Property Investory
Henry Vila - Perfect Projects: Planning for Profits
November 11, 2018
On this episode of Property Investory we talk to professional developer and builder Henry Vila. After spending two decades in the corporate sector, Vila used property to regain his financial freedom and never looked back. With more than 25 years’ experience in the delivery of major projects across Australia working in roles in client services, planning, contracting, estimating, on-site supervision and finance Vila reveals the personal tools and tactics he uses to sell every project he’s ever undertaken. We hear the best ways to find prospective sites and why a developer’s best friend should be a local. Tune in to find out the difference between the Australian market and its global counterparts. Plus, where people want to live and why you should listen!
Timestamps:
1.10 | Love What You Do
3.34 | Not From Around Here
6.20 | It All Helps
7.19 | Falling For Development: Hook, Line and Sinker
14.58 | ‘Never Begin The Day Until It’s Finished on Paper’
23.55 | ‘I Could Never See The World The Same Way’
25.37 | Patience is a Virtue… I Don’t Have
28.50 | Our Advantage
 42.34 | The Investors Tool Kit
 46.30 | Good Things Ahead

Resources and Links:

Transcript:
Henry Vila 
[15:47] to build a new home, new house and your dwelling from effectively a patch of dirt…[15:55] I fell in love with the process. [16:09] So, then once I was hooked, there was no going back. 

**INTRO MUSIC**

Tyrone Shum

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

I’m Tyrone Shum and in this episode we’re speaking with Franco Buildings development lead, Henry Vila. Tune in to learn about the most overlooked key to a successful development and the reason why it causes so many to stumble. Also, learn about the 8-month development plan that ensures a successful and selling project every time. 

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

Love What You do

Tyrone Shum
Vila loves the world of property and he gets to experience it every day. While it’s said you shouldn’t mix business with pleasure, he says with a job that has so much variety and so many rewards, it’s almost impossible to not enjoy it.  The best part? He gets to help others fall in love with property too!

Henry Vila
[0:17] I am a property developer and a builder with Franco Buildings. So, a lot of my property journey has been focused on property development and construction, both for our own projects and for clients.

[0:39] A lot of what we do is residential development, particularly multi-unit seems to be the 80% or 90% of what we do. We do a few apartment buildings but they're probably not as big a part of what we do as some of the other projects, but definitely the residential area. 

[1:05] A lot of what we do is increase the density of existing property. So, if a property is a big block, say there's a single house in there. What we help our clients do is we knock down that house, and then build two, three, four, five townhouses or units—depending obviously on the land and where it is or what the market can sustain—with a view that they will then go on to sell that product and make a profit in the process.

Tyrone Shum 
Vila thinks building routines doesn’t have to be associated with the boredom. In his eyes, they are not a burden at all, actually quite the opposite. 

Henry Vila 
My day to day is actually fairly consistent and to be honest, a little bit boring. So, there's two things that I do every day. One of them has to do with building residential projects. So, the project management and administration of those projects, we tend to have anywhere between three and nine projects going at the same time. So, going to decide and listen with trades and suppliers and getting properties constructed. The other part of what we do, which is to be honest probably more important for us, has to do with providing advice to our clients on how to maximise their return on their existing properties or their return on their other development projects that they are already running. So, very often we have clients who are thinking about doing development or doing development already and they just don't know necessarily what product to build or how to build it, how to optimise the construction cost. So, that way obviously they maximise the return. We play a key pivotel role in providing them advice in those areas.

Not From Around Here

Tyrone Shum 
20 years ago, Vila’s world looked very different. In fact, property wasn’t even a part of it. 

Henry Vila 
[7:35] You can tell by my accent I wasn't born in this part of the world. So, I'm from a place called Venezuela on the edge of the Caribbean—much warmer than Melbourne these days—and I studied engineering over there. After doing that for a few years I moved to the United States on and off before finally moving to Australia nearly 15 years ago. And ever since I've been calling Australia home.

[10:22] I studied engineering and computer sciences. So, universities over there have a little bit of a structural difference to the way Australian universities work, in the sense that their degrees are much longer. So, I went to university for five years and there they are a lot more academic— that’s probably the way I will describe it. So, back then there weren't kind of degrees in business systems or anything like that. So, you had to study engineering first and then after that specialise yourself. In my case, specialising in computer sciences. So, that background in core engineering became really, really useful once I transitioned into property. 

[8:39] My career is a little bit interesting. So, I used to be a corporate IT guy a long time ago and from there, I evolved into consulting, project management and ultimately that kind of led me to do construction and engineering. Obviously, in Australia it's a big industry for us. So, once the opportunity presented itself to transition fully into property development and construction, I took it straightaway.


Tyrone Shum 
To turn his new passion into a career he’s taken every chance he could to gain industry experience. The rest as they say, is history. 

Henry Vila 
[9:21] I worked for a number of the corporations here and as I was training and understanding the market better, ultimately I met who is today my business partner, who has been running the building company for a little bit. He was in a growth path but like many builders, his biggest challenge was, ‘Who could he sit next to him that will understand the philosophies of the organisation and could drive growth in the same way that he as founder could drive growth?’ So, because we had a long-standing relationship we were a good fit for each other. I ended up at the organisation full-time and now we're well and truly on that path since our start in the last few years.

It All Helps

Tyrone Shum 
However, the skills Vila has built outside development haven’t been wasted. 

Henry Vila
[11:30] My parents are both accountants of different types. So, one is more of a practising accountant and the other one is more of a corporate accountant. So, from the very beginning, from a really, really early age they helped me understand business and finance really well. Even some of those really basic concepts serve as a very good base to understand how to build and grow a business across a number of different industries. So, really sort of general basic skills and knowledge that became really useful launch later on. I had a pile of early ventures back in the .com days and following that. That set a good base for when I decided to kind of go on my own and establish my own company.

Falling For Development: Hook, Line and Sinker

Tyrone Shum 
Working in property is one thing, starting a personal investment journey is another adventure entirely. 

Henry Vila 
[14:29] Definitely an interesting journey. A bit of an unexpected one, there's a little bit of luck involved being in the right place at the right time. So, as an investment tool my first property was a little two-bedroom unit in a place called Drouin up in the Gippsland in country Victoria. I bought it with the intention of living in it—didn't quite pan out the lifestyle. So, after a year I turned it into a stellar investment property. Great investment property by itself, kind of positive cash flow, positive gear, low maintenance. So, pretty good, but more in the traditional way of investing in property. And it was only much later when I started building my own house in Melbourne and got much closer to that particular project—I'd kind of follow it in on a day to day basis together with the person that today is my friend and my business partner in Franco buildings. 

[15:33] So, I got the opportunity to see both the similarities between managing a construction project and managing all the types of problems that are managing the place, but also how exciting it is to build a new home, new house and your dwelling from effectively a patch of dirt. So, I fell in love with the process and immediately I started looking for opportunities to get more involved in projects like that, to get more involved on a day to day basis, on the process and the running of projects. So, then once I was hooked, there was no going back.

Tyrone Shum 
Usually development is a tool many investors leave un-utilised, however Vila was interested almost straight away. He says working in a partnership boosted his confidence. 

Henry Vila 
[16:27] The first probably sort of end-to-end townhouse development my business partner had already started in Surry Hills. So, I came aboard sort of when they were through that process maybe a third through, but enough to see the end-to-end construction of the property and all the way to sell. So, obviously, lots of learnings through that process and a lot of preparation. So, that project we ran together and both my business partner and I were property managers in the deal. 

[17:07] So, it allowed me to learn from the experience he already had and the systems we already had. But at the same time look at the project with sort of new fresh eyes and have a look for opportunities to improve our processes, implement new tools. And I guess take a lot of the experience that I had managing other projects and how those learnings and those tools could be used in property to improve the outcome and shorten the duration of projects and get a better result.

Tyrone Shum 
Sure enough, Vila’s first dip into development was nothing like he’d done before, in the best way possible. 

Henry Vila 
[17:55] I did two townhouses in Surrey Hills—a fairly upmarket area here in Melbourne. So, these stone houses were almost identical copies of each other. They're four bedrooms, four and a half bathrooms, really high-end in terms of finishes and really high quality construction. It's a market where they expect that most rooms will have an ensuite in it, which is why you see so many bathrooms in that process and they also expect a certain level of quality, not only the construction, but also in the finishes.

[18:31] So, Tasmanian oak in the in the floorings, kind of throughout. High-end carpet in the bedrooms, German appliances,  top end architraves and kind of details, spas in almost every bathroom, frameless showers, floor to ceiling tiles, high ceilings and ultimately that kind of top finish. So, it was a really good experience for us to reinforce one of our core principles, which is the building of high quality properties, rather than just going the lower cost. It also ended up paying back to the developer who was kind of funding to this particular project because both units sold for about 10% above the expectation that the real estate agents had quoted. So, one of those sold at auction for nearly $1.8 million and the other one sold sort of privately shortly thereafter for a similar sum. So, ultimately a great result for a property like that.

Tyrone Shum 
Even through a single project, Vila says he was exposed to one of the key elements of building success: speed. 

Henry Vila 
[19:58] We built it in about seven months but it included a period of rain, which again, Melbourne is notorious for, so depending on what time of the yea construction starts there's about a month there that needs to be kind of taken off. So, the real kind of effective time of construction was probably six and a half months. 

[20:35] So, still the way we execute our project is high speed, we're probably faster than 90% of the builders in Victoria, because we not only plan them ahead, but we have a series of kind of tools and techniques that we deploy throughout the construction to ensure that there's effectively very little downtime. We don't sit around waiting, we make sure that the next step is ready to start. As soon as one trade comes out, the next one goes in and sometimes even in parallel if that's possible, because we know for most of our clients and for our own projects, a shorter project has an intrinsic value in terms of holding cost and speed to market. 

Tyrone Shum 
Prioritising quick turnarounds for clients has now allowed Vila and his team to undertake all kinds of challenging initiatives.  



Henry Vila
[21:57] If I talk about the last four or five years, we build about 40 units every year. Both a combination of our own projects, projects that we do for for clients and obviously a mix of sizes of actual projects. So, there's projects in there that are single custom houses, there might be five or six townhouses and we're building 14 apartment buildings at the moment, but in general our average is about 40 units every year.

‘Never Begin The Day Until It’s Finished on Paper’

Tyrone Shum 
Of course, sometimes even a great team can’t solve the biggest problem in any development project: poor planning. 

Henry Vila 
[23:02] I have plenty of disaster stories in my investment career, but luckily not in development. This one had to do with a project where the permits have been processed to get sort of expediency through council. And in the process of doing that, a few decisions have been made around the structure of the house, the location of the house, the size of the rooms and then the distribution of some of these properties to kind of make it easy to go through council. But the person going through that process did not necessarily think about the construction stage. I'm not exactly sure why but they might have thought, ‘That's the builders problem.’ Or, 'we'll figure that out when we get to the building stage.’ So, we obviously got involved in the building stage and the moment we had a look at the plans 

[24:09] We realised that a few of those decisions that had been made that were suboptimal, but the plans by then were already approved. So, the client had two options, option one: built it as it was designed on the plans and then probably spend between 150,000 and $200,000 more than they should have, with no expectation of getting that money back through the sale. Or, going back through the whole planning process again through council or get a new DA or a new planning permit and get that approved, which will effectively set back that project eight or nine months, so it was one of those lose-lose situations. The client decided to do what I consider to be probably the less painful option: go back to council and redo the process. All of that could have been saved by thinking about the project end-to-end from the very beginning, rather than thinking one step at a time without considering the consequences of some of those decisions.

Tyrone Shum 
A lack of preparation is something Vila sees far too often.

Henry Vila 
[3:21] Listen, by far the biggest issue we see in the development world is when people don't do their numbers right. So, it's very easy. If you're not involved in the industry, if you're not a builder, if you've never done property development before, it's very easy to underestimate the development cost of a project like this. Whether it’s leaving out big expenses during the construction project, or even during the design and permit process, or the DA process as it's called in other parts of the country. Or, whether it’s leaving out things like GST or council contributions and all of those things can be of themselves bigger than the potential profit of the project. 

[4:37] So, it has the ability to turn a perfectly positive project into a project that just doesn't provide the profit that they really expected. So, we see that happening a lot with new developers—what we call the ones and done developers—’developers who get emotional about the process and maybe pay too much for a site without necessarily building their numbers correctly and paying too much then or now.’ 

[3:42] They're at a point where they need to execute, even if they're not going to make any money during that process. They get burned out and never do it again, sort of retire from the industry. We also see a whole lot of builders, particularly lower-end builders who have been in financial struggles in the last few years and they've seen development as a way of generating pipeline for the construction companies. So, they're happy to not make a profit in the development side of the project, because they're making a profit on the building side of the project and that's a sound business decision. It basically leaves the builders hanging from a thread. So, if one thing were to go wrong, then the problem is sometimes even the builder ends up going on there. ‘So, definitely the biggest recommendation is do your numbers correctly, do your feasibility and make sure you include every element before making a decision. It's a lot easier to say no to a building site or to a development site before you buy it, than after you pay too much for it.‘

Tyrone Shum 
The fact that development can be such a difficult undertaking is actually one of the reasons Vila loves it so much. He knows he can help.

Henry Vila
[26:34] Fairly early in my development career, once I got involved in a couple of projects that I was able to see sort of end-to-end—it was in that same sort of Surrey Hill projects that I was talking about in a different part of the interview—when I realised that one of the great things about property development is that there are no losers in the process, there's no losers in the game. What I mean by that is in a well structured, well-executed development project everyone makes money and everyone gets something out of it. So, the owner of the site can maximise their sell value of the property, because often sites that get used for development carry a premium and they tend to be happy with that. The developer obviously makes money through the development process and the construction process, suppliers and trades can make a decent earning out of providing skills and work and materials for for the construction projects. 

[27:42] The ultimate buyer who buys the end product also ends up with an incredibly quality home that they can either live in or add to their investment portfolio as a rental. So, there's really no one in the cycle that ends up losing or that is worse off, provided a pretty good structure and property. That's one of the things that I love about development. That's one of the things when we made development a key tool in our arsenal and kind of our life calling is not—it's not about the money. It's not about the interesting projects that we execute or the intellectually challenging exercises that we do every day, all of those things are important. The one thing that really kind of drives us every day is the ability to create value for other people.


**ADVERTISEMENT**

Tyrone Shum
Coming up after the break, Vila shares with us the mindset he maintains when undertaking any challenge, even outside the property space. 

Henry Vila 
[3:02 PT2] I've developed a mindset where I am open to listen to anyone, you don't know where the next pearl of wisdom can come from…

Tyrone Shum 
Plus the most rewarding strategies for your money and your mind…

Henry Vila 
[6:31 PT2] I start with the end in mind, I don't look for a site straightaway, I don't necessarily look for an area straightaway, we analyse the market to see what end users are demanding…

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

‘I Could Never See The World The Same Way’ 

Tyrone Shum 
Vila has kindly agreed to share with us the mindset which has contributed to so much of his success. However, he think it’s important to mention that it hasn’t come naturally. 

Henry Vila
[1:23] A friend of mine, gave me a book from Robert Kiyosaki called Rich Dad Poor Dad, which you have mentioned in the podcast 1000 times with many of your interviewees. It was one of those times—I'm one of those who can read the book and suddenly it sparks enough curiosity to go and understand more, to want to talk to people, to go and see how this thing works. Luckily, my analytical mind was well-equipped to have a look at the evidence and realise that a lot of those concepts were valid. Like I said, once that clicked in my head, there was no going back. I could never see the world the same way.

[0:16] Now, this is something that I think holds a lot of people back. It did hold me back for many, many years. Luckily, I kind of began to run it myself with the right people to get around, but it was my perception of debt. So, one of the things that is very different in property than in other vehicles is the ability to carry debt. And when you have a perception of debt as something that is bad, like my parents did— my whole upbringing led me to where you try to pay off debt rather than carrying it—that can become a really limiting factor. So, there's good debt and bad debt and once you understand that, you can use that for your advantage and, to be honest, to achieve things that you could not achieve any other way.

Patience is a Virtue… I Don’t Have

Tyrone Shum 
Ironically, it’s probably Vila’s understanding of his own limitations that has helped him achieve so much. 

Henry Vila
[2:29] Listen, there's all sorts of things that I've done over over the years, everything from kind of specific sales training, to specific building training to specific material training, but I think the one that's made the most difference is the mindset. The work I’ve done on mindset and the people surrounded me with—I'm going to be a bit preachy—I mentioned a lot of the people that you will have heard of in other places, Robert Kiyosaki, T Harv Eker, Tony Robbins, all of those guys. Again, I've developed a mindset where I am open to listen to anyone, you don't know where the next pearl of wisdom can come from and sometimes it's out of these kind of big failures. Sometimes, it's what I call the little people, what I call a tradie, someone in the street. I think getting that mindset of openness and learning and being able to relate to the stories other people tell you to your own reality is probably what has made the most difference in my development career.

[3:50] Listen, the best advice I've ever received is to help enough other people get what they want, because that's what gonna make them help you get what you want. So, that mindset and culture of serving others, of creating value for others without necessarily thinking directly about what's in it for you, trusting that, if you do enough of that it will all come around, and you'll be in a great place.

Tyrone Shum 
Yet the only guarantee in development is that problems will come. Vila says that’s not necessarily a bad thing. 

Henry Vila 
[4:31] For me, it's all about the way you look at problems, the way we look at problems. People generally don't like problems. They think they are something bad, that they should be avoided and a that a life without problems will be great. I have a different view. So, my view is that problems are opportunities and that my daily job is really solving problems. So, the problems for us will be problems for others and if we focus on the next problem or the next step, then everything is going to be fine. 

[5:09] Many people kind of look at a big development project and they get overwhelmed by knowing that there'll be 20 or 100 problems that will arise over the duration of a project and they don't know how they're going to solve that last problem. So, they give up even before they start. For me in terms of habits, what I do every day, what I remind myself of doing every day, is look at problems as opportunities and also when problems arise, concentrate on that first step. Let's solve the first portion of it and then once you get there, you can concentrate on the next one, and keep plodding along until you achieve the results you want.

Our Advantage 

Tyrone Shum 
Vila’s unique mindset helps set him apart from others. So, what about his business? 

Henry Vila 
[6:26] The way my process runs on my Australian property development roles is I start with the end in mind— I don't look for a site straightaway, I don't necessarily look for an area straightaway, we analyse the market to see what end users are demanding. ‘Where people want to live, what kind of houses or what kind of properties they want to live in?  Where's demand increasing? Where's demand decreasing?’ We follow a little bit of a method where we—particularly in Melbourne, and in the southeast of Melbourne in particular, which is where we do a lot of our work, there's a little bit of a wave moving from the inner suburbs all the way out to the outer suburbs. So, we follow those trends and try to get a little bit ahead of them because development probably takes about 18 months. So, once we know what's being demanded, what people want, where people want to live and what kind of houses they want to live in, then we start having a look at where can we buy lots of land or sites to build that kind of property. That leads us to the right suburbs, the right parts of the suburbs, the right streets within those suburbs and then ultimately getting into kind of specific negotiations for specific sites and specific properties. 

[7:52] Once we have a property, then we will go through a process of designing what the end product will look like. Again, because we are builders ourselves, we manage the end-to-end process. So, in that early planning we take into account construction cost and the effect particular design decisions make on those construction costs. So, we optimise that process to make it both easy to go to council or at least as easy as it can be to go through council these days. Also, to ensure that the end product is as close to what the market wants as as possible. 

[8:34] Once we go through council and get a DA or a planning permit, depending on which state you are we go through the process of creating construction documentation, building permits, detailed drawings, structural engineering. And then we will process or we proceed to start the construction, which takes anywhere between seven and 12 months, depending on the project. Somewhere in that process, depending on the project and depending on where the project is, we tend to involve real estate agents— obviously tradies—but real estate agents in particular so we can understand if we're going to do sales off-the-plan or if we want to wait for the project to be fully built before we take it to the market. Again, with a view of optimising the results of each specific project and in cases where we work with clients to optimise the results for our specific clients. 

Tyrone Shum 
Vila says good strategies don’t have to be complex or even unique. 

Henry Vila 
[10:01] Our development projects are, to be honest, rather boring. Sometimes we tend to follow a bit of a bit of a recipe. So, there are two trends in Melbourne at the moment that we're trying to address, one is increasing density. So, gone are the days where the minimum requirement for a suburban house was 750 square metres of land or 1000 metres of land—a big house, four bedrooms, two bathrooms, double car garage. Those properties, they still exist in the outer rings, but in the in the inner and central rings they're just not not affordable anymore. So, there's a push to increase density in those areas and put two townhouses where there used to be one or sometimes three townhouses where they used to be one. So, we look at a lot of those projects. 

[11:01] The other big trend we're following, sometimes in parallel with this first one, is the ageing population. So, a lot of people will be living in these houses in some of those suburbs for 20, 30, 40 or 50 years. They're at a point where children have grown up and they’ve gone their own way and now they're stuck with a house that might be too big for what they want and hard to maintain. They don't want to mow the lawn, they don't want the maintenance that a traditional three bedroom house needs. At the same time, they don't want to move. 

[11:42] They're in a place where they're used to the locality, their friends live around them, they know where their shops are, they know where their entertainment areas are. So, what we tend to do is we tend to establish projects that will allow those downsizers to take the opportunity to continue living in their communities, they can live and take advantage of the lifestyle that the place offers them, while at the same time have a low maintenance, kind of new-feeling property that will take them for many years.

Tyrone Shum 
For a project to work, just like any building, it all starts with solid foundations.

Henry Vila

[12:56] We start— with any mindset— we start off, ‘How much will these units or townhouses sell for?’ That tends to set the frame for the entirety of the rest of the process, that's effectively the bucket of money that we have to spend on a project. Now, some of that will go to the land, and to be honest, the land is usually the last component. Some of that will go to the construction, the construction costs tend to be kind of demise a little bit, but tend to be largely fixed. So, what we tend to do is we tend to conduct a full feasibility study, where we take into account the end sales price of the property, minus the sales expenses. 

[13:40] So, commissions for the real estate agents, GST’s, taxes, that sort of thing. Then, of the of the remaining bucket, we subtract or take into account what we call the development cost that includes both the construction cost, but also the other costs that are related to obtaining planning permits or DA's, to getting design, engineering and working drawings out of that process. That tells us how much this property will cost to develop and the residual of that is how much money we can pay—the maximum we can pay—for a block of land but without any profit. 

[14:25] So, we tend to take that amount of money, substract out of that what we consider to be a fair profit for the project and then we go shopping with the rest of the money, because  we know how much money we can afford for to pay for a site. So, we go to the market directly looking for sites with the characteristics needed for that project, whether it's the meterage or the frontage or the right zoning, but also with a very, very clear budget of how much we can pay for a block of land. If it fits all that criteria, then we buy very, very quickly. We tend to take, two or three days to make an offer. If it doesn't fit that criteria, we immediately put it to one side and move on to the next.

Tyrone Shum 
Vila says life is much easier when plans are in place, giving everything else a clear timeframe and natural progression. 

Henry Vila 
[15:38] Once we find a site that we negotiated, we can immediately start deploying our development team into the property. So, there are a number of professionals that get involved very early in the process, everything from arborists to make sure that there are no trees in the property that will cause an issue or that we can maintain and what the design parameters have to protect those trees. Land surveyors to do a feature survey of the block of land and immediately we get involved our own architects and town planners to start thinking about the specific design and specific dimensions of the properties that we will build into the block. All of those documents and all of those activities with a view of very, very quickly putting a package together— an application package to go to council to obtain a planning permit or a DA planning permit in the case of Victoria. 

[16:49] Then once we have all of that we have what's in Victoria called a pre-submission meeting with the relevant Council, where we have a conversation with them about the project, what we're trying to build, how we think it's going to impact the community and make sure that we address all the council's requirements upfront. Once all of that has been done, then we submit to council and that's the way it starts. So, that process tends to take eight or nine months to get from that point to the point where we get a permit. 

[17:57] In a lot of cases, we try to negotiate long settlements where it's not uncommon for us to buy properties with settlements 10 or 12 months away. That gives us enough time for us to do all the process of obtaining permits, without effectively owning the land and without effectively having any holding costs for for the land beyond the deposit that we paid up front. So, sometimes that's not possible and when that's not possible, then the holding costs during that period get factored into the feasibility study that we run for the project. 

Tyrone Shum 
With good foundations, Vila’s development strategy is as close as you can get to a sure thing. His experiences prove that. 

Henry Vila 
[19:39] There’s two reasons why we don't end up abandoning the property. The first one is we make sure that all those conditions that will lead to us abandoning a project and not selling the property, we make sure that all of those things are avoided upfront when we buy the site. So, that's why we meet with council before we submit the application, that's why we really only buy sites where our chances of success in the development process are high, rather than when there's a surprise or something is unclear, or where there are kind of risks involved that are beyond what we're willing to accept. The other reason why we don't tend to abandon them is because being a builder, we already have all the team and the mechanisms for us to drive projects to completion. So, sometimes we bring joint venture partners along the process. If for whatever reason, we decided that it's important for us to share the risk, or if we have joint venture partners particularly interested in working with us in some of these projects. In general, we tend to finish every project we start, apart from ones that we haven't done that yet. 

Tyrone Shum 
If it works so well, why risk selling after completion?  

Henry Vila
[21:25] Most properties we run will have a certain amount of pre-sales while the construction is happening. It tends to be aligned with the location of the project. So, probably more affordable suburban areas are easier to sell off-the-plan. By selling off- -the-plan, we can allow people to get access to those properties at a lower cost because they're obviously reducing our risk by buying upfront.  Also, they don't get access to the property immediately, they need to wait three or four months or so while those properties are completed. However, there are projects where pre-sales are just not practical, particularly the high-end suburbs, around the bay in Melbourne is a good example. 

[22:16] People just don't tend to buy these properties on pre-sale off-the-plan, they tend to wait so they can see it and feel it, until they can actually confirm the level of finishes that have been put in there, whether they like the colours or not, whether they like the appliances that have been put in there or not. So, we tend to have that dual strategy in a lot of our projects, in other projects it’s just not practical to do pre-sale. So, those get planned to run all the way to completion, and then go to sale.

The Investors Tool Kit

Tyrone Shum 
Transforming a mindset into practical steps mirrors what Vila does everyday in his career, and that’s why he has numerous processes.  

Henry Vila
[25:32] There's a tool I personally use, which is to create a pre commitment, right? So, that pre commitment—as well as being impatient— I'm also fairly committed. So, once I commit to achieving something I relentlessly pursue it and we were talking about not giving up. Once I commit to achieving a particular property through a particular process, I tend to follow through very well. So, the way I've managed to control my impatience is by creating those commitments, even sometimes artificially, even sometimes when they're not needed. So, I will go and commit to pursue a project for 18 months and put it in writing, sometimes put it in a contract, even if I don't have to, just to ensure that once it's written down now I need to follow through. So, it's really, really hard for me to kind of get away from that kind of personal commitment to me or my business partner or my clients before that time. 

[26:44] The other thing that has helped me a lot is to have enough things going on at the same time. So, we don't have one project that runs for 18 months, because what tends to happen in most projects is really, really busy times, and there's really, really quiet times and in those quiet times is when my impatience kicks in the most. I can't sit still, I can't not be adding value by doing something. So, the way I manage that is to have enough projects. So, there's always something going on in my life and that actually forces me to slow down. I know it's a little bit counterintuitive, but because I have enough things going on at the same time, it's very easy for me to kind of look back and think, ‘Where have the last six, 12 or 18 months gone?’ Because I've been busy doing what I do best, doing what I love.


Tyrone Shum
While Vila has many tools at his disposal, one of his personal favourites is hindsight. 

Henry Vila 
[24:35] Probably the biggest thing I will say to my younger self was to be patient. That's really important in what I do today, but it took me 10 years to figure it out. To not jump from one thing to the next—to one strategy to the next, to one vehicle to the next. It has not worked in the six, 12, 18 months that I've tried it. Most things in life take time. Development in particular takes a lot of time and patience is incredibly important. So, I am naturally impatient, so, I've had to do a lot of work to develop the patience to drive these projects, from the very beginning to attend.

[23:38] The main reason why I'm still in property development is I still feel I'm really young at this game, I still feel have 30 or 40 years of doing this and enjoying it to be honest, more than I did the first day. It's a really, really fun process to have and it's a fun process to go through that has the very rare opportunity of creating a lot of value for others, but also obviously a lot of value for me personally, both as a personal growth instrument, but obviously financially. You're talking about my journey and I think my journey is just starting.

Good Things Ahead

Tyrone Shum 
So, what’s next for Henry Vila?

Henry Vila
[27:56] We're excited about a number of things. So, we're on a growth path as an organisation and personally as well. We're trying to double the size of our business in the next 12 to 18 months and we're tracking really, really well in that process. We're also excited to see some of the new trends and the new kind of properties that are starting to make appearances in a market like Victoria, where traditionally most properties have been of a particular type and a particular shape and a particular finish. It's almost like there's been this cookie cutter approach to houses for many decades. Finally, with people like us, migrants coming here and getting more exposure to the younger generation. A lot of those bar dives are falling down, so, I'm really excited to see the kind of properties we're going to be building five, 10 years from now.

**OUTRO**

Tyrone Shum
Thank you to Henry Vila, our guest on this episode of Property Investory.