Client Story: Proactive PropertyMarch 4, 2020
Proactive Property is run by Richard Shoesmith, who is a long-term client of Oreon. Richard came to Jarrad Dunn at Oreon Partners in 2005 when Richard was seeking funding for a development in Thebarton, South Australia.
The company originally began as a shed-building business over 15 years ago, and then moved into commercial warehousing under the name All Shed Solutions. When the firm first started, their average sale was $20k; today, with the same amount of overhead, the company’s average sale is $6m!
How the business works
In short, a property syndicate is a direct property investment where numerous investors pool their capital in order to invest in real estate. Pooling capital provides investors with an opportunity to invest in properties that might otherwise be too expensive for them individually.
Typically, Richard purchases a commercial property and then commences development. Because they operate a building company, they’re able to do the majority of the work themselves. He then gets investors onboard and once any developments have been completed, he organises tenants for the properties and investors begin to see a return on their investments.
Steps in the process include:
- Finding a site
- Speaking to the agent
- Lining up a tenant
- Contracting the land
- Finding and securing investors
- Building the commercial warehouse for the tenant.
While the company is involved in building and development, the key point of difference for Proactive Property is that they have a long-term outlook. They now have a property management division to help manage each of the properties, rather than having an external real estate manager involved.
With a team of only six people, the business has a very lean structure. There’s no management structure needed to check every stage; everyone involved is on the same page, wanting the same things, with personal ownership at the core.
“It’s a very effective model,” says Richard. “We bring together the ‘supply chain’ of what would normally involve many different businesses.”
The company averages three projects per year, with 30 total projects completed to date. They now have $100m of property developments, primarily in South Australia but also some in Sydney, which Richard sees as a potential growth area for the firm.
How Oreon has been involved in their success
Since 2005, Oreon Partners has assisted Richard in establishing many successful property syndicates. In turn, Richard has referred a number of clients to Oreon who are investors in syndicate projects. They are given guidance and advice on many things including the best structure with which to invest.
“It’s been great working with Richard over many years, not only as a business partner, client and friend, but as someone who appreciates what we do and believes in our ability to look after the investors he’s referred,” says Jarrad Dunn. “Our team is in regular weekly contact about many aspects of the business.”
After several years of success and growth, Richard worked with Oreon to find and recruit his own accounting staff. Oreon encouraged all syndicates to set up Xero for their bookkeeping and then provided training and advice on how to use the software.
Oreon’s current involvement with the company includes:
- Lodging business activity statements (BAS) every month or quarter (depending on the reporting cycle) for each syndicate
- Providing ongoing reviews of accounts as needed
- Preparing year-end financials and tax returns
- Preparing interim reports for investors at 31 December
- Providing referrals and opportunities for other clients to invest in the syndicates
“The best thing about working with Oreon Partners is that they always know what the correct answer is – or can find out quickly,” says Richard. “They know my risk profile the best, and I look forward to doing even more developments with their help.”