One Sydney-based agent has weighed in on how he has maximised the opportunities being presented by the apartment and off-the-plan landscape to reap great success.
In a conversation with REB, BadgerFox co-founder Marco Fabrizio explained how he has built a business on apartment development — something that he noted not a lot of real estate agents have dabbled in.
“I have been involved in developing and the construction of apartments for over a decade. I have been on building sites from school holidays as a child working in apartments to recent times financing some of Australia’s largest developer builders via private debt,” he said.
According to Mr Fabrizio, apartments make for solid foundations for an investment portfolio as they offer peace of mind through great yields and guaranteed rents — all for just half of what they would have paid for a house.
“This means they can build a portfolio quicker. Like the game Monopoly, if you get enough little red boxes of ‘apartments’, you can buy the dream house or even a hotel,” the agent continued.
Selling an idea
While the benefits that can ultimately be reaped by investors from apartments are significant, Mr Fabrizio said that selling them has proven to be a greater challenge compared with selling a house.
For one, prospective buyers have to believe in the project before they are even able to see it.
“Firstly, you’re selling an idea. All you have is paper, so it’s always about, ‘Is the project good that I am buying one myself?’ I only take on a project if I believe in it myself,” he said.
“The project needs to be saleable, liveable and my developer needs to be a solid operator because I want to sleep at night and I don’t need a headache. Reputation is everything to me.”
Selling off the plan also requires a certain know-how to be able to earn the trust of the buyers, Mr Fabrizio noted, adding that he spends time with quality developers before taking them on as his mentor in order to provide added value to clients.
“I can pull apart the bones of an apartment building and tell my clients how it will be built. Mostly, the conversation needs to be around who the current owner is and why you should trust them, and whether it could be a good investment,” Mr Fabrizio said.
Given the recent concerns around the quality of apartment buildings, this knowledge will also serve to mitigate potential purchaser concerts, he added.
“I am very confident in apartments and I know where to look for growth, yield and cash flow that replaces the everyday income,” he continued.
“Aussies have a problem with not doing their due diligence prior to even putting down an expression of interest. Do your research, understand who you’re buying from, remove the agent and forget what they are selling you.
“Is the developer reputable? Do they have current projects completed with no defects? Have they been doing this for decades or is it their first project? How much is in the sinking fund? Who is the strata manager? Do they have a clue? Do they deliver the utmost quality? Do they offer any guarantees? Do they care about you and your future?”
At the end of the day, the success of his business does not fully rely on just good selling tactics, Mr Fabrizio said.
Instead, “I educate them and then my clients buy”, he concluded.