How I Made $520K With One Phone Call: A Commercial Property Case Study

TL;DR

I made $520,000 net on one industrial property with a single phone call to the tenant. The move was simple: I switched their lease from a semi-gross structure, where I paid the land tax and management fees, to a fully net lease where the tenant carries those costs. That lifted my net rent from $739,000 to $799,000, and at a 6% cap rate that is roughly a million dollars of value. After paying the tenant a $454,000 incentive to agree, I was left with about $520,000, documented and signed inside 54 days.

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The short version

The value in commercial property is not always in buying and selling. Often it is sitting inside a lease you already control. On this industrial property in Western Australia, the problem was a semi-gross lease. I was receiving $739,000 but paying the land tax and management fees myself, and land tax only ever seems to go up. That erosion was quietly dragging on my value.

So I asked what it was actually worth to remove it. If the tenant took on that $60,000 of outgoings, my net rent would climb to $799,000, and applying the same 6% cap rate, that is about a million dollars of uplift. A more passive, fully net asset is worth more to any future buyer. Less to manage, less to worry about, more it is worth.

Then I made it a win-win. I worked out the present value of the outgoings the tenant would take on over the remaining lease, and we agreed a $454,000 incentive paid to them upfront. They got cash to put to work today, I got the value uplift, and nobody felt done over. This is the kind of value-add move I teach inside the six-step framework.

The last piece was documenting it fast. We agreed on the phone, signed a one-page heads of agreement the next day, and only paid the incentive within five business days of the tenant executing the formal lease variation. That turned a phone call into $520,000 net in 54 days.

Where to go from here

Most people start with the free training. Cal’s Fortify Your Wealth series is a free multi-part video series on the strategies he uses when the market shifts, and there are weekly videos on YouTube.

If you would rather talk it through, book a quick 15-minute intro call with the Investor Code team: book an intro call.

And for the full framework, that is the Commercial Property Mastery online course.

Frequently asked questions

What is the difference between a net lease and a gross lease?

On a gross or semi-gross lease, the landlord pays some or all of the property outgoings, such as land tax and management fees. On a fully net lease, the tenant pays those outgoings on top of the rent, so the landlord keeps the full net rent. A net lease is usually worth more because it is more passive and carries less risk for the owner.

How does changing a lease add value to commercial property?

Commercial property value is largely the net rent divided by the cap rate. If you lift the net rent, say from $739,000 to $799,000, and the cap rate stays the same, the value rises. In this case that difference was around a million dollars of uplift from one lease change.

What is a tenant incentive and why pay one?

An incentive is a payment or benefit you give a tenant to agree to a change, such as taking on outgoings or extending a lease. Paying one keeps the deal a genuine win-win, which removes friction and gets the tenant to sign quickly rather than dig in.

What is a heads of agreement?

A heads of agreement is a short document, often a single page, that records the key terms both parties have agreed before the lawyers draft the formal lease. It lets you lock in the deal fast and hand the lawyers a signed agreement rather than an idea.

How long does a lease variation take to complete?

In this case it took 54 days from the first phone call to the signed lease. The heads of agreement was signed the next day, then the lawyers turned it into a registrable lease variation over about three to four weeks.

Full transcript

Intro and what’s covered today

Hey everyone, Cal Doggett here, founder of Investor Code. Today I’m going to show you exactly how I made $520,000 net with one phone call. I want to show you the tools and the tricks I use to do it. I also want to show you basically the thinking behind it because I want you to understand these opportunities are there. If you’re currently owning property or if you’re going to buy them, these opportunities are actually everywhere if you know what to look for. So, what I’ll do is I’ll head to the PowerPoint slide and I will go from there. How I made $520,000 with one phone call. What I’m going to cover is how to spot value add opportunities. Not just this opportunity, but value add opportunities in general. How to calculate your upsides. I’ll actually take you to my Excel spreadsheet and I’ll show you what that looks like. And then, okay, so now you’ve got the numbers which tell you you’re going to make money. Well, how do you go create that outcome? How do you actually structure that conversation? How do you bring that to fruition? And then lastly, I’ll show you how to document the outcome. And that’s really important, guys. You can agree something verbally, but then you have to go and actually get it in writing. So, I’ve got a frictionless way of how to do that, which is what I’ll cover today. If you like my content, please subscribe and follow so that I can keep bringing this to you. And if you’re looking for more information, you can find my online course at investorcode.com.au. And I know what you’re thinking. Why listen to me? I’ll cover it off quickly. I’ve got 20 years of commercial property investing experience through all classes and all types of commercial property. I’ve done well over $550 million of property transactions now. I’ve done well over a hundred plus leasing deals, probably more like 200 plus now, and that’s everything from the smallest tenants in Australia up to the biggest retailers. Through my syndicated business, Properties and Pathways, I’ve generated an average return of 21% per annum. But the more important part is that there are countless examples now of me generating 100% per annum returns using an extremely simple formula which I cover in depth in my online course. But let’s get into this particular transaction.

My six-step framework to make money out of property

I cover this in my course, guys. There are six steps, and I’ll show you which step I used to make this money. Step one, find and locate the property. You need to have an asset in order to generate the upside in it. Step two, run your feasibility, and you have to have discipline with this. Then you contract or secure the property. In some instances you don’t have to actually secure it, you can just get it under your control. Then you conduct your due diligence and secure your finance, which is so important, because due diligence is where you uncover all the problems, the risks and the faults, but it is also where you uncover opportunities, and often you can turn a problem into an opportunity if you think about it the right way. This is a really great example of exactly that. Then I show you how to manipulate value, which is the exciting part, and ultimately with commercial property you decide whether to hold or to sell, which I will not cover today.

The deal metrics

I’m not going to tell you where this asset was or the address, that is confidential, but I can tell you it was an industrial property in Western Australia and this is exactly what happened. This was in 2025. The price of the property was about $12.3 million before I did this transaction with the tenant, and afterwards it was about $13.3 million. That is a million dollar uplift, but there were some costs to generate it, which is why we were left with $520,000 as our net uplift. This tenant was a multinational enterprise, and I was able to do this with a phone call, which shows you that win-win outcomes create a frictionless environment for you and the tenant. That mentality removes the adversarial relationship tenants often experience with landlords. The passing rent on this asset was $739,000, which we were able to increase, and there were about 8 years left on the lease, so the value was capitalising eight years of income. The cap rate was 6% before and after the deal, unchanged. Before the deal the tenant was paying us $739,000 and we were paying all the expenses, and that roughly $60,000 of land tax and management fees eroded our return. The deal we did was to flip their lease from a semi-gross lease to a truly net lease.

How the feasibility stacked up

So here we go, this is my feasibility, guys, and I’m showing it to you transparently. The top part shows the tenancy schedule on a semi-gross basis. Then I have copied and pasted it, and in the second one I have changed only one thing, which moves it to a fully net lease. The difference I have highlighted in yellow. You can see what we were receiving was $784,000 of net rent plus $14,000 of hard stand, which collectively created $799,000 per annum. The tenant was paying all of the expenses on top of that, except we as a landlord had to pay about $60,000. Where did that come from? Those amounts came from the valuation. There is a screenshot of the outgoings for the property, and it highlights two things: land tax of about $36,030, and administration and management fees of about $24,100. Added together, that is roughly $60,000, and it showed that our net receivable after the rent and after paying those amounts was $739,000. What we wanted to do was go to the tenant and say, how about we transfer your lease to a fully net lease, you take on the burden of paying that $60,000, and we will incentivise you to do it. The tenant said, that sounds reasonable, what kind of incentive would you offer? Now the same rent comes in, the same hard stand comes in, and instead of eroding our net rent with land tax and management fees, we take home $799,000. Then I needed to calculate how much we could offer the tenant to entice them, because it always has to be a genuine win-win. So I asked how much do we have to play with. The net rent moved from $739,000 to $799,000, the cap rate from our valuation was 6%, which drives a value of $12.3 million. Applying the same cap rate to the higher rent of $799,000 gives about $13.3 million. There is an argument the cap rate would actually tighten, because a fully net asset is even more passive for a future owner, but let us assume it stays the same. So I knew that if we could articulate this quickly and the cap rate held, there could be about a million dollars of value from one deal. But the tenant would want an enticement, because they are taking on the $60,000 a year, which could be more next year and the year after. So how did I calculate it? I said, we know CPI is about 2.5%, you have eight years left, so what if we take that $60,000 and escalate it every year at CPI? The total over the full term, $60,000 plus seven years of escalated outgoings, came to about $610,000. I asked the tenant to take on the responsibility worth about $610,000, and they said that sounds amazing. High level, we could make about a million dollars of upside and it would cost about $610,000. But here is where I got a little clever. I said, it is worth more to you to get the money now than to spend it in years five, seven and eight, because you could invest it. So a fairer way is to use the present value of those cash flows. Using a present value calculation in Excel at a 3% discount rate, the present value of that stream was about $482,000. We negotiated somewhere in the middle, and the payout figure we agreed was $454,000. So with a phone call, we created a million dollars of uplift and agreed a $454,000 incentive for the tenant to take the deal.

Executing the deal and signing the agreement

There was about $548,000 of profit, a sizable result from one phone call, but now I had to do a few more things. I had to get the tenant to actually sign an agreement, and lease agreements can take time once lawyers get involved. So I said, why don’t we just do a heads of agreement, a document we use often, as simple as a few words on a page. You sign it, we sign it, it captures the high-level agreed terms. They said no dramas. We created it on the spot, sent it that night, it documented exactly what we agreed, and they signed it. Then I said, now that both parties have it on paper, we will go to our lawyers and ask them to put it into a form we can register with Landgate, and that took about three or four weeks. I proposed the idea to the tenant on the 13th of August. The heads of agreement was signed the next day. They signed the formal lease on the 6th of October, which was 54 days later. So I made about $520,000, actually a little more, in 54 days with one phone call.

Summary, everything you’ve learned in a nutshell

So what did I cover? First, how to spot value add opportunities. The genesis of this deal was that we were on a semi-gross lease, which is a risk to us and a slight detriment to the property value. If land tax is 10% higher next year, we get less. I looked at that problem and asked what it was worth to remove it, because any valuer and any incoming buyer would pay more for an asset with that risk removed. The sums suggested about a million dollar uplift. That is how you spot the value add: look for the problem, what is reducing value, what is stopping the asset being worth more. Then we approached the tenant with a win-win: you get $454,000 in your pocket today, and we get an uplift of about a million dollars in value. It is all human nature. A fully net lease is more valuable than a semi-gross lease because it is less to manage and less to worry about. A ten-year term is more valuable than a two-year term because the income runs longer. The metrics and spreadsheets sit behind the decision, but ultimately it is human nature: reduce risk, increase reward. Second, how to calculate the upside. We applied the same cap rate to the increased rent, from $739,000 to $799,000, for about a million dollars of uplift, then worked out the cost to the tenant of taking on the outgoings over eight years, about $610,000, then the present value of that, and agreed $454,000. Third, how to create the outcome. It was a phone call. When you are creating outcomes based on human nature, get on the phone, or better still meet in person, and be genuine about the win-win. Fourth, how to document and protect it. We captured it in a one-page heads of agreement that night, then had the lawyers turn it into a registrable lease variation, and critically we agreed the tenant would only receive the $454,000 within five business days of executing the lease. That meant we risked no money until the lease was signed, and it put the tenant on the clock to sign quickly. We also got the valuation in two stages, numbers first and the full report second, to derisk our spend before going to the bank to withdraw equity for the next asset.

How to simply and safely invest in commercial property

I cover all of this in my online course. There is a formula. You focus on three key actions that drive enormous value, and one of them I covered today, literally changing leases to net leases. You need to find properties that allow you to do this, and you need to learn the few essential things you need to know, how to do them and when, to secure the opportunity and derisk it before you buy. As I explained today, I derisked every step of this outcome before ever spending that $454,000. Thank you so much for watching. Please comment below and let me know how I can improve these videos, subscribe if you want them every week, and if you want more, investorcode.com.au is where you get my online course and my newsletter.