Why this property investor decided to start developing multiple dwellings

When did you decide to step out of building a single dwelling and start developing multiple dwellings?

Jason Byron: I've only been doing [development] for four years. So these were reno[vation]s and flips and then … some subdivisions and some builds. And then, I also got so good at it that I was finding people properties and I got a buyer's agent license. Then it got to a stage [where] we did something in Leichhardt … We built this four-level townhouse … [There] two of them [because] this was a duplex, and then BoysTown bought one of them. Those are the people that buy the house and give it away as a lottery [prize].

That was a stage [where] we made $300,000 profit … and that's when I ... started saying … ‘I love the fact that by the time we sold off the first one because it was a duplex, I paid off so much of the debt that it wasn't scary anymore.’

How different is property development from purchasing existing assets?

Jason Byron: I remember situations where we've had a house before—because I've done lots of different things and we've renovated—we put it on the market but we waited six weeks to try and get that price. And then, sometimes you think, "Oh, do I reduce it or not?" And then, suddenly, we get the price.

There's a lot of times where stuff sticks on the market and you get worried. And I like the fact that with the townhouses now, if I've got four of them, I sell off three of them. The debts are paid off, so I can just kind of sit back because I know that my equity's in that last one.

Do you keep that equity?

Jason Byron: I haven't done that previously. I will do that now because I am getting smarter at building these. I wanted to spend four years maximising my skill, and now we're looking at that. But a lot of times, I've taken that money, that chunk ... and invested it overseas in different things because I like to diversify my portfolio. Or [I go and buy] something, like a land lot ... that I might do in the future.

What’s the scope of the projects you’re working on right now?

Jason Byron: So we've got $23 million[-worth] in the works at the moment. They're different lots—we've got a 14-pack [and] a 12-pack. We've got another, just a simple subdivision again, build two houses.

Some people think that now I don't do anything but just townhouses. But the funny thing is, as a developer, you get land sent to you all the time.

Do you like your current position better than when you were just purchasing existing properties?

Jason Byron: My job before was weekends going out looking at stuff, bidding at auctions, not getting the price that I wanted ... So much stress. [I’m also] paying for pest and building reports—I didn't get it. And so my whole thing was ‘How do I save time and save money?’ [That’s] property development.

Now … I spend time with my daughter on weekends because I actually don't go looking at any properties—they come to me. I haven't gone on realestate.com or any other domain for years.

Where are the locations of your large-pack developments?

Jason Byron: The ones that we're doing right now are in Brisbane.

We like to do within 5k, so we make it even stronger. The current ones that we're doing [are] in Morningside and one in Ascot ... Then we've got two or three that are in the works. We're never ever not doing anything.

How would you describe the type of development you do?

Jason Byron: It is at the higher end, definitely. [I come] from Sydney and [lived] in Leichhardt and [I am] doing really [a] nice-level property ... My partner Amy Tang, she's a furniture designer, so she's got that natural skill to make things beautiful … [and] she's taken that on as her passion and put it into property

I'd say that the stuff we do is medium to high. It's very different from high-end Sydney to high-end Brisbane, right?

Do you encourage other property investors to transition into development?

Jason Byron: As a property developer … I say, "There's a certain thing that is much better [with] being a property developer than just a normal property buyer … The areas that [available] are laid out [because] the government has growth corridors and it’s going to be in every single state … All you have to do is get to that growth corridor and have a look. And that's where they actually say to developers, "Hey, we need you."

That's the beauty of it—[you can always] go somewhere.

Are you concerned about the Brisbane market, especially in terms of your ability to shift these properties once built?

Jason Byron: It's interesting, yeah. And I worked in media for quite a while, and so I say that they are factual stories … but are they the real stories? They're using the approvals that have gone on the air, and that's fine, but all of them are renting. So, it's funny when they finish them [and] they don't have a problem renting them out.

There is a demand there [because] I'm not doing units. I'm doing townhouses ... I've seen there's a demand for people who want to be in convenient locations.

Remember Brisbane, if you've been up there before in the past and you cast your eyes back to five, six years ago … It was the sleepiest town—nothing was happening. It was boring, and the council [wasn't] active to allow areas to be developed. Then, they lost all their talent to Gold Coast. Suddenly, something happened, and they went, "We don't have any young talent here anymore. We need to let people live in brand-new places." And that's when they started changing it all and giving the opportunity.

When I first moved up to Brisbane, there wasn't such a thing as a nice, brand-new unit to move into, [but] now there's hundreds of them. So, the demographics kind of catching up to them and they're loving it!

What is your basis for a good development project?

Jason Byron: Our product is something that's in the area that people want to live and [there is] a high demand for townhouses. Our product meets the market now ... I've been doing quite a few developments now and I've learned a lot about what to do and where to do it.

My whole strategy … is: I look at the convenience factors and I go, "Why is someone living in a townhouse or a unit over a house?" And ... there are two different scenarios. One is that they want the convenience factor or, [two], they can't afford a house in that suburb but they [still] want to be there because it's a beautiful suburb and it's convenient.

And so, I look at those factors and I look at the demographics around and go, "Where is the nearest restaurant?" "Where is the nearest public transport?" "Where is the convenience factors of the cafe's and that type of culture?" And that's where I build my townhouses, and it always works.

If I can give that person a high-level product, high-level finishes, still give them the double garage, still give them three bedrooms and place them in a convenient location of that suburb, they're happy.

Has there ever been a point where your valuations haven't stacked up at all?

Jason Byron: No, they've been fine … I'm pretty realistic [about] our feasibilities and people know that about me … I want to see what happens in the medium-market sales on my feasibility instead of an overinflated price. A lot of people kind of go, "Well, what does the real estate agent say? They say, ‘We'll get you $700,000 something" even when the realistic price is $650,000 in a market that could slow down. Now, I know I am going to be able to sell that product because it's in that convenient area and I've matched it right.

If the market does turn, does go down a little bit, then what's my buffer? Now, a lot of my developments, [the] cash-on-cash return is 50% and over. So, I've got a good buffer there. If something goes wrong, what's the worse that can happen to us? We break even. What's the worse thing that can happen to us? We have to hold one … Those are the two scenarios that might happen out of it.

Even if something happened … something went wrong and we'd have to hold all of them, they've still got value [because] it's a brand new product. I can still rent it. I can still hold it if I do an interest-only loan on it.

What’s your final advice for property developers?

Jason Byron: [People] don't buy overpriced. You make sure that you use buyer's agency if you can—[someone who] knows what they're doing because they're going to hear all the different prices. You make sure that your sale price isn't too high, that it's right at the top level, and you're not offering exactly something that matches that level … [Lastly], the convenience is the number one thing for us.

Tune in to Jason Byron’s episode on The Smart Property Investment Show to find out how his portfolio grew from a countryside home to $20 million development properties and how growth corridors are his chosen path to success.

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