Timestamps:
0.21 | Looking for the Next Investment
10.17 | Turning a Profit
15.17 | For the Love of Property
20.55 | Time Investment

Resources and Links:

[6:24] Property is tangible, it’s humanistic, they want people to see what they got, what they're behind, what they're paying for.

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

I’m Tyrone Shum and in this episode we’re continuing our conversation with CEO of NPI Group Paul Maaskaant. Maskaant takes us through what is needed when it comes to successfully subdividing and selling developments as well as how he can achieve an average of 15 - 20% profit margins by getting the property under market and developing it.

Throughout his career as a builder, Maaskant got more and more into property development, leading him to where he is today with NPI group. He explains the significance of motive when selling property.

[00:18 but it’s fine to start at 0:21 if it sounds better] Sometimes you have to sell. And if I think if you're selling to deploy your cash somewhere else, even like I said, if you're selling to have the money in a bank account, it's a shiny number on a page, then it's not the right thing to do. But if you're selling to maybe do another development, or, or do a bigger development, or maybe buy a buy and hold strategy property, or commercial property or whatever, you know what I mean, it's all, as long as you're deploying it even want to buy shares or something like that, like, deploy it somewhere, to be able to get some to be able to keep working for you. But if it's sitting in the bank, it's not worth it.

[1:34] Now, for clients, we do exactly what I've done over the last six years, we buy development sites, and then like I said, get them through council and then get them to the builders and get them built, and then handed back to the clients turnkey, and they can do what they want after. I'll give them a recommendation, but then don't have to take it, they can, if they want to sell it, they might deploy it somewhere else. They might want to go on a holiday and they might want to do one development and go and take their family on a really nice trip to Europe or America or something like that. And that's what they want to do, then great. And then they might come back and go again in the next couple of years, but I kind of get a lot of repeat clients because they see what's happened. And they have liked the process of doing it. Because it's been quite seamless, because we take care of everything. And then they kind of reinvest again, they go back to the bank and see what they can get. And they go again, generally. But it depends what stage people are at basically a bit of stage of their life throughout.

Maaskant describes to us how he finds development opportunities and what his favourite type of investments are in his line of work.

[2:57] It's just relationships with agents a lot of the time, which has probably been harder in the last couple of years, because the market's been so hot. But which is sort of coming back to coming back a little bit, I'm noticing agents just kind of calling me a little bit more now. It's just relationships with them. Being able to be ready to go is important as well. So have your pre approvals in place and just be ready to go. 

[3:26] When we find a site, we can do a quick due diligence on it by speaking to surveyors, councils, all that kind of stuff that we need to speak to make sure we're in the right zoning for developments. I think the main point is to be ready to go when the agent rings. We've got buyers there and the thing about that is agents are happy to get a clean deal as well. And they know when they ring us that if the price is right, we're not going to, we're not paying overs, we're paying market value. And we'll get the job done for them. By that afternoon the property was sold and we could move on.

[4:23] I really like the retain and builds. Just the small ones. So you're not putting, you know, millions of dollars into it. But I really liked the retain and builds where you're building the house behind the front house and keeping the front house. I seem to think I don't think bigger is always better. And as you get bigger, you get a lot more Council issues. You got to deal with this and to deal with that. You get council taxes, car parks, open space, leaving all this kind of stuff that needs to come into it. So I think there really is a lot to retain and build. So when they come up, I try to get them as much as possible. I think people think doing a 4, 5, 6, 7, 8 unit subdivision is where it's at. But sometimes it's just not. Because of the headaches, they're a lot more prevalent than doing a simple subdivision. You can go through the council just that little bit quicker. I think you can get your money back a bit easier. So potentially, if someone comes to me, and they've got X amount of money and they've got a lot of money, I might put them in three of those instead of doing a six unit site. I would say, ‘Let's do three retain and builds. Yeah. Because I think you can go through it quickly.’ I get it done all at the same time and you'll make the same return.

So what goes into a development once you’re in there? 

So we'd sort of, we’ll tender it out to three different three from builders, which we've obviously done a lot. So we've got some good relationships with builders, they're willing to work with us extra. So I generally set it to one volume builder, and just a sort of everyday builder as well. I'll say to them as to [whom] and then generally, the client has someone in mind as well, very rarely, they don't, they kind of have a friend of a friend or, or they know someone or whatever. So they'll send it to them as well, if they'd like to do that process. And then we sort of work out who’s the best, sometimes the cheapest isn't the best either. We work out and we'll go through the contract for the client, looking at inclusions, and exclusions, all that kind of stuff. And making sure they're getting exactly what they pay for. Because I think that can be a bit of a problem as well, in the building industry, people sort of try and pull the wool over people's eyes. And at least we've got to have a set of eyes from a trade background that can look at that and make sure that the client is getting exactly what they are paying for.

[8:47] A lot of people don’t understand and that's fair enough. Because not everyone's in the building industry then. And sometimes not even builders know, don’t know what they're quoting. You know what I mean? So, it's better for us to have an eye that we can look over it and say, ‘Yeah, this is exactly what you're getting.’ Well, some people will leave out the driveway, for instance, and not even know about it. I know, we never quite look at page 30 or look at page 32 of the contract and they'll say exclusion driveway and the people are like, ‘Make sure that kind of stuff doesn't happen’ because then some builders will do that, will leave out driveways and stuff like that, just because it's too hard an ask, we’ll leave it until the end and whatnot. So yeah, so we make sure that all is in place. We look over it, look over the three quotes and we sort of pick the best builder/price/product. We get a client, we don't sit there and go and we will give him a recommendation. But they might want for one reason or another to go with another builder and that's fine. It's their job really with the money for it. So it's their job so they can choose whatever they want to do.

In the property industry, your return of investment is always a key interest when investing successfully. 

[10:17] I like working with 15 to 20% margins. Generally, that's kind of where we're looking. I also, with the buyer's agency, part of it, I like to make sure that I'm buying in areas that are gonna have capital growth as well, over that couple of years when the development is being done. I think that's important as well, to get some uplift as well through holding the property. It's not just the development, it's gonna give you that cash, or cash flow, it's going to be the market as well. So that's why we do some market research. It is important from our end, at least at the start. So I like to look 15 to 20%, sometimes you can get more. And sometimes you fall a bit short. Because development can be tricky. And it can be expensive at times. And there's also little things that can happen. I've had a job before where we had to go to VCAT. For a tree, for instance, the tree was on the boundary, a very frustrating tree on the boundary. Council, knock back the application. So we said why and they said because of the tree and then we said ‘Okay, we'll take you to VCAT.’ We ended up winning but it cost an extra five grand. 

[11:45] These things happen. And there's not really a way that you can say that's not going to happen, or that it is going to happen, it's sort of like, well, you've just got to sometimes have a go and find out on the way.

As we’ve mentioned for many episodes now, COVID had a profound impact on the property market. For Maaskant, it was a struggle. 

[12:56] Challenging. Challenging to say the least. Yeah, it is. It is. What do you do? It's been, it's been, it's been hard. But the best thing is the clients understand. It's not like that. I'm saying to them, Hey, look, we can't get material, but everyone else has got material, like it's, you turn on, then you turn on the news or turn open in one paper. And you can see what's going on. So people understand it is frustrating, and that's part of the unknown. Like we said earlier, part of the unknown, you know. So we have some, we have some places that are going through, again develop now, which were bought pre COVID. So how do you know that COVID is coming in, you never know that you never know once in 100 year something is gonna come up and bite you on the bum. So we just kind of just kind of this part of the unknown. And we just have to deal with it when we try our best to try and get the builders to get there and get the job done.

[14:19] But what I will say is that if you're buying your property now, you're not developing for a year, year and a half anyway. So hopefully by then supply chains have opened up and things start to get back to normal, more normal. And we can move on. But it's a question I get asked a lot. And to be honest, I haven't really gotten answers. It's kind of one of those things we've got to just deal with as best as we can. 

Coming up after the break, we’ll continue chatting with Paul Maaskant as he shares his natural affinity for property developments…

[15:17] I love property. I really do. And I always feel like I've almost done two apprenticeships. So that makes sense.

The transition into where he is today…

I thought, well, maybe there's a business here if people want to do this kind of stuff. Where can we go with it?

The most important piece of advice he can give…

I wanted to do it all. And then it was a class I read somewhere. It was like a bit of a saying or quote mark, how do you expect to be better than someone that's training 40 hours a week? When you're not?

And that’s next. I’m Tyrone Shum and you’re listening to property investory. 

Maaskant explains the process of his career path, explaining why he went into the business of buyers agency and development. 

[15:17] Look, I love property. I really do. And I always feel like I've almost done two apprenticeships. So that makes sense. I feel like I've done an apprenticeship as a carpenter builder. And I've done an apprenticeship in property. Self taught, obviously. But sometimes I think that's the best way. And jumping in from doing developments to doing it helping other people to develop. It was just a bit of a morphing, I suppose, I'd get people out like when friends asked me, ‘What do you think of this? What do you do here? How would you develop this?’ And I'd say, ‘Yeah, let's go’ or ‘nah, that's no good. Because of this, this and this.’ And more and more people would ask, and you know, then I'd be getting random phone calls saying, ‘Hey, mate, I'm a friend of a friend. I'm looking to buy some property. What do you think?’ Just kind of just kind of like that. It just kind of had a snowballing effect, I suppose. It just kept going and going, and then I thought, well, maybe there's a business here if people want to do this kind of stuff. Where can we go with it? And yes, I started it. And here we are.

[16:52] You get repeat clients as well. And then you get people that are kind of older clients so that their children have sort of spoken to me about things and they're like, ‘Oh, I would… I need to do something for my retirement. I wouldn't mind doing something like this and I need to make some extra money.’ And so they're, they're kind of more buying, developing and selling. They try and they want to keep the cash a bit more younger people [who] potentially can rent them out. [It] just kind of morphed from helping friends to helping a few family members, cousins and stuff like that. And then moving on to the friends of friends and then just random people.

Success in any endeavour, whether it be property, sporting or anything else, usually comes down to motivation. 

[17:49] I suppose when you're working, it's all for your family, isn't it? It’s really like you want to have, you want to give them and give your kids the best life they can possibly have. You want to be able to take them out and do things and go on really nice holidays and make sure that you've got a nice life ahead in the future. A little bit of pain now for a bit again later is this… not what I live by, but just sort of think. I think the main reason is just your family; just making sure that they can live the best life that they can.

Maaskant reflects on the best advice he’s received in his lifetime. 

[20:55] The best advice is probably not really into property. But when I was a kid, I read it somewhere I heard it. I wanted to, I wanted to do it all. And then it was a class I read somewhere. It was like a bit of a saying or quote mark, you know, how do you expect to be better than someone that's training 40 hours a week? When you're not? Like as in, you know, if they're, if they're a professional, they're training 40 hours a week? How can you be better than them if you're only training five hours a week, or 10 hours a week. So that's how you got to kind of live by that a little bit as well. If you're doing something as a professional all the time, you have to be better than everybody else. So that's probably one little one there. 

[22:31] Let's take a step back. If you say you met yourself, say 10 years ago, what do you think you would have said to him?

[22:40] I know everyone says, I would have bought more property and whatever. And I think I would have started my business a bit sooner, I think I was lacking confidence in doing what I was doing or like I kind of wasn't sure. I think it would have started my business a bit sooner, as you know, as MPI group. But in terms of what I've done last year, I don't know. I think, for me, everything just happens for a reason. 10 years ago, I was 25 and just got home from overseas and was like, ‘I don't know what I'm doing.’ You know what I mean? So I know, everyone says, I would have bought 20 more properties and be very rich right now. But I probably would have stayed, if I would have known then I probably started my business. So having more confidence in myself and what I was doing. 

[26:37] How much do you think your success that you've achieved right now has been due to intelligence, hard work and skill? And how much of it do you think has been due to luck?

[26:50] I think a little bit of everything. Hard work probably up there was probably the most, though. I remember working all day, and then going back to the houses and doing more work there for another six, seven hours, you know, painting or waterproofing or tiling, or whatever, just to get the stuff done, and then go back and work another day, the next day. And you can do that when you're younger and have your kids and it's fine. But now I don't think my wife would be too happy. Lots of hard work. Intelligence, maybe, maybe definitely early on. Because I didn't buy the markets. I didn't buy the right properties early on, but I am intelligent enough to be able to keep them like I said to you, and property can be very forgiving over time. And the mistakes can get eroded pretty quickly. So intelligence to maybe hold them and then learn a bit more after but early on. I wasn't very intelligent with property. No, not at all. It's a bit of luck. A bit of luck as well, the market, the markets that have moved has been moved nicely for me. But it's moved nicely everywhere in the last 12 to 24 months. So we'll see what happens over the next 12-24 months. And we'll see. See the luck right there. But yeah, a little bit of everything. I think you need a little bit of everything. But you also get a bit of luck. By throwing enough capital out there as well. You're not going to have any luck with the capital sitting and doing nothing. That's the main thing that sometimes I think you have no chance of being part of the luck if you don't have a go. 

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