Why Focus on Process Instead of Outcome?

by Ben Handler

December 1, 2020

Buyer's Agent Darren Venter on why focus on process instead of outcome

Ben Handler:

Welcome to the Buyer’s Agent Institute how. The purpose of the show is to bring awareness to buyer’s agents. Bring awareness around the career opportunities the sector is providing people. To bring awareness of the value that buyer’s agents are providing people who need help buying property.

Ben Handler:

Our goal of the show is to strip back and dive into the remarkable stories and journeys of buyer’s agents who are paving the way forward in one of the fastest-growing career sectors in real estate right now.

Our guest today is Darren Venter. He’s the director and founder of Strat Prop here in Sydney, an investment-based national focused property business. Darren migrated from South Africa in 2008 to Australia. His first taste of real estate was actually in development. He was buying land for a developer for the purpose of development sites here in Australia. Darren has a background in CAD designing, which was actually the fundamental reason why he moved to Australia.

Darren’s now moved on. He’s got entrepreneurial, I guess, the taste of what it’s like to really get out there and do his own thing, and he’s started his own buyer’s agent business. As I said earlier, it’s called Strat Prop. What Darren is doing is quite unique. He’s developing a very custom bespoke client journey, fully focused on building investment portfolios. Investment portfolios for the future. So I’m really excited to introduce Darren Venter today. Welcome, Darren.

Darren Venter:

Thanks Bennie. Very warm welcome. Thank you very much.

Ben Handler:

For people who don’t know, what is CAD designing?

Darren Venter:

Well, CAD designing is… So there’s obviously a lot of different industries that use CAD designing, but CAD is computer-aided designing. The objective with CAD designing is that it’s a quick method to produce something, but there’s a very logical thought process in the actual workings of CAD design.

You have to reach an objective by starting at a start point. Like anything, I mean, you could put that analogy into baking a cake. You want to get a cake out of the oven you’ve got to start with the recipe. It’s the same thing with CAD. So there’s a very logical thought process when coming into a situation, being able to divide it out into the steps that you need to take to get to the end product.

Ben Handler:

I love it. And like building an investment portfolio, which is probably why it’s fundamental to what you’re doing with your new business at Strat Prop, right?

Darren Venter:

Absolutely. So with Strat Prop what we’re more focused around more than just buying property is actually growing the portfolio for our clients. So understanding that maybe while CAD designing is the process to get a product, building that portfolio or buying those properties is the process to build that portfolio. So when we do purchase our properties for our clients, we actually go in knowing exactly what their profile looks like as an individual.

And we question them out by a series of questions. It actually puts them into, I think it’s three different sets of criteria that they fill out or rather three different buckets that they are put into by means of, I think it’s 27 or 28 questions. And these questions essentially profile them out into nine major sections and it shows their weaknesses and their strengths. And then we basically take those, and we use them inside the process to be able to purchase their property.

So what this looks like, just to elaborate on that, is if we have a client that might be time-poor, but they have high funds, or if they have a lot of time available, but low funds, you could strategically purchase that property knowing that if they do have more funds then they can basically put that cash towards contractors to be able to develop a property. Therefore, that means that that property will have to be that type of a property. Then we have to look in certain areas because those properties are only in certain areas, but it’s also got to then fit into their actual budget.

So being able to balance all of these things is basically how we purchase our properties for our clients, and then build off that every single time in their portfolio. So getting that property to perform in the right way for them, and then essentially withdrawing the equity, moving it on to the next property and building out in that strategic layering that we go through.

Ben Handler:

How important is the first purchase?

Darren Venter:

Extremely important. So a lot of the times that first purchase is also considered the exit property, just because you can only lend so many times from the bank and therefore the bank’s only going to give you so much money. So that property, the initial property purchase that you’re going through, that actually has to be the one that’s going to be able to get you into the good books with the banks again, because essentially you can’t borrow forever. The banks handicap you at a point and that property is then the tool to get you out and re-inject that equity back into your portfolio and use it further on.

Typically, you’re probably looking at around four to five purchases before you get this knockback. Sometimes six purchases, depending on obviously the client’s profile with the bank because everybody has their absolute individual profiles, but it’s about being able to balance that profile financially within the property structure.

So very important to get the first property right because that property is the one that’s going to be able to essentially lead you onto further growth when you do hit speed bumps. Because as we all know, property investment is not all cakes and cookies. There are some speed humps on the way, but it’s about preparing yourself and making sure that you go into the game with that exit strategy in place.

Ben Handler:

Yeah. And which is like what you were sharing with the CAD designing, you’re thinking about the end goal and you’re moving.

So let’s talk a bit about research. Obviously it’s fundamental to what you’re doing, to what all investors do. One of the big issues I think for investors and buyer’s agents is a bit like a membership site is overwhelm. You go in there and you’re like, I’ve got Real Estate Investar, I’ve got HtAG, I’ve got [inaudible 00:06:08], I’ve got RP Data. I’ve got Pricefinder et cetera. This does this, that that.

What’s your approach to A) Consolidate and then B) For it to become a bit more seamless for you to move quicker.

Darren Venter:

Well, the consolidation is the biggest thing. You’ve got to get the information, but you can’t just get the information. You got to get the right information. So data is available to everybody. We’re all got privy to it. Everybody can get it. It’s really easy. That’s not the problem. It’s being able to understand what that data means.

So being able to construct that into an actual legible format and to be able to predict what that’s going to mean. That’s the trick there. So if we take a look at, for example, a low vacancy rate in that area, it might be a good factor to make judgement off, but it might not be that right factor to make judgement off. You’ve got to look at the demographic behind that vacancy rate. You also got to ask yourself why that vacancy rate is there. And also what influences around there are the government putting in place to influence that vacancy rate and what’s going to influence it negatively or positively in the future.

We basically base a lot of the information and a lot of the data that we collect is off government’s portal. And you’re able to take this information because the government makes it really available to a lot of people. And you can take this information, understand what infrastructure expenditure’s going into certain areas, be able to make a prediction of what that is going to look like in terms of the projection of value growth in an area and work off that.

Ben Handler:

So if you’re looking into an area, I’m assuming you’re looking at obviously local economy, looking at vacancy. What are the key things you are looking for when you’re moving into a potential let’s call it a new hot spot or new area?

Darren Venter:

So we want to understand what the actual demographic movements look like. So the vacancy rate is one thing, but what is that vacancy rate over? We keep harping on the vacancy rate, but it is an important point. But it also really does come down to the rate of movement. So what are those people… How quickly are they moving into an area? How quickly are they moving out of an area?

The infrastructure spend is a big thing. And I’ll just put that back into an actual situation. So if we look at, for example, out in the western suburbs of Sydney or in Canberra, they’ve got the international expansions for their airport at the moment. And we all know that Canberra’s going under a very high injection of tech at the moment, introducing the first 5Gs connectivities and a lot of tech hub around Canberra. But what we also need to look at is that those international airport connections are going to be in the likes of Los Angeles and Tokyo to the biggest tech hubs in the world.

So some of this influence can be predictive of what else can we look for in terms of tech development, tech boom. And so then we can go back into the Canberra market and find out what other influences the government’s putting in place to assist that. And therefore, if that’s going to be… They’re obviously going to need cabling under the ground or other infrastructures that are going to be able to support that industry.

Then essentially we can look for the people that are going to be able to work to support those industries. Those people have to live somewhere. We’re in the business of buying property. So we have to buy those properties that are going to be able to work for those locations, for those industries, for those reasons. So it’s about back stepping and understanding the full scope and then honing in on the actual data, which is the supportive point for it.

Ben Handler:

Most of your clients are they typically locking in interest-only loans to support this strategic direction that you’re going in?

Darren Venter:

We work very closely with our finance partners because not everybody is the same and it depends where you are in the portfolio too. Throughout that big questionnaire that we give our clients… It’s not a big questionnaire but throughout the questionnaire that we give our clients, a lot of that stuff is also financial questions, but we also then lead onto the conversation with our mortgage brokers and our financial partners.

So every instance is very specific and particularly tailored to the client’s needs. If there’s a need for a principal and interest, then we might go that way. But typically getting into the investment properties, starting off interest-only, great. If you can get into the 80%, great. If you can’t there’s still lenders mortgage insurance, which we can tap on. It just means that your rate of growth is influenced by the decisions you make on the financial side too.

So there’s two very important things that we need to do here is the property purchase strategy and then the financial placement strategy. And if you can place those together to work really well, then essentially that property is going to be able to perform for you, perform for your portfolio and allow that to grow in a very structured strategic way.

Ben Handler:

Are you focusing on existing stock or is it new or are you doing both?

Darren Venter:

We don’t buy new stock. It’s very rare that we buy new stock. And just a bit of a background. I used to actually do land finding, land investigations for building companies and for mass developments. And I stepped away from that because it’s not necessarily the point where I found value because I really value finding properties where the growth of the property is influenced by what I’ve literally been speaking about.

A lot of developments don’t necessarily have a lot of that interest best of mind or front of mind. And I’m not saying that’s in every single case, but that is one of the reasons why I actually stepped out of that side of the industry is because I really saw the value of what the market growth does. So because of that, I actually took myself away from the new builds because we couldn’t really justify the value growth in the new builds.

Ben Handler:

Which makes sense.

Darren Venter:

Yeah. So we actually purchase existing stock most of the time. In fact, all of the time. So we find these products in regional pockets of Australia, also outer metro areas of Australia. And as long as it makes sense for the clients, then that’s what we go ahead with. But essentially every property that we purchase for our clients is individually picked. We don’t have a place where we like to pick right now, because that might not be right for the portfolio. Every product and every property has its own reason in the portfolio.

Ben Handler:

Which makes sense. And it’s obviously a backdrop to your business model, which is obviously very custom bespoke. And as you were saying around the interest-only or the PNI, it’s based on that specific time for that specific client for what they need at that time. And I think that’s great because there’s no one size fits all approach for investing. I think you need to analyze the situation as it is, which I’m sure clearly you’re doing and then working out what’s the best strategy to meet the objective outcome.

Darren Venter:

Absolutely. Everybody has their own situation. Everybody has their own objective and everybody has to have their own plan to get there. So it’s about creating that plan and doing it through strategic purchasing is to me the only way to do that.

Ben Handler:

What have you found challenging? Obviously, as an entrepreneur starting your own business, it’s never easy. Buyer’s agents are starting to grow now. Obviously property is something you’re passionate about. What have you found most challenging starting out Strat Prop?

Darren Venter:

The most challenging part of starting any business is being able to let people know what you’re able to do for them. There’s a big rapport that you have to have. There’s a big amount of rapport that you have to have with your clients and potential clients. Building that relationship is always the biggest thing for me to be able to get people to understand what it is that I do and why I do it.

So I think for me, that’s probably always been the biggest thing. I wouldn’t say it’s been necessarily a challenge, but it’s been my main focus in business would be to try and get that relationship with people because when you are purchasing properties for them, which is of such… They’re good volumes of cash spend that they’re putting down into your trust to actually be able to purchase a property for them, you really do need to get to know those people because you need to understand what their objectives are.

So in terms of the biggest challenge, it would probably be to get out in front of my potential clientele and let them know what it is that I’m able to do for them. But like with any business that you create, there’s a lot of challenges. There’s the marketing challenges. And that’s pretty much what I’ve just harped on there. So that is marketing 101 is about getting people to be able to trust you and understand what you’re doing. Probably the most important thing or the most challenging thing would probably be getting in front of the right people.

Ben Handler:

Which is also comes down to getting clients. And I think that’s a common problem for all businesses typically starting out is client acquisition.

Darren Venter:

Yeah, absolutely. It is a tricky part, but what I’m finding is that as soon as you take on a couple clients, they refer on to other clients, they refer on to other clients and you build your network that way. And you really do grow a strong clientele base. And that I think is probably more valuable than any sort of online marketing that you can do because you know the product that you’re supplying to this person, and they’re able to share that knowledge with somebody else.

So understanding what you do and sharing that with your client, allows them to share it with their clients. So being really open and exposed about the whole process is one of our… Is basically top of mind for us is that we expose all of our discussions and our conversations and our findings. And we actually train our clients up along the way so that they have a very good understanding and comfort level with what we’re trying to do.

Ben Handler:

The whole transparency. I sent an email out to my database a few days ago, and I was sharing two tips on what I felt buyers wish they knew before they… Because I personally with my experience, I think that buyers are very naive. I’m sure you’ve got your own experience and perspective, but I think they think they know what they’re doing, especially the ones who might have, they might have bought one property or two, or they may have never bought before. They don’t know what they don’t know.

So my two tips. Just one of them and we can elaborate on this. I’m curious to get your perspective. The first tip was around, I guess the whole essence of developing real estate agent relationships. The importance of having a solid real estate agent relationship for two reasons, especially for a buyer’s agent. One is getting access to all available stock. So not relying on real estate and domain. And then the second is to position you to buy the property at the right price because you have that relationship so they’ll say, “Hey Darren. I’ve got two other buyers here. If you just give me 420, deal’s done. We’ll go unconditional.” So that was the first one was about agent relationships.

And the second tip that I mentioned was around negotiation. In the sense of… I was mentioning that the negotiation begins when you walk through a property if you do go through it. Just judging body language. If you’re looking like you love it all and you try not to say much and you think because you’re not talking that you’re winning it. And then when you get on the phone to try and crunch the deal out as a buyer potentially they know you love it. And they’re going to use that as leverage. And they’re going to squeeze you.

What’s your take on those two things? So one is obviously the importance of real estate agent relationships and two just around negotiation.

Darren Venter:

Number one. Real estate agent relationships. It is extremely important. I know there’s, unfortunately, a little bit of a taboo thought process around real estate agents. And I’ll be honest with you. They are all great people. They’re all doing their job, and they’re all doing the best that they can do.

So when you’re going into a negotiation or a discussion with a real estate agent, be open, put your cards on the table, know what you have to hold back if you do have to hold anything back, but understand that they are still people trying to do their job and work with them as much as you can. If you’re open, if you’re upfront and if you are basically putting everything out there that you should be, you can’t put everything out because there’s negotiations taking place, but if you are open and you’re friendly and you’re humble and you are just… If you put out the energy to be able to receive the energy, then that’s when that good relationship comes through.

And having an open conversation with an agent is probably the first step in the right direction. Going into those discussions being closed off to an agent is not going to get you anywhere. You’ve got to befriend them. You’ve got to make them understand that you are doing your job just as much as they are. And understanding that basically allows a good coherence between the two parties.

Ben Handler:

And also, I guess, gives you more access to stock. And what your take on negotiation? Because I think a lot of buyers think they know how to negotiate. They can negotiate on a fridge, or they might be negotiating in something very different to property, but then they jump into property, and they think they’re this expert negotiator. What’s your take on that?

Darren Venter:

The negotiation game it comes down to every single circumstance at hand. There’s a lot that you can play on in the negotiations. When you do go into negotiation, I would just be mindful that there’s a lot of options that… Because you obviously can’t put everything on the table at the same time, they’re probably not putting everything on the table at the same time, too.

As long as you have a good rapport and you can go into that negotiation on a good holistic level where you’re not battling each other, where it’s a good conversation, I think that will get you further in uncovering a little bit more information which you’re able to use in your negotiation. So definitely being able to create that rapport with an agency is very important too, especially with being able to get those off-market listings. It’s creating the trust between the two parties and there’s obviously the trust factor, but then there’s the fact factor.

The trust factor you can only get so far being a negative person without much trust. But if you have a bit of a positive attitude going into it, you’re going to get more of the fact factor than the trust factor from the party that you’re actually negotiating with.

There’s obviously always a lot of tools that you can use in a negotiation strategy. Obviously on forwarding the rental onto the property. Helping the agents keep that property on their rental. So there’s a whole bunch of different factors you can use. It’s always very dependent on the property at hand. But I would say number one is, go into it understanding that they are just as human as you are and that you’re having this human conversation between two parties and don’t make it an argument, make it a discussion.

Ben Handler:

I love it. And let’s talk about all these buyers out there who are waiting until September to buy. And then yesterday we just got news that it’s going to be… So they could be waiting until January.

Darren Venter:

They could be.

Ben Handler:

And they could be waiting until 2063. So what’s your take if buyers come to you and they’re like, Darren, I’m just waiting to September or now they’re going to be waiting until December to buy. Have you got an opinion around that or is there something that you’d like to share to them?

Darren Venter:

Absolutely. Don’t wait because the more you wait, the less interest you can earn or the less gross you’re going to get on that actual money that you have saved up. A lot of our clients come to us, and they do you have this discussion with us where they say, well, we just want to wait, and we want to test out the market because we’ve heard that something’s going to happen. It may happen. It may not happen, but what’s the point of waiting?

Right now with the funds you have available, with the place that you are, with what you’re looking to achieve, we can create that plan. That plan might look different in eight months’ time and that’s that plan. But right now it could be this plan. Each plan will have an outcome, and it’ll basically be able to take us towards your objective one way or another. But if you wait, you’re going to get there later. And that’s the bottom line.

Ben Handler:

Yeah, it’s an interesting one. I always tend to think that the people who are on that fence wanting to wait, I guess the real question is how serious are they? Is it a high priority to buy? And I tend to think not so much because why would they want to then…? If the right property presented itself today at the right price, why wouldn’t you want to buy it?

Darren Venter:

Absolutely. I think that comes down to, again, the question of what is your desire to work with a buyer’s agent too? If you’re able to find that on your own, if you see it on your own and you want to buy it on your own, then buy it on your own. But is that property, the right property for you to be buying and for the right reason?

So it’s understanding what the market factor is behind the property, but it’s also understanding what that property is going to be able to do for you. So if you’re waiting for the property to do something, I can tell you now, today it’s going to be there and in two months it’s going to be there. It’s still going to be there in a year. It’s not going anywhere. It’s the performance of the market and how you can gauge that with your personal profile.

Ben Handler:

What made you personally want to become a buyer’s agent? What was the drive behind it?

Darren Venter:

Well, my whole family comes from property originally. So my mum was a real estate agent. My auntie was a very big real estate agent. My grandfather actually owned one of the biggest real estate agents in Johannesburg.

Ben Handler:

Why didn’t you get the sales gene?

Darren Venter:

No, you see, that’s the thing.

Ben Handler:

You missed it.

Darren Venter:

I think I got my technical knowledge and my technical head from my dad. All the property was on my mom’s side. And I took this love for property, which I could see that they were doing really well with, and I saw what it had done for the family on that side, but I’ve got a more technical approach on things. I’m not necessarily a salesperson, but I do like the interaction with people. I love that.

So being able to take the property, which I love. I love the property factor of it. And being able to put it into a technical aspect such as investment purchasing through strategic plans. Then I think yeah, onto a winner, and I think I got that from my dad’s side because we used to sit down every Sunday and draw out house plans on A3 papers, and we’d be like, yeah, this is the house we’re going to buy, and we’re going to build this one. Good memories.

Ben Handler:

Obviously we’ve hit a new FY. What’s the plan for Strat Prop high level?

Darren Venter:

So I’d say high-level plans is we’ve got some new, really cool tools inside of our business, which we’re using with our clients. And it allows our clients to basically be able to grow their portfolios effectively without having to actually manage it themselves.

Ben Handler:

This is your IP?

Darren Venter:

This is our IP. And we’ve developed this over the last several months. It’s come to fruition just probably about four weeks ago. The new development release of it at least has become fruition about four weeks ago. It’s really interesting stuff. So basically we’re stepping more into the portfolio growth rather than property purchasing side of things.

So for our clients now, for the next coming years, we are wanting to take on clients who are actually looking to be able to grow their portfolios, rather than just buy one or two properties. We actually want to set them up and nurture them and manage that whole system and set up and structure for them.

Ben Handler:

Okay. That’s exciting.

Darren Venter:

It is very exciting.

Ben Handler:

It’s big. And so you’re based in Sydney, mainly?

Darren Venter:

Based in Sydney, Northern Beaches, but we purchase countrywide pretty much.

Ben Handler:

Love it. As we wrap up, where can people find you?

Darren Venter:

So the website’s www.stratprop.com.au. Facebook is Strat Prop AU and Instagram is Strap Prop, I believe. LinkedIn Strap Prop again, Darren Venter. My personal email address is darren@stratprop.com.au or you can give me a call. The number’s on the website.

Ben Handler:

Awesome, man. Really appreciated the chat.

Darren Venter:

Thank you very much.

Ben Handler:

Great to see your journey evolve and just looking forward to see you kick some massive goals over the next FY.

Darren Venter:

Thanks mate, you too.

Ben Handler:

Great to have you.

Darren Venter:

Thank you very much.

Ben Handler:

Appreciate it. Okay.

So hope that was a good little background and backdrop on to Darren’s story at Strap Prop. As you can see, being a buyer’s agent, you don’t need to be that salesperson. Like you see the real estate agent with the shiny teeth and the pointy shoes and the flashy car and all that stuff.

A lot of buyer’s agents are actually quite technical like Darren. Especially for investors, they’re analyzing data. Like we talked about. There’s so much information that it’s overwhelming. You’ve got to learn how to consolidate it all. And as you just heard with Darren, he’s actually built out with his own IP a lot of tools around delivering his client a different, fresh innovative experience to really grow that portfolio and watch it grow and measure it.

So if you want to learn more about Darren, check him out. His details are on the screen now. You can check him out on his website. You can email him. He’s running an investment national business. It’s very bespoke and custom. Awesome chatting. See you next week.

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