Property Planning Gains w/ Fabio Frisenda

Transcript

Unknown Speaker  0:01  

The purpose of wealth talk is to educate, inform, and hopefully entertain you on the subject of building your wealth. Wealth builders recommends you should always take independent financial tax or legal advice before making any decisions around your finances.

Christian Rodwell  0:19  

Welcome to Episode 158 of wealth talk. My name is Christian Rodwell, the membership director of wealth builders. And I'm joined today by our founder Mr. Kevin Whalen. Hi, Kevin.

Unknown Speaker  0:28  

Hi, Chris. Good to be with you again. In again, interesting times, Bank of England just put the base rate up, so doesn't bode well, for you know, those those who are borrowing money, particularly those people looking to just get on the property ladder, right? Because there's a there's definitely the warning signs of something coming. And if I get a chance, I'll talk about that.

Christian Rodwell  0:52  

Yeah, yeah. So today, we've invited one of our members, who's Fabio for sender to talk about a particular kind of strategy that he's been looking at recently. And I think in these times, Kevin, we have a lot of conversations, don't we, with members who become a bit frustrated, perhaps they've been, you know, following something that's been working quite well for a long period of time. And then the climate, the economic climate changes, and, and they start worrying a little bit and things are not quite as easy. And this is where you have to start thinking outside of the box and looking for new opportunities. Sometimes.

Unknown Speaker  1:26  

I think always, I mean, irrespective of, you know, we call it the economic wind, okay, so when, when it comes to the same economic wind blowing on all of us, it's the set of the sail that determines our success. And I want to reframe Jim Rowan's words. So you smile. He's a big fan of Jim Rohn. You, you listeners out there, but always good for a quote as Jim Rohn. But But I would say it's all about distinctions, you know, so just as you put your hand on the tiller, and you you're tweaking your direction into the wind, the same thing applies when you're building wealth. So you might start off with with a strategy in mind, but then you need to flip and change direction. And this is really important, Chris to recognise, because I think many people who start to build their wealth, build their wealth, and they have a particular strategy. You know, I do stock market, or I do investing, or I do property. And if I do property, I do HMOs. Or if I do property, I do development. And they think about that process and don't realise, often, that you need to equip yourself with a holistic way of building wealth. So that the more that you can build a roundedness, a way to look at things from different angles, not just means not just you being smarter, but surrounding yourself with other people who can help you. And then because you can see 360 If you imagine your your driving, or your you've got your hand on the tiller, if we're going to use that analogy, you're kind of looking forward, but you need constantly to be looking 360 around you, because then you can change direction of Something's coming. And that's what Fabio has done. And I think making distinctions is not a DIY activity. You've got to be working with other people talking to people connecting to people, because you will see what other people are doing. And you know, Fabio is a experienced guide. His own rights, you know, is fundamentally if you said to Fabio, what is it you do, you would say I'm a property developer. But he's not. He makes money from property opportunities. And in the interview, he'll he'll reveal you kind of what he's doing. But but the backdrop to all of this, Chris is fundamental, because you think about what's going on in the world. And I've often got a new quote of my own, which is the new order is disorder is all over the place. So you've really got to be fleeter foot when it comes to your finances. And one of the ways to do that is to understand what's going on, you know, understand where you are understand the context. So just like a sat nav, sat nav is useless. A map is useless unless you know where you are. And right now we've got a bubbling cauldron of things that are going wrong, Chris, that are not good. Right, and here's the summary of all of them. And there's a word that summarises all of that, that I haven't heard for 30 years. Right. I've known this word brought up, but I'm hearing it being brought up now. And is this when you get a heady mix, a horrible mix of rising prices, double digit inflation.

Unknown Speaker  4:56  

When you get consumer demand still high Supply side problems everywhere. You know, you and I were laughing when we're meeting recently and I was talking about, I was thinking about getting a new car for my wife, 14 months, they said it's gonna take to get that supply side problems. Fabia will talk about supply side problems in property, right. So we're now starting to list these things. And then when you get interest rate rises. Oops, you know, we just had one today. And you get a combination of all those things. And the OECD, the kind of governing body who talk about economic development, saying the UK is going to be the lowest growing country in the world next year. Now, that means when you combine a stagnant economy, together with all those other things I mentioned, plus double digit inflation. That combined horribleness is called stag, inflation. Nothing to do with bulls and bears stagnant economy, plus rampant inflation, and all those other issues, stag fallacious. Now usually, there's one other thing that's in the mix, which is unemployment rising, but we're seeing employment unrest, we're seeing strikes, we're seeing challenges, we're seeing double digit inflation, people wanting pay rises, and companies can't afford to do it. So if companies get to a place where they simply don't invest money anymore, they see the future is uninspiring, worthwhile actually cutting and going backwards retreating into a shell, then we're gonna have nightmare scenario. And Stagflation is almost upon us. And the only way the government knows how to handle Stagflation is rising interest rates to quell and dampen demand. So that's the economic background in which we're headed. So what's happening is a storm ahead. And we've got to navigate through that storm. Unfortunately, we're well positioned at wealth builders, because we understand that how many people have been Have you heard that word before Chris stagflation?

Christian Rodwell  7:23  

Yeah, have been off for a while. Yeah.

Unknown Speaker  7:27  

Now, the last time we had it really was the 70s when we had the oil embargo, OPEC countries, you know, putting a limit on the amount of supply of oil. And that's a big challenge there. So. So consequently, I think we've got to manage our own personal economy and not worry about the wind. And Fabian is going to really talk about what he's doing to bolster and to boost his profits without just putting all of his eggs in that very same basket.

Christian Rodwell  8:01  

Absolutely. Yeah. And it's all about being proactive, not passive when, when these circumstances arise. So yeah, we let's go to our conversation with Fabian and then I'm sure we'll, we'll be back to debrief the lessons afterwards. So yeah, he's our guest for today, Fabio for sander, Fabio, welcome to wealth talk today. How are you?

Unknown Speaker  8:23  

I'm good. Thank you, Christian yourself.

Christian Rodwell  8:25  

Yeah, really, really good. Thanks. It's pleasure to have you on Fabio, member of the wealth builders Academy. And today, we're talking all about planning games and uplift on development sites. And this is an area that you've got a lot of experience with Fabuloso, perhaps let's begin there. Tell us about how you got into development yourself.

Unknown Speaker  8:43  

Okay, so I have been in property for over 25 years, I started my career as an estate agent. So after I would say, basically 15 years being an estate agent having a business or sold it. So to me was the natural progression getting into property development, and construction. So obviously, the few the first developments and deals were more flips, small planning gains. And then we're doing I would say, bigger planning gains and bigger sites. So but yeah, that's the natural progression. And that's how I got into I was lucky, I was always into property. You know, that?

Christian Rodwell  9:24  

Yeah, yeah. Yeah. And, of course, you know, we talked about multiple pillars and property is definitely a popular pillar and one that's working well for you Fabio, but at the moment, of course, you know, we're going through some troubled times, sort of midway through 2022. And perhaps the landscape is changing a bit. And I know, in particular, you've noticed that, you know, there's real opportunity now around, you know, getting planning gains and just tell us a little bit about what actually gains are for someone who might not be you know, fully clear on that.

Unknown Speaker  9:52  

Okay, so what does that mean exactly? Basically, it's an uplift between the site that you bought originated with that planning. And because you took that site, either plot of land or an old building that didn't have planning for residential, you put it through the process of getting planning once the land or the building is valued after the process, meaning once you've got planning, well, there's a big difference. And hopefully each time we do this, there's a margin profit. So I'm just going to take an example. You can buy a site for a million pounds, for instance, and if you get, let's just say, 25 apartments, obviously, these numbers, you know, would make sense that on a different site. So it's just about once you've paid your planning costs, maybe that site might be worth 1.4 1.5. All depends on the site and on the areas. But that's the main idea of it making money through getting planning approved and granted,

Christian Rodwell  10:54  

right? And who is this suitable for? In particular, Fabio.

Unknown Speaker  10:59  

For everybody, I would say someone who wants to invest time and learn, obviously, when you start and you're not from a proxy world, you could be simply an investor. And then I would advise, I would say investors to work with developers, or people who do pending gains. So people like me, for instance. But I can also help people get in through that process, because we got a good team in place. So it is a good strategy. Because we know we in property, you've got different strategies on how to make money in planning games is one of them.

Christian Rodwell  11:33  

Yeah. And are you seeing a thing this becoming more prevalent at the moment? And if so, is there any particular reason? Why do you think?

Unknown Speaker  11:42  

Yeah, one of the main reasons is the risk of construction and building these sites, because of the inflation we've seen in the past year. And with the pandemic, prices of materials going up. Construction, the crops that we used to do two years ago, are nowhere near and the products that we do today, they're probably 25%, higher. The other element as well is Brexit. Meaning that there's a shortage of staff and people that were willing to work in the construction work. So every reputable construction company or builder has always got work. So it's very, very difficult. I get clients ringing me say, can you do this within the next month or two? It's impossible. We just can't we we've got so much work. And we've own departments as well, and trying to work with subcontractors all the time. That's difficult. So planning games take out the risk of construction.

Christian Rodwell  12:39  

Okay, so Fabio does the several steps really, that someone needs to be aware of, I suppose if they're going to use this as a strategy, so do you think perhaps walk us through? You know, what, what's the right thing to be looking out for at the beginning all the way through to, you know, the actual sale? Yeah.

Unknown Speaker  12:57  

So basically, we are looking for sites with no planning whatsoever. So I'm not going to go in the ins and outs today of how to source the sites. But the steps are, basically, to start with my personal experience, we recite this but no planning whatsoever, is to start with a pre act, meaning talking to the council. So obviously, it's the planning consultant who would do that job and you instruction to do that. And then the council would come back with their opinion on the site saying, Yeah, we would be in favour of residential commercial apartments houses. And then from there, we can take steps to say, okay, and we got a good chance of getting planning approved. So that would be to me the first step.

Christian Rodwell  13:45  

Okay. Okay, great. And then just take us take us through what was,

Unknown Speaker  13:50  

the next step we'll see, as well is that you do come across. Sometimes we have sites that have got outline planning, which is not full planning, but basically, it's in between the middle saying, okay, the council has approved this scheme. If you apply for full planning, you've got 90% chance of getting it. So there are sites with with that, what we call outline planning, the reason why vendors upright outline because it's much cheaper, and then full planet. And it gives them an indication and enables them to set aside basically, which is, I would say a bit more than a site, we've got nothing at all. So that's what vendors use at that point. And obviously, the developer would take the this application to full planning, get all the surveys done, get everything that needs to be done with the architects to come to Burbank consultant, and the council to be able to have planning granted. So that's outline planning. And then, obviously, full planning, that's, that's where you the goal is is to take a site to full planning, meaning that you've got the right to build it once for planning is granted. So in terms of that, the cost are a completely different and timescales are completely different. But these are, I would say three points like pre replication, planning and full planning. Okay, you can't, you can't do that on your own. However, even if you haven't got much experience in planning gains, the team should be able to do the job for you. If you hire the right people, meaning the right architects, the right planning consultants, mainly, and then they've got a team around them, who will do all the surveys necessary on the site, or the building to get it through plan. But that's mainly how I operate.

Christian Rodwell  15:34  

Okay. And then I guess, we're looking at costs as well.

Unknown Speaker  15:39  

Yes, so we were talking about the cost of pre op is called into different categories should be free, but sometimes asked you for a small fee, probably 1000 pound, 2000 pound depending on council, but some council that preempt advice is free. So that's good Outland planning, you don't have to pay the fee to the Council for 500 pound per wedding is a smaller fee. So that's much cheaper. And then obviously, you've got your architect fees, and you've got your planning consultant fees with various surveys, the goal is to take it to full planning, because that's what they represent, you know, that's what is gives the value to the site, basically. So the cost involved in that are 500 pound per dwelling. So let's just say you've got a site and you're planning to get a block of apartments of 20 apartments on it, that will cost around 10,000 pounds. So that's the fee to be paid to the council. And then you got your architect fees, that's a quote to all architects work differently on a different basis. And then you get your planning consulting fee. So fees could vary on different sites, but we can talk we were talking about 20,000 pounds, or maybe 100 200,000 pounds for bigger blocks of flats, like 100 units plus, so but if you if you look at sites where I would say there's an average between 10 and 30, units, either houses or flats, it's not going to cost millions, you know, 5060 70k, maybe depending on the site and the surveys, we should be able to get it. But the uplift, that's where that's where the beauty of this is, sometimes you can double or triple your money and your investment within the space of, I would say 12 months to maybe the site's a bit more complicated, maybe 15 months, 18 months of planning, that there's companies out there and I would say specialised investors, all they do is just planning it never build anything. They're just constantly with their team looking for sites without planning or without land planning. Take it through the process of getting full planet and then just sell them on to the property developers or the investors.

Christian Rodwell  17:55  

Yeah, no, that's great. Thank you for walking us through that. So it sounds like you know that no, two sites are the same. They're easy, say they can cost different amounts, and certainly take different amounts of time. But you know, just for someone, even just walking around their local area, right is just to start looking and start thinking and these opportunities are probably all around once you know what to be looking at. Yeah, we could we could

Unknown Speaker  18:17  

probably do a different podcasts just alone about how to source these. These sites, you know, that would take we could talk about that for a long time. But without going too, specifically into the ins and outs. Yeah, you can get these sites through your network and your networks, agents, sources, architects, planning consultants, other developers as well who who have got stuck and that they just don't want to build sometimes. And they say, Look, we bought this some conditional, we just want to sell it on. And obviously you could probably negotiate an option or change contracts on different bases and, and take you through the planning process. So I would say it's really, really interesting. And and especially in this climate, in terms of risk, it's less risky than doing full developments and building it yourself. Because like, as we mentioned, you take out the risk of construction, and delays and inflation and price of materials going up. So it's a tricky market at the minute.

Christian Rodwell  19:18  

Tell us a little bit more about your company and some of the projects that you're currently working on or ones that you're looking at to be doing in the future.

Unknown Speaker  19:25  

Yeah. So investing started this nearly six years ago. So we started with obviously smaller projects. But we do now, various things we source for some of our good clients. We work with developers in terms of finding, I would say sites we work with housing associations, where we work closely with them to find sites and build them because I've also got invested in construction with a business partner so we do the full package for investors. And also we develop plans selves. So some of the projects, we've done a lot of conversions of buildings into, I would say HMOs. So that we sold them to housing associations. But we also got departments of flats in the pipeline, planning games and a few sites that we just won. I would say London, where it's going to be big projects 20 30 million GDP plus. So it's going to be exciting for us for the end of this year and 2023 as well.

Christian Rodwell  20:28  

Excellent. Fabio, thanks so much for sharing with us today. And we'll talk.

Unknown Speaker  20:32  

Okay, thank you, Christian. Thank you for having me.

Christian Rodwell  20:36  

Okay, so thanks to Fabio there for taking us through the process really, of how to get an uplift on on land on a development opportunity. But let's head over to Trustpilot. Before we dive into the lessons that we learned there, Kevin, and I'm going to pull out a review that's come in about your book, actually. So this is from no name on this review. Just we accommodate company name there. The wealth coach by Kevin Whelan and Bradley J sugars, easily rate read narrative to provide a simple story based overview of the steps and principles of wealth management while dance Kevin and Bradley for a well crafted book.

Unknown Speaker  21:16  

Yeah, okay, well, that's short and sweet. And we're definitely getting the book out the Amazon link will be out soon. Been getting some good reviews. So we've had, you know, some people reading the book and a group, like a book club. And then invite me on to speak about the lessons but like how we do this, Chris, which is kind of fun and interesting. And not with you, but with with other people. But it's, it's interesting, and I'm enjoying doing that. So if you've got a group of people, and you'd like to do a book club, where you can review books, not just my book, but any book and start having discussions about that, we'd love to hear about that. So maybe there's a little idea for you to think about.

Christian Rodwell  21:58  

Yeah, yeah. Okay, so let's look at, you know, the strategy that Fabian talked us through there, how to make a planning, gain or an uplift on a site. And, you know, we said just before the interview there, you know, cost of materials are increasing, there's a shortage of people. And you have to start, you know, looking at other ways to generate income streams. And this, in some cases can be a less risky strategy, if you know what you're doing.

Unknown Speaker  22:25  

Well, everything's about knowing what you're doing. And if we wanted to, we went from a Jim Rohn, quote, to a, Kevin Whelan, quote to now a warren buffett quote, which is risk is when you don't know what you are doing. And the challenge here is, you know, you can't do these things without knowing more. And that really means building a team, or getting connected to a team, whether it's Fabio, but you heard him talk about architects, planning consultants. And of course, within wealth builders, we know many of those, for those who are interested in, in connecting, and you've got to build a team. And you can also build a team of people looking for opportunities, because he talked about site finding as a rich and challenging game. And of course, it is because in property, the real value is on the buy, you know, it's what you do, the beginning of finding the site is the key to all of this, because you can imagine a scenario of getting an uplift, making something more valuable. And that's what wealth is all about, isn't it. So either creating flow of cash, creating a flow of capital. So this strategy is creating flow of capital. And then it's what you do with a couple upwards cash flow. So let's be clear, this is not a wealth building strategy from a cash flow point of view. But it's a capital flow point of view. Now, in order to do that, you need to understand the process. And the hardest part is the site finding. And I think even one of the ways just to even begin to think about it is to get curious, that you mentioned walking about, you know, so what about getting a bike and riding around your geographical area and looking for sight lines, you know, sight lines is, if you see uneven heights, if you see a building that looks like this space to the left, or to the right, or above, or even and we talked about in the past because down below, where we've seen London based developers going into basements because it's so much easier to do that. So wherever you can see a north south east west, a 360 point of view and uneven sightlines. That's one way to have a look at it just get curious and and then you can use tools and and software like we talked in the past we've talked about Nimbus, for example, Chris, and you could probably get with a link to that podcast show, when we talked about that, but you know, there are other side finding tools. And I'm talking to

Unknown Speaker  25:09  

another guy who is very interesting called Charlie who runs a business called stacked. And we're going to talk a little bit further about that. So other tools are available. And the point is, though, you can look at a site, and then immediately identify it and see whether or not anybody's applied for planning permission before whether it was granted or not. You can go look at the council plan to see you know, what their plans are for certain sites and so on. And as family you said, you know, you can get information from the council, often it free, or very low cost, but how many people do that? Here, they tend to see themselves in the property sector is looking for property, online, right, move websites from agents, that's not how you're going to discover this. This is you taking yourself out of that, and looking more deeply into a niche. And I think the real value, and this is just to think about everything you do when you're building wealth is like a value chain, you know, so what, what's the first thing you do? What's the second thing? What's the third thing? What's the fourth thing and each time you do something, you've got the capacity to increase value? And then you can decide, well, where do I want to capture that value? Where do I want to crystallise that value? Where do I want to take that value. And in some cases, you can do that even in your pension. So you can make a decision like this, you can look at a building, you could say, well, I'm going to buy the building, with my pension, and get planning permission and pay for the planning permission with the pension, you could sell it at that point, you know, as an uplift and sell it to somebody else, or sell it to a developer. Or you could do a joint venture with a developer. So you could do that joint venture outside of your pension. So you've got so many different ways to create value, but the key is to understand the steps in the journey. So finding properties, number one, we talked about the pre AP, which is is it likely something can happen, then outline planning permission, then planning permission, then what do I do with it? And when you've got a developing company, or a development company, rather like Fabio, then, in many developers to have a finite number of properties they can take on, you know, supply side challenges, again, how many staff can you do? How many projects can you run at the same time, so some developers will find projects, but they don't have the capacity to develop. So they'll sell it to somebody else, either for cash or for joint venture cash to put money back in the bank account. And we We recently spoke to one of our clients marcou, who bought a building from a developer who didn't want to do it, because there are too many other projects. And it was a great site that all the planning was done, all the work was done, everything was done, and they just bought it. And they'll, they want to do the development where so we didn't. So this is where the collaboration comes in, what do you want to do? What is somebody else going to do? And you can work out how best to do that. And in fabulous case, it's about not doing the development, it's about selling it to somebody else who will do the development, because they really different position to you. And then you can capture that value, which can be a considerable uplift, okay, you got to put some money in upfront. So you need some knowledge, there's going to be time lag, could be 12 months could be 18 months, so you got to wait. And a lot of times with wealth building, you're waiting for something to happen, there's a lag time between doing something and getting the value. So you could be having multiple things like this. And as long as you've got a supply of money to do the planning, wait, you know, you've got to pay for the planning, and then wait for the, for the planning. And it doesn't have to be a lot of money. And he talked about projects in the millions because he's very experienced. But you could do this at a much lower level, and just have a few 1000 out there. So you could easily add this to your strategy to give you a buffer. You could sell something and be a sorcerer, and then sell that to somebody else. Or you could find people who are sourcing them who don't have the money if you've got money to do I mean this is all where you got to work out where your own leverages and maybe you can remind people where they could find out about their leverage Chris on a previous podcast of finance, intellect or interest, relationship, systems and time. And once you've worked out where you are, you can work out where this strategy fits in. And I think it could fit in for most people these days. Because all you got to do really at the beginning is start being Curious about the layout of buildings around you?

Christian Rodwell  30:04  

Yeah, you brought a few things into play. They're talking about multiple pillars. Of course, the wealth builders model is built around the seven pillars. And you mentioned leverage. And we have many aspects of the wealth building process, which anyone who's new to the podcast may not be familiar with. So perhaps this is a good time for us to mention our next webinar, which we're holding next Tuesday evening, Kevin on the 28th of June, where we're going to be talking through all nine steps of our recurring revenue roadmap. And of course, Fabio is a member of the Academy as well. And and we're gonna touch on all of these key aspects of understanding what's the right pillar for you? How do you choose the best strategy based on your points of leverage? And then how do you turn the wheel of wealth to start generating either capital or cash flow. So if you're new, or if you just want to jump on and join us next Tuesday evening, then grab the link that will be in the show notes, click and register. And you and I, Kevin will be there?

Unknown Speaker  31:00  

Well, look, I'm going to implore people to take some action. Now, you know, I said earlier on, we're heading for trouble times, as the song goes, there will be trouble ahead. I know I'm not a singer. So that's not part of my IP. Chris, I'm not going to get any royalties for that. There's trouble ahead. You need to plot your way through this. Otherwise, if you don't, you're going to be stuck, sitting, not knowing what to do, in a Push Me Pull You economy being pushed by opinion by being pulled by the weather, the economic weather not knowing what to do. So being able to think make distinctions have a set of principles and strategies that work would be a very valuable addition rather than waiting, because the last time we had stagflation, Chris, it took 10 years to come out of that. Now, if we get another decade like that, then too many of the people listening to this, it'll already be too late for them. And you know, they'll get into the Hokey cokey, you when we talked about that they will go Oh, no, I don't know what to do. So they'll, they'll jump from one thing to another. And often without information, just fear of not knowing what to do, please get some principles, you know, learn the principles, apply the principles, and you better plot your way through this and build your wealth. And it's predictable. So that's what I suggest jump on the webinar. Come and see what what we do. And we'll help you carve a path through the troubled times ahead.

Christian Rodwell  32:36  

Yeah. So wherever you're listening to this podcast today, Spotify, Apple, just hit the show notes. You'll see the link to register for the webinars completely free will starting at 7:30pm in the evening, and we'll show you exactly our process for helping people move from financial insecurity fruit to financial independence.

Unknown Speaker  32:55  

And while you know, Chris, we normally like to ask people to do a review. Please don't do a review of my singing entirely inappropriate. We don't want any comments or anything like that. Just you know, I'm having fun doing this. But do I do I look like I'm worried about being buffeted by what's coming now? Because financially, we can learn to become bulletproof. We can put a financial fortress around ourselves, that keeps us protected. And that's the real skill. And we can teach you how to do that.

Christian Rodwell  33:29  

Yeah. So thanks again to Fabio for being our guest today. Thanks for listening. And Kev. We'll be back Same time, same place next week.

Unknown Speaker  33:36  

To learn with friends see you.

Unknown Speaker  33:41  

We hope you enjoy today's episode. Don't forget that we are constantly updating our resources inside the wealth builders membership site to help you create, build and protect your wealth. Head over to wealth builders.co.uk/membership right now for free access. That's wealth builders.co.uk/membership

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