Timestamps:
4.30 | Home is Where the Heart Is
8.25 | Ball is Life
13.01 | What Could’ve Been
16.01 | Starting from Scratch?
21.12 | No Test Runs

Resources and Links:
Commercial and Construction Capital
Ryde Property Profile
Tim Cahill
Lucas Niell
Hunter’s Hill Property Profile
Putney Property Profile

Transcript:
Fabian De Marco: 

[10:49] I'd say up to the age of 16, I was playing at the highest level that you could for a 16 year old in Australia. [11:02] A couple of my teammates are probably well known— Tim Cahill—I played with him on his team for a couple of years at Sydney Olympic. I also played alongside Lucas Neil a few times when I was younger as well.

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 speaking with Fabian De Marco, Managing Director of Commercial and Construction Capital. We’ll hear how he juggles a business and his own personal investments. He’ll share some life lessons from a self-proclaimed former party animal, and the difference between loving the game of soccer and living it.  

 

De Marco is a Senior Commercial Lending specialist with over 20 years of financial services expertise honed within property development and corporate finance. He’s worked for the big banks and the small ones. He’s seen the good, the not-so-good, and the great ways of doing property finance. But maybe the best part about him? He’s a local boy from Sydney!

[0:26] You can probably tell by the surname that I have some ethnic descent. My parents were both born in Italy and migrated over to Australia when they were about 13 or 14 years old.  I was born and raised here in in Sydney. I would describe myself as someone that is adventurous, someone that likes having fun, but someone that can also be serious when when they need to.

[1:05] I'm the managing director for Commercial and Construction Capital. Commercial and Construction Capital are an expert firm in arranging non-bank, private finance for property investors and property developers. 

As someone who’s worked in a high pressure environment for several decades, you’d think De Marco can handle everything that’s thrown at him. You’d be right if we were just talking about finance, but family? I don’t think anyone has that figured out yet.   

[1:35] The best way to describe it is—and I know the younger listeners are probably not going to have any idea about what I'm about to say —but when I was little, there used to be these little Christmas things that were filled with water. And when you shake them it had snow in it. And as you shake it the snow would go everywhere and it would slowly then settle back down to the ground. But when you first pick it up and you shake it, everything goes everywhere. And then as the water starts to settle, everything starts to settle back into place, and that's pretty much my day in a nutshell now. I wake up in the morning, we've got three young boys, and it's just nonstop from the second they wake up to the second we get them to bed. Obviously in between there there's some serious stuff, I run a business. 

[2:33] I try to keep myself active by trying to get to the gym as well in the mornings, at least three or four times a week. I can't say that always happens, but that's typically the plan. We start off with with a little bit of exercise in the morning, get the kids off to school and then get into the workday. Obviously, afternoons, the kids come home. There's that period between sort of three o'clock and five o'clock where both my wife and I are like circus juggling clowns where we're juggling between kids and trying to take emails and take calls and still try and present a very corporate and professional appearance. All whilst we've got kids asking for afternoon tea and activities and all of that. It's very exciting, it's that time of life for us. The one thing that I've realised, you can miss a lot of life if you're constantly trying to always be at the next checkpoint instead of sort of just appreciating where you are. This is the phase of life we're in right now, it's chaotic, but we try to find a little bit of beauty in the chaos, if that makes sense.

Now De Marco is a father, trying his best to forge a great life for his family. His own childhood was a little different.

[5:06] For the listeners that are not from Sydney, I'd say it's about 20 minutes outside of the Sydney CBD in an area called Ryde. I went to school in that area as well. I've pretty much been in Sydney my whole life. We've toyed with the idea of possibly life outside of Sydney, but at the moment Sydney is where we call home.

[5:51]  The best memories I have is sort of just playing with your cousins on a weekend or after school. We did everything, we'd play soccer, we'd play cricket, we'd chase cicada's, knock on the neighbor's doors and go and play in their backyard. There's a lot of things that kids don't I think have the opportunity to do today. The world is a very different place now than it was a while back. I don't want to say how long back but it was fun. I have great memories of my childhood. It’s something that I hope my kids look back as well and can say they have good memories as well.

In the modern world we live in, great memories can look different to every new generation. 

[7:07] My little one was at the TV the other day just trying to swipe and change the channel. At first we looked at him and said, 'What's he doing?' But then we thought, 'Why wouldn't he do that?' Every single device he touches, he can touch and swipe it and move it and it looks just like a giant iPad, so it would make sense. That's the future. Obviously, it's a balancing act, you try to sort of not expose them to too much technology, because obviously you want their brain to develop organically. But at the same token, that's the future, that's the world they're growing into. You can't shield them from it and not let them be exposed to it, because then they're probably going to grow up a little bit behind where everyone else is. It's a bit of a balancing act, trying to balance, what's a fair and suitable amount of time on devices. 

Sport has always played a big part in the Australian way of life. For De Marco, it really shaped how he has lived his.

[8:37] Growing up, I was very, very much into my football, into soccer. I would say I would describe myself as obsessed. That's all I thought about, that's all I wanted to do. I was convinced that I was going to be a professional player. In my head through high school, it wasn't a matter of if, it was only a matter of when. Look, truth be told, I probably had enough talent to probably play it at a higher level than I did. However, I think one of the key fundamental parts, which is attitude, discipline, those sorts of elements, I lacked poorly, which brought my career to an early halt. So I never gave too much thought to university or anything like that whilst in my year 11 and 12 studies. Hence when I finished high school, I ventured overseas for a short stint to trial my luck overseas. I came back with no success and once I got back I— look obviously as an 18 year old, you're just trying to earn some money and go out and have some fun, which is what I sort of did. That might be a good segue I suppose into the next phase. I ended up just working and trying to get myself some money so I could go out on the weekends and have fun and and I sort of always said to myself, 'I'm still young, I’ve  got plenty of time to get serious about my training again and give professional football another crack.' But as time goes on, you keep putting everything on the back burner and eventually time passes you by and you start to see all your old friends playing on TV and playing for the Socceroos in World Cups and then it hits you like a ton of bricks. Your chance is gone.

[10:49] I'd say up to the age of 16, I was playing at the highest level that you could for a 16 year old in Australia. I never played for the national team or anything like that. But a couple of my teammates are probably well known.  Tim Cahill, I played with him in his team for a couple of years at Sydney Olympic. I played alongside Lucas Neil a few times when I was younger as well. So, a few of the Socceroos, that's as a 15, 16 year old when I was sort of playing at that level. As I said,, that jump from that age group to senior football, it's all mental. It's all discipline, it's all hard work. And if you're not willing to do that, then you don't have a chance. And unfortunately, I was more concerned about going to nightclubs chasing girls and having fun than I was about training. 

Hindsight is a powerful tool that we are all presented with about a decade too late. 

[11:52] I had a lot of fun. I definitely can't deny that I had a lot of fun in my 20s. Obviously, hindsight is a beautiful thing. It was a lot of great lessons learned to put that away.

[12:40] There's no doubt, being a professional football—So when I say football, I'm referring to soccer. I just habit by calling it football— Being a professional in that sport, you're pretty much set. If you play anywhere in Europe, provided you invest your money wisely, you should be financially set for the rest of your life. But it's one of those things. I always think if I had gone down that path, whilst it sounds glamorous, and it sounds like it would have been amazing. I look around and I think, 'Well, I wouldn't have probably wouldn't have these kids, I probably wouldn't have met my wife, I probably wouldn't have learned all these lessons over the last 20, 30 years that I have now to draw on. So, it's one of those things. My dad's got a good saying that he always says to me, “If you look over your fence and the grass looks greener, sometimes it's not a matter of the grass being greener, it means you need to water your own grass.” I always sort of look around what I have and I'm quite grateful for for what I've got.

From footballer to financier, something had to happen in-between. De Marco says his journey wasn’t as profound as some others, but it did lead him to the best outcome he can think of. And it’s not his job. 

[14:21] I sort of thought, 'What's the easiest job that I could get that sort of fits with my personality and what I like?' When I was 18, 19, I was quite a sociable person, I enjoyed music. In Parramatta Westfields there was a clothing store, like a young hip clothing store— I approached them and just said, 'Look, if you have any casual work I'd love to work.' I mean for me it was you go into a shop, you say hello to people and there's music blaring. It was just a fun thing for me to do and I thought, “they're gonna pay me for this too, even better.” I worked in that sort of role for a year and a bit, two years towards—when I was around 21, I met my wife who was working two doors up in another shop. At the time, she was going to uni, she was studying accounting, or a Bachelor of Finance in Accounting or something. But I liked her and I sort of got the idea, I thought, 'Okay, if I'm going to be her with long term, I've probably got to think about my future and maybe what do I want to do with my life?' 

[15:54] I sort of started thinking and I had a chat with my dad who was working in finance at the time. And naturally, as any parent would, they sort of said, 'Look, why don't you have a think about this and I'll show you a little bit about it, I understand it.' So, I started learning a little bit about that through my dad's business at the time. Once I sort of thought I had a decent amount of knowledge I just applied for a role with a finance company at a very entry level position. And I did that, and twenty odd years on, here I am now running my own finance company. It's been one of those, not to sound cliche, but sort of started at the bottom and worked my way through it. And along the way I've done some study, some entry level studies, have done a couple of certificates in finance. I've done my RG 146 in securities, derivatives, managed investments. I've done a little bit of study, but really my education has been done through through basically trial and error.

 

Coming up after the break, we dive into De Marco’s personal property encounters. 

 

[20:39] Usually when you go to buy, any of your listeners who buy property, and I'm talking about when you're buying a property that you're most likely going to live in, you usually make a decision within the first 20 seconds, or sometimes even just approaching the property, you can make a decision about whether this is going to be it or not.

The reasons why the words emotion and property should never be seen together. 

[28:09] But if you're buying something for investment and the purpose of that acquisition is to give you either a profit, capital growth or income, then you have to be smart.

How looking for a forever home changes your mindset. 

[21:55] The second we stepped inside and went out onto a balcony, it wasn't that it had a spectacular view or anything, the view was okay, but just something about it was so serene, we fell in love. 

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

 

While De Marco learnt the tools of the trade by using them on the job, he already had a natural disposition for finance, at least at the core level.

[17:27] I like numbers. Numbers make sense to me. I like money, I like making money. I like understanding how money is made and I like property. So, property is something that really interests me. Now, whether it's property investment, property development. So when sort of thinking about the idea of finance, and when I talk finance, I'm talking about I'm working in finance to do with financing property, so buying and selling of property. The two sort of excited me, I sort of liked that idea.  What's crazy is when I say I like numbers, one thing that might shock people is that in year 11 and 12, I did not do mathematics as a selected subject. 

[18:22] But back when I was in Year 12, it was possible. I didn't do mathematics. But look, I don't mind admitting it, because I'm actually quite good with numbers now. My wife would kill me for saying this, but many, many, many years ago, she was interviewing for a job and one of the tests she had to do was in online mathematics. It was like a quick flash a question up and you've got like five seconds to answer it. And it was one you do at home, so I sat next to her and as the questions came up, I just gave her the answers like lightning straight away. And she came back and said, 'This is the highest score we've ever had on this test.' I said, ‘Not bad for someone that didn't do mathematics in year 11 and 12.

[19:20] My day to day role, I probably crunch four or five feasibilities a day sometimes.

Of course, playing with someone elses numbers is one thing. Putting your money where your mouth is, is often where the rubber hits the road. For De Marco, this rings true even outside the world of investment. 

 [20:20] The first purchase would have been, how long ago now, about 20 odd years ago now almost, maybe a little bit less. Obviously, just getting married, we were looking to buy a property. At that stage we weren't sure whether we wanted to buy it as an investment or one to live in. But it was, I remember, it was quite nerve racking. We found one that we fell in love with, which, as anyone knows puts you in a very difficult position when it comes time to try and negotiate price. It was one of those properties where it was a two bedroom apartment in Hunters Hill. At first, when you looked at it, we thought, ‘Look, it looks nice, but I don't think it will be the one. 

[20:39] Usually when you go to buy, any of your listeners who buy property, and I'm talking about when you're buying a property that you're most likely going to live in, you usually make a decision within the first 20 seconds, or sometimes even just approaching the property you can make a decision about whether this is going to be it or not. Not always, but nine times out of 10 you can approach a property and straight away, 'I don't like this street, I don't like the driveway, I don't like this.' This one was a bit weird approaching it. We said 'No, I don't think so, the road looks a bit too busy and this and that.' The second we stepped inside and went out onto a balcony, it wasn't that it had a spectacular view or anything. The view was okay, but just something about it was so serene, we fell in love. And immediately we asked for a contract of sale and just started the negotiating process. So, it was very exciting. 

[22:18] The most exciting feeling we had was, I suppose when they accepted our offer. We went to the offices and signed the contract. And that excitement was swiftly followed by sheer terror. Once we settled and got the keys and went to visit the property and realised just how bad a condition it was internally. We didn't you know, when you go to look at a property, you don't check little things like windows. Do the windows open properly? Are they jammed? Can the doors open? Are other other doors rusted? Or, what's this  storage area like? So there's little things you don't check into. What was the condition of the carpets? Or underneath the couch? We didn't realise underneath the couch, the carpets were in poor condition. And so, we quickly realised a lot of the savings we had set aside were going to be used to bringing the apartment back up to a good standard for us living. But it was exciting. 

Buying property to invest in was a bit of a shock to De Marco’s system. It’s more transactional, theoretical and sometimes even downright taxing, in more ways than one.

[23:32] We later bought another villa in Putney which was a similar experience. We  didn't particularly fall in love with it. But we fell in love with what we could do with this place. S,o this was something we bought and thought we could completely strip it down to the bricks and rebuild the inside. Both properties, I'd say if you were to look at them as investments, let's say you're buying to renovate and flip, I'd say we would have done well on both of them. I don't know if a lot of your listeners have been involved in property renovations and flipping and selling, it can be a pretty draining experience. Trying to coordinate things and all of a sudden, a quote has gone from two thousand to three and a half thousand because of something unexpected. And all of a sudden you're getting carried away with picking expensive tiles for the kitchen and the backdrop and so the budgets can blow out, costs can go up. But overall, I think it was an enjoyable experience. We've really liked it financially, I'd say the second property was more of a break even transaction. But it's fully enjoyable.

[25:19] That's always something you're thinking about.  When you're youn, and you're buying a property to live in, most of the time in today's day and age it doesn't end up being the house or the property you stay in forever, because naturally family grows and you need more space. They're always sort of bought with a view to become an investment. It's easy to get carried away when you're new and you start renovating and dressing it up. And you've sometimes got to remind yourself, 'Look, we're not going to be here forever. I don't need the $10,000 benchtop.'

It’s this scenario where feelings and property become involved that De Marco says can be so damaging. Not because he’s heard about it, but because he sees it every day. 

[27:08] I have to say, the properties we've invested in, we've also invested in a commercial office in the city before, which was probably out of the three investments, was probably by far the best one. I wish I could say we've had a really bad experience on property investing, but I've seen some some horror stories. And I'd say the one thing that I would probably be wary of most if I was investing in property is not to over capitalise in the beginning. If you're buying a property for investment purposes, it has to be the only property purchase where I would go all out and not be worried too much about it is obviously a property that that's going to be your forever home. Because in that instance, you're going to enjoy it, you're going to be there. But if you're buying something for investment and the purpose of that acquisition is to give you either a profit, capital growth or income, then you have to be smart. So, I've seen in the property development space a lot of developers get it wrong, because they've maybe paid too much for this site, way too much. Because they get caught up at an auction and there's two or three people bidding and they all want the site. And it goes from where their feasibility told them that this site should be worth no more than 1.2 million, they ended up paying 1.6 million. So, all of a sudden, to get a profit out of this project, they have to sell the property for a ridiculous amount. That's never going to happen, and that's where you can get caught. I would probably recommend people to really take a close look on how much they spend in the beginning because that could ultimately affect how much profit you'll end up making on a property purchase.

[29:35] The amount of clients sometimes that I come across that sign contracts of sale, and then go and try and organise finance after is is just mind boggling. Now, I don't know if I see more of it because I specialise in that private space and most people that end up in that situation, tend to up in a non-bank private lending option. But I would highly recommend people at least engage with a financier or a broker to at least understand what their options are, before they sign a contract of sale. I've seen some clients that put themselves in a position where they may be buying a commercial property or a development site, and they've signed a contract of sale, they've got a settlement date now that's looming. They've gone to their bank, who they thought was going to do it and the banks turned around and said no. And now they've got two weeks to find a finance solution, or they lose their deposit. 

[30:47] When you put yourself in that position, you open yourself up to predatory lenders because you can't hide your situation, it's there to see. And if you're not careful, you’ve got lenders out there who will take advantage of that and charge you astronomical rates and fees. I guess this sort of comes back to investors and anyone who's looking at property to sort of have a bit of a clean process, a strategic process that you follow when you're buying property or investing. You need to sort have a set criteria of things that you do. It's kind of like a pilot, don't let him take off or let her take off a plane off the ground unless all of the checks have been done by the engineers before and the plane is cleared for takeoff. They don't let him just take off and say, 'Okay, we'll just check it when we land or halfway up in the air. Doesn't happen. I guess when people are playing with their money, money is not the most important thing in the world, but it's up there with oxygen. It's pretty important, you can't survive without it. So, the thought of people being just careless with it and buying property and not thinking about the risk involved and how they can mitigate that risk. It's crazy sometimes.

Fabian De Marco’s story continues in the next episode of Property Investory. He’ll tell us the most common qualities of successful property projects. 

[16:39 Pt. 2] The developers I see around me that are the most successful [16:57] are the ones that prioritise working with trustworthy and reliable people.

An approach to measuring success that makes life seem a lot simpler.  

[0:20 Pt.2] I'd say probably about six months ago, I had this moment where the universe sort of tapped me on the shoulder and said, ”here is a little bit of wisdom that you're in desperate need off.”

The ins and outs of the modern money marketplace. 

[21:14, Pt2] If you tick that criteria, you now have a myriad of possibilities on how to source financing and supply and demand because there are so many of them out there.

And that’s next time on Property Investory.