Property Investory
Dean Parker - Jobless to Joyous - Dean Parker’s Winding Road to $10 Million
September 19, 2018
Dean Parker is the founder and managing director of full-service property company Your Style Homes. Also a licensed Real Estate Agent and fully-qualified IT analyst, Parker worked in the corporate world for the beginning stages of his career life for some of the biggest tech companies in the world. But something didn’t feel right. For all the work he did as an employee he had nothing to show for it. At rock-bottom, he was ready to change his life…through the vehicle of property.
On this episode we’ll follow Parker’s journey navigating his desire for a better life with the real, everyday challenges he’s had to face over time. Listen to his transformation from beginner investor to entrepreneur and full-time developer with over 450 property transactions totalling over $160 million in value, including renovations, new property developments and a portfolio of investment properties. The best thing? Hear how with the right tools by your side, it’s possible for you to transform too.

Timestamps:
1.03 | From Zero to Hero
6.27 | There Has To Be Something Better…
9.47 | Property One: Struggle Street
13.35 | Lifestyle: A Tough Sell
17.14 | A Foot in The Door
24.18 | The Circus Show That Is Property
28.31 | Not How, But Who…
31.48 | Challenge Accepted
35.43 | Level Up
39.18 | On A Roll
43.50 | A Whole New World
48.18 | You Can Never Be Too Careful
51.59 | What About Me?
56.21 | What’s Next?

Resources and Links:

Transcript:

Dean Parker
[11:38] I remember literally crying as I was walking down the street talking to Elise telling her about what just happened. And knowing that we're just about to sell this property and I've just lost my job.

**INTRO MUSIC**
 
Tyrone Shum:
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 licenced real estate agent, developer and founder of Your Style Homes, Dean Parker. We follow his transition from unemployed IT worker to full-time property developer, leading to his involvement in over 450 property transactions totalling over $160 million!     

**END INTRO MUSIC**
 
**START BACKGROUND MUSIC**

From zero to hero 

Tyrone Shum 
Parker’s business abides by its mission, ‘Satisfaction Beyond the Keys’. He runs a full-service property company, who strive to maximise both capital growth and rental return prospects for every single client. Through over two decades of property experience, he’s done it all and succeeded, with some bumps along the way. Now his favourite activity is helpings others, who are perhaps just starting.  

Dean Parker
[0:17] I was formerly IT, but we've been able to get out of the IT industry and be a full time property investor, slash educator, slash developer. So, that's what I generally spend my time doing.

[0:52] Well, generally, we have a team of eight staff, we are running our projects. So we have residential, and commercial projects that we undertake and we're managing those projects. And at the same time, we are now running some educational events to try and help other people get into property and to be effective in property and to not lose money. And to hopefully make some money along the way. But we also offer property management services to our clients as well. 

[1:29] So, I guess what we're trying to do is offer a full turnkey system where people can first meet us, via potentially an education event, whether that be a first homebuyer event or a property investing event. They can then have a look at the type of properties that we offer to our clients. And then if they decide to go ahead with something, we can also offer Property Management Services, because I guess I got frustrated handing our properties over to property managers who weren't doing a very good job at it. So we decided to do that ourselves so we could offer the best possible service.

Tyrone Shum 
Parker now lives and breathes property, as both a rewarding career and passion. But it wasn’t always like this. In fact, this wasn’t really the plan. 

Dean Parker 
[4:53] I was born in Ballarat in regional Victoria and stayed there till I was in grade two or grade three. I missed I think almost all of grade two because I got salmonella, which was a a disease— it wasn't really it was a sickness that no one really knew about at the time. And although it wasn't contagious, and although I did get very sick from it, I was in hospital for a significant amount of time. I missed the whole of grade two because again, it wasn't very well known at the time. I ended up having to pause and was basically stopped from going to school. So, I did schooling from home that year. But then the year after we moved to Melton, which was probably about an hour out of the city out of Melbourne. And that's where I finished off my primary schooling and did all of all my high school.

[6:33] Now I went from high school straight into uni and did a double degree. So, I did Deakin Uni down in Geelong and did a Bachelor of Commerce majoring in Accounting Management and also a Bachelor of Science majoring in information systems.

[6:59] Now it's four years for that course full time. So, I got that course finished in full time. And then I guess with that education, I figured it works best to go into an IT job that required some accounting knowledge. So, I started as an accountant for a very short period of time, just through a friend's business to get some experience. But then was able to get a job at IBM, and worked for IBM for a few years before being headhunted by a Melbourne company and then moving into Melbourne and working there for a few years as well.

Tyrone Shum 
From the outside looking in, Parker’s career in IT was on the rise. However, for Parker himself, something just wasn’t right. 

Dean Parker 
[7:49] Well, I wouldn't say I was happy being an IT person. I went there probably because it was an interest at the time and I guess my parents had probably— we never really had a lot of money as a family. And my mum always wanted me to go off and educate myself and I guess try to create a better life. So, I went went to uni and did that sort of course. Probably because at the time, it was an interest. But I guess I wasn't a big fan of sitting behind the desk, day in day out, just working on computer programmes, which is basically what I was. 

[8:26] So, I was a web designer to start with and then went into a system analyst role. So I'd go into businesses and actually help them define their systems and then actually build them for them. So, I guess that's what I was doing. But it wasn't overly exciting. So I was always looking for something else. But that property thing came about because I realised that it was gonna take forever to save up for a dwelling. So, it was more about let's have a look at property and see what we can do there and see if we can make some money in that way.

There Has To Be Something Better…

Tyrone Shum 
For Parker and his now wife, the daily grind was taking it’s toll without any reward. They felt there had to be another way that was better. It really took a well known property expert to help them settle on property as their escape. 

Dean Parker 
[2:34] I guess that's how we got started. So, I was an IT person, my wife was an IT person and we were looking for a way to improve our lives. When i say improve our lives, we were both on reasonably good salaries. We were in a position though, where we had to finance cars, and we were trying to save for a house and we realised that we were probably going backwards rather than forwards. So we figured that we had to do something different outside of our jobs in order to save for deposit quickly. So we were looking at all sorts of things: share, and anything that we could find at all to try and make some money. And I guess it was through the first book or not first book, but the main book that I probably had a significant liking to was Steve McKnight’s book ‘Zero to 130 properties in three and a half years.’ So, I guess that particular book was full of really good educational content. 

[3:40] And then Steve at that time was running educational events. And although we've been to probably at least a dozen, if not more, different speaking events trying to find a solution to making more money and quicker. Steve was probably the first guy that we met that seemed to be very legitimate and had really good content. So, for me now, I don't think there's anyone really out there doing that. I know Steve doesn't do live events anymore himself. We want to basically fill that void and provide those live education events to people based on actual experience of what we've done over the last 14 years. We've done a fair bit in the last 14 years. So, happy to really look forward to passing that information on. 

Tyrone Shum 
There are other investment tools than property. So why was Parker reading about property in the first place? 

Dean Parker
[13:43] I think it was probably just because it was the easiest thing to understand. I would never own shares. Again, as I said before, we never had a real lot of money. My parents weren't tertiary educated or anything like that. My old man had worked at Australia Post for a long, long time and my mum was a nurse. So, there was not like a whole heap of education or anything passed down. Not to say that I'm not happy about that from them, it's just they didn't know what they didn't know. So, from that point of view, it was probably just fundamentally from my parents—being a good person, doing the right thing, I guess that's what we got from them. But realistically, property was more about just the fact that it was something familiar. I mean, everyone lives in a house, you sort of understand how it works a bit, so I guess that works. But shares were were pretty foreign and that was like another language to me. So, I thought property was an easier thing to get into.

Property One: Struggle Street

Tyrone Shum 
Having made his mind up, Parker had to act. Like so many first investments, it wasn’t exactly smooth sailing. 

Dean Parker
[9:29] I guess it was searching for that better life, but two: just—I guess when we go back to when we were living in the city, we were trying to buy an apartment in there. And I mean we were leasing in the city and we're realising that's when we were going backwards, because we're paying for all our cars and our rent and our lifestyle that we had in there. Actually I think we'd started with about $8,000 of savings, well Elise did, I don't think I had anything. At the end of the year, we'd actually gone backwards a little bit. So, that was the first thing and I guess that led then to the realisation that we were not going to be able to afford to buy something in the city, which was pretty devastating. 

[10:17] So, we had to look for other options. The first place we bought was what my wife called the stinky brown unit, which was this very cheap, two bedroom, mission brown, very mouldy unit that we bought in Melton. Which is probably the lower socio-economic area in in Melbourne and at the time, it was the cheapest housing. That's where we bought. 

[10:43] But I guess the the other thing that happened was three weeks before settlement I actually lost my job. So, I'd been in it for maybe five or six years at that time. I'd gone, I was at IBM and I'd been headhunted by this other company. And then we walked into work one day, and there's about 50 staff and 25 just went into one room and the other 25 went into another. And I was unfortunately in the room where I was told that our service was no longer required and to head back to our desk, grab our personal belongings, not to touch the computers or the files or anything and to exit as quickly as we possibly could—without any fuss and that was it basically. We'd get paid four weeks of pay and thank you very much. And at that time, IT jobs were hard to find.

 [11:38] I remember literally crying as I was walking down the street talking to Elise telling her about what just happened. Knowing that we're just about to sell this property and I've just lost my job. So, that probably was realistically the catalyst for trying to take a bit more control of our life to go, ‘You know what? We just don't want to be in a position where we go to work in one day and someone can just take that blanket out from underneath us.’  So, it was more about being in more control of our life and control of our own destiny. So, that definitely was a factor. I mean I guess the combination of all of those things to say, ‘Hey, a job's not going to get us there, but oops, hold on. Now the jobs no longer there, we need to go off and do something different.’ 


Tyrone Shum 
Parker would love to say his circumstances changed as quickly as his mindset. However, the reality of his story is much more impactful.  

Dean Parker
[12:43] It took me another eight months to get a job.  I was doing some consulting to some businesses in the short term. But it was hard at that time that whole Millennium Bug thing had gone through and the IT industry really expanded. But then as it cooled off, then the IT jobs got harder to find. But I eventually did get another IT job. And was doing that when we really started looking hard for for those other options to get out of  our jobs into—I've got that job just to keep us going until we find a solution— and that's when we really started looking into that property side of things.

Lifestyle: A Tough Sell

Tyrone Shum
When we don’t see results straight away, it’s hard not to lose hope. This is especially the case without the benefit of a property education. For Parker, this truth hits close to home.

Dean Parker
[14:45] Now I've got one younger sister.

[14:52] She's a dental nurse so she still lives in Melton, my parents both —they've actually separated now, unfortunately. My mum still lives in Melton, in the same house I was brought up in and my sister lives just around the corner. So, they do their thing. They don't really understand a lot of what I do and I can remember when we started really getting into property, my mum was always questioning what we were doing and very concerned because I'd gone off to uni, done all these degrees. And then all of a sudden, she felt that I was going to throw that all the way by renovating houses and things because that's what we started doing. So, she thought we were a little bit crazy for doing that, and for giving up all that education that we've undertaken, but I guess she didn't realise that all of that education actually was helping us with what we're doing. 

[15:50] So, I mean, maybe not the IT stuff straight away, but definitely the accounting degree and the management degree—that helped us obviously do the financials for the deals that we started doing. And then managing the people that we're working with as work progressed, now our businesses is definitely heavily focused on it. And that system analyst role that I was doing we were able to create a whole heap of systems around what we did. And I think that's fundamentally why we were able to do so much in such a short period of time, as opposed to I guess what other people can or have been achieving.

Tyrone Shum 
Despite his immense success in property, the only sell Parker is yet to pull off is sadly one of the most important: his extended family.

Dean Parker
[16:33] To be honest, they don't really ask that much. They know what we do. But it's not like they go into our projects. I mean, I've got friends and other people that are definitely a lot more interested. They know we're in property, we run a property business, but they don't know that we're building. My mum probably has been out to one or two of the projects, but not a lot. Yeah, it's interesting, it's one of those things that I can remember going to these education events and one of the things that Steve would always say early on was that, ‘You're going to find that people are going to probably knock you down more than they support you,’ because they don't understand what's going on. And that was definitely the case for us early on. Most of our friends and family just didn't understand what we were doing. And that we probably got into some cult rather than going somewhere to educate ourselves and better our lives. 

[17:25] And realistically, they still don't really understand. I mean, once we started in that education thing we learnt that a support network was really great. But we did that for years and years and years, and went to plenty of events and then helped out at events. That's why I'm really passionate about bringing those really good, high quality training events back. I think, for us especially, that's where it all began. And that was our opportunity to break out of a pattern of a lifestyle that my parents and sister still live. And we've been able to get out of that and build significant wealth and be different. So I'm really grateful for it. 

A Foot in The Door 

Tyrone Shum 
On the path to becoming different, Parker’s first property purchase was certainly unique and had special qualities.

Dean Parker 

[19:00] Basically because it was cheap. We had very little money to start with, basically nothing. I think we'd used a lot of the savings that we'd had. We didn't really want to rely on family members to give us a start. So, at the time there was a $7,000 first home owners grant that that we could get. So we did that and I think we paid $77,000 for that unit and the grant was 7000. We got a 95% loan, which meant we needed about $3,700 or whatever it was as a deposit. 

[19:40] There was some lenders mortgage insurance in there and some legal fees, but I'm pretty sure on settlement day, we actually got paid like $800 or something for settling that property. So, we didn't put any of their own money into it at all. So the grant paid for the deposit and the bank paid for the rest. So, from that point of view that was the only way we could really get into the market. The plan was to live in it. As I said, I lost my job just prior to settling it and we actually— I don't know how I convinced the leaser to do it because we'd only really just started dating not that long earlier. We actually moved back into my parents house.

Tyrone Shum
Pretty much at rock bottom, Parker’s fortunes could only improve. Looking back now, he thinks it’s hilarious that they really didn’t. At least not in the ways he expected. 

Dean Parker 
[20:19] This first property was really a step backwards anyway, because we were living in South Bank in Melbourne having this great life. We've got this realisation that we can't afford it. We've gone and bought this terrible, mouldy stinky unit in Melton and then we can't even afford to move into that because because I lost my job. So, it wasn't a great start back then. But that's what we did and I guess we were willing to sacrifice to get in. And that's probably one thing looking back I guess if you think about helping people out it's definitely one thing that we did. We made sure that we made decisions that were for the future and not for the now and that was part of that. So we moved in with my parents and swallowed a pretty bitter pill and stayed there for, I think almost a year to save up some money in order to buy another property.

Tyrone Shum
Undetered by his bad luck, all Parker and his then-girlfriend could do was see out their plan to the end. 

Dean Parker 
[21:21] We did a very quick tidy up basically. I can remember there was mould in the shower and everywhere and we got in there and scrubbed that all out and took the grout out and had someone come around and reseal it. We just cleaned the place up. We were actually able to rent it out for $150 a week. So, it actually meant that it was a positively geared property, which was good. So, we accidentally stumbled across that. It wasn't a purposely bought property for that positive cash flow. That's what it ended up being which was great. And the good thing I guess about that is because it was such a good rent, by the time we'd sort of done that quick little clean up and it was neat and tidy, Although it was still brown—I think it was probably about 18 months later, we were able to refinance and take some equity out of it to actually use for other purposes.

Tyrone Shum 
With a little luck and a lot of hard work, Parker had conquered his first property challenge victorious. Feeling confident, it was on to the next. 

Dean Parker
[22:50] At that time we didn't know Steve, when we bought our first property. So we bought that one and as I said, we saved up that next 12 months and had some money and then used the equity out of that little unit that we had bought to buy another house. So, we bought a house again in Melton because now we sort of figured all right, well, we sort of know this area now. And look, that's where my parents were at the time anyways. So that sort of worked out. So, we went and bought another house, and it was half renovated. It was a husband and wife that had separated halfway through a renovation. It had half the kitchen, the bathroom had been renovated, but basically, some of the walls had been pulled out. There was tiles on some of the floor and not others, it was just a mess. But that was perfect for what we wanted because we were happy to get in there and actually do our first renovation.  Again, that was something that took us 18 months, or 12 months to actually complete. But by the end of it because we've done all the work ourselves, we made a pretty substantial gain out of that as well, which was good. 

Tyrone Shum 
Success is often spoken of in the same sentence as sacrifice. Parker’s experiences confirm this truth, but he’s actually gained much more than money.

Dean Parker
[24:08] We lived in it for the 12 months. That's why it took 12 months because we were still both working full time. At this time the thing we didn't realise is when you move out to Melton to buy cheaper property and you work in the city— like we both were doing— it was taking us an hour and a half to get in there and an hour and a half to get back. So, the traffic over the West Gate Bridge was a nightmare. So we would basically just work during the week and then Friday night, Saturday and Sunday, we would get the paint brushes out or get whatever we could and do as much work as we could over the weekend. Again our friends and family thought we were mad because they're off playing sport or doing whatever they were doing and we were just working to try and get this renovation done. But that took us 12 months to actually turn that three bedroom, one bathroom house into a place that we could actually say was finished. But we lived in it half renovated, or quarter renovated or partly renovated the whole time basically. So, it was another little challenge that we undertook, but it was worth it in the long run.

[25:24] It was actually good fun, we actually really both enjoyed it. And we both got our hands dirty and I look back at photos now and there's photos of us both painting. And one of the funny things I looked back at the other day when I was preparing a presentation actually, we had these—it was this paint system we bought at a home show. They're like these pads and they told us it was the quickest way to paint a house. And we got sucked into that and used these things and it took us probably five times longer to paint than if we had to use rollers and a brush. And yeah, we obviously don't do that, we learnt that rollers and a brush were much better because that's what every other painter uses. But anyway, we got sucked into this stupid pad system thing. And that's probably why the renovation was a lot longer than what it should have, because neither of us had any trade background at all, this was just us having a bit of a crack as kids. So it was good. 

The Circus Show That Is Property 

Tyrone Shum 
Some investors are satisfied with a few positive property experiences. After his third flip, Parker could have stopped then and there with a healthy gain.

Dean Parker 
[26:35] We bought those two properties and then we renovated that one and then we were able to pull the equity out of that to buy a third. So we had three properties. But then we had basically maxed out, we couldn't do anything else thereafter. So, that's when we actually went to Steve and that's when I read the book. That's when we went to Steve's seminars and things like that, we realised that the only way to move forward would be to sell those properties. So, we actually sold all three of them in the next six months in order to free up all that capital to  then to go off and do the next project. So, I guess at the time from the education onwards, which was 2004, halfway through to then now. So, in those 14 years after we've been involved in 454 property transactions, which works out to about one sale or purchase of a property every 11 days during that period of time. So, we've been pretty busy. 

Tyrone Shum
Over 400 property transactions, Parker’s got some stories to tell. He says, if you’ve seen some of the things he has, you’d never say the real estate world is boring.

Dean Parker 
[27:58] It's actually a tough one because I get asked that a lot and we haven't had a necessarily bad project or property deal. I guess the only thing that would spring to my mind was a property we bought in Ballarat. I can remember the day after we bought it or it had settled, we walked into it and I fell through the floor of it. We did know that we were going to redo the floor anyway, but look we've definitely seen some very interesting types of houses over the years. We've renovated 220 something properties and built another 200 something properties. So, through that time, there's been definitely some very interesting and odd looking houses that we've bought and and done over that period. 

[29:00] Well, we definitely had one that had been used as a drug house. So, it was this same agent we've gone through and I'd walked into the garage— so this is one we didn't buy but we bought the next one we looked at this day— but we've gone into it and the garage from the outside looks really big and then you go into it and the garage didn't look as big on the inside. They'd built this fake wall at the back of it in steel but there's this little bit you can slide out and all of a sudden in the back of that that's where they're growing their drugs, which is incredible. This is Melton for you, unfortunately, but the house that we did buy at auction—actually it wasn't at auction it went to auction we bought it afterwards. 

[29:50] So, when we started renovating that and we we found all of these holes in the ceiling where they had all the exhaust fans. So like in the bedrooms, there was two bedrooms at the front of the house that had basically about 20 exhaust fan holes in both those bedrooms. And that also cut the power, or the power where it came into the actual building they'd actually modified that to go straight to these fans rather than to the electrical switchboard, so that no one would know how much power they're using. So, pretty sophisticated types of setups that we'd uncovered.  But there was anything from that to a 100-year old house that we renovated to places that were just completely, sadly, just very dirty, and where people have lived there as tenants for 10, 20 years and that it's not been maintained by anyone. So, we've been able to move some people out of properties that really shouldn't have been living in any way into better properties. So, from that point of view, it's it's been a mixed bag of all sorts of things.

Not How, But Who…

Tyrone Shum
But how did Parker start the transition from small-time investor to multi-million dollar developer? The better question is probably not how, but who. 

Dean Parker
[32:25] I think probably the realisation—we started by doing everything ourselves, and I can remember Steve and Dave—when I say Dave, Dave Bradley.  We got very close with both of those guys and I guess had been to a lot of their events and things. We did go to the Kiwi adventure, which was a trip that I think it was about 20 of us that went over to New Zealand. And it was about how to buy positive cash flow properties over there. So  the first day you sit in a room and they teach you about the property market and what a contract is and they had solicitor come in and an accountant come in and make sure you structured it properly and all that sort of thing.  

[33:18] Basically how the numbers would work. And then at the end of that first day, there was basically then five days to go off and buy property, then come back at the end of the weekend and report back to to the group of how many positive cash flow properties that you'd bought. So I remember, we did have some money when I went over there but not a lot. For me it was more about getting experience and again more education. But I went over there and we bought I bought a couple of houses. I think I bought a house for $50 000, it was rented out for $125 a week. And another duplex that was about $75 000 and it was rented for $120 each.  At the end of the week I got back there was about four properties and we didn't have enough money to to pay for these. Anyway, I was going to have to talk to people when I got home to try and source the money. 

Tyrone Shum
Parker says being placed in an environment of accountability with like-minded people took his journey to the next level. In the property space, these kind of once-in-a-lifetime opportunities don’t come up everyday. Parker never wants to take it for granted.


Dean Parker
[34:16] I guess that was one thing in itself was actually stepping out my comfort zone to do that. But when we went back, I remember I'd actually seen a block of four units that was for sale. It was right at the end and I went, ‘I can't afford this. Even though it's a really good positive cash flow deal I can't do it.’ But I'd gone back to report back in and I was telling people about this block of units and Dave Bradley and Steve overheard me and I remember one of them, I think it was Steve, challenged me basically and said, 'Dean that's probably the best positive cash flow deal that anyone's found and you left it there, what's going on?’ I said, ‘Well, I don't have enough money to buy it.’ I remember the words were, 'If the deal is good enough the money will come.’ Those words have stayed with me forever, because I've bought hundreds of properties and not necessarily ever had the money to settle them at the time I've bought them. I've always been able to find a way because if the deal is good enough, money will come.

Challenge Accepted

Tyrone Shum
It was time to put his money where his mouth was, or go home. Depending on the outcome, Parker’s next decision could ruin his finances, or even his relationships.

Dean Parker
[35:20] So what happened was he said, 'You've got 10 minutes to call an agent and buy it yourself, otherwise, I'm going to do it,’ so I'll buy it myself. All right, well, there's a challenge. So, I called up the agent and bought the property and I think we paid $82,000 for four two-bedroom units in Tokoroa. And they were rented for $115 each. So, this was like 460 bucks of income on 80 grand. So, it was a huge yield and better than anything that was going on out there. And through talking to all these agents, during that week, I've realised that there was one agent that was selling property based on yield. So, that particular property we sold about four months later for $170,000, because we'd gone to an agent that was a city agent that was selling stuff purely based on return. 

[36:17] So, he said, ‘I can get you 12% return,’ and we might have bought the thing for 19% or 20% I can't remember exactly what it was. So, we just gave it to him and he sold it. So, we did nothing. I don't think I even went through the property at all and we made about 70 or 80 grand after all costs and that's what it taught me. If the deal is good enough, the money will come. But that particular deal allowed me then to take a year off work because we just earned a year of salary basically in that one deal. So to actually take that next step to go, ‘You know what, we're going to do this full time.’ So that was definitely a moment that that definitely changed our life. That's for sure, if you want to call it an aha moment that there was definitely something that happened at that time. 

[38:01] I guess just all these little things that were learning outcomes in that one trip meant that we could actually take a year off. And I could have red hot crack at doing property full time.

**ADVERTISEMENT**

Tyrone Shum 
Coming up after the break, we dive into the development mindset that transformed Parker’s return.

Dean Parker 
 [10:17] All of a sudden, we looked at the property differently all together. [10:31] We could renovate the house plus build one in the backyard. And that's where it all began.

Tyrone Shum 
Plus, the most common rookie investment mistakes. And importantly, how to avoid them all together.  

Dean Parker
[17:42] So this is their first investment, and they're going to lose 100 grand.

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

Tyrone Shum 
Parker’s property adventure was starting to become more than an occasional bonus cheque. It was time to take the next step, 

Dean Parker
[1:28] What we started doing is I took a year of unpaid leave from work. I still had my job, which was important, because that meant we had serviceability for our loans.

[1:45] It was interesting. That IT company I'd gone to—remember I said I'd got that other job? So they were called expert information services. And then what happened, they got bought out by an Indian company who was trying to basically outsource it all. So, the plan for them was to eventually get rid of all the stuff anyway, to basically take all the knowledge and to replace it with Indian cheaper labour. So, at that time, it was just fortunate that I could sit there and go, ‘You know what, can I have a year of unpaid leave?’ And they went, ‘That suits us fine, because realistically, we don't have to return to and and hopefully you go anyway.’ So, from that point of view it was good timing.  

[2:27] It wasn't too long after that when we started getting a Elise out of her job as well. And for her, it started by cutting back a day a week. So in a review, instead of offering a salary increase, what she said was, 'Can I cut back to four days a week?' And then the I think it was six months later, she actually went back and said, 'Hey, I want to cut back another day.' So, she ended up being two days a week with her employer until we got to the point where she could then also leave her job full time. 

Tyrone Shum 
From a profit standpoint, Parker probably could have left his job much earlier. He certainly wasn’t enjoying it. So why did he stick around as long as he did? 

Dean Parker
[3:07] It was serviceability for the banks. So, there's obviously two parts of a loan, there's one: having a deposit. And there's two having serviceability, which means your ability to pay that loan back to the bank. So that's why we kept the jobs for as long as we could, until we had a proven track record of income from the properties so that that there was a transition period there and why that happened. 

Tyrone Shum 
While it was great finally turning property into a career, Parker says the first few years were like the start of most businesses: pretty tight. 

Dean Parker 
[3:33] The other thing that we did during that time was we joint ventured with people who had incomes in order to, I guess, leverage their serviceability as well. So, there was all these little tricks and things were doing. So we were just joint venture, again, because we didn't have a whole heap of money. We still didn't have money, like with any money we had, we were buying that New Zealand property, for example. 

[3:55] So, when I first got back from them and I took that year off, we started doing renovation projects. And we just joint ventured with a whole heap of people. I remember doing some deals with a plumber and a builder at the tennis club that I played with, and the neighbours from that very first house that we renovated— the one that took 12 months when we lived in it. We became good friends with the neighbours next door and they were in their 60's at the time, and they had a block of land in Tasmania that they owned outright that had some equity in it. So, we used that equity to buy a house and then we did the work. We all did the work together, but they actually put all the money into it. 

[4:33] So, there's a whole heap of these things that we did in order to do as many projects as we possibly could. I guess going back to that if the deal is good enough, the money will come. We just kept finding projects and and kept finding money partners in order to do it. And although we were giving away a lot of the profits at that time, like we'd share profits 50-50 or whatever, we were gaining incredibly good experience and also building a track record for the banks, showing them that we could actually do this sort of stuff. 

On A Roll

Tyrone Shum 
Only a few months after getting started, Parker and his wife settled in a handy niche: the renovation. Combining their business backgrounds and property experience they created a repeatable system. 

Dean Parker 
[5:39] We might have done 50 renos, or maybe 40 or 50 renos before we started development. And we were able to create a really good system around it. So, we were doing most of the houses were doing were brick veneer, on slab and they were just cosmetic. Maybe kitchens and bathrooms, but paint, landscaping and just bringing them back to life. So, we created this spreadsheet to control our costs. 

[6:05] And the other key thing that we did is we understood finance. And what we learned was that you could get a non-completion valuation done. So, if we bought a house for $200,000, we could give the specifications to the bank and say, ‘Here's what the specs are, we want to get an on-completion val done.’ And they'd go off to a valuer and say, 'Here it is,’ and they'd go to check at that property.' And they come back and say, 'All right, well, if you do all these things to it, it's gonna be worth $260,000 at the end.' So, by doing that, that meant that the minute we finished the property we could actually pull the equity out that we've created and push that into our next deal. 

[6:43] So that was a key for doing lots of projects. I guess generally what people do is they buy a property, they renovate it, they don't know how much they're going to spend, they get out the other end and they don't know where it's going to be worth. Then they sit there and leave it on the market for two or three months. And then it takes another two or three months to settle. Then they get the money at the end, which is probably a bit lucky because they didn't budget properly and they didn't know what it was gonna be worth at the other end. They're not using that money effectively. 


[7:13] But by creating those systems around the renovations, that's how we actually were able to pretty clearly know what we were going to make and how quickly we could do it. And then how quick we can get that money out to stick it back into another project. And that's one of the key reasons why we were able to do so many reno’s so quickly. Like, as I said, we've renovated 200-plus properties in that time and that was because we just did heaps of those. And we created this really good system. We’d use the same colours and the tiles and everything else was all the same. It was just a cookie cutter machine that we just put a property into and spit out a profit basically, which was great.

Tyrone Shum 
Things were going well for Parker, at least in the small bubble of renovation. His next turn was another moment of not how, but who?   

Dean Parker 
[7:57] We did a lot of the work early on. But it got to the point where we couldn't do the work all ourselves because we just had too many projects that we were doing. And I guess the catalyst for development was, again, at one of propertyinvesting.com events. We used to help out at the event and when you'd help out at the end of the event, Steve would take all the helpers out to dinner. Just to thank us for for helping out at the event. And look they were always great for us because one, we got to learn. And two, the after-event where you sat down with Steve and the team was always probably the best. That was better than actually going to the event. You got to sit down with Steve and talk to him for an hour and he also get whoever the speaker was at the time to sit down and have a really good conversation with them. So, it was actually one of those after events. We met a guy called Martin Ayles. 

[8:59] I had no idea who he was, but I ended up sitting beside him at one of these post event dinners. He was there to check them out because he was going to start speaking with Steve. So, he had been over to just have a look at how Steve ran these events and things and we got talking. He's telling me what he was doing over there and I said, ‘I've never really thought about it.’ He said, ‘Oh mate, I've renovated heaps of stuff, developing isn’t that hard, you should come over and check out what we're doing.' So, I think we paid him 1500 bucks or two grand to go over there for one day. 

[9:31] So, he said come over and I'll allocate a day to you. And we were happy to pay that money because in the big scheme of things we were going to learn a lot. So basically he picked us up from the airport, we drove around all day and looked at what he did. He looked at—I think he bought a site that day. He literally did back of the envelope numbers. I'm not saying that that's how we do it now but that's what he did at the time. I mean he had a cookie cutter machine for what he was doing. 

A Whole New World

Tyrone Shum 
They say you should never meet your heroes, but Parker has no idea why. From that moment onwards, he would see things that only few people could. 

Dean Parker 
[9:58] He would basically buy a house, built two in the backyard, and he just knew what it would cost to build it. He knew what he could pay for the land and he knew what we could sell these things for. So, he had I guess a similar sort of process and system set up for developing that we had for renovations. So the thing was, after coming back, all of a sudden we looked at property differently all together. Although we had all these houses we were renovating, which was all great. Now we could see if a house had a big block of land, all of a sudden we could renovate the house plus build one in the backyard. And that's where it all began.

[10:35] That's what happened was that first property I was telling you about, that had all the drug stuff in it. That was a property that had gone to auction, and it passed on. I was trying to make it work from a renovation point of view and couldn't make the numbers work. We went over see Marty talk about the stuff in the backyard and then all of a sudden, I came back and relooked at that property. It's sitting on 800 square metres of land, and we can easily stick a townhouse in the backyard. So, we bought it that next week and all of a sudden there's our first development site. And that's what happened basically. 

Tyrone Shum 
Parker doesn’t think you could sum up what sets him apart from other investors, at least not in one skill or strategy. However, if you had to come close here’s what he says.  

Dean Parker 
[12:18] All deals are all about the numbers fundamentally. So, whether it's a renovation or development, we've got feasibilities that we run as part of our due diligence. I mean, we never buy anything, whether it be a renovation or a development without a due diligence clause. Because one, I don't want to sit there and waste time on a project only for it to be sold to someone else, because our due diligence is very particular. So we always want to get it under contract, then we do our due diligence. If we need to negotiate the price at the end of that, we do. If we don't, then we just we go on conditional, but that due diligence process is all about understanding the numbers and making sure we're locking in any quotes or anything we need to do and going from there. So, I'm going to give you one example. 

[13:07] Just from a pricing point of view, when we were doing the projects in Ballarat, Ballarat's obviously a regional part of Melbourne and very —Victoria, I should say— and very affordable type of property. And we went from Ballarat to Brisbane, so we moved up here in 2011. And we'd gone from doing townhouses that were selling—these are two and three bedroom townhouses that were selling for between like $220 000 and $250,000, for a free standing 120 square-metre townhouse. Then all of a sudden, we go up to Brisbane, and we're buying property in Cooper, which is about five K's out of the city. And for a block of seven apartments, which was the first project we bought up here, it was $2 million dollars. 

[23:08] It's just that the numbers did change a bit. So, instead of buying raw land for sort of $20 000, to $30 000, to $40,000 a site, all of a sudden you're paying $80 000 to $90 000 to $100 000  a site. Instead of selling for $200,000, you're selling for $400 000 to 450 000. I mean we're selling properties for six, seven, eights, nines— a million dollars now, which is not unusual. But when you're doing 10 and 20 and 30 of them at one time, those numbers start getting pretty big.

[13:54] So, we've gone from literally paying nothing and selling a brand new finished product in Victoria for 200 grand. Now all of a sudden, we're paying 10 times that to buy a block of an existing, built in the 1970s, needing a full renovation block of apartments. So, that was again, just another mindset thing. To go well, 'Hold on, that's a hell of a lot of money all of a sudden.' But when we did our feasibility and understood that we could buy it for that and sell it for something else and know exactly what we were going to spend on the renovation works. And how much the holding cost would be and where the risks were and getting that on-completion valuation done throughout the process, we could take away a lot of the risk. And fundamentally, it doesn't matter what the purchase price is. It's all about reducing the risks of what you're going to be doing in order to make the project work. 

You Can Never Be Too Careful

Tyrone Shum 
The bad news is that not everyone is born with a natural talent for project management. As Parker knows, the good news is that you don’t have to in order to be successful. 

Dean Parker
[15:06] Look, it's mindset, but fundamentally across the board, it's education. Its knowledge. We continually educated ourselves and built up our knowledge and experience to the point where you feel confident in doing those projects, and you feel confident in your numbers and the process. So, when we came up here, we didn't assume that we could pay the same amount for a kitchen up here that we were doing in Ballarat. We turned around and went, let's go off and get some quotes for kitchens up here. 

[15:36] Let's find out how much the kitchens are going to be. And in our renovation process, we've got hundreds of things that we price, so we would price every single item in there to make sure that we were sure in our numbers. So realistically, it's just knowledge and process that takes the fear away. The number—the mindset about the number is not—I mean, it's there, because it can be another zero, like we're never doing million dollar projects. And realistically now, most of our projects are over $10 million.  Realistically, the process that we follow was the same, it's just that we're dealing with a bigger number now.

Tyrone Shum 
Parker’s attention to detail might seem a bit extreme. However, it’s only because he’s seen the consequences of investing in the dark. 

Dean Parker 
[16:32] I think my my advice would be it's all about the numbers. I'm sure someone's probably told me that before. But fundamentally all projects,  take your emotion and everything else aside. It's just being diligent in understanding your feasibility. I've been doing a little—we've just started doing some some speaking again just recently. And a lot of people are coming up to me afterwards telling me about all these deals that they're doing where they didn't know the prices to get in. They've jumped in, and they've done the project and not really had any process to follow. And they're losing like significant amounts of money. 

[17:16] A couple that I met just last week down at Steve's last mega conference told me about a project that they bought. They were going to try and stick one in the backyard. And they've now found out that they can't build anything in the backyard because of a— it's called an overland flow path. It’s not flooding, but it's actually just water would run through in a very heavy rain and that stops them from developing it. 

[17:42] So, this is their first investment and they're going to lose $100 000. They put about $120 000 to $150 000 grand in and they're going to lose 100 of that in their first go. So, I mean for me, it's all about the numbers and it's to just educate yourself. Like seriously, that's why I want to get back into this stuff. I hate hearing about that sort of thing. We've been lucky enough to be mentored by people who have drilled that into us enough. But for people who are out there that don't get that or think I'm not going to pay for education, I'll just have a go at it. Seriously, there's too much to risk. We're not buying a DVD here or a new bike or a new car, we're paying hundreds of thousand's of dollars for a property. And these things can go pear shaped very quickly, whether it's just a simple investment property, or whether it's a renovation or whether it's a development. There's just so many things to consider before going into this. So, I'm just passionate about helping people out and getting them on the right track again.

What About Me?

Tyrone Shum 
Parker is so full of real, fascinating stories of risk and reward that twist and turn as much as any narrative. It seems a miracle he and his wife have come out the other side in one piece. He says miracles aren’t the reasons of success, but instead some crucial personal qualities are.

Dean Parker 
[18:59] I think one thing that Elise and I are very good at is just getting something finished. There's always what we call project fatigue. We can even get into a project and it gets a bit hard and you get to the end of a reno and you've got all those last little bits to do, and those last little bits take the longest time. But we would just get it done before we moved on to the next thing. And some people can get a bit bored and like, 'I just want this to finish,' and all of a sudden start doing something else. But we would just get in and if we had a project we would get it finished, and we wouldn't let it simmer away and then be a problem. So, I think that's a trait we definitely have that I think is a good thing. 

[19:48] I think just communication and doing the right thing by people. Like the reason why we always had trades that would work for us and would always show up is because we paid every week. We had a weekly pay run, because we understood that was an important thing for trades was to get paid. So, some builders didn't pay them or they paid them like in a month or whatever. So, trades aren't necessarily the best at managing their cash, especially when it can be sporadic when it comes in and you've got your own business. So, it's pretty fundamental to get paid at all, but on a weekly basis made it even more appealing. So, that was something. Some of the things that we did was to say, ‘Right, well, if you get your invoices in by Sunday night, then they'd definitely get paid by Tuesday.’ That was just the rule that we had and everyone knew it and that's why we had people that were always happy to work for us. 

[20:56] I guess another thing that Dave Bradley definitely instilled into us was cashflow, and just making sure that we knew what cash flow meant and to make sure that we always had enough money. And I guess that comes back to those feasibilities again that we're talking about that. We wouldn't just factor in renovation costs, but you also factor in your holding costs and some extra holding costs and everything else to make sure that you have enough money to finish the project. So, that you're not halfway through going, 'We need more, what are we going to do?' We would always get all of the capital we needed upfront and make sure that we had it all there. Obviously made that project very smooth thereafter. 

Tyrone Shum 
For all his wealth of property knowledge and experience, Parker’s advice is simple. 

Dean Parker 
[27:07] Have a crack? Get in there? Well I mean, that's what we did. But if I was saying that to anyone else, if you don't do it now, when are you going to do it? And luckily, we had some people that supported us in doing that at the time. Look, I'm just glad that we sort of did that at the time. But it would be to just get in there and have a go, educate yourself and have a go.

Tyrone Shum 
How has Parker’s own strategy changed as he has grown in investment maturity?

Dean Parker
[25:44] We would always try and keep one or two in a project as we went. So, we’d build up a portfolio and then we get to a point we go, 'You know what, we probably need some capital.’ Then we sell some and then we do the same thing again. Look our portfolios worth about $10 million personally at the moment. Which again, some of that we're selling. We've got some properties in Ballarat and the Ballarat market is going quite strongly at the moment. So, I just figured that's a good time to be to be selling it. Again, nothing apart from the house we live in is an emotional purchase. Everything else  has got just a number and a return attached. So, we were building a portfolio and that doesn't mean that that it has to stay there forever. And I guess the thing that has changed is that the portfolio that we're building now is more based on a return of a rental return, like a significantly positive rental return, rather than something that might be for capital growth.

What’s Next?

Tyrone Shum 
So what’s next for Parker? Anything else for him to conquer? 

Dean Parker
[27:46] What we're doing at the moment is we're setting up, I guess, the education upfront. I've been on the front-end of selling the last couple of months, because I wanted to actually get in there and see what it's like to sell property, and to talk to people. So, I've realised that first time buyers and a lot of investors actually don't really know what they're doing. So, that's a big part of the reason why we want to start the education events to first home buyers. To actually explain to them what a contract is, and how to buy and what the purchase costs will be and what your holding costs will be. So, people don't jump into stuff without actually having some sort of method to the madness. I guess not only about that process, but where to buy and what's likely to achieve capital growth and all those sort of things as well. So, I'm excited to build that education side of the business, which is new for us. 

Tyrone Shum
Parker says the best parts of his achievements haven’t been financial at all, but something else entirely. 

Dean Parker
[29:16] Elise and I have always loved helping people. So, that's one thing that we're excited about doing. Continuing to deliver high quality properties into the market that are that are great for owner occupiers and also investors. 

[29:30] We're finding that even though we're doing quite high spec, we try to always be the best in market. We're getting a lot of investors that are buying our product because it's high quality, the warranties are good. They always get great tenants, the tenants stay in there. So, from that point of view, we're there. We're excited to continue to deliver those sort of projects. And the third part of it then is to offer the ongoing management. So, our mission statement is satisfaction beyond the keys, which is as a developer not only selling you something, but also managing it for you and standing by it. And making sure it's going to be a great project, or a great property or a great investment for you into the future. And so that if something does go wrong, you've got us to turn to. Now everything about the property, we create it, we organise the builder and we know who to contact if something does go wrong and can support people in that process.

**OUTRO**

Tyrone Shum
Thank you to Dean Parker, our guest on this episode of Property Investory. 

** END OUTRO**