In this episode, Verdouw extends a warm invitation to join him on an electrifying journey through the highs and lows of his enthralling venture in the world of property development. Prepare for a wild roller coaster ride, from the heart-pounding challenges of squeezing a mere $23,000 profit off of his property during the tumultuous days of COVID-19 to the triumphant moments of acquiring several properties valued at over $1 million. As Verdouw shares his remarkable journey, he generously imparts the priceless wisdom and knowledge he’s gleaned from influential mentors who have played pivotal roles in his path to success.

Timestamps:
01:22 | Craving Change and Making New Beginnings
06:31 | Returning to Corporate Life
08:27 | Navigating the property Development Mindset
12:34 | A Nerve-Racking Start
18:11 | The Million-Dollar Challenge
22:17 | The Journey of Six Profitable Projects
23:56 | The Inflation Rollercoaster
27:32 | Verdouw’s Aha Moment
28:34 | Applying Insights
29:42 | A message to His Past-self
30:33 | Building for the future
31:29 | A Perfect Blend
 
Resources and Links:

 
Transcript:
Phil Verdouw: 

[00:12:54] [There was] a tree stump halfway up, [and] if [I had] taken the tree stump out, it would have taken half [of] the neighbour’s backyard out as well. So, I had to cut it on the boundary line with a chainsaw. I was up there for three days cutting the tree stump with a chainsaw. Lucky Workplace Health and Safety wasn’t there because that wouldn’t have been a good sight.

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 back with Phil Verdouw, the director of PV Properties. From struggling beginnings and modest profits on impulsive property decisions, he’s now a triumphant developer with six completed projects with two profiting an astonishing $1 million each. Join us as we explore his incredible journey in property development. 

After a thrilling career in the corporate world, Verdouw started to lose the joy he once had for this career path, prompting him to embark on a quest for greater fulfilment. This journey led him into the exciting realm of property development. 

[00:00:15] For me, [when I] became the global manager, I just started losing the joy in the corporate world [and] I was losing the joy [from] the job. I was craving; I spent quite a long time looking for a business to buy; maybe an engineering company and then grow that further. I had a look at some [businesses] and went through the process of doing due diligence on them, only to not follow through; it just wasn’t really what I was looking for.

[00:00:52] [Then] I picked up on property development [as] I thought this is something that I really enjoy doing. I enjoy the building and construction side of things and I really wanted to stay there; it was something that I had always had an inkling to get into. 

[00:01:07] So in [the] early [to] mid-2000s’, I started studying and reading up [about property]. Then in 2010, I bought my first development site and I land banked that for four years. And then that was my first development in 2014 to 2015; I turned that [property] from a single house into three townhouses. 

Inspired by his carpentry background, Verdouw decided to delve into the realm of townhouse developments, marking the beginning of his property development journey. 

[00:01:45] Because I like [townhouses]. I’ve built townhouses before as a carpenter and joinery. So I knew the townhouses [and] the building side of things. That’s what led me down that path, to begin with. 

[00:02:01] I got involved with a guy called Michael Yardney; he does a lot of armchair development. So you can basically become an armchair developer, [but] I didn’t want to be an armchair developer, I wanted to be the developer. I spent time with Michael [Yardney] and I did his courses and followed him and had meetings with them. They helped me buy that first lot, and then I spent that four years while I was land banking, just working out how I was going to put townhouses on there. 

[00:02:36] At the time, it was 2012, Michael [Yardney] pulled out of [working in] Queensland because of the downturn. But I kept going, I want this to happen. So I kept pursuing it and then just slowly but surely pulled it all together. [I] found a town planner that was really helpful; he was incredibly good and a good architect for the product.

[00:03:07] [I] made lots of mistakes while I was doing it; lots and lots of mistakes. But [I] ended up pulling the project off and from that first one, we [now] own one of the townhouses almost outright.  

[00:03:21] Excellent. Where was this property [again]? 

[00:03:25] This was in Camp Hill. 

[00:03:27] Camp Hill. Oh, so it is in Brisbane. 

[00:03:25] In Brisbane, yeah. 

Verdouw discusses the DEA approval process he navigated for that project and highlights the crucial contributions of a skilful architect and town planner in facilitating the process. 

[00:03:42] That was 2013 to 2014 [when] we went through the DEA approval process. [I] got the architect involved, and the town planner. They were the two key people for me [during this process], they helped me through a lot of the process, and they were fantastic. I was winging it. Just because I don’t know it, doesn’t mean I don’t go ahead with it, I wing it and find the solutions [and] I find the answers that I need. 

[00:04:11] It’s just really interesting because, I was just thinking when you land bank [the property], even though it’s only for four years, which is still a relatively reasonable short time, but we kind of know as developers it’s still going to take between 12 to 18 months depending on which council [you go through] to just get approval. So there is a lot of time that you’re just going to have to wait, unfortunately. [There is] nothing more you can do until then. But I am assuming that the house still had rental income. 

[00:04:39] Yeah I did. I had rental income there for quite some time, well for most of the time. I ended up letting the tenants go a little bit too early in the end because it took that long to get the house, [and] get the DA through. I was expecting it a little bit too quickly. So I had about six months of the house being empty without that income coming in. It didn’t hurt me too much but it would have been nice to have had that income for that little bit longer.  

Following the successful sale of his first project, Verdouw briefly reentered the corporate realm, engaging in substantial road contract projects in Uganda. 

[00:05:17] But when I finished that [project], I went back into the corporate world, and just kept working. [I] spent some time in Uganda and went down there and lived there for two years while I was working on the Woolgoolga to Ballina upgrade and doing contract procurement there. 

[00:05:33] Oh, nice. 

[00:05:33] Yeah, doing some of the major contracts for road sealing and road paving. 

[00:05:38] What was the reason for jumping back into corporate at that point? 

[00:05:42] Look, it was probably more [about my] personal relationship with my wife. [She] was more comfortable for me [being] in a role earning an income like that than me [being] in [a] business where, in property development, cash flow is terrible. 

[00:06:00] Yes. 

[00:06:02] And you’re trying to bring cash to keep things going. It’s not an easy task. 

[00:06:07] No, it’s always big chunks. Sometimes it might come in, but more than likely, nine times out of 10, it’s always going to be delayed. 

[00:06:15] Absolutely, yeah. 

[00:06:17] So we kind of, as developers, expect that all of the time. 

[00:06:20] It’s a real juggling act in property development. She would have liked me to stay in that [corporate position], [but] in the end, I couldn’t do it anymore. 

[00:06:29] I came back from Yamba back to Brisbane, [and] spent nine months with Hastings Deering during procurement there with Hastings Deering and their Cat equipment. Great organisation to work for; beautiful people there, but my heart wasn’t in it anymore. I needed to get out and work for myself. 

[00:06:53] In the end, I just said look, I’ve got to do it. I was out of work for a bit because I was made redundant in between times, and trying to find work as a guy in his 50s wasn’t an easy task. It convinced me that I needed to go back and work for myself and make my own way in the world. 

Verdouw’s venture into property development took a significant turn when he became part of Rob Flux’s property developer network, ultimately guiding him from a scattered learning approach to a focused and successful strategy. 

[00:07:33] I joined Rob Flux’s property developer network. I did a few more before him; I did Mark Rolton’s Conclave [course]. I’ve done some study; I bought some manuals from other educators out there and just kept learning as much as I could about property development. 

[00:07:55] Yes. 

[00:07:55] In the end, I did Mark Rolten’s Conclave, got home that weekend, and thought it was a great course, but there was something missing out of it for me. I needed more, and I needed someone who could actually have my back as I [was] going through the process. 

[00:08:15] So, I joined Rob Flux’s group, and he got me really focused. I was a little bit too scattergun [in my] approach before Rob [Flux]. I was looking at subdivisions, I was looking at townhouse sites, and I wasn’t really settling down on anything. So I wasn’t achieving anything [and] I wasn’t winning any projects or securing any projects or sites, I should say. 

[00:08:45] Rob [Flux] got me focused; he narrowed me right down, and I focused on just one specific strategy—still on subdivisions, but just one in the twos, [or] one of the threes. That’s all I focused on. Then I picked up my first project, then my second, then my third, then my fourth and then my fifth, and it just kept on snowballing from there. 

[00:09:14] It’s amazing what focus does, isn’t it? 

[00:09:17] It was just [a matter of] getting my mind [right]. When you have a scattergun approach, it’s so hard to secure anything. 

[00:09:23] When you say scattergun, what do you mean? Were you applying for different types of deals all the time?

[00:09:29] Exactly, yeah. It was like a deal would come my way, and I’d be [thinking], oh, that looks interesting, I’ll try [to] do a feasibility on that. Then a deal on another style of development would come, or another strategy development and I would look at that [and] I would think I’ll try that and I’ll do a feasibility on that. 

[00:09:43] But I could never make any of them work; I could never find the right price to secure these projects. One of the things I’ve learned in this whole process is [that] you turn over so many sites before you find one that works. 

[00:09:58] Yeah, very true. 

[00:10:00] One that works for me won’t work for other developers, and one that works for other developers doesn’t work for me, and so on. Two developers will have two different mindsets and two different views and how to look at a site, and they’ll see it differently; I just turn them over quickly. It’s really important that you look at it and find reasons not to do it, and if you can’t find a reason not to do it, then you take it to the next level. 

[00:10:32] Yeah, that’s excellent. It’s like filtering. If you don’t filter anything, especially on the internet nowadays, if you don’t filter anything, you end up just being bombarded with all this information. You become overwhelmed, scattered and then you go, what am I doing? And then you just don’t do anything, then you procrastinate, and then you go, oh gosh, this is too hard, and then you throw it in.  

[00:10:55] The overwhelm creeps in and all this. So, getting that focus was so important and so beneficial for me. That really dragged me right back to something small, and now I can pick a site, look at pretty much any site, and be confident. If the numbers work, great, I’ll put the offer in; if it doesn’t work, the offer doesn’t go in. I don’t even put an offer in if I don’t think it’s going to work.  

After concluding his corporate career, Verdouw plunged himself back into the property realm, taking on a challenging Camp Hill subdivision project fraught with obstacles and hurdles. 

[00:11:38] That was nerve-racking when the settlers came back and said, “Yes, we accept your prices”. And I went, “Oh, shit, now what”. 

[00:11:52] It means it’s real now. 

[00:11:56] It was a splitter in Camp Hill, another Camp Hill project. 

[00:12:02] You must love that suburb. 

[00:12:05] It’s pretty good, it’s been good for me. And then, you know, I had to pull the house down and go through that whole process, and then [I sold] the land. Then, COVID hit, sales fell through. We ended up selling one of the lots at our [indiscernible] price, but the other one we sold for about $60,000 less. So that reduced our profitability so much. 

[00:12:34] Unfortunately, with the agreement with my joint venture partner, because of the agreement structure, I took the hit on that. So my income [from] that was really small; [I got] $23,000 [from] my first project, which hurt, but my second project made up for it. 

[00:12:52] Tell us about your second one. 

[00:12:54] The second one was in Bardon, where [it] was a very steep block of land. I had to put the stormwater in for the land up above. I had to dig that out by hand. [There was] a tree stump halfway up, [and] if [I had] taken the tree stump out, it would have taken half [of] the neighbour’s backyard out as well. 

[00:13:18] I had to cut it on the boundary line with a chainsaw. I was up there for three days cutting the tree stump with a chainsaw. Lucky Workplace Health and Safety wasn’t there because that wouldn’t have been a good sight. But I managed to do it. I finally got the tree stump out of the way, and then I dug the rest by hand.  

[00:13:42] Holy moly. How big was this tree stump? I am trying to understand three days of work. 

[00:13:47] It was probably 1200 millimetres high out of the ground, and then I had to get right down around it. But it was about 800 millimetres in diameter. 

[00:13:59] That’s huge. 

[00:13:59] It was a big tree. Most of it has been cut away by the arborist so I could put the drain [in] there. But I still had to get [the other] half of that stump out. I had to cut it along the boundary. I went through 12 chainsaw blades trying to get through it all. 

[00:14:20] I could imagine. You couldn’t get any machinery in there besides the chainsaw. 

[00:14:22] I could not. The biggest machine I could get in was an eight-tonner. The eight-tonner could only just touch the tree stump. So if it pulled it out, it would have pulled out the whole thing and half the neighbour’s backyard, which wouldn’t have been a good thing. 

[00:14:43] I am already just trying to picture what it looks like. 

[00:14:51] I had planks around it to stand on, but no handrails, no scaffold. It was like, get in, get it done and make it happen. 

Verdouw delves into the formidable challenges he encountered during his second project and the determination he summoned to overcome them. 

[00:15:13] We had some [challenging moments] in this one. I had already invested $40,000 of my own money in this one, and then only to be told that we went through Risksmart, and it got knocked back in Risksmart because there was water; there was [an] overland flow on the road. Then I found out that the overland flow was 800 millimetres deep, and I [thought], “Oh my god, how am I going to make this work?” I started having little heart attacks. 

[00:15:45] Heart palpitations.   

[00:15:47] I was like, “Oh this is going to end my marriage, I’m in trouble here.” 

[00:15:52] I went and had a chat [with] a couple of different town planners; we talked about it. We realised that it was code assessable, [so] we resubmitted [it] through the process, and within a month, it was passed, [and] the DA was approved. 

[00:16:11] That worked out well then. 

[00:16:12] Yeah, because there were already houses upstream from this—that was up the road—that [had] gone through the same [process], [and] they were all approved and so on. The block itself was dry; it was just the road that had the overland flow on it. 

After the break, we’ll delve further into Phil Verdouw’s thrilling property journey, exploring a unique agreement he forged to acquire a property … 

[00:17:05] When I met the owners, they wanted a million dollars for it; my budget was $900,000 to purchase, and they wanted a million. 

He unveils a startling incident when a builder attempted to charge him an exorbitant sum for a project … 

[00:26:09] He had [a] 30% markup because he didn’t know whether the prices would stay the same or not. And you know what, I don’t want to pay that 30%. That's just ridiculous. 

He imparts valuable insights he has learnt along his property journey … 

[00:27:22] Every hurdle that comes up there’s a solution to every problem that comes along.

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

Verdouw shares a memorable story of his pursuit of a property beyond his budget and the unconventional agreement he forged with the property owners to make the purchase. 

[00:16:53] There was an existing house there that I needed to renovate a little bit, paint it up, make it look tidy [and] really nice. But the deal was interesting. When I met the owners, they wanted a million dollars for it; my budget was $900,000 to purchase, and they wanted a million. 

[00:17:11] I said, “Look, I’ll go away, and I’ll come back and talk about it and I’ll see if I can come up with a strategy”. I came back and I said to them, “Look, I can get you [the] million dollars that you need to stay in the deal all the way till the very end when I sell the proprietress, and the sale process is where you’ll get your money”. We talked a bit about it, and for them, the important thing was the million-dollar mark. 

[00:17:41] They didn’t care how long [it took] then. 

[00:17:43] They didn’t care how long or what it was going to take, they just wanted the million dollars, that was their thing. So we agreed on that and they agreed and stayed in the deal. So I started putting some contracts together. We tried an [indiscernible] contract, that had special conditions, [but] that was too difficult [for them] to get their head around. So, my solicitor and myself, we put together an option agreement. 

[00:18:07] Ah, okay. 

[00:18:08] [Regarding] the option agreement, we talked a bit about how the land would sell and what the price points would be. Then they came back to me and said, “What if you get more than what you think they are worth? What if you sell [it] for more?” Well, I thought, here you go, now how am I going to deal with this? So I agreed [and] said, “Look, this is the price point that I think I can sell each property for. If I get more than that, we’ll split the extra 50-50”. 

[00:18:40] Okay, that’s fair. 

[00:18:42] Yeah, so we agreed to split the extra 50-50, and we did. I got a lot more; I got an extra $87,000 more than what I thought I would for the project. I was wrapped after all [the] cost I’d made because I paid for all the development costs; they didn’t pay for anything. I paid for all the DAs and I had to borrow money at 40% interest on that project. 

[00:19:08] You should’ve been talking to me; I would’ve gotten you much less than that. 

[00:19:13] One of the loans was 40%, [and] the other one was 20%; I liked the 20% one; that one was much better. 

[00:19:18] Yes, yes. 

[00:19:18] But it was unsecured funds. They were just on the strength of me delivering a project and making it work. So it was high-risk money, you know, that sort of thing. And it wasn’t a great deal; it was like $120,000 that I borrowed. I paid all that back with the interest, which was great. In the [grand] scheme of things, it wasn’t a lot because it was like $5,000 or $10,000 for one of them and then $15,000 for the other one. So it wasn’t big money. Then I sold it, [and] I made $220,000 profit out of it.  

[00:19:54] That’s fantastic. 

[00:19:55] Which was great. It was a great project and more than what I expected. I expected to make about $100,000 out of it, [so making] a lot more, I was pretty happy with that. 

[00:20:05] That’s great. How long was that project for? 

[00:20:07] It went [on] for about six months. 

[00:20:09] That’s pretty fast 

[00:20:10] Yeah, yeah. The one thing that really hit me in the end or got me on the end was the plan ceiling. That took a lot longer than I expected. [It] took eight weeks, and the sellers were really stressed out about it; I was stressed out about it. I couldn’t hurry the council along. I tried to; I got my solicitor to write to them and see if we could help them make things quicker. Big mistake on my part; [I’m] never doing that again. 

[00:20:41] Yeah, they end up ignoring it and making things longer. 

[00:20:45] So, I just pulled my head in and let the process take its course. 

Verdouw proudly reflects on his remarkable track record at PV Properties, recounting the six profitable projects he has successfully completed, including million-dollar triumphs and strategic makeovers. 

[00:21:21] [We] have successfully completed six projects—two in Bardon, two in Camp Hill, one in Cannon Hill and one in [indiscernible] down south. [The] profitability on one of the Barton was over a million dollars, the one in Roach down south was over a million [dollars and] the one in Cannon Hill was $300,000. They were really profitable projects [sold] at the right time in the market. Now we’ve got the splitter in Brighton on Flinders Parade on the water, one in Coorparoo, which is a subdivision in the high-end home and renovation of the existing home. We’ve got a subdivision in Waterford West [with] 17 lots, which is in for DA at the moment. 

[00:22:21] Wow, that’s big. 

[00:22:22] I have six lots in Cornubia that I am holding at the moment. I’m turning that one into a childcare centre, so that is a really good one. Then another project we are doing due diligence on at the moment, which is up in Kenmore Hills for the 16 lots; we are looking at that one to turn that one into townhouses instead, so I think that will be more favourable with the council. 

Despite the challenges Verdouw has already shared, he emphasises that the most challenging moment he encountered in his property development journey was one that occurred in the past year. 

[00:23:10] I think the hardest or the most challenging one has been the 12 months with the high inflation and construction costs.

[00:23:18] Oh okay. Tell me about that. 

[00:23:20] I knew there were construction cost rises coming, and I was monitoring all of that. But the bill prices that were coming back were just astronomical for what we were looking at. They were almost double what I previously built for the same sort of product, and they were coming in incredibly high. 

[00:23:42] So we’ve had to do a lot of work and delay the projects, so delaying the projects has cost us money in interest and holding costs. So that’s been expensive, and we’ve had to write refinances; the main lender, the senior debt, they decided that after 12 months they wanted out, [which was] fair enough, so I had to refinance those as well, so that’s costly. 

[00:24:08] Those sorts of things have [made it] the toughest year because of high inflation, the market turning and making sure that the projects stay profitable. That’s the key; that you keep working them until such time as you bring them back on track and they remain profitable. 

Verdouw shed light on a valuable lesson he learned from this challenge, underscoring the significance of selecting the right builder to collaborate with. 

[00:24:55] You know, the interesting thing I’ve found is that builders are so unsophisticated here in Brisbane, in the main [area]. There are a couple we’ve found that are really good, but they don’t have a handle on their pricing; they just get a price from a supplier and pass it on. They don’t check it, they don’t assess it for a sensibility or not but they just pass it on and then the prices just go through the roof basically. 

[00:25:28] So, we’ve been lucky [to find] a builder for our Brighton property [who] has a real good grasp of his suppliers and [has a] great relationship with them. He knows how to get the right price out of them. That’s brought the prices for the build right back to where we need it to still make the project profitable. 

[00:25:50] That’s what you need. You have to work with someone who has the experience, has the knowledge and is willing to do it. Otherwise, you’d lose business; the builders probably don’t care because there are other people who need to get things done. 

[00:26:03] Yeah. One builder we had had [a] 30% markup.  

[00:26:08] Wow. 

[00:26:09] We found that out by interrogating him. He had [a] 30% markup because he didn’t know whether the prices would stay the same or not. And you know what, I don’t want to pay that 30%. That's just ridiculous. That’s my risk, not his. 

[00:26:27] Exactly. And you don’t know until you sell the [property you don’t know] if you are going to get that margin. So you are taking a lot of risks too. 

[00:26:34] Yeah, exactly. So it’s my income at risk, I mean, this is my business. I need to make sure [and] I need to manage all my lenders [and] my JV partners; I need to manage their risk and manage my risk because they all get paid first, I am the last one that gets paid so I want to make sure that there’s something left for me too. 

Verdouw uncovers his most profound ‘aha moment’ from his property journey, a revelation that has transformed his perspective and fielded his determination to achieve even greater success. 

[00:27:06] It’s just how much you can actually achieve when you don’t believe you can. [When] everything is stacked up against you but you just keep going and it's that ‘aha’ just don’t stop, never stop. Every hurdle that comes up there’s a solution to every problem that comes along. It may not sound like an ‘aha moment’, but it’s probably the biggest thing that I’ve come through in my whole life. You just keep going. 

[00:27:50] Even with the biggest challenges. Yeah, I totally agree with you; that’s so important because sometimes if you just give up, that really does mean that you give up. If you keep going you’ll find a way. 

[00:28:01] Yeah, find a way; there is a solution to every single problem out there.  

Verdouw reflects on the impact of meticulously studying property development manuals and integrating valuable lessons from his experience working in larger engineering companies on his property journey. 

[00:28:23] I met Jones and bought his property development manuals; back in 2017, I bought his manuals. I’ve reviewed a lot, I’ve just researched a lot over the years and just read everything that I could about property development to learn as much as I can about it. 

[00:28:46] And then from there you have taken a lot of them whole didn’t you, and just applied them. 

[00:28:49] When I worked in these big engineering global companies, a lot of the learnings [I had] from those organisations too. One of the great mantras I found [and] I felt was a good mantra Sinclair Knight Merz was slow and steady wealth creation. Don’t rush it; just make sure you do what you can manage. You only do what you can manage. Your slow and steady wealth creation is sustainable, [which] means that you can build wealth and create a solid foundation going forward. 

Verdouw shares the advice he believes would have been most beneficial for his younger self a decade ago, emphasising the importance of perseverance and belief in one’s ability to achieve success. 

[00:29:35] Just keep going with your plan because you’ll get there. Just because I’ve always been, you know, when I achieved something, I know 10 years ago, once I got a new role, I thought, “What’s my next journey?” I didn’t just sit there and sit in that new role or that new job and enjoy it. I thought, right well, what’s my next one that I can achieve. But back then, I probably worried a bit [about] whether I would achieve a lot of the things that I ended up achieving. So I’d say to myself, just keep going; you will do it; you will get there. 

Verdouw shares his enthusiasm for the upcoming milestones in his property development journey and the ambitious goals he aims to accomplish. 

[00:30:35] You know, my son’s in the business, [and] I want the business to grow further. I’m looking for a partner to come into the business to help with [it’s] growth because we are primed for more growth. 

[00:30:49] I can see big things for us, and eventually, our target is to grow the business to $200 million in GRV; that’s primarily so that I can pull back and semi-retire. I don’t think I’ll ever fully retire; I’ll be around to annoy my son for a long time. I just want to have a business that’s sustainable and for the long term, something that my son can carry on, and to leave a legacy for him and for my family. 

[00:31:24] How much of your success do you think has been because of the skill, hard work [and] intelligence? How much do you think you would have been because of luck?

[00:31:43] I think there’s a mixture of everything in it. I think you put yourself out there, luck comes your way. If you work hard and you just keep going, you do make your own luck. 

[00:31:59] Yeah. 

[00:32:00] You really do make it yourself by putting yourself [out there] and just going for it and not stopping. And I think a lot of determination, just sheer determination to keep going in the face of people, events, or circumstances. Putting walls up all the time, and just going around that wall or over it or under it all, whatever needs to be. 

Thank you to Phil Verdouw, our guest on this episode of Property Investory.