Timestamps:
1.11 | A Blooming Market
4.00 | Where it All Started
10.56 | Creating Capital
16.23 | Escape to… Another City?
18.39 | Investing in Real Life
26.33 | Finding IT: Leaping of The Page
31.45 | Getting Prepared
35.48 | Building Your Building Team
38.13 | Jumping Through Hoops
41.26 | ‘Move Quickly’
45.43 | Value Added
49.25 | Get in Touch!
 
Resources and Links:

[0:36 pt2] When I first looked into investing in property, I read the book, Rich Dad Poor Dad. The first thing he taught is to go out and become educated so you’ll know what you’re doing. [0:50] So, I did a course, but taking that very first step into buying my first investment property was very interesting. 

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 development manager, blogger and author Jo Chivers. Tune in to hear how she turned her 20-year passion for property into a career, founding her property management company Property Bloom. Chivers will guide us through all her most pivotal property moments, reflecting on her growth in the property space over two decades of lived mistakes and triumph. Listen in to find out how you too can find value where others don’t. 

I’m Tyrone Shum and in this episode we’re speaking with development manager and author of Property Bloom, Jo Chivers. Tune in to hear how she transitioned from corporate marketing into her 20-year passion for property development as a career.

Then discover how as a young mum, the simple act of picking up a book changed her life.

Tyrone Shum  

While a specialist in property development, Chivers is what anyone would consider multi-talented. 

[0:35] Jo Chivers. I am the Director of Property Bloom Australia Proprietary Limited which is a project management company. We project manage property development for our clients. I’ve had this business for 15 years now and over that time, we’ve developed over 100 properties for our clients.

[1:15] So, I do write blogs and I’m published on a few other websites. So, propertyobserver.com.au is one of the main websites that I write for. I also publish blogs on my own website which is propertybloom.com.au, and then we just feed them out to whoever may be interested. We do get some inquiries from magazines — Australian Property Investor and YourProperty Investment Magazine, that’s who I write for when they contact me. So, I think I’m a good writer as well.

Chivers’ talents certainly don’t stop her from taking on responsibility. 

[2:05]  We project manage small property development. So, my typical day will involve a lot of project management either from my office, over the phone, connecting with my builder, my site managers, my real estate agents, land developers, talking to a lot of people and of course our clients. Also, a lot of email work as well. When we’re on site once a week, we inspect— we do a site inspection for the projects that are under construction. So, we are on site each week inspecting where the builder is at, what stage they’re at and then we report it back to our client. We write a detailed update report every week to our clients so they can stay in touch with what’s happening with their development, they can see photos so they actually don’t need to do anything other than read our report. So there can be quite a variety of things probably being done throughout the day. 

Throughout her developing career, Chivers has had to build her own foundations as much as her properties. 

[3:23] Project management and property development — it’s really quite hands-on and it’s really about the experience that you have. So, I guess communication is key in this type of job, in this type of role. Communicating with a variety of people — it could be some of our consultants, like engineers or surveyors and as I mentioned real estate agents or builders — it’s obviously important that we communicate with them very, very regularly. I suppose that is one of the things that you need to be able to do as you’re going into property development and/or project management.

Like most people, Chiver's life hasn’t been a linear progression. 

[4:34]  I’m from Sydney, and I should actually mention here that we do focus our development in the Hunter Region — a lot of people think I’m originally from the Hunter Region in New South Wales. I’m actually born and bred in Sydney. I still live in Sydney, I went to school in Sydney. When I left school, I travelled for quite a while — two and a half years, backpacking around the world like a lot of people do. 

[5:03] When I came back. I actually went into marketing, corporate marketing as a career. So, I sort of started in that as product manager and then moved up into marketing manager. I found that after about 10 years in that career it was a fantastic background for what I actually do now. Communication and marketing and PR and those kinds of things — jobs with those tough analysis skills that you learn when you’re managing you know big brands. I got to the top of that career ladder and thought, “gosh, you know, am I really happy here?” I was thinking of having a family at that stage and I thought, “how can I stay in the corporate world and still have children and be able to still enjoy my work?” I am a person who loves to work so for me — of course there’s nothing wrong with it at all — but to sort of convert into a stay-at-home mum, which is a very important role, I couldn’t see myself sitting still long enough.

If Chivers didn’t realise the power of books, she was about to.  

[6:05] So, I actually left that corporate world. I did read at the same time, I was pregnant with my first son, I picked up a book Rich Dad Poor Dad and read that book. The little light bulbs popped on at that moment and I thought, “Gosh, I think this is what I really want to do.” My husband and I didn’t have any investments apart from the superannuation that we both had through our jobs. I thought, “gosh, we need to start investing and building for our future.” One of the messages that Robert Kiyosaki has in the book is really to become educated, to become financially literate, and it’s really important that you do that, rather than just hand over your money to someone else to manage and not really know where it’s being invested and what’s going on.

[6:55] So I embarked on his course to educate myself financially but also in property. He talks about investment and building up your own investment portfolio so that you don’t have to rely on the government moving forward — not having to rely on a pension. So, that really resonated for me as well because my parents were on the pension and they didn’t have any investments built up either. They retired in a beautiful spot, but they were really cash poor. They had a lovely home that they’re living in but they really couldn’t do anything in their retirement years. So, I really wanted something different for myself and my family. So, that was all part of my motivation starting off.

According to Chivers, that feeling of finally understanding the steps to financial freedom is pretty hard to top.

[7:36] So, pregnant with my first son 15 years ago, I was sitting this course — it was a long course back then, it was a year-long course. In that course, it was amazing. I learned all the different strategies that you can use with property to invest. So, I came out of that course and we had bought a family home by that stage and there was equity built up in that family home. So, I started investing — back then in the 2000s in an off-the-plan style project. Now off-the-plan back then was very different to buying off-the-plan right now. So, the developer used to offer a discount before you bought off-the-plan and then if we did it at the correct time in the cycle and the market was moving up you would make some equity. By the time you settled that apartment, you could set up equity to keep moving forward. 

Of course, nothing tops the feeling of putting that newfound education into practice. 

[8:37] I started investing, I bought four properties using that strategy, and they were spaced out so they weren’t all at once. As one got settled, I’d draw out the equity, get ready for the next one to settle and so forth. What I did find out was — the properties were in Sydney one was a commercial office space and three were apartments in Sydney — I did find out that they were all quite negatively geared.

[9:05] So, I needed to find cash flow. I needed to find something that’s going to give me more cash flow to be able to hold on to those properties and still move forward in my investment journey. So, that’s when I started looking outside of Sydney. Basically I looked at a map and went, “OK, within a two hour radius from Sydney.” I looked down South of Sydney and up North. I found the Hunter Region. I went up and did a lot of due diligence up there. I had a really good look around and was amazed by what was going on in the region, how much more affordable property was and how bigger the blocks were.

Chivers’ discovery turned out to be the next chapter in her investment journey and her first step towards her new career, she just didn’t know it. 

[9:38] That’s when I switched my strategy to developments. I found a house on a big thousand square metre block. I renovated the house, built it and subdivided, and that was my very first development. I had a few friends watching that I’d share my stories with and watch what I was doing. Two of those friends said, “gosh, can you find us a project like that?” andI said, “sure, sure.” That’s when I realised, oh gosh, maybe I can make business out of this, searching for development sites and project managing them for people. That’s how Property Bloom was born basically.

[10:29] So, with the first two clients being friends I was sort of really learning myself, I was still very much learning. That is the best way to learn is to go through physically and do and try a strategy and actually carry it out. You’ll learn far more that way than just studying them. So, after that, I obviously need to find some more clients. So, I presented my concept to a financial planning company and they loved the concept. In fact, the financial planner did a project with me and then referred me to a few of their clients. At that point I also started writing articles as well to get some awareness up and about and to tell what my service is about — getting the website up obviously. It’s been a slow and steady climb really from 15 years ago to now.

While distance to capital cities is usually an indicator of price, Chiver’s says there are other ways to add value. 

[11:16] Right now, Property Bloom is doing very well working around Newcastle at the moment. What we tend to do depends on what the market is dictating, what part of the cycle each of the cities are. The Hunter is made up of a handful of large cities and also a lot more smaller towns as well. So, we look around that region, we look at the economic indicators and we find out where that particular city or town is in the cycle and then we’ll work in that area. Then we may move on when the market conditions change.

[11:50] So, at the moment we’ve been working in Newcastle and that has been fantastic for us because we have structured work going on in that area. Organically growing I guess you would say over that period of time. Most of our clients now, our regular clients, in effect they’d all come back and do another project with us when they finished one. We also have referred business as well — some people just mention us to their friends or family and we end up doing some work for them too.

Chivers says she likes to work in the transition areas: turning homes that are money takers into money makers. 

[12:43] Our clients are really usually people who have invested in property in the past but are looking for that next step into adding value. I understand the concept of adding value rather than, say, buying a property and then keeping and holding it, waiting for capital growth. What we do with a project is we create equity through the development process. So, I typically call a Property Bloom development a dual occupancy project where we’ll find a site where we can build two dwellings, they may be attached or detached. If they’re attached dwellings, it would be a duplex that we build. It’s quite a simple concept.

[13:24] When you do look for sites, not every site will suit a dual occupancy, or if you need land size, you need a certain frontage. A lot of land estates might have a covenant against dual occupancies. So, finding a site is what we do for our clients and then we’ll run an analysis on what the cost may be using estimates from our experience, from what we’ve done in the past and we’ll present that to our client. Now, our client will look at the numbers — it really is about numbers. So, we do a lot of due diligence and research in a location before we would then present that to our client. Once we’re happy we know that it should be a good area because of the fundamentals in that market, then we’ll present that and we’ll look for land within our development part within that location. 

Chivers, like many of our previous guests, echoes a common theme: numbers don’t lie. Her company tries to transform them from the page into profit.

[14:14] We’ll present the numbers to our clients, they’ll look at them and they can choose whether they want to stay with that project or not. Mostly we would only present concepts or present analysis to our clients the way the numbers stack up. So, to give you an idea, we look to make approximately anywhere between 100K and 200K in equity through the development process. That’s usually credited within a 12-month period, and that would structure depending on what the value of the property is worth when they’re finished. Most of our clients hold and refinance and put out the equity at the end from the selling as well. It will also depend on the building cost as the construction costs can increase all the time depending on what’s happening in the market currently. Currently, there’s a bit of a trainee shortage and there’s a construction boom going on so construction materials and labour has increased a little bit this year.

[15:12] Then we’ll carry that project through. So, we’ll put a concept plan together, we look at that with our clients and we obviously try and maximise the space that we’ve got to use on that project. Then we’ll manage the whole process of getting that into council with the DA process, getting it approved and then the construction certificate process and then into the construction size.

Tyrone Shum 

While experiencing success through subdivision, Chivers says it's not the only way developers can add value to their property. 

[16:28] We do have another strategy which is a granny flat strategy, which is more about a high yield strategy rather than an equity creation strategy. That’s when we’ll look for existing homes on large blocks of land that only need cosmetic renovation so we can maximise the rent, we’ll then do the granny flat. Then the client will end up with dual income so two dwellings to rent out, but they can’t subdivide. So, it’s not really an equity creation strategy and that’s a low entry point as well. So, that would be for someone who's just looking for a long term hold, to get some good cash flow and just moving forward that way. We can still pull some equity out of that but it will depend on —because we’re not subdividing the land — it will just depend on what the market is doing.

While property investment can seem unachievable, especially for first-time investors, Chivers says the regions can open doors. 

 [17:33]  Well the starting point with the granny flat strategy for instance is around the 450,000 mark. That’s for purchasing a house and renovation costs and to build a two-bedroom granny flat. Then we jump up to dual occupancy projects. As I mentioned, we’ve been working in Newcastle for the land costs, they’re a bit higher in Newcastle than they would be in other cities in the Hunter like Cessnock or Maitland. So, a typical duplex type development — which involves the two-lot Torrens Title subdivision —  cost for that type of project would be anywhere from about 750,000 for the land and construction and subdivision cost. That includes all council fees and charges as well and up to maybe 780,000 or even 800,000 depending on how big the block is. So, you’re looking at around that mark, but that’s two properties, so with 800,000 you’re creating two properties on their own Torrens Title.

[18:32] If you compare that with what we've combined in Sydney for instance, it might be a one-bedroom apartment for 800,000 in some areas of Sydney. So, it’s a good alternative option for people wanting to diversify and move out of the Sydney market and look at other options. 

[19:31] There are other regions in other states as well for people listening obviously outside of New South Wales. We’ve got large regional areas out in Queensland like for instance, Toowoomba, or down in Melbourne perhaps around the Geelong area. I don’t know a lot about —we just focused on New South Wales— the other states, but there is opportunity everywhere and you just need to do your research and find, “OK, what are the indicators? What are the infrastructures? What’s going on in those larger regional areas? And are there growth prospects?”  Once you start delving into all of that and find out  “what’s going to happen for that city?” Get your hands on some really good, high quality reports, then you can drill down into specific suburbs within that city and find your own location.

Even with decades of property experience, Chivers isn’t immune to the everyday challenges of family.  

[21:01] My big focus was to pay down our principal place of residence first. So, once I got the investment portfolio established then I was focusing on paying our mortgage on our principal place of residence. Unfortunately, my marriage didn’t work and we split up a few years ago, so I had to buy my husband out of the family home. So again, my focus in the last few years has been to pay down that debt which I’m doing really well. Just this month I have purchased my next development site which is in Newcastle, so I’m back on that horse now which I’ve been wanting to do for a little while but I had to focus on making sure my mortgage was manageable first and obviously create some equity in my own home. 

Chivers still finds joy in the simple concept of appreciation. 

[21:57] The other thing is when you hold property for a long time. The properties I’ve held—I did have to sell one of the investment properties but I’ve managed to hold on to those three and it’s great to watch—I’ve held them for over 10 years. So, you can say even though it has been a straight buy and hold strategy that the growth in those investment properties has come to fruition. They are all pretty much positively geared now.

[22:24] So it’s interesting, for me, personally, my strategy is to buy and hold long term and I think property is a very natural long term hold because the entry costs are high with the stamp duty cost. So, for me, that’s the way I look at things. So, I’m really looking forward to getting into my next development myself. I love what I do, and project managing for other people,it feels like my project as well. So it’s great, I’ve been able to keep doing what I love for other people until now and now I’m getting back into my own development. So, I’ll just continue from there and my strategy really is at least for the next 10 years to just continue to move forward when I can purchase. The important thing for me is—I’ve got two kids, I’ve got two boys—and I just want to build a future for them. We’ve got a savings account setup for them for their first property, term deposits so that each month the money goes into their account so that they’ll be able to then purchase their first little investment property. 

Chivers says that one of the biggest dangers investors face is to underestimate the power of the banks.  

 [24:26] I’ll share two quickly with you. Personally, there was one because I was lending—15 years ago the old low dot type loan— because I had my own business we ended up during the GFC and the credit crisis that the lender that we had gone with ended up selling to another financier. So we were completely at the mercy of that new lender and our loans were transferred over to them. They just put the interest rate up, up, up, up. So, we were really struggling with that loan for a little while. So, that was really quite a lot of pressure because that property was still negatively geared.

[25:40] So that was interesting to learn, that banks can do that. So, this wasn’t a mainstream bank, it was a low dock lender who got purchased out by another larger lender and that larger lender just does what they want to really. So, that was a lesson I learned— to really understand the banks and what they can and can’t do because basically you are at their mercy. That was an interesting lesson to learn,  we eventually were able to refinance from that but it took a while.

[25:47] Also back then, some of those lenders had exit fees—which have now abolished which is fantastic— but again, if you did exit out of the loan within a certain period of time you were given another extra fee. So, that was an important lesson to really research my lenders more carefully. If we look at it from the development perspective, I guess it wasn’t a bad development but it was something where we ended up in a place that we didn’t plan to be in the beginning.

Or the maze of dealing with council.

[26:23] We had a client—I found a large block of land, a 1000 square metre block of land where we can build three dwellings, so it’s a three-unit project. We put that into the council. We had already appraised them through the market and we were meeting all the requirements from the Development Control Plan and the LEP of that counsel. What happened during that time the DA was in council, the council actually went under administration. So, New South Wales planning actually looked at that council’s performance and said, “You’re too slow” and they were very slow. However, we just— we’ve been in council for about three months I think at that stage and with the communication with the town planner he said, “Yes, it’s just about to be released” right at the end stage of DA processing.

[27:12] So, when It did go under administration what happened was an independent planning panel was put in place to take over all of the DAs that were apparently in council. So, this panel of planners came from all different areas. I think there were five new planners that were put on from different Sydney councils actually onto this panel. So, they all looked at the DAs in a different light, and that DA for the three units was rejected. We didn’t even get a chance to—they didn’t even tell us what grounds they were rejecting. They just rejected it and after they have rejected it they gave us a letter with why. We had met all the requirements of the DCP but there was a bit of a grey area with the way the interpretation of the requirements can be taken. So, because they rejected that, we couldn’t redesign or make changes to that current plan. We actually had to re-launch a new DA and after a lot of consulting and discussion with our clients and our team planning consultant we decided that we’re going with the dual occupancy—so two dwellings. So, a design with two larger dwellings rather than push the boundaries with the three-unit dwelling. 

All investments have an element of risk, and the best-laid plans can still fall through. Chivers says, to keep moving forward, you’ve got to learn from when things don’t go perfectly. 

[28:33] The long and the short of it was we still couldn't finish the project, it took a bit longer because it had to go back into council and redesign that back in. However, our clients ended up with two large dwellings instead of three smaller ones. The equity creation was less than what we had originally estimated because of that. However, you know it still works out in the end. I still ended up with a development that was complete and the eventual yield was good and equity creation was there as well.

[29:01] So, I guess that’s an example of when you’re developing properties, there are certain stages where you really don’t have control. Council is one of those stages where all you can do is to go and design something to meet their requirements, so when something like that happens—that was a very abnormal type situation to happen—we were really at their mercy, we didn’t have a say.

Property is all about timing: the buy, the sell, the hold. Chivers says if you invest long enough you eventually get it right.

[30:59] The other good moment is when you find a location that just sticks out. It’s amazing because when you look at numbers, you start off with an estimate and you do have to estimate of course what the future value may be when you finish that development. So, I’m always very conservative with that type of estimation, or you can even just go on into comparable sales in the market and then see what happens during that period that you are under development.  What I found in this area in Newcastle is that it just had fantastic growth during the time that we’re developing. So that’s the real sweet spot, if you can find a location where the capital growth is happening and starting and you’re developing at the same time. That’s when you have more equity because you’re getting the combination of creating equity through the development process, but also the market is moving in the right direction over that time.

[32:18] It will stop and I know it will stop. However, the good thing about property development is you are creating that buffer of equity. So, if the market just plateaued for a few years, we’re still creating a chunk of equity. Whereas, if you bought a property and you bought it just before the market stopped then you’ve got to wait in that next part of the cycle before the capital growth will come. So, in a way, you’re building a little bit of a safety net for yourself because the equity is created through the land subdivision. So, what you’re ending up with is creating two or three or four properties from the one piece of land. You’ll still create some equity no matter where the cycle is, but obviously when it’s timed right in getting that combination of capital growth at the same time then it’s great.

Another of Chivers development discernments, is the target market.

[33:23] The end market for what we’re doing is the downsizers. So, I know when I did my marketing course and looking at marketing in general, we all know that the baby boomers are a massive segment of the market. So, of course they’re all coming through right now and they’re retiring, getting to that retirement stage—they are downsizing. So, that is interesting just that the phenomenon is in the market taking place. So what I’m excited about is actually creating something for that market. So, we’re really thinking about, ok, “what can we put in there that’s going to appeal to this type of baby boomer and to the downsizers who are selling their big family home?” They’re wanting something low-maintenance but still want all of the facilities of this particular state - close to the shops, transport. They don’t want a big five-bedroom family home on a large block, where they’ve got to be mowing lawns every week. 

[34:26] So, we’re thinking about “what do they want to do? What does that market need?” So, it’s quite exciting when you know that is a target market that you can actually fill. I think that’s exciting at the moment, but also there’s some interesting other things coming to construction processes that are saving time and cost as well. 

 

Coming up after the break, we hear how Chivers battles with self-doubt…

 

[2:39] it really came down to believing in myself and having to back myself. I had all the research and the data that I’ve collected, so everything stacked up, but then really I started to take that step forward.

How to build a support network setup for success…

 

[7:05] put those people on your team that have the directive in what you’re doing. So, people who are investing in property…

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

 

It’s often easier to try something new when we understand how it works.

 [0:36] When I first looked into investing in property, I read the book, Rich Dad Poor Dad. The first thing he taught is to go out and become educated and also financially literate. So, I did a course, and took that very first step into buying my first investment property. At that time—this was 15 years ago—but I remember researching and part of my course was a case study on a suburb. I hoped to identify a suburb that was going to be like a slow suburb, so perhaps the suburbs around that had some capital growth and it was yet to hit that particular suburb. So, I found a suburb and I researched that and it was a local suburb to where I live. 

Chivers says there comes a point where trying eventually trumps training.

[1:21] It was interesting looking at that particular suburb and then I had to find development within that suburb that I could use as a case study. So, I found this small boutique block of four apartments that were being built in this suburb and typically, this suburb is quite sleepy—it was a beach suburb, but mostly contained really old 1950s- type old apartment blocks or just a little beach shacks. So, this lovely little development was being built right on the waterfront on the lake, there was a lake there and the beach portion as well. When I looked at the pricing of these apartments, it was really hard to get my head around. They’re going to cost—I think at that time it was something like 600,000, but at that time the median price was probably around 400,000. It was just hard to look into the future and say “OK now, is this really going to be worth 600,000 when the development finishes?” It was only going to be a 12-month project and it’s only a small block of four apartments that he was building.

[2:31] But, I could see all the other indicators as far as looking around with the other suburbs, that’s the flow-on effect. It really came down to believing in myself and having to back myself. I had all the research and the data that I’ve collected, so everything stacks up, but then really I started to take that step forward and I decided to purchase one of the apartments as a part of my very first portfolio of investment property. It was a real mindset as, “OK look, you’ve got to really trust yourself, you’ve done all the research.” It was just quite difficult to take that very first step, so I do understand why people get caught up in what some people refer to as analysis paralysis—they research and research, they do course after course but they don’t take that first step. It’s really important that you actually do move forward with the knowledge that you gained and the research that you put together, and if you think it is a good investment then take action. So, taking action is what I found of the time quite a hard step to take. 

She says that patient practice pays off… literally. 

[4:25] Well, I did end up selling that property on completion because I knew it was going to be quite negative. That was my very first investment property purchase and I made 200,000 even within the 12-month process. So, that was the big “oh my God! This property game is fantastic!” So again, it was the year 2000, the market was moving up, we were having that uprise in Sydney and these little suburbs were being developed. After that, I look at that suburb now and it is full of new development everywhere. So,I did my research, I did identify it as an emerging suburb and, and that was right in hindsight. I was lucky too because it was an off-the-plan purchase and the market was moving up. 

Even property veterans have someone to thank for their success. Chivers says she has more than one and you should too.

[5:53] Unfortunately, the course I did is not offered now, but during that course, it was fantastic. You’re taking all the information that they are telling you and you still need to go and do a little bit more of the research on your own as well. So, mentors as well, at that time I think Margaret Lomas—she had a lot of books she’d been writing and so I’ve read a few of her books. I think you pick and choose your mentors closely, you need to look for people or businesses that you know are going to push you into a particular area.

[6:31] So, it is really important to have a really good accountant on your side so you can look at numbers with someone in that area of expertise and also a really good lawyer as well. If you look at contracts or you can look at different agreements with a lawyer they can advise you there in that area. So, my mentors actually became my team as well— my accountant at that time and my lawyer at that time, I would really rely on what they thought of a particular deal that I was looking at because they had experience. Even more important is putting people on your team that have the directive in what you’re doing. So, people who are investing in property, such as an accountant that has property experience for instance himself or herself so that you can share the fact with them.

It’s not just other people you can learn from, Chivers says you have to be confident by yourself first.

[7:35] I think it’s educating yourself. Becoming educated in whatever you’re going to be investing in—I think that’s going to really support whatever you do moving forward in the sense that if you understand that process because you’ve been educated and you’re not just handing in money over to someone else to manage for you, then I think you’re going to do far better. I’m saying that there are some great operators out there who will invest and show money for you, but you really have the responsibility of understanding how they’re going to do that and understanding their process. So, becoming educated in property investment in general is very, very important.

In saying this, the development process can be complex. Chivers tries to streamline her tactics to control what she can. 

[9:04] Let’s look at a typical duplex style development first—the dual occupancy development where we’re building two attached dwellings. In this case we’ve been building a three bedroom, two bathroom, single garage attached dwelling and it’s referred to as a duplex. If you’re doing three dwellings and they were attached that would be referred to as a triplex. A lot of people get confused between a dual occupancy and a duplex. You can have a dual occupancy where the dwellings are freestanding for instance, so that is still a dual but they’re freestanding. 

So, typically, what we’ve been doing recently is a duplex development with a two lot Torrens Title subdivision. So, the process of identifying correct land—so site selection— is very, very important in property development. If you choose the wrong site from the beginning, then you’re not going to have a great development as it all expands out over the process. So site selection is very important. We need to understand what the council requirements in that location are.

[10:03] You need to know what size land you’re looking for, you need to make sure you’ve got the right frontage, you need to make sure that it has not too much so as to not fall into the river, make sure the drainage was even and the sewer is running along that. You need to even check the front, because if there’s anything that may hinder the drainage to the driveway for instance, it could be a drain gutter, that could be a sewer manhole, something like that you need to avoid. 

So, a site selection is really important and then it’s going into the analysis and understanding what the other costs are once you enter into that land purchase. From there you’ll have consultant fees and charges—you’ll need to have a control survey done by a surveyor and you may need to use an engineer. We’ll need to use a stormwater plan for instance that you’ll probably need to lodge with your DA. You’ll need to have  draftspeople or architects to work with and then the most important person is of course, the builder.

According to Chivers, a reliable builder is worth their weight in gold. Finding them requires some tricks of the trade. 

[11:09] Researching your builder can be quite difficult if you’re starting and you’ve never used a builder in that area. So, it’s a matter of having a really good chat with a lot of builders and going and having a look at what they’re doing. One little trick and secret that I use is to talk to the tradies on site who are working for that builder. Ask them, “do you like working for this builder? What are they like? Do they pay you on time?” It’s a really important question because if the tradie is being paid on time then they’re happy. If they are not being paid on time then they’ll probably tell you because they are being ripped off. So, that can be one way of researching a builder. It’s really hard to understand the builder’s financial situation but the worst thing that can happen will be going through liquidation when you’re halfway through construction. So, it’s important to find a good builder.

Chivers says that Property Bloom thrives in simplifying the many moving parts of the development process, which can seem intimidating.

[12:04] Once you’ve got that team of people together then the process should flow. You will need to understand as I mentioned about the council requirements that you need, you may need a team planning consultant as well if you’re not familiar with them and they can help guide you through the design and make sure you are meeting all of the requirements of council. So, the idea is to get your DA in the council as quickly as possible because time is money and holding costs—as soon as you settle on that land you start to pay holding costs on the land.

[12:36] We strive to have that DA lodged before settlement of the land, so we got a lot of work done upfront very, very quickly so that we’re ready to lodge with council as settlement takes place. We can actually lodge to council in the settlement period if the land is registered. You will just need a permission letter from the vendor who you’re buying the land of. In most cases, we’re buying land that’s unregistered so we can’t lodge a DA until the registration takes place. We have everything checked up and ready to go so it goes into council then it’s a matter trying to manage that as closely as possible. The plans—these will all work at their own pace. All you can do is stay in touch with the account plan allocated to the DA and see what they can offer you at each stage of that. On their website, you can add a DA tracker, so you can actually jump on the website and see where your DA is at. 

Amazingly, reaching the end of the council maze doesn’t mean the end of red tape. Chivers says the key is to be quick.

[13:40] So once it comes out of council there is still a lot of work to do before we can start construction. So, you need to get a construction certificate or a building certificate and after we switch over from council we use a private certifier for the work because it is a lot quicker. So, you need to have more construction certificate plans done up again, more engineering and design and then most construction certificate plans are lodged with the product certifier or council. Then you’re issued with a Construction Certificate, then that’s when you could start building. Then you’ll also need to have your construction finance in place. The banks will require all the DA approved and CC approved plans, as well as the builder’s contracts before they’ll release funds for you to start building. 

So, that finance process can take up to three months sometimes with some banks so it’s very frustrating. So, your idea is to get all the documentation together as quickly as you can into the bank, so that they could get that financed, the construction line in place and you could start building. Once you get under construction, then it’s really important that you manage that closely with your builder and that they are achieving the milestones that they should be each week with each building phase and stage. So, things in the beginning can get quite bogged down in the construction phase. We have a fantastic builder, we’ll complete our duplex within about four months. So, again, try to keep the builder on track—communication is key.

After construction comes the final phase of development.

[15:15] Once you’re coming out to the end of the construction, then that’s when—if you’re holding the properties—you would brief a property manager and let them start advertising them for lease, even just as you’re finishing construction so that hopefully you have tenants lined up at the end. 

[15:35] If you’re selling, you can do the same thing and get them listed on the market to sell. I usually wait for that lockup so people can see it actually coming out of the ground and being established, and it can hopefully have a sale ready to settle as you’re finishing construction as well. Time is money in development. It’s always important just to have everything moving as quickly and as smoothly as possible throughout the whole process. 

Chivers thinks all developers should ask themselves one question before any new project: How am I adding value? 

[18:39] I learned—my very first investments were just buying houses or they were off-the-plan, but I see with the off-the-plan process back then in the year 2000 when I started, it’s very different to now. The developer used to give a discount for people buying off-the-plan. That got me interested in the developing process because I could see if “Ok, if we’re making a little bit of a margin by getting in early, buying off-the-plan and maybe if you’re lucky some capital growth will come in so when you settle that property, it may be worth more than when you bought it.” That’s fantastic! “What sort of margins are the developers making?” So, that actually got me quite interested in the development process. 

[19:36] It’s the value add that you can do through another strategy—it doesn’t have to be new dwellings. It can be a house renovation where you add value and you add another room, for instance, another bedroom or you make a double garage or you’re putting up a granny flat on that project. It’s about adding value. So, rather than just buying a dwelling and holding it and waiting for capital growth, if you can be active and add value, then that’s going to create some equity through that process.

Chivers has also shared with us some of the personal habits that have contributed to her success. 

[20:33] Well, I stay fit, I think if you’re fit and healthy that’s so important and that’s great. A habit  to do with actually my strategy, I think it’s research. I'm always researching, I’m always looking for the next location. You can spend a lot of time doing that, so I think over the years, I’ve kind of got a little bit of a process or a system in place. I know that location, I do specialise in the Hunter Region, so it became familiar with the cities and towns that we’ve been working in. So, I can very quickly assess a property that’s coming on to the market or that is being advertised and see whether that’s going to stick out for development fast.

[21:24] So, I think it’s a matter of just fine-tuning your process for yourself and whatever strategy you're going to be using  so that when you do—when you do have to do research or whatever it is, that you’ve got a little process that you follow. You can get quite caught up with the internet and all of the sudden you’re looking at the property in that page and then here you are or a missed page because there’s been a link and you’re reading a blog about that. The internet is a fantastic research tool but it can be quite time consuming, wasting your time too. So, you really need to be focused on what you’re trying to achieve. 

Chivers research mainly extend to finding the perfect location.  

[22:22] Once we find a region, which is the Hunter Region, and we find a city which might be Newcastle, then we find the suburb that we’re going to work in and then just focus on that and become an expert on that one suburb. Again, there’s so many options out there that you could be just sidetracked in looking for another location. If you identify a suburb having some potential, then really become familiar and understand what’s going on in that suburb and then you’ll get to know the streets and you’ll get to know the lot sizes and you’ll get to know the local agents and you’ll become an expert in that particular area. Then it'll be very quick for you to see when an opportunity comes up in that suburb.

[23:06] So, I think a lot of people just go, “OK, where am I going to invest?” and then start a lucky dip—searching on websites—and there’s thousands, and thousands, and thousands of properties out there - It becomes overwhelming to find the right investments. 

You can hear more about Chivers' property journey in some of her own work.

[24:05]  I helped co-author that book quite a while ago, maybe 10 years ago. And I wrote the chapter on development in subdivision—you can buy that I believe through propertywomen.com.au. That was a group of ladies that I started to do some talks with and again a really good network of women in properties. So, Property is a Girl’s Best Friend is a great little book because it goes into a lot more detail of other people who have written other chapters and what their strategies are and how that can help you move forward.

[24:42] The other book I’ve co-authored is Property Millionaire. That’s a great book you can have a look at too because again, it showcases a group of different people—maybe 12 different people and what they have done in the property industry and their own personal investment journey. So, it’s always great to read books and be inspired. It’s great I think just learning about other people’s journey, so it’s really interesting. 

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