Kribashini: Hi. I'm Kribashini from BuildHer and I'm here with Jess and Matt from Chamberlain Properties and we have a pretty exciting lineup of questions for you both to get into. Welcome along to our podcast.
Jess: Thank you. Happy to be here.
Kribashini: Delighted. Jess and Matt are a unique couple. After just speaking to them for the day, I think I've found out a few interesting facts about you both.
Jess: You've learned a lot about us.
Kribashini: I have. Jess and Matt, actually, instead of buying their first home together as most couples do, actually decided to buy a development project together for their first property, which is super exciting. We just love to share with our listeners today, a little bit about how you came about to do that and why.
Jess: We basically started our property investing journey about six years ago now and it grew really organically. We had a big interest in property. Our parents, my parents at least, had kind of come from the mentality of slowly building up a property portfolio over the years, buying one, renting it out, negative gearing, enjoying that capital growth. We thought bricks and water investing was a really good way to grow our wealth.
We bought our first property back in 2013 in the inner western suburbs of Melbourne, right around the corner from Matt's family home. We felt like we knew the area pretty well and had done the heaps and heaps of research on what we could fit onto the site. We ended up thinking we could fit three single-story townhouses on there.
Kribashini: Whose idea was it to buy the property as an investment? Do you remember or do you remember that differently?
Jess: It was definitely Matt.
Matt: Yes. I was definitely pushing that.
Kribashini: How did approach it with Jess to start off with?
Matt: Jess was very relaxed about it. I think had a few conversations with the local real estate agent that I knew quite well and then a couple of developers that I was working with at the time. Run some numbers past and she had a pretty positive approach to it. Yes, I was surprised.
Jess: It's pretty fantastic because we were just having a conversation before and I think it makes a real difference when you both have a shared vision and you both have a slightly maybe different appetite for risk, but you can both see the benefits.
Kribashini: What did you see? What were your thoughts when Matt first made that suggestion?
Jess: I definitely had a big appetite to invest in property. Property development probably wasn't the first thing I gravitated towards, just because I had seen what my parents had done, but Matt obviously had a lot of relationships from being an electrician and running an electrical underground company of working with the developers and he stepped me through what the risk mitigation strategy was going to be, to give me a little bit of ease. While we did plan on having three single-story townhouses, we did have some backup plans in there. For example, putting two on the back of an existing house, putting, worst-case scenario, one on the back of an existing house. He put my mind at ease that while there is always a risk with doing these sorts of projects, it was quite low because we had a lot of those other options already locked down before we started. It was still scary.
Kribashini: I know. The first time we do anything is scary, isn't it?
Kribashini: How did your friends and family react to the idea that your were buying something to develop?
Matt: I don't know if they were very keen on the idea initially. Thinking back, it took a bit of persuasion to talk them into what we're doing. I think there's a lot of bad publicity around property development.
Matt: Everyone's heard a horror story of a builder and so forth, so it takes some getting used to.
Jess: I think as well, people, because we didn't own another property, wanting you to buy a house first. I think there was a little bit of questioning around why we did that.
Kribashini: I think you've definitely broken the mold in terms of what's traditional and what to do, which is to buy a family home first, build up some equity, then jump into the market, if you're willing to do that, if you can do it, and then it's about security. I think it's really actually inspiring to hear your story that you've decided based on what you both wanted to do for yourselves and for your future, to jump into property investment to start off with. I know every time I approach something to my husband like, "I've been thinking--" ultimately, he's always like, "No, the market's going to drop."
Kribashini: We're either optimistic or pessimistic.
Jess: I think you have to also expand your expectation of what you think you can get back a little bit, because I think often we limit ourselves by thinking we can only earn so much or we can only profit so much out of certain investments and it's sort of a limiting mindset, whereas, if you open yourself up to a whole different range of things, you get a lot more back.
Kribashini: Absolutely. What made you both think that you could actually do it? Was it one thing or was it a whole lot of things that fell into place that made you think you could do it? Tell us a little bit about that.
Matt: I think I definitely had a couple of close friends that had been through the projects on their own, because I was working for developers for quite a few years. I was literally sort of asking questions every day, until they got sick of me asking questions. It's always hard because you try to learn, but you're not trying to bother people. We're working with them every day, it's just going back to them and running things past. I think that's how I get my peace of mind, is just double checking what I'm thinking with some more experienced people and that's what gave me comfort to go ahead.
Kribashini: What were you doing with them at the time?
Matt: Setting up underground infrastructure for subdivisions, so we were really heavily involved-- As you know, when you do a development, one of the hard parts is getting all your infrastructure and stuff setup to each lot. We were heavily involved in that and literally underground, putting that stuff in, before they'll go ahead and start pouring the slabs.
Kribashini: It's really fantastic that you're able to test out your theories and ask them questions as you're going along. A lot of people, I guess, are in the dark over what happens in a developmental-- How these little things come together. That's part of what the inner circle, developers in a circle is all about. It's really demystifying that. I'm curious to know what were some of the things that you were asking them about while your mind was ticking over about what your potential future could be.
Matt: I think initially it was a lot about build rates and per square meter rates and as you get more experience, you start to learn whether they are important or not, what you need to know and definitely around consultant cost. There's a lot of those soft costs, what we call pre-construction cost and as you know, scope with consultants like architects can range from such a wide field, that checking those cost off were definitely my initial questions. I think some of things you're first learning is the time that it takes. People see people building and, yes, you can build in four to six months. Generally, it is 10 to 12 months, but most people don't realize just how long a project will actually take from start to finish, so that was a good learning curve for us.
Kribashini: How many people are involved in bringing project together?
Jess: All the different people that you have to bring together and coordinate to be on the same page, I think that's a really important skill that if we had someone like you guys at the start, would have been very valuable because it just takes time.
Matt: I think conventionally, development has been very secretive. People hold their cards close to their chest.
Jess: That's really true.
Matt: I think in more recent years, you start to see some of this environment, where people are opening up about it. It's really great for-- [crosstalk]
Jess: A lot more education around it.
Kribashini: I guess you were both on different career paths before you decided to go down the developing journey, because I say everything now with a Develop Her ring.
Kribashini: My English is broken. Was it ever a dream of yours? How did you make that pivot, I guess, to change your careers and really get into it and make it your career going forward?
Jess: I think our big top-level dream is just flexibility and having the power to decide what we wanted to do and when we wanted to it and be in a really comfortable financial position. I think we didn't really mind how we got there at the beginning, but that was the big top-level goal. It's to be able to leave our 9:00 to 5:00 jobs and have a business of our own that was really flexible. After doing our first development, we got the bug and it was like, "We can really do this and we can grow it and it isn't just going to be a side hustle." Yes, it took us a while to get to that point where we were both on it full time, but that was definitely the goal.
Kribashini: What was that like? A lot of listeners out here might actually be starting off the side hustle or thinking about doing that side hustle. Maybe would you like to give them some insight to what that really felt like? Just that first project to have that job and still come home.
Jess: I guess with anything that you're doing for the first time, our expectation going into it was really, "Let's learn as much as we can and really get our hands dirty and see how much we can get out of it." Not from a monetary perspective, just from a knowledge perspective, by doing we'll learn as much as we can. It was working 9:00 to 5:00 or 9:00 to 9:00 at our regular jobs and then coming home and pretty much, always spoke about in those days was the development.
Matt: Definitely challenging, not so much when you're doing one project as a side hustle and you're working, but as you become addicted and you set that up to two or three, it starts to get a bit busier.
Jessica: The balance starts to shift a little bit.
Kribashini: Do you ever have any big disagreements over scope or dollars or what final product should be?
Jessica: I think probably our biggest disagreements is how to tackle, say, an obstacle that comes up. For example, like with a contractor, I often want to be quite hardline and this is what the paperwork says, this is what needs to be done. Whereas, Matt comes at it from more of a relationship background. He's a lot more wanting to negotiate and keep the relationship good, which I have to be honest, has worked well in the past, because it meant the job can move ahead a lot smoother. It might not have been the cheapest way to solve the problem, but in the grand scheme of headaches, it was worth it.
Kribashini: Would you agree?
Matt: Definitely agree.
Kribashini: I think actually you're both 100% right. It's actually that perfect balance of both.
Paperwork is always there to back you up, but at the end of the day, it's relationship building. The stronger those relationships are, and the better they are, the easier those hard conversations can be.
Jessica: Yes. You really have to weigh up what it's going to cost you down the line, if you stick to the letter of the law.
Kribashini: I love it because I love paperwork too.
Kribashini: What actually enabled you to take the first step since your very first development?
Matt: I think we were looking for a way, rather than just buying investment property and banking on some capital growth. We were a little bit looking for a way or a vehicle we could just manufacture some growth, so it wasn't so much of a gamble like you're just buying this property, thinking, "I'm going to make a 5% or 6% capital growth." With property development, you're working off feasibility which drives everything and you're working off today's numbers. You're taking a small risk to say that the market is not going to turn down or turn down horribly because you've got conservative resale. It just gives you the option of manufacturing a profit, rather than just sitting around.
Jess: It's really about adding value.
Kribashini: I guess you both get to be creative with your solutions. You have to be creative about what you're designing, and at the end of the day, you get to have built something. I think that's the most exciting thing about being in the building industry or even developing or even just renovating your own home. You've created something that's going to be there and that's a little part of you. It's really sad that not everyone gets to develop. [laughs]
Jess: It is really satisfying at the end, to stand back and see people move into their new houses.
Kribashini: You get to drive around the city and be like, "That's one of mine, that's one of mine, that's one of mine." Have you done that yet?
Jess: It's a good feeling. Yes, I have. I have taken my parents on a little bit of a tour just to show off.
Kribashini: It's such a funny thing. I still take my parents on a little Contiki tour of all my-- I like to call it my greatest hits, when they into town.
Jess: They get bored after the first one but--
Kribashini: They are parents, they have to do it. They can't get out of the car.
Jessica: That's their job.
Kribashini: With property developing, you started off your first project and we touched on that a lot, because a lot of people really struggle with that first step, how do they go about it or seeing that opportunity. Fast forward five years, you're actually doing a lot of projects, and you're doing them in different styles, which is absolutely fantastic. What were the doors, I guess, that were open for you after having done that first project?
Matt: I think building a strong relationship with not only your builder but also with the real estate agents. I think before you have those initial relationships, you are always on the fence on whether you can really trust some of the advice they're giving to you. We tried to with most of the people we've been working with, to build relationships and not be so transactional, so that when we are looking at doing another project, we can go to a real estate agent that we trust and say, "What are these going to sell for?" That gives us more peace of mind that we're dealing with someone that we trust, and have got some experience with.
Jess: Also on the other end, more people start approaching you, especially a real estate perspective with potential sites that before they go on the market, because they like working with you and they know it's going to be an ongoing relationship.
Kribashini: For our listeners today, who are some of those people that you need to be able to work with?
Jess: Our key people have always been our agent, our architects-
Matt: Town planner.
Jessica: Our town planner.
Matt: Definitely the bank.
Kribashini: The council town planner or-- [crosstalk]
Jess: Our professional town planner. We've just found that while you can do the town planning process yourself, often, if you engage a professional town planner, they already know what the council want to see. Often, they've worked in the council as a previous experience, and they can often expedite your applications a lot faster than you could on your own.
Kribashini: That's true, actually, and because each council is slightly different, although they're all working under the planning scheme, the way that they interpret their character studies...
Jess: It's so different.
Kribashini: It's very different. Getting your head around that can be quite daunting. That's one way to avoid that, but then also build this great knowledge that you have to work in different areas.
Jess: We found them really valuable, especially with larger multi-residential projects, because they can often tell you before you've even spoken to counsel, what your application is going to look like. You can save a lot of time.
Kribashini: With multi-residential projects, what do you think are some of the benefits of developing multi-res?
Jess: Definitely just the added value. You can add much more value to a site, doing multi-res developments. I think you've got also, quite a lot of levers to pull, in terms of you've got several sales that you're banking on, you're not necessarily looking at just one large sale. You've got a little bit more flexibility to-- Maybe we need to accept two lower sales to get our finance through before construction starts, but at the end of the project, when people can walk and touch and go through the finished product, then you know your sales are going to go up quite a bit and that can offset your lower sales at the start. I think multi-res has been great.
Kribashini: Do you find there's a big demand for multi-res?
Jess: I think definitely in the townhouse area that we've been working in, apartments we've never done before and we've heard that they're not as in demand, but I think definitely for townhouses especially, are a little bit larger. Three-plus bedrooms that a family can fit in and people who are looking for their first home, it's often quite a good compromise to make in a product, when you're getting something that's brand new, that is quite sizable, that can be your family, and you're not having to pay the price of an established house that it's on its own full-size block. It's a great way to get into the market.
Kribashini: Absolutely. I think also what you're able to do with that price point, and still the way that you're both able to develop them to get that right look and feel, they don't feel like it's a tight, small town, as you can raise a family in it. I think as a society, we're changing about what our expectation is in terms of space, but also what our ability is to borrow.
Jess: Yes, definitely. I think especially the new generation trying to get into the property market, it's so much harder. Also at the same time, there's not really that same expectation around having a large backyard. A lot of people want something that's low maintenance. A lot of your leisure time isn't spent at home. Now it's going out, going for breakfast going for coffee, so maybe you don't want to spend so much and have a high mortgage. All of the smashed avocado.
Kribashini: What are some of your and Jessica's goals for Chamberlain Property and going into the future?
Matt: I think we're definitely looking to stay in the same market that we're in. I don't think there's any arguments there about considering going into a partner projects or commercial. We really enjoy the residential space. I think just really going in with some design-led spaces, getting a bit more playful with some of our fit-outs in certain areas that we can spend the money in, so the returns come back, but yes, I think we're definitely going to a slightly higher specification and some slightly higher areas now. I think it's going to be a pretty exciting year to come.
Jess: We're still wanting to differentiate a little bit as well, the types of projects, because I think while developments are really good and have worked really well for us, they are two to three year commitments. We're really looking at ways that we can make that process a lot faster and whether it's chucking in a renovation in the middle of that, so that we can turn over some of our funds a little bit faster while we're waiting for a planning permit. I think we'll start trying to be a little bit more efficient with our strategy.
Kribashini: I think it's a natural progression too, right? Not only do you want to try new things, once you've mastered a model, but also as you do more projects, you have that ability to try different finishes, you want to use new products. What are some of the things that really drive you to try and do better on your next project?
Jess: Definitely creating some more beautiful spaces that we can be a bit more playful in. Doing multi-res developments, you are restricted to the council and what their preferences are, so being able to go into a renovating space means we are in total control of what we're doing and we can create spaces that are really well designed and different.
Kribashini: Looking back on your suite of projects, what would you say would be probably your favorite or most rewarding project?
Matt: I think the most exciting project probably would be our Doncaster project that's coming up. It's a really interesting site. The council there responded really well to quite a modern approach with the facade treatment and stuff, that they allowed us to come through.
Kribashini: Great. We're actually hearing that quite a lot. Councils are getting quite excited about certain projects that are coming out of the pipeline.
Jess: Yes. We've actually found, depending on the architect, if the council town planner's really excited about the architect you're using, they're a lot more open to your applications.
Kribashini: Really? There's a tip, ladies.
Jess: We had a pre-up meeting a couple of months ago and our architect came along, who's quite well known and the town planner was just pumped that one of their buildings is going to be in the area.
Kribashini: Hot tip. You heard it here first.
Kribashini: Jess, what's one of your most rewarding projects?
Jess: I would probably say Matt's mum's house was probably the most rewarding. She owned a block in the Western suburbs and owned the house outright and we ended up splitting it into three dwellings. We built her a really beautiful big house at the front and she'd never lived in a brand new house before. We also built two two-bedroom single-story houses on the backlogs and she's been able to keep them as investment properties.
That's been really rewarding in terms of being able to see someone who works in a casual full-time position, who's been working so hard all her life, doesn't really have the capacity or the super contributions to retire yet, but would really like to pair back and then to be able at the end of it, to-- She's the owner of three properties now. That's just been really, really rewarding and she can live off the rent for that. That's probably the most rewarding one from a personal side.
Matt: Jess had a lot of involvement in those finishes.
Jess: She let me have full design control over her house, which is really nice.
Kribashini: Holiday home.
Jess: Yeah, we stay there a lot.
Kribashini: I think it's all right. Sometimes it's those projects that have that little bit of extra personal purpose behind them, like what you've set up there is really fantastic for someone who's nearing or into retirement.
Jess: Yes. It's not only satisfying to see the buildings go up, but also to see people being more secure in their financial future. That's what property development's done for us. Just give us that security and yet to see it for other people, is really great as well.
Kribashini: Before we leave our listeners today, would you both like to share some tips and advice to anyone who is thinking about their development projects or they're in it or they're just thinking about it? What would be some maybe three bits of advice that you'd like to give or share with us today?
Jess: I would say if you haven't started yet, just don't be afraid to make the jump. If you've done your due diligence and your research, and all your number stack up, don't let just your mindset hold you back from making that jump, because you've put all the hard work in. Why not reap the benefits? I think once I got over that first hurdle of buying our first property and signing the paper, then everything else fell into place, but that was probably the hardest step to take.
Matt: Just trust your consultants. If you engage really good consultants, and that goes from everyone from your accountant to your town planners to your architects and really trust their advice. It takes a while to get used to handling such a big investment when you've got such a large amount of money on the line and naturally, you're signing the contracts for things. It can be a little bit stressful, but if you've got the right people engaged, you can really pull the trigger a bit more comfortably.
Jess: I guess the only other thing would be, expect stuff to go wrong, but it's not the worst thing in the world. You can't control everything no matter how much research and due diligence you do. You can't control the councils, you can't control the banks to a certain extent. All you can do is work off contingencies and worst-case scenarios. It may not go 100% to plan but if it goes 80% to plan, it's fine.
Kribashini: It's all very good advice, I think. I always say to my clients, "Everything's going well, but it could always go wrong."
Jess: Yes, it definitely can. It can go right as well.
Kribashini: That's right. As badly as something goes wrong, you can turn it around and it can go right.
Matt: It can definitely go longer in development. It's not a get rich quick scheme, so you have to be patient.
Kribashini: That's right. Sometimes it pays to have that long term strategy, but it's also really important that you're enjoying every step along the way, so that longterm strategy to grow your personal wealth and to give you-- I just love that you said that your ultimate goal was flexibility. I think we ultimately get too tied into making our goals. I know a specific goal is a good goal, but I love that it's overwriting bracket of flexibility, because flexibility can mean a lot of different things and it doesn't really pigeon hole you to one type of business or one type of project.
Jess: Yes, exactly. I think it's allowed our business to evolve over the last few years into some different spaces.
Kribashini: That's fantastic. I'm super excited for what it can bring you in your future and I hope that we get to talk again. Probably the next time we do something amazing, we'll podcast you again.
Jess: Look forward to it.
Kribashini: Thanks so much for being with us. Today, we're speaking with Jess and Matt from Chamberlain property. Check them out. They've got a great portfolio and they are doing some amazing things in the Melbourne area.
Jess: Thanks, Kribashini.