Timestamps:
01:20 | Funding
04:06 | Community and Contacts
07:19 | A Site in His Sights
12:19 | Clarity
16:10 | Strategising
21:18 | Not Positive About Cash Flow Positive
26:52 | Looking Back
31:36 | Looking Forward

Resources and Links:

[00:16:39] Developing a big house where a lot of people will get educated or a lot of families, perhaps if they have a kid in this childcare, they will be able to have a second kid because they can get a little bit of help with the childcare. [It] will be extremely, extremely valuable. So I feel like in a way we always look at: What is the impact that I'm generating besides the money?

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 Dan Lazar, co-founder and CEO of HeroX. With a vision to make life easier and more sustainable for families in Australia, Africa, and all that’s in between, he’s been serving heroism since Shark Tank. Thanks to his strategic approach and open communication, he’s well on his way towards achieving his ultimate goals.

Tyrone Shum:   

Lazar found himself a brand-new transplant to Australia just before COVID-19 reared its ugly head. Despite this, he found his first development site and got stuck in. After six or seven months, they ended up settling and went straight into construction with their shovels in hand.

Dan Lazar:   

[00:01:20] I funded all of the costs to become shovel ready and the deposit. So when the investor came in, the deal was shovel ready. We had a quantity surveyor’s report, we had a valuation. So the biggest two variables— the sales and the cost to build it— were already confirmed by third parties. 

  

[00:01:41] And not only that they invested in something that was approved, but it was approved. And also the two biggest variables were confirmed by third parties.

Tyrone Shum:   

He also had to get investors, as that made for less speculation.

Dan Lazar:   

[00:01:57] They're not investing in a deal that Dan is saying that he's making money or that you buy it thinking that you will get approval for three townhouses and you get approval for two townhouses and we no longer accept it was something that was... its risk profile decreased a lot.

Tyrone Shum:   

The investors had confidence that the townhouses were going to go ahead, while Lazar had his own method to feel confident starting all over again on the other side of the world.

Dan Lazar:   

[00:02:51] I had a small chunk of money that enabled me to sustain myself for a year and also cover the deposit and all of the expenses that we needed to make in order to get shovel ready. 

  

[00:03:04] However, the second business that I mentioned with the air domes, that kept working. So [unintelligible] doing anything in Romania, because I sold the business in Romania, we still promote this product outside of Romania.

Tyrone Shum:   

[00:03:24] Oh, so you still have some cash flow coming in from the business?

Dan Lazar:   

[00:03:28] Fundamentally, that's how I put food on the table for my family, basically.

Tyrone Shum:   

Always equipped with an answer to every problem, he’d also figured out how to find investors for his project.

Dan Lazar:   

[00:04:06] Most investors were either personal contacts of mine or part of Rob's community. By being part of the community, that's how I found, I'd say 75% of the capital and 25% were just personal contact of mine, maybe relatives of mine that pitched in, in exchange for [a] fixed return per annum.

Tyrone Shum:   

Between his creativity and his connections, he has a plan for every scenario.

Dan Lazar:   

[00:04:45] We sold all of the townhouses. All of them besides one that failed to finance and that one is going to auction [on the] 15th of April. So hopefully by [the] end of April, we should be 100% done with everything by the construction has finalised anyhow. One of the townhouses, it was acquired, but subject to finance. Now in to do this auction, and hopefully we will get it done with by the end of April.

 

[00:05:35] The last one would get my funds out and remaining investor funds as well.

Tyrone Shum:   

[00:05:42] How profitable has this development site gone for you?

Dan Lazar:   

[00:05:47] Even though initially, we were expecting somewhere in the range of 15% profit, I would say, obviously, because we were still dependent a little bit on how this last settled will go through, it's probably around 5% to 7% profit.

  

[00:06:13] I may be subjective, but I think this may have been one of the worst times for the construction industry, we've seen the bailout that was required to help medical survive. 

  

[00:06:25] So construction costs went through the roof, even though we bought the site were probably 10% on the market, even though we sold well, a little bit better than the valuation. So it's clear that we had the right products, the right setup, the right location, because construction costs just blew out of proportion. 

  

[00:06:47] To a certain degree, there were shortages of people, shortages of materials, inflation for the cost of construction. It has been a struggle for a lot of people.

Tyrone Shum:   

There’s no rest in store for Lazar, as he already has his sights set on a new site.

Dan Lazar:   

[00:07:19] We already secured the second one, and we are shovel ready, basically, we start with demolish[ing] next week. [It's] a development for five townhouses next to a park. So that will be going into construction next month, and hopefully that will be a 12 month term.

 

[00:27:38] And with that being said, my next one will be a childcare [centre]. So I'm making a lot of offers on a lot of childcare approved sites, and hopefully we'll be securing some in the next three months to be able to start developing them. And hopefully, depending on the setup that we'll have, when investors, I'm exploring how we may be able to keep it long term [and] not have to sell it at the end.

Tyrone Shum:   

With the delays and worldwide challenges over the past several years, he’s ultimately achieved everything in just over a year. In that time, he’s also learnt some things about himself.

Dan Lazar:   

[00:08:39] Probably one of the most important ingredients which is both a good and a bad thing, I'll say was the... I feel like I'm a little bit— or a lot— disrespectful to myself in terms of how much I work, how much I get to sleep [and so on]. 

 

[00:08:54] So I guess when you put so much more hours in than what everybody does, in a way the good part is that you may achieve things a bit faster. In the other way that maybe other things won't work as much in your life, maybe we'll get health issues or whatever it is. Nothing in that direction in my case, but I'm still young, so I don't think I... it's healthy to push as hard as I pushed going forward. It's okay to push like this for periods of time, but [it] is unfeasible and unrealistic to continue pushing like this. So that's a very important aspect which is both something that I did well and bad at the same time. 

  

[00:09:40] Now regarding the biggest challenges, I will say that due to our lack of experience, everything was a challenge in a way. Two weeks prior to settlement, we had two lenders lined up. Both of them gave up on us two weeks prior to settlement. 

  

[00:09:59] Then we were lucky we found a priority lender, a private lender that agreed to fund us. 

  

[00:10:05] Then at around the frame stage, two weeks prior to the delivery of the frame, the frame company comes and says, 'Oh, we're going to be three months late'. And even though the builder was a little bit tolerating the situation, because that was his go-to frame supplier, we had to push and find a different solution. It was unacceptable to be delayed for four months just for the frame. 

  

[00:10:30] So we ended up finding a steel supplier that could do it in time. And we proposed that to the builder and the builder agreed to change from timber to steel frame. So that's another big thing. 

  

[00:10:41] And probably all in all, probably the biggest learning is to start from trust level zero with everybody that you're dealing with. Not that everybody is worthy only of level zero. But in this way, you avoid a lot of drama, and you being disappointed just because maybe you give somebody trust level seven, and they act like trust level four. 

  

[00:11:11] So if you give everybody the trust level zero from the get go, that gives you the awareness to position yourself in a way that bad things can't happen to you. The builder can't pass variations on to you without being reasonable. It just makes you more aware of the things that can go wrong and can be a bit proactive about it. I feel like I was a bit naive in a few of the agreements that we had, and that ended up being quite costly.

Tyrone Shum:   

When it comes to awareness, he’s found a way to tap into that a little bit deeper as well.

Dan Lazar:   

[00:12:19] I try to meditate daily. In a recent meditation, I was really analysing where we could have improved [and] what we could have done differently. And probably the number one thing is the clarity of our agreements that we had with all of the people that we encountered.

 

[00:12:35] So not having any verbal agreements, everything has to be written and whatever is written is to be extremely clear. [It's] better [to] spend a few hour[s], I don't know, one hour extra per agreement to just clarify to the maximum of your ability, because otherwise, you'll pay a price in this lack of clarity in time in some shape or form. 

  

[00:12:58] And I guess the insight that I got from this meditation I was just thinking about [was] even though this was a costly lesson to learn, as long as I leverage it, and don't repeat the same mistake in the future, I probably got 10 times more in value than what it costs me to learn this lesson. 

  

[00:13:22] So if the people listening can just add somewhere in their calendar or as a habit, to always have all agreements in writing and to have 110% clarity, this will enable them to save hundreds of thousands of dollars in whatever they do, property wise or not.

Tyrone Shum:   

On the flip side to the challenges he’s faced, he’s also had many positive moments along the way.

Dan Lazar:   

[00:14:05] I would say the biggest aha moment is how I'm improving from a strategy point of view or what I will be doing in the future in a little bit this change to childcare. 

  

[00:14:19] I think if you split everything in a number of variables: What is your strategy? What is your capital stack? What is your exit strategy? If you really narrow down on development, all of these variables and fine tune everything, then I think there is a lot of ways to improve it to be more aligned with your experience or your value. 

  

[00:14:39] So as an idea, as an example, moving from residential to childcare, then it opens us up to having the ability at the end to keep the childcare. So if you're in a market that is not very friendly, you can just keep your tenant in render for a year and sell the asset a year from now on, which is something that you can't do in the residential space. 

  

[00:15:00] And when you're at peak depth and you have investor funds that invested with you, you really have to sell at almost all costs in a way. So that's one of the many things that we plan on changing. Even from the way we collaborate with the investors, we plan to work more in a joint venture setup than a fixed return. Because then if the result is great, then everybody's making more money. If the result is not as nice as expected, there is not as much pressure on you, as a developer. You don't have as many sleepless nights as I think I did in this first project.

Coming up after the break, he explains how his childcare centre idea came about…

Dan Lazar:   

[00:16:10] I spoke to a lot of other developers doing other things. I spoke to people doing apartments, I spoke to people doing industrial development, I spoke to people doing flips, I spoke to a number of people.

Why being cash flow positive can be incredibly difficult…

Dan Lazar:   

[00:21:35] And I think that eventual[ly, it's] is not really cash flow positive.

He details the many ways he keeps his head screwed on straight.

Dan Lazar:   

[00:23:00] Two things that I think enabled me to just improve my focus lately, were one, the fact that I deleted all social media apps from my phone.

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

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Tyrone Shum:   

Jumping from a four and five pack to childcare centres may look like a bit of a leap, but the pivot isn’t as out of the blue as it may seem.

Dan Lazar:   

[00:16:10] I spoke to a lot of other developers doing other things. I spoke to people doing apartments, I spoke to people doing industrial development, I spoke to people doing flips, I spoke to a number of people. 

  

[00:16:21] And in a way, childcare seems more profitable than all of the other strategies. [It] seems a little bit like one of the best strategies that you can apply. 

  

[00:16:32] And secondly, I think it's more aligned with my values as well. I feel like developing a big house where a lot of people will get educated or a lot of families, perhaps if they have a kid in this childcare, they will be able to have a second kid because they can get a little bit of help with the childcare. [It] will be extremely, extremely valuable. 

  

[00:16:55] So I feel like in a way we always look at: What is the impact that I'm generating besides the money? So I always act as aligned as I can with my values.

Tyrone Shum:   

Aligning his values with his ambitions is a great start. From there, he made an offer on every approved childcare centre he could find listed online.

Dan Lazar:   

[00:17:59] And probably everybody that has a childcare that is approved, even though it's not listed— it may be off the market— received some sort of communication from me, which might have been in the shape of a letter, of an agent knocking on their door, or me knocking on their door. So I have a big pipeline. 

  

[00:18:19] However, I'm very strategic in my approach. With my first one, I just want to make sure that I achieve the best outcome possible with the first one, because then scaling will be a lot easier. 

  

[00:18:32] If I am able to nail it and make 25% profit on the first one, then investors will stay a little bit in line to be able to gain access to such opportunities.

  

[00:18:47] I have a very weird strategy. Not only I'm looking to secure something that is approved on a small deposit with the delayed settlement, but also want to have a period of ideally one to two months of due diligence when I will be aiming to secure a tenant. 

  

[00:19:06] In this two months, if I manage to secure a tenant, then that enables me to be very clear about the numbers and not speculate for one second, basically, because we know what the tenant will be paying. We know roughly 5.5% or 6% calculate what the value of the asset will be at the end. So the numbers are very clear. 

  

[00:19:35] And again, you have an extra option at the end where you can sell it or actually keep it because it's cashflow positive. And I think in a way, one of the best things about property is how it appreciates in time. So unless you also retain property, you're always working for money. Money's not really working for you as a developer unless you retain stock.

  

[00:20:22] I know a lot of people say sell everything, keep one, or keep all. When I look at the people that are giving this advice out and look at the quality of their life, of how many holidays they do, the people that hold most or more than usual are the ones that have a better lifestyle in time. Because there's just more property that grows in value and grows their equity or equity component.

Tyrone Shum:   

For the moment, his plan is to switch completely from townhouse development to childcare development as cash flow producing assets.

Dan Lazar:   

[00:21:18] So we'll either do one childcare, and then we'll do another one, or we'll do a childcare and then I decide I want to try to do a rooming house, but I'm sort of switching to cash flow producing assets.

 

[00:21:35] And I think that eventual[ly, it's] not really cash flow positive. It's very hard to be cash flow positive, even if you do apartments. Then, yes, maybe they might be cash flow positive, but then you don't get as much appreciation. So then, in the end, you're far better to do something in the commercial space.

Tyrone Shum:   

As for mindset, he takes a technology-focused approach to a traditional medium for daily morsels of bite-sized knowledge.

Dan Lazar:   

[00:22:36] I use an app called Headway. And in this app, they basically give you a 15 to 20 minute summary of a book and I basically listen to a book per day, and then I strive at least one action from there to implement that day. So I guess that's a very, very good resource. 

  

[00:23:00] Two things that I think enabled me to just improve my focus lately, were one, the fact that I deleted all social media apps from my phone. So there is nothing, no negative distractions that are either in my phone weaponising my focus against me— that's something very, very important. 

  

[00:23:21] And probably secondly, the fact that I am fasting and I eat probably 90% of the days one meal per day, I think it just improved my productivity and my mental energy by 10% to 20% probably.

  

[00:23:47] Quantity wise, I'm not eating less, I'm basically eating two meals per day, but inside of one or two hours per day.

  

[00:23:58] There's a lot of value from a health point of view, I can go into about that one as well. But also you just have more blood in your head the whole day, or more energy in your head to focus on what the task at hand. Then you just decrease, probably the level of focus that you have when you're eating for one to two hours per day.

  

[00:24:23] When you're eating, by the way, blood is moving from your head to your tummy. So I just leave my blood in my head to give me maximum focus.

  

[00:25:05] I've done a test recently. I'm not advertising this in any way. It's called Viome. Basically give them three samples of [unintelligible], different other things. And then they look at you from a DNA point of view and see which foods are more efficient for you. So they give you a huge list of foods that are super foods, okay foods, foods that are not really okay, and foods that you need to avoid. And again, aligning my eating habits to this new insights. Again, I think it really, again, just improved my efficiency a lot lately.

Tyrone Shum:   

[00:26:52] If you went back in time and you met yourself 10 years ago, what do you think you would have said to him?

Dan Lazar:   

[00:27:00] Very good question. I would probably say a two part message. 

 

[00:27:07] Part number one is be more brave and trust in your abilities. I think for me, it took a little bit of time to just break the glass ceilings above my head of 'Am I good enough to do business that goes international? Am I good enough to do property development? Am I good enough to do proper development in Australia?' 

  

[00:27:27] So I think I had a number of limiting beliefs in a way. That may be part number one, so just be a bit more brave and ambitious and trustworthy in your own abilities. 

  

[00:27:42] And second step, just start property earlier. I feel like in a way, even though it's a good thing that I hadn't any Sagarin which was a small business and then I had [the] air domes, even though I feel like... if we're talking about money making, I wasted a little bit my time, I could have done a small project that would have made the same amount of money. 

  

[00:28:09] The good part is that now I have a little bit of cash flow to do that business. But I think going into property earlier just gives you more time to learn, make mistakes, [and] connect with people in property. A very safe bet in a way, obviously, depending on how you do it and how much leverage and how risky is your game plan. But there's not a lot of things that have a better risk reward ratio than property in my opinion.

Tyrone Shum:   

He shares some tips on how he overcame his limiting beliefs along his journey.

Dan Lazar:   

[00:29:08] I think one part is surrounding yourself with people that made it. I feel like myself surrounding with or having the chance to be around the biggest property developer in Romania, in a way you realise how smart they are. But you also realize that they're human. They're also human, and by consequence, if you do all of the right actions in your discipline, and you take as much level of action as they do, it's likely that you might achieve similar results. 

  

[00:29:43] Obviously, maybe they got lucky at some point or another. But I think seeing that somebody else did it can also break the glass ceiling that I think we all have in a way above our head.

  

[00:30:10] If you watch Married at First Sight or just wasteful shows like this, I don't think there is a lot that you can learn. But listening to a podcast or being very disciplined on how you spend your time, or who you spend your time with, can lead to you breaking these glass ceilings faster, I guess.

  

[00:30:47] If we're talking about money making, then I think we all have a few or a lot of limiting beliefs. Because in a way, if we, let's say we have a lunch, and we agree, okay, our objective for the next 24 hours is to make $1 billion. It's 100% not impossible. 

 

[00:31:10] If we were at the same table with Elon Musk and [we] would give Elon Musk the task to make $1 billion, Elon Musk would make $1 billion in 24 hours. However, 99.99% of us don't achieve the same outcome. And, again, that also is due to the vehicles that we have, the businesses that we have, and so on, but also due to our limiting beliefs in a way.

Tyrone Shum:   

[00:31:36] On the flip side, then, Dan, what are you most excited about that's going to happen [in] the next five years for you?

Dan Lazar:   

[00:31:42] I am very excited about this childcare path that I think I'll be taking. My vision is for Dan Lazar, not in five years, but in 10 years from now on, is a guy that has developed 100 childcares. So if each childcare has 100 kids, then that's, like, 10,000 kids more are getting an education, and then maybe 10,000 families are getting help to the child care and potential, they can get another kid and another kid and things like this. 

  

[00:32:18] So that is my vision, a guy that has developed 100 child cares in the next 10 years, that hopefully will be smart enough to make enough profit and for each child care that he develops to also build a school in Africa. So that's my vision at the moment that if I manage to do it, for this child care that I do, to also build a school in Africa, I've contributed to a school that is getting built now in Africa.

  

[00:32:48] And as soon as it's finished, I'll go visit it. And if it's generating the impact that I think it's generating, I also want to double down in this direction. So I am very... I don't care about countries, I don't care about me being from Romania or Australia or Africa, I just... Africa, I think it's more of a better spot due to the impact that your money could generate. 

  

[00:33:15] So we'd handle okay, we can build a school for 300 kids in Africa, something that is impossible both in Romania and in Australia. So I think you just just again, because you will find that the kids have zero education there. If you look on a longer timeframe, one generation, two generation, three generations, then maybe you might be educating a little bit. A huge number of people.

Tyrone Shum:   

[00:33:50] How much of your success do you think has been due to your skill, intelligence and hard work, and how much of it has been due to luck?

Dan Lazar:   

[00:33:58] I think it's a combination of things. I think a lot is luck as well, for the fact that I had two parents that were educating me, that showed me things, I think is very important. If I would have been born in Africa, then my life would have been a lot different. 

  

[00:34:19] So even though I work crazy hours, and I am very driven, and I try to do my best to educate and always improve as much as I can, luck plays an important part. So I think from the person that you marry, to the parents that you have, to the place that you're born into, the people that you stumbled upon. So even the experience how I heard the conversation while playing tennis. And that conversation led to me helping a guy who ended up being the biggest property developer in Romania. What if I didn't go and play tennis that day?

 

[00:34:54] In a way, working really, really hard, I think it just increases the surface where we can be lucky. In a way, the more you work, the more luckier you get a little bit, just because you have more chances to be lucky.

Thank you to Dan Lazar, our guest on this episode of Property Investory.