just shrug it and say it has to be luck, because you can't really explain it. And I guess that's what I've found. A lot of people in the space, they either talk about 'How did you know that was going to happen in that area to buy that parcel of land?'. Or do you get other people who say 'You're so lucky that you bought that land where it happened to be a train station or a train or a light rail stop is going to happen right at your doorstep'. So it depends how you look at it. 

Tyrone Shum  35:11  

Yeah, I think it's more the how and preparation and knowledge and skill to be able to find all that, isn't it. You've got that knowledge to be able to get into it.

Fayad Fayad  35:22  

Where luck comes into it is I guess, meeting people and being at the right place at the right time. That's what luck is. Not so much the processes or acquisition, it's more the networking side of things. So there's so many people I've met out of pure coincidence, I was just lucky to be at this function where I met this guy, I'm still doing business with him 10 years down the line. So I guess that's where luck comes into it, from meeting people. But then from that point, it becomes a skillset. What do you do with that introduction? 

Thank you to Fayad Fayad, our guest on this episode of Property Investory.