In this special episode Shum explains the criteria he looks for when assessing deals, revealing what can make or break a deal and where the sweet spot can be found. In sharing several case studies, he reveals how large a part criteria such as location and development approval play, why sponsors turn to him rather than the big banks, and how changes in the market are— or aren’t— affecting how he runs his business.

Timestamps:
01:20 | Alternative Lending
03:02 | Investing Rules 101
07:24 | The Impact of the Changing Environment
10:19 | I Wanna See the Receipts
14:05 | The Little Guys vs. The Big Banks
16:05 | Clear Tape
20:52 | Is This For Me?
26:26 | Fears and Fixed Returns

Resources and Links:

[00:03:29] Well, the first thing for me, when I look at these types of deals, there's a number of criterias that we have a look at. And we've got this checklist that we always check off before we actually even jump into taking on and look at an opportunity, or even go into any due diligence.  

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 Salena Kulkarni jumps back into the driver’s seat to ask me the big questions about my method of alternative investing. We take a tour through how I got started in the alternative space, and I share some case studies and reveal the criteria I look for when I play the role of the bank, including the ‘sweet spot’ and what makes it appealing to our appetite.

Tyrone Shum:   

As an open book when it comes to anything and everything property-related, I’m more than happy for listeners to take a peek behind the curtain of my alternative investment strategy. Kulkarni leads us through an overview of how I’ve participated in the alternative investing world, before taking a deep dive with no holds barred.

Salena Kulkarni:  

[00:01:20] Tyrone has had a lot of exposure to a lot of different strategies, and in recent years has become quite ingrained in the alternative investment strategy of lending. So becoming the bank. 

  

[00:01:35] And lots of investors have been participating in his deal. But I think where I would love to start today, for those people who are maybe new to this, is could you kind of give people an insight into what kinds of deals they are participating in, when they when they're jumping in on these deals?

Tyrone Shum:   

[00:01:58] Maybe to frame it so people can understand, as Selena has said, we're pretty much mostly in the lending space. And typically, we are dealing with sophisticated and wholesale investors. And then at the same time, the other side of the coin, which is on the borrower side, also sophisticated wholesale borrowers as well, too. 

  

[00:02:15] And typically, the kind of deals that we go into [is] usually some type of property opportunity that can actually have an add value option to it. So that could be in developments, that could be in commercial properties, could be even just a residential, [property]. So I guess that's kind of an overview or high level of the type of developments. 

  

[00:02:37] I mean, throughout this episode, I'll definitely be happy to share some case studies and some examples of the type of deals that we've been going in. But at a high level, what we're trying to look for is: Is there some kind of a add opportunity? So that way, we can generate some additional increase in value for the property. Because that's ultimately where we can actually lend our funds to, and then at the end of the day, get a very good return for ourselves and also for our investors as well.

Salena Kulkarni:   

[00:03:02] I think one of the things that would definitely be on people's minds right now, particularly given the current environment is: What are your investing rules? 

 

[00:03:14] So when you're looking at these deals, and you're trying to establish whether something's a fit or not a fit, what are the rules that you have in your mind that are absolutely non-negotiable when you're evaluating deals?

Tyrone Shum:   

[00:03:29] Well, the first thing for me, when I look at these types of deals, there's a number of criterias that we have a look at. And we've got this checklist that we always check off before we actually even jump into taking on and look at an opportunity, or even go into any due diligence. 

  

[00:03:44] The first things that we usually typically look at is firstly, which state it is in. Because ultimately, we are looking at a property location. And we are looking at the property itself. So we want to make sure that it is in a very desirable location. Particularly it has to be for us within a metropolitan suburb of whichever state, could be New South Wales, Victoria, Queensland, Western Australia, or South Australia, any one of those states. We look at mainly pretty much within the metropolitan area. 

 

[00:04:12] We haven't gone anywhere sort of regional, because we see that there is risk there, because the demand of those type of properties are not usually very high. But we are starting to see a lot of developers going out that way, because they can do a lot of land subdivision. So that's a thing, but the main criteria for that one is metropolitan within a specific state. That's the first criteria. 

 

[00:04:31] The second criteria we look at is we want to know if there is a DA approval application on it, or if there is an uplift or Advait opportunity to these type of deals. If there is, great. Then that's where we want to see, 'Okay, how is this going to work?' and then look into it a little bit after that. That's the second criteria I usually look at. 

  

[00:04:47] Third one is we want to check the sponsor. Are they able to service this type of loan? So we will be doing a very, very deep analysis into the sponsor and finding out who they are, what their track record is, is do they have any strong background of past sites that they've done or past projects that we can see? That's definitely another one that we look at in terms of the deal. 

  

[00:05:07] The other thing is, is that we have this kind of what we call 'sweet spot' for us. And this is sort of an internal thing. We typically fund deals anywhere between about $1 million, anywhere up to about $3 million. That's sort of our sweet spot. And the reason why we say that is because that's just enough for us to be able to go, 'Look, this development size is just enough'. 

  

[00:05:25] If we went anything above that, and I know I can guarantee there's tonnes and tonnes of those deals that we can fund above $5 million and so forth. But they get a bit too large for our appetite for our lenders. And the reason behind that is because the project gets extremely large. 

  

[00:05:38] So if we're looking at, say, funding a $5 million [to] $10 million plus projects above, the overall cost of a project like that would be anywhere in excess of $50 million to $100 million. And when you get those kind of large scales, there's a lot more complexities involved. So that's the reason why we don't like to fund those type of projects at all. 

  

[00:05:55] And I'm sure there's plenty of funders or lenders out there who can do that.

 

[00:06:00] So that that is one of the other criterias that we'll look at as well, too. 

  

[00:06:04] Another thing is LVR. We want to be able to go, 'Okay, if we look at this particular property, is there enough equity, or is the LVR relatively low?'. And for us, this is just a general rule. We try to find where the property has at least $1 million worth of equity in it, minimum, for us. 

 

[00:06:22] Because if we don't have that kind of buffer in place, if we'd need to ever go into say, for example, administration [or] liquidation, or whatever insolvency, we want to be able to recover any costs, the legal fees, and also the interest that is owing, whether it be default interest, and any sales and marketing costs that's involved. 

  

[00:06:40] And those things chew up quite substantially. And having $1 million worth of equity buffer in there is going to be sufficient enough to cover those kinds of costs as well. So LVR for us is quite important, we look at that. 

  

[00:06:51] And then I guess ultimately, at the end of the day, we've got to assess the deal based on what the lender's appetite is. Whether or not it's going to be a monthly deal or a deal that's capitalised and paid at the end. 

  

[00:07:01] So those are some of the criterias. We go back to our lenders and discuss that with them in better detail and understand what they want as well, too. So we pretty much here act as a facilitator, to be able to provide as much information as we can get from the borrowers, and then put that kind of deal together so that our investors can have a look in detail and make their own judgement assessment for themselves.

Salena Kulkarni:   

[00:07:24] That's really, really helpful. I think one of the questions that I have of anyone in the real estate space right now is: How is the current environment making you adapt those rules? Are you being more picky? Are there projects that you kind of just put a red line through and say, 'No, we're not going to touch that'? So how are you quantifying and managing risk at the moment? 

Tyrone Shum:   

[00:07:50] That's an exceptionally good question. And the reason why we've looked at this [in] a lot more detail [is] because of the market changing. We've noticed some of the deals itself just doesn't stack up anymore.

 

[00:08:00] Maybe 12 months ago, when we would have assessed it, as an example, back then, it may have been okay. And we would think, 'Okay, this is manageable'. But because valuations at the moment are coming back from the vendors that have been provided, they're coming back actually 5% lower than it was previously. And they're already factoring that in as well. So they're being super, super conservative, which is great for us. 

  

[00:08:22] Because there are some properties out there that we, and even myself, I feel is a little bit still overpriced. And when I do, say, for example, searches using our systems that we've got an internal access to to understand property data, historical record, sales, data, etc, all those kinds of things, we look at it and go, 'Looks a little bit odd, it looks a bit high'. 

  

[00:08:40] So based on those kinds of evaluations, we look at [it] and we go, 'Okay, well, I don't think the valuation is going to be right', or whatever the borrower thinks. Because typically, if it's their own property, the borrower thinks it's worth a lot more. So they will probably appreciate it and say it's a lot high value. 

  

[00:08:55] But no, in all honesty, we have been cutting back and taking a little bit more of a conservative view on a lot of these assessments. Like, the other day, for example, a developer who we've been working with for a while, he came back to us with some really, really good sites. And when we did our assessment, I thought, 'Oh, great, these are fantastic sites, there's enough profit in it'. 

  

[00:09:14] But then when we actually did our full calculation [we] realised, 'Hold on, the LVR's sitting quite high'. We couldn't factor that deal into our deal flow. And we had to basically decline it because it just didn't add up and make sense in terms of what the current market situation is. 

  

[00:09:31] So we've really, really been stringent on that. We make sure that any of the deals that we're looking at, at this point in time, has enough buffer to factor in say, you know, the market may take six [to] 12 months to sell the property if we need to. We factor that in as well too. 

 

[00:09:47] And we've got what we call default calculators and all these things that we do worst case scenarios on. Which makes it really, really important because then it gives us perspective. We go, 'Okay, if we did go through that scenario, which I've got experience through that, how long would it realistically take to get the money back to be able to pay back all our investors?' 

  

[00:10:07] And we've got these in place to be able to factor these in. So to answer your question in a long winded way, yes, it has impacted us. And we've made sure that right now our calculators and all our due diligence that we do factor all this in at this point in time.

Salena Kulkarni:   

[00:10:19] I think what a lot of people are really interested in understanding is the process that you would go through, if a borrower were to kind of hit the skids in some way and put themselves in a situation where maybe they did default on interest. Like, in your mind, how much leeway do you give people before you take a legal approach? Or in terms of your criteria for making sure they can make interest repayments? 

  

[00:10:49] Do you physically need to see cash set aside? Or do you just need to know that they have a certain income? Like, what are you looking for? And then if you could describe in your mind, if something were to go sideways, what your thinking of the process would look like.

Tyrone Shum:   

[00:11:05] Maybe just to put it in context, when we do work with say, for example, a borrower who's coming to get a loan from us, typically, the way we look at it is we want to treat them as though it is like a business. We want to see their assets and liabilities. So that includes profit and loss statements, balance sheets, pretty much a summary of their financial position at that point in time, so we can understand. 

 

[00:11:25] And if we can obviously get their tax returns that [have] been done recently, or within the last couple of years, it would also help just to be able to substantiate and also back up with what they're saying. Because sometimes they can put things in the calculations, into their statements that might not match up to what they've submitted to the ATO. We discover that from time to time. [I'm] not saying that everyone does that, but it's just sometimes that just doesn't make sense. 

  

[00:11:47] But things that we do check. And that's the key thing, is that if it's an operational business or ongoing concern that's on the property, then that's actually a positive because there's some form of cash flow that's coming in. 

 

[00:11:58] If it's just an empty, vacant block of land, then the other thing is, we have to look at what the other business are doing as well, too, in terms of the development. 

  

[00:12:05] So we do look at those things. We want to find out, firstly, the asset side of things, what does that asset look like, make sure that the valuations that they've provided stack up to the numbers that we've been provided. Obviously, they provide an estimate initially at the beginning, but until we get a proper valuation that's been done, we can't obviously rely on what they've told us because it could be way off to what the actual valuer says. 

  

[00:12:26] So those are very, very important parts that we look at. We want to know as well what the history of the payments [is], because if they're already with an existing bank, or they're with an existing private lender, we request them to provide us bank statements. 

  

[00:12:40] I'm actually going through a lot of detail in terms of the due diligence that we do. But this is kind of the stuff that we do. We definitely check these things out, because you want to look out for if they've made defaults in the past with other lenders, if they've had any history with bankruptcy, all those kinds of things will come up once you start doing your due diligence. And that's the kind of level of detail we get to. 

  

[00:12:59] Now, I could go on for hours talking about this, because there's so much that we do in depth. But I guess as a general overview, the thing that we want to look out for is: One, as a sponsor, have they actually been paying all the past bills or expenses, or any of those kinds of things on time? And what's their really net worth at the end of the day? If we actually had to go out and really sell all the assets back out, how much do they have? 

 

[00:13:22] Because typically, they give us their personal guarantee. So they've given us their personal guarantee, we would have all the access to whatever assets they have. And we want to be able to get our money back at the end of the day. 

 

[00:13:32] So that's really what ultimately the big picture is, that's what we want to do. And as long as those criterias match with all the other stuff that we've got, then we're comfortable with what we do. 

  

[00:13:43] And I know with banks, it's a bit different because banks typically assess on serviceability. Can they potentially service a loan that's over 30 years? These kinds of loans that we're doing are short term, like six to 12 months. 

  

[00:13:54] What we want to be able to see is their asset value. Can they actually service it for that short period of time? And then is there going to be an uplift? And if there is, then there's a clear exit strategy. So yeah, there's a lot that I've just packed into that. 

Coming up after the break, we discuss typical entry and exit points…

[00:18:19] I think that in itself probably takes a lot of risk out of the equation for a lot of people. 

The key component for all parties involved…

[00:25:52] You've really got to rely on the person who's putting the deal together, like yourself, to run the deal. 

We delve into the one thing I try to do in every deal to improve everybody’s confidence.

[00:28:08] Tell me about what kinds of people you see as being a fit for working with you and which ones may be not. 

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

Pivoting to a question I get asked frequently, and for good reason, we turn our attention to how my criteria differs to that of a bank, and why a borrower or deal sponsor would come to me over a traditional bank.

Salena Kulkarni:   

[00:14:05] I think people who are switched on and smart investors are really interested in getting into the weeds. I think this is really useful information. 

 

[00:14:31] Because obviously, you're charging a significant premium on money compared to a bank. But why wouldn't they just go to a bank, a traditional bank?

Tyrone Shum:   

[00:14:46] It's really, ultimately, at the end of the day, it's time. And if you know— I'm pretty sure you know from experience, Salena— going to the bank is a very rigorous, long process. 

  

[00:14:56] It's not as simple as just say[ing], 'Hey, Mr. Banker, I want to submit my tax returns here, I'll give you my assets, can you come back to me and let me know how much I can borrow?' No, it's not as simple as that. 

  

[00:15:06] I've been just dealing with a broker who initiated or engaged about a month and a half ago, and still haven't got a confirmation on what approval we can get from a loan. And that's because they're waiting on other paperwork that I'm getting from my accountant, which is delaying that process. 

  

[00:15:23] Typically, that stuff just delays the whole thing. And I know that a lot of these types of developers who I've worked with, or commercial borrowers I've worked with, they've all been trying to move quicker. Because at the end of the day, if they're holding these properties that they've either purchased with DA approval on it, they just can't do anything until they get a loan, because they get stuck. And the longer they hold on to this, the higher the costs start to accumulate. 

  

[00:15:49] So for them, it's more about timing. If they have to wait six months for, for example, a major bank to come back to them to provide them with all that information, because it could cost them as well, additional time with going to solicitors, lawyers, accountants, etc, to compile all this information together. 

  

[00:16:05] Whereas coming through us as a private lending institution, or private lenders, the process is clean and simple. There's a lot of rigour that goes in. And as you know, there's a lot of red tape within banks. There's just all this credit checks and all that kind of stuff. Not saying that we don't do that. But we're a lot faster than that. So we don't have to spend so much time as they do in the banks. 

  

[00:16:27] And especially when you've got thousands and thousands of applications going through to the bank, it's basically you're just another person in the queue. 

  

[00:16:34] Whereas with us, we're directly dealing with a lot of these developers who have had strong relationships with. And because they've proven they've got good track record, we can work with them on a personal basis, and then work things out pretty quickly. So that I think is a pretty common question. 

  

[00:16:49] Now, I guess, at the end of the day, these developers know that they're not going to be here with us like a 30 year loan. Otherwise, it'll literally destroy their projects if they were, with the rates that we charge. Because it's so short term, for them they're in [for] maybe six months, [or a] maximum of 12 months, they can afford to whear that cost, because it's only a small, small percentage compared to the larger loan. 

  

[00:17:08] Typically, they've got probably a large loan with either a large, first tier private lender, or maybe a bank, and that rate would probably be substantially lower. And then they've only got this small percentage of this loan with us, which is only going to be maybe for three [or] six [or] 12 months max. 

  

[00:17:23] And when you add that cost into the overall project, it might be an extra one or 2% for them. And hence the reason why it's a win/win for them, because they get the funds much faster. So they can actually proceed further with the project and not delay that. 

  

[00:17:35] Because ultimately, they just want to get finished and then paid, and make a profit. Whereas for us, we just want to come in and get out quickly too.

Salena Kulkarni:   

[00:17:44] I know we talked about this right at the beginning, in terms of the sorts of projects, then the scope of projects really becoming a lot wider. I think one of the concerns that a lot of people have is anything to do with ground up construction. 

  

[00:17:59] Now, my understanding of your strategy— correct me if I'm wrong— is that you're looking really to not have that exposure to the ground up construction type of thing. But can you just explain where your product kind of enters from a timeline point of view for most developers, and then when you exit? Because I think that in itself probably takes a lot of risk out of the equation for a lot of people. 

Tyrone Shum:   

[00:18:25] So typically, developers have few stages in the pipe. And I'm going to talk a very high level so that way people can understand. 

  

[00:18:33] For development projects, usually you've got one stage, which is to purchase the land and then go through to to a DA approval, which is through Council. That stage, I guess you can say, is very much determined by how long Council is going to take. And it's very unknown. There's not a fixed timeframe. 

  

[00:18:48] Some councils in, say, for example, Sydney, take 12 months to get approval. Other councils in Queensland might take only two months to do. So it's dependent on where it is. But there's no fixed time and date. 

 

[00:18:59] And that's the sort of risky part about it, is that you can actually get the site but you might have to wait 12 months. And if someone goes in and loans you that kind of amount, you're got additional costs there. You're basically holding costs to be managing and keeping that project or that site.

  

[00:19:14] We try to avoid going into those kind of things, and we usually don't go, normally it's from the DA process. So if once they've got the DA approved, it's a DA to the construction loan process. That's where we come in. 

  

[00:19:25] And that's typically what they call in the industry a bridging loan. Because during that stage, they still have a lot of work to do. So even once they get the DA approved, it doesn't necessarily mean that they're ready to go on site and start building the next day. It's not as simple as that. There's still consultancy work that's involved. 

  

[00:19:41] I mean, Salena, you know from this from your own experience of doing development, [there's] still all that additional paperwork to be done. Then after that you got to get your building, approval, etc. You know, getting your builder on board as well. So that takes time. And on top of that, if you haven't got your construction finance ready, as well, too, you've also got to go and get that. 

  

[00:20:00] So that process can take typically anywhere between three to six months. [It] just depends on how fast you move. And that's where we come in, to actually support that process is to provide that short term loan to help them. 

  

[00:20:15] And that's where I guess the beautiful thing about where we come in, in that short period of time is because it's kind of fixed. You know, roughly it's going to be taking no more than six months. Because the exit strategy for that is that we're going to be paid out by the first tier lender through a construction loan, as an example. And that way, the exit strategy is very, very clear.

Salena Kulkarni:   

[00:20:36] That's terrific. So I think, just to clarify, you're not trying to offer people construction finance, you're really just bridging the gap between the DA process and getting ready to go to site. So that certainly reduces the risk for a lot of people. 

Salena Kulkarni:  

[00:20:52] I think the last question that I'd love you to unpack a little bit is really a question around who these types of strategies are for and who are not for. Because I know in my own journey, you tell people about the sorts of double digit returns that you can achieve in alternative. And everyone wants a piece of that. 

  

[00:21:16] But as a strategist, my feeling is that it's right time, right person, right place, right everything. So, could you talk from your perspective about who you see as being a fit for these types of lending deals and who's not a fit?

Tyrone Shum:   

[00:21:32] It's a really, really good point that you've raised. And it's not discriminating [against] anyone— at the end of the day, we're here to try and help as many people as possible. But I think as part of what we have to do, being the stewards and facilitators, we also need to abide by certain rules, which [are] provided by ASIC. 

  

[00:21:49] And one thing that we've been doing, because we're also going through to get our FSL licence recently too, is that we actually have been asked by our legal team to actually only accept applicants who are wholesale investors, or sophisticated investors. Which is typically what most of these deals are targeted at. 

  

[00:22:08] So if you look on the ASIC website and find out what a sophisticated investor is, it's typically $250,000 of income earnt in the last two years, and obviously, it's got to be support[ed] and sustain[ed] by an accountant who's got to write a letter for you. Or you've got a little bit over, I think it's $2.2 million worth of assets or something like that. 

 

[00:22:26] So that definition is pretty much the first criteria in order to be able to be accepted into receiving these type of deals. 

  

[00:22:34] So as a wholesale investor, you get access to opportunities like this. And this is quite common, not just in Australia, but across the world. If you read Rich Dad, Poor Dad, the reason why a lot of the successful, rich, wealthy people get access to the best deals is because they've proven that they can actually manage money. Because this is not for what they call [a] retail investor or someone who's just starting out.

  

[00:22:58] There are inherent risks. And I will say that. There are inherent risks that you've got to expect. And if you've never done an investment, or purchased property, or done any type of dealings with investment before and knowing the risks about it, then this is ideally not going to be the best option for you. 

 

[00:23:12] Because once you invest this capital into this, you will have to expect that there may be delays. There are going to be some things that happen. Typically, we try to get everything back on time. But with so many moving parts and so many things happening, you can't always guarantee. And there's no guarantees in this type of game. 

  

[00:23:32] But the good thing is that when we actually structure these type[s] of deals, it's protecting our lenders, but also protecting and ensuring that we get as much security as possible. So that way, you don't lose whatever you've put in there.

 

[00:23:44] [I'm] not saying that you're guaranteed to get all your money back all the time. I mean, ideally, that's what we want. But I think what I'm just trying to say is that we protect as much as possible by getting guarantees from the borrowers and security. So yeah, that's the first thing, is wholesale investors is the key point. 

  

[00:23:59] Second thing is minimum capital. Looking at least half a million dollars worth of capital that you can invest into these type[s] of deals. And I guess the thing is is this kind of investment opportunity, or these type[s] of deals that you will be receiving is that the money that you'd be putting into, it can't be stuff that you got to use on a day to day living. That's the question that I will ask when we have a face to face interview. 

 

[00:24:21] Because at the end of day, as I said, if you need this money to be reliant to be able to live off, then it's not going to be for you. Because this is more of an investment, ultimately. 

  

[00:24:30] And it's the same thing if you're gonna buy a property, you're not going to be looking to buy the property and sell [it] in six months. You're going to be looking at buying the property, holding it for a long term. 

  

[00:24:39] And obviously, you can't just go to the bank and sell it instantly the next day, because it's going to take some time. By the time you go through all the costs, the timeframes, it's going to be at least two or three months before we can sell and this is the same thing. Sometimes you've just gotta leave it in there until it matures and then that's when you get your return back. 

 

[00:24:54] So typically, that's what we will say initially up front. Yes, the returns are fantastic. Phenomenal. And we do provide updates to all our lenders and ensure that they're always kept up to date what's going on. 

 

[00:25:06] But yes, there are gonna be some times where there's delays. That's just part of running any project. Sometimes there may be things that may just change in the market. And that's where we'd have to restructure some things. 

  

[00:25:17] Especially in a condition like this, volatility is becoming higher, and we just need to make sure that we protect everything that we do. And we ensure that there's always mechanisms for us to have clear and safe exit strategies as well for all our lenders. 

Salena Kulkarni:   

[00:25:35] I think it's a really important point that you've made, which is when you participate in an alternative investment as a passive investor, you just need to understand that your ability to control the deal and your ability to exit is secondary. You've really got to rely on the person who's putting the deal together, like yourself, to run the deal. And trust that you've made the right judgement, but you can't just pull out midstream. 

 

[00:26:05] And I think that's true across all of the alternative strategies. These are big assets, there's commitments made, and you can't just exit. So it's a very different mindset to where, for example, you buy a share or a piece of property that you control, and that you can decide to sell at any particular point.

Tyrone Shum:   

[00:26:26] That's exactly right. And I think the other thing I just want to mention is that people are, understandably, in this volatile market, looking for liquidity. So I've had many lenders come up to me and say, 'Can we exit?' Because they just want to hold the cash. 

  

[00:26:39] That, I think, is because of understanding [the] emotional side of things is that some people just get fearful, and we can't let fear block us from still taking action at the end of day. But you've just got to make some clear decisions. 

  

[00:26:51] Because ultimately, if the return is fixed, and you can see that there's a certain timeframe— like you're not locked in for five years, or anything like that, you've got six months or 12 months— then it's only really short term. 

  

[00:27:01] And I think the thing is just to understand that. Once these have already matured, then you could obviously either keep that cash and just wait to see what happens. But ultimately, what we try to do for the best is to make sure that the investors get a very, very good return at the end of the day. 

  

[00:27:15] And hence the reason why I continue for myself. I walk my talk, because I have invested quite a lot of my money into all these deals, and the returns are phenomenal. But I know that there are gonna be some delays. And I don't need this money at this point in time. And that's why I go, 'Okay, just let it compound, do its thing'. And it's very passive. As passive as I can get it. 

  

[00:27:35] So that's the whole reason why we've done this, is because you just want your investments to work hard for you, not you having to be actively involved in those investments.

Salena Kulkarni:   

[00:27:44] I love it. These have been some really great insights for people who are interested in being involved in this type of deal and this particular strategy. 

  

[00:27:55] I think that the the final question that I have for you, Tyrone is really around... you haven't really mentioned it, but I know that one of my criteria is to always work with people I genuinely know, like, and trust. Tell me about what kinds of people you see as being a fit for working with you and which ones may be not. It's kind of an extension of previous question.

Tyrone Shum:   

[00:28:17] It's a really, really good question. And this is one of my criterias, because I'm a bit old school, I prefer to meet people who I am going to be working with, typically, as much as I can. As long as I can get to where they are, we would actually go and meet the actual borrower, or developer, whoever you want to call it. And pretty much every one of the developers that we've worked with, we've met either via Zoom, or I've actually gone out and met them on site. 

  

[00:28:43] And that gives us a bit of confidence, especially myself, to know, 'Okay, if I've met this person, I can kind of read who they are, I can genuinely see what they're going to show me'. Because typically, you don't just go and meet them, they'll actually show you the site, they'll show you what the operations look like in their businesses and stuff. 

  

[00:28:58] And [the] most recent one that I just went out to meet with another very successful borrower as well, successful developer, he actually went through and spent pretty much a few hours with us to show us step by step, 'Here's our team, this is what we do. Have a look at our operations'. He took us behind the scenes, literally. 

  

[00:29:13] And that gave me so much confidence to go, 'Okay, he's not just talking about it, it's not just on paper, but I can actually see what is going on'. And then next week, I'm going to go and visit his site again, to see another site to see what's happening there. 

[00:29:24] And that kind of gives me very, very good assurance, because ultimately, these are long term clients that we're gonna work with. Even though they're coming for short term, but they're constantly doing new projects all the time. So if I have a strong relationship with them, and they like working with us, then, it's a win/win situation for everyone.

Thank you to Salena Kulkarni for interviewing me on this special episode of Property Investory.