3 Degrees of Freedom

Ep 173 - How Market Cycles Don't Exactly Repeat, But Rhyme with Michael Yardney

• Derek Clifford • Season 3 • Episode 173

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Today we speak with titan of Australian real estate, Michael Yardney. Beginning his journey in the 1970s, Michael now reaches over 2.7 million readers annually through his popular blog, Property Investment Update. Voted Australia’s top property investment advisor six times, Michael understands both the practical and psychological keys to success in real estate investing and achieving financial freedom.

In this episode, Michael shares his perspective on current economic trends and how market cycles tend to rhyme if not repeat. We discuss the patience and intentional mindset required to break free from the “time equals money” trap through property investment. Michael explains common mental obstacles that hold people back from realizing their financial potential, and how to shift focus to your “inner world” first. Tune in to uncover Michael’s “secret sauce” to persevering through ups and downs over decades in property, ultimately reaching not just financial but also locational and time freedom.

Connect with Michael thru the social links below and learn more about his business:
Facebook: https://www.facebook.com/michael.yardney
Instagram: https://www.instagram.com/michaelyardney/
Website: www.PropertyUpdate.com.au

Unlock 3+1 degrees of freedom (time, location, financial + health) with our 5-Point Blueprint! https://elevateequity.org/podcastgift

If you really enjoyed this content and are looking for more, you can continue to learn more about us in several different places for free!

If you'd like to have a FREE copy of our 7 Ways Commercial Real Estate Syndications Protect and Build Wealth, simply click the link below. We are here and vested in your long-term success! elevateequity.org/7waysEbook

Welcome to the three degrees of freedom podcast, where we explore lifestyle engineering with our expert guests to bring you in alignment with your own three degrees of freedom, location, time, and financial independence.

Derek:

Hello, everyone. Welcome back. And today we are delighted to have a Titan absolute Titan in Australian real estate. Mr. Michael Yardney. Michael began his journey in 2001 and now his wildly popular blog. Property investment update reaches over 3 million individual readers a year now, I believe. He's not just an influential thought leader, but also a practical player in facilitating property transactions, of which he's done over 5 billion of which it's amazing. Michael has been voted Australia's leading property investment advisor six times in the last eight years. And he truly understands the psychology of success, which blends very nicely with our mission to help our listeners like you unlock their own potential and achieve more degrees of freedom. So, Michael, thank you so much for coming on the show. It's great to have you here. How are you today? My

Michael:

pleasure, Derek. One little correction, if I could, I'm a little bit older than that. So I actually started investing in the 1970s, early seventies, I started a company called Metropole in 2001. So we've been helping. investors along their path. But boy, I've been around for over five decades. The gray hair shows that

Derek:

that's amazing. I was going to say actually the wisdom, and the knowledge shows that, or at least what I'm sure we're going to be finding out here

Michael:

soon. That's actually been very handy recently, Derek, because just like in the States. In Australia, we've gone through a couple of years of chaos and started with COVID when there were a lot of unknowns and then inflation, which a lot of people didn't know about rising interest rates is when a lot of investors have never experienced that either, but having been around the block a few times, and that's an Australian expression. I'm not sure if it's the same in the United States. I can see some patterns in the chaos. So that's what happens when you've been around a few

Derek:

times. I'm really fascinated to explore this a little bit more. definitely want to put that on a list of things to talk about here. And there's a lot that I want to talk about with you, because you definitely know what it is that you're talking about. So we'll start like we always start with every one of our guests. Which of the three degrees of freedom, which is location, time, or financial, do you feel that you're the strongest in right now? And if there's any of them that you want to increase, which ones do you want to increase? Well,

Michael:

I'm actually, I've turned 71 a couple of weeks ago, and I have been fortunate enough to build a very substantial real estate portfolio that gives me All of those freedoms, but boy, it's come at the expense of, a, my first marriage in, I divorced 30 years ago when I chased the wrong things and I chased money, not recognizing the importance of these other things as well. I've actually stepped back as the CEO of a national company now, and I'm just doing the things I enjoy doing podcasts like this videos, writing blogs, dealing with the media. So I've actually, luckily. I've got the in the position now that I believe I've got all those three degrees of freedom. But I think a lesson for our listeners and our viewers is it doesn't come easily and it doesn't come quickly. Wealth is the, as Warren Buffett said, the transfer of money from the inpatient to the patient. I believe it takes probably a good 30 years of not investing to get to the point of having all three degrees of freedom.

Derek:

I love that answer. Thank you so much. And, I couldn't agree more with you. And, I really appreciate the respect and the patience that it takes for someone to realize that financial freedom or freedom for that matter, there's a cost to it. It's not like you can just walk right in and just go, you know, and just assume that there's a silver bullet that you can either pay for it or that you can, you know, buddy up to someone with it and just gain it for yourself. It just long term sustainable success doesn't work that way. And your story has a very stark message that I also share with you because my wife at one point, she was telling me, Michael, that like, she felt that I was in love with real estate more than her. And that was a big warning, you know, back when I first got started, of course, this was like eight, six, you know, six, seven, eight years ago, which to you is like, you know, almost yesterday, right. In terms of macroeconomic scales, but, I can totally relate with that. And I will, I can definitely confirm from personal experience that your message is a hundred percent dead on. You've got to give something in order to get to where you want to go, but real estate will get you there. That's the great thing is that as a population increases on this planet, there's They're not making more real estate, right? So you just have to

Michael:

They're not. But interestingly, while it may be simple, it's not easy, Derek. And that's not a play on words. Most people who get involved in real estate as an investment, in my mind, fail. They don't get the financial freedom they deserve. And we can go into that in a moment. So It's too easy to, just get caught up with the promises of this new breed of gurus who are flipping hamburgers at McDonald's five years ago and now have a multi million dollar property portfolio. Yeah.

Derek:

Yeah. Let's, let's actually talk a little bit more about that. Just a couple of minutes ago, you mentioned, the fact that There is a lot of telling signs in the economy right now. And we've actually been somewhere like this history tends to maybe not repeat, but it rhymes, right? I forgot who said that. Is there something that you're seeing in the current economic winds and especially most of our listeners are understanding they're in the United States and they understand that you're not in the United States because of your amazing accent. You're in Australia and you've

Michael:

got the accent. I'm fine.

Derek:

That's great. Very true. But what I guess my point is that in Australia, there's more of a global outlook here in the U S we tend to think more us, right? That's just the way that we've been brought up. And so we think in terms of the U S so I'm fascinated with your perspective, because what happens in Australia is very closely related to what happens around the sphere around you and in the global economy, especially China, Indonesia. You know, India and the United States, all these different economies, right? So I'm curious to hear what you think you're seeing, given all of the background on your, your educational material and everything, what type of trends you're seeing right now as for the world as a whole, and for real estate investing in general.

Michael:

Well, Australian property markets work differently to America. We've got a higher percentage of home owners. They're actually a little bit more like the Canadian property market, but there's always going to be tenants. There's always going to be people who, Own their own property and it's not always because they're poor. It's often because of their lifestyle changes. They've moved from one state to another. Maybe they've moved to a university to study. Maybe they've actually, college. Maybe they've, moved because of a new job or in between. They're building a new home or they've had a divorce. So what in. In some countries, the government provides a lot of housing in Australia, and I know in the United States, the government doesn't provide a lot of public housing, so it is dependent on investors like you and me and our viewers to provide that, so they're in small business, so therefore you've got to treat it as a business, you've got to take a risk, you've got to borrow money, and you've got to make some decisions And some of the things you've got, you're in control of, but there's a whole lot of other things that you're not in control of. I guess the first thing is to start with a bit of a plan, but to answer your question about the macroeconomic factors, I think you've also got to recognize that real estate doesn't work in isolation. Investing in real estate is related to There's like local economies. There's not one U. S. market, there's not one Texas market, there's not even in the same city a market because the different locations will perform differently as well. So you need some local knowledge. You need some knowledge of the laws of tax and finance, because property investment in my mind is a game of finance with some houses thrown in the middle there. You've got to understand why you're investing. Is it for cash flow? Is it for capital growth or a combination of both? And you need to understand what the economy is going to do to your business. If you owned a dress shop, you'd want to understand what the fashions are and what's going to affect what your customers want. So much the same if you own commercial real estate or single houses or multi family properties or, what's going on. So we've gone through a period of inflation which has occurred. In part due to the stimulus that the governments around the world made to get us through a pandemic. No one knew what was going to happen. So it's easy to look back and say, yes, you should have had vaccines. No, you shouldn't. Yes. The government should have printed so much more money. No, they shouldn't. They did. I think what they thought was best at the time, but the end result of that stimulus and extra money spending is inflation. And now the governments have kept raising interest rates to try and slow down inflation. And now they're talking about lowering interest rates you've paid. And they've got to come back now to the Goldilocks interest rate of not too low to stimulate the economy. Never get back to the wartime interest rates that we had to get through the COVID pandemic, but not too high like we've had in the last little while to slow it down. So our governments like a little bit of inflation, two, three percent, but they don't like very high inflation, which has other nasty side effects. The problem is many people who've invested for the last decade or so or longer have never lived through high inflationary periods and many have never lived through periods of rising interest rates, where the mortgage costs and the cost of living has gone up. So it's not just interest rates, it's the cost of fuel, the cost of living, the cost of everything. I think we've gotten through the worst of it. This is a long answer. I'm sorry, but the, I believe that the Fed has actually brought inflation in America under control. Oil prices, which are one of the big factors, not just because what you get at the Bowser, but the flow on effect from transport and, all the goods that's coming under control as well. The trouble is there's all the geopolitical problems overseas, America's involvement in those, and an election coming up. So I guess what you've got to watch out for is all these, what I like to call an X factor, the unknowns. The risks are not the things you think of. The things you plan for by having insurance, by having financial buffers in place, by owning the best properties in the best locations and the right ownership structures, the big risk for property investors is the things you don't haven't even thought of that are going to come out of the blue and they do every

Derek:

year. Absolutely. One thing. And one thing that I have to mention here too, is that there's been so many changes in this market, just looking in the U. S. alone. First of all, Demographics are changing, right? We're having more millennials and Gen Zers coming into the market that have different spending habits and different mentalities and voting preferences and living preferences that contribute to the economy. That could be one thing. Maybe they just are okay with no savings and just, you know, spending everything. That contributes to the long term health of the U. S. dollar and also the global economy. Because the U. S. economy is tied to the Chinese economy, which is tied to the European. It's all connected. then you also have an aging demographic of baby boomers who are now looking for senior housing. And that was a new segment that just came up in the last 10 years. Then we have COVID. They don't want

Michael:

to go to retirement villages, do they? That's right. Very different

Derek:

from their parents. Very different. And so now you have more medicine. People are living for longer. There's anti aging, all these variables. If anyone claims to know the answer of what's going on, then I don't know. It'd be very, I'd be very hesitant to, to accept that. I think there's a way to like figure out what can't or what shouldn't be happening or what's not likely to happen. But I think it's impossible to predict exactly where things are going to go and what the timing is of things because that's everything right timing is one of the great

Michael:

lessons is. Be careful who you listen to and don't believe the forecast. The media has to fill 24 7 of, TV stations, or online media. And so it's job's not to educate you. It's, I guess, in many ways to entertain you and get your eyeballs there. But if I could just confirm that I believe the long term future of real estate in America and in Australia is more tied to demographics, like you said, then Short term ups and downs of interest rates or inflation or even government policies. So, if you believe that over the long term the population of America is going to keep increasing, And it's going to be a wealthy nation because it's a knowledge based economy. They're the two big fundamental drivers that are going to push up property values in the long term. Now, I'm not suggesting it's a straight line. It definitely isn't. The property market is cyclical. Each boom sets itself up for the next downturn. And each downturn sets itself up for the next upturn, I guess, but following demographics is in my mind, one of the best ways of seeing where the market is going to move. And so we like what you're right. Millennials are moving to. Household. So family formation stage. So they're looking for different sort of accommodation now than previous generations. Baby boomers are, there's an expression in Australia, because we used to call it downsizing, but there was almost a little bit derogatory. So now baby boomers right size, right? Rather than leave the big four bedroom home, they're looking for apartments, but they're not wanting to go. To pre change or see change like some people suggested, many still want to live in the same cities where they can be close to their children, where they can go to the same hairdresser or a doctor, but maybe in more modern family of friendly apartments where they, but yeah. Transport or near airports where their grandkids can come, where their kids can come. So demographic trends critical in, your success of finding an property that outperforms averages, because I can assure you that over the next 10 years, some properties are going to do much, much better than others. And that'll be very much related to location. I think location does 80 percent of the heavy lifting and then owning the right property in that location will do the difference.

Derek:

I love this perspective because you also can see in the United States, we have a lot of different places where people can move to and live. And I'm sure it's the same in Australia. Most people live around the coast, if I remember correctly. And, you can see what the national averages of people moving or what the natural, the national growth rate is. as average for across the entire US and the United States. And then there's data out there that shows what each state, where each state is growing, or each city, or each county, how quickly they're growing in comparison to the national average. And so not only is it looking at the demographics from like a high level view of how many boomers, how many Gen Zers, how many millennials are out there, but where are they physically moving to? You know, where are they actually moving? And that is one lead indicator that is an absolute cornerstone of when you're buying, when you think about buying a real estate investment, that's what you look for. Because if there's negative. Population growth was meaning people are net leaving that city or town. That's probably not a good idea because then the demand starts going down for a fixed supply. Right? So it's interesting to look at that from both the local level, from a physical location standpoint, but then also from the, you know, the number of people on the planet perspective to the demographics is huge, so I love that you touched on that. More than that,

Michael:

I think we should be looking at areas that are gentrified. So, again, if you're looking at real estate, you're wanting properties that increase in value and also areas where people can afford to and are prepared to pay more rent to live. So it's not just what the locals are earning, and I like buying in areas where people are earning more than the state average, more than the local average, and some suburbs are like that, but also I like areas where younger people are coming in with more money, improving the area, buying the old places and fixing them up, doing them up, new small developments occurring as well. And you can see that because then you're going to have different sort of shops, different sort of local economies. In Australia, one of the things that COVID taught us was the importance of neighborhood. My city, Melbourne was locked down. Intermittently for 260 days, we were locked down more than any other part of the world, and we could walk around five. We will go five kilometers. The importance of neighborhood has been very important. I think the other demographic trend is working from home. More people are working in a more hybrid way, and so therefore They want to be able to go, we call it a 20 minute neighborhood where, within 20 minutes, you can get a variety of stores, a variety of gyms, houses of worship, yeah, parks, recreation, and sometimes even jobs. So I think looking, that's why I was saying a while ago that location is critical, and the right neighborhood is going to be more important than ever moving forward, Derek.

Derek:

Yeah, I couldn't have said it better myself. Now, I actually want to change gears a little bit and talk a little bit about mindset. And before we get there, you've been writing about investing in properties for a very long time, multiple decades. Again, I mentioned the 2001 figure, but I suspect that you probably have been doing it even before that, or at least having some inklings of doing it before then. Can you talk a little bit about. How the public perception or how your reception has been to your articles or to your knowledge and like, what, what type of insights have you been garnering as you write these articles and being, seeing the responses to them? Well,

Michael:

what happened was I started blogging, I think, before the word blogging became fashionable. And I enjoyed that. I think I've been very lucky. I've been fortunate. I've built a substantial portfolio. I've got good wealth. And I think it's my responsibility, the responsibility of anyone who's done well past the information and the knowledge on. So I freely pass it on through my property update daily newsletter, which has been voted the talk. Property real estate newsletter in the world for seven years in a row by Feedspot, an American organization. I've started doing podcasts years ago. I've got 5 million downloads of my podcast on YouTube. And one of the interesting things is that there's been lots and lots more people doing podcasts, blogs, videos. And one of the things that hasn't changed In Australia is that 50 percent of those people who get into property investments sell up in the first five years, they get it wrong, they bought the wrong property, they brought the made the wrong decision, they haven't got the right finance, they haven't done it right. So they've not made the right decisions and in Australia and the statistics will be different in America, but the trends would be similar. The average investor owns one or two investment properties. 92 percent never get past their second property real estate investment. interestingly, less than 1 percent own six or more properties. Interestingly, the clients at Metropole, my company, we did a result of, ordered their results. 7. 3 times more likely than the average to own six or more properties. So therefore what we did was we looked to see what they did differently. And so all the blogs, all the articles, all the things to answer your question are not useful unless you've got the right mindset. And I didn't know that initially, I didn't understand that. So over the years, I've not only written about. The facts of the demographics, but I've changed my emphasis to the way you think and I believe you can't change the external results, can you change the way you think initially came from Wallace Wattles in his great book, secrets of the, thinking, I think grow rich, but, in fact, more recently, it was, another book secrets of the millionaire mind, which said your thoughts lead to your feelings. Your feelings lead to your actions. Your actions lead to your results. Yeah. So I genuinely believe it's the inner world. Yes. Your inner world that affects the outer world. And so you've got to first recognize even how you think and why you think, because you've learned these habits. from people, your mentors, and your early mentors were your parents. So this is a message for our listeners, but also for anyone who is a parent or grandparent, be careful what you do, what you say, and what you don't say, because you're affecting the next generations, Derek.

Derek:

This is really, really important for people to listen to. I think in the United States, you have to be really intentional about what it is that you're putting into your brain. And that includes Surrounding yourself around the right people and reading the right material and not watching the wrong material, because believe it or not, even if you think something is on in the background, it has a sneaky way of like entering into your subconscious, right? If it's, I don't want to say trashy TV or content online, then it, that eventually will make your way into it, into your brain subconsciously, and it will come out in certain ways. So can I ask you, is there anything that you've been doing for your mindset? It's clear that you've developed this mindset of success. for both investing in real estate and also for advising others and preparing articles, just being an entrepreneur in general. Is there anything that you did to develop this early on? Or how did your, like, how did you get the spark for mindset and for learning about it? Because it wasn't so commonplace back, you know, in the eighties and early on. No,

Michael:

no, no, it wasn't. So I first, I came from a poor background. My parents were migrants. I was a migrant. I came to Australia at the age of three. And interestingly, my parents were workers, but my parents friends owned real estate and owned businesses, and my friends parents, who were my parents friends, owned real estate, and I wanted to be like them. I didn't have my first car, I didn't own a car until the age of 25, 26, but I already owned two investment properties by that time. I went halves with my parents in the first one because I'd only saved up a small down payment. I didn't know anything about mindset then. over the years I then got mentors and I learned that you shouldn't try and do it all on your own, which is what I wanted to do initially. I thought that was the right way to do things. So as I learned and as I read and I had some Great mentors early on in the piece. I, then started getting involved in mastermind groups. I still today have business mentors and coaches and pay for coaching. and I guess they opened my mind, went to Tony Robbins seminars. I even did this fire walk that he talks about. Yeah, I wasn't going to do that. I'm not stupid. I'm not going to walk on fire like other people. And they threw it on us in the first day. And what it showed is, if you look at the green grass ahead rather than the fire underneath, if you can get through that, you can get through anything. So I did a lot of motivational courses. And while a number of my friends and acquaintances thought it was all rah rah, I actually recognized, no, it wasn't. So it was a I had to study it and I had to learn it and in the old days there were tapes and then there were CDs and you'd play in the car and things like that. There wasn't podcasts and YouTube videos. And then I studied the wealthy and I met. Through Twitter, which is now X, somebody from America from, New Jersey, Tom Corley, who did a five year study of the rich, and we use a CPA, and we wrote a book together called Rich Habits, Poor Habits, which has, been translated to about eight languages around the world, including Chinese, including Polish, Malaysian, Vietnamese, Indian, and it's, Been an international bestseller and it talks about the habits that the wealthy have and the habits of the poor have, and then teaches you how to, I guess, change your habits. So the first part is to actually recognize it. And that's what my mentors taught me. Then it's to delete the disempowering habits and to replace them with empowering habits. Because Derek, I learned early in the piece. We're all driving around with one foot on the accelerator on the gas, as you call it, and one on the brake. We've got empowering beliefs, and we've got disempowering beliefs. And we don't know it. We're doing it naturally. I mean, none of us want to do silly things or crazy things. But your mind plays tricks on you, Derek.

Derek:

Oh man, such gold here. I love this. And I, I have so many different directions that I want to go from here, but. Maybe where I'll start is maybe a question that's more that it's relevant to many of my audience members who may be thinking this right now. A lot of them, Michael, are stuck in the time equals money trap. They're going to work. They're earning money, you know, for exchanging their time for a paycheck. And I think at some point everyone has to go through that in order to learn what that world is like. You have to, and I think there's a use for it. But can you talk about how you were able to achieve exit velocity from that point? Because it sounds like, and again, I don't know too much of your early, early career. But I'm wondering if you were also in this and then you were kind of had your eyes on it as well to try to find a way to break away from this equation. Unless you

Michael:

suddenly inherit a lot of money or win the lottery, you've got no choice. You have to start there. And in fact, I think if you inherit money, we know the story. If you win the lottery, most people don't have it. Down the track. I guess another way of looking at it, Derek, is that if you took all the money in the world and distributed it evenly, I believe in the next five years or so, it would end up in much the same proportions, because it's really to do with some people have a different mindset. Have what I call a wealth thermostat. So, look at Oprah Winfrey. She's a billionaire If she was a millionaire, she'd feel poor But what's the average so her mindset her wealth thermostat is set for a much higher level But what's the average american's thermostat set for you know, hundreds of dollars or thousands of dollars? They have a short term mentality. They wonder what they're going to do this weekend and the average investor has maybe A medium term mentality, what they're going to do in five years time or so, but the super successful investors, business people, entrepreneurs, they're, they have a 10, 15, 20 year time frame. And so therefore you've got to do the hard things now to have the easy life later. If you do the easy things now, you're going to have a harder life

Derek:

later. That's incredible. And so what, again, I've already, like, I, I discovered this stuff also from listening to podcasts and I've had the fortune experience to listen to people. Like you talk about these things and I put it into practice, but discovering these things on your own back then, right. When this was no commonplace. Can you talk a little bit about how you did make that shift away from working to becoming a full time investor? And I'm not saying that maybe, you know, it happened instantly or overnight. And I know that there was a shift, but can you talk a little bit about how that happened in your personal experience? Well,

Michael:

basically I, to be an investor, you need income. The bank, residential real estate and commercial real estate requires leverage. If you don't, And using, the benefit of levering, by using other people's money, the bank's money to buy more real estate, then shares are probably just a good stocks and just a good investment. But if you've got 100, 000 to put down and then you can borrow seven, 800, 000 and buy a million dollar property, whatever. You got the growth on your money, not just the growth on the property and for the banks to lend you money. And it's more difficult today than it was in the past. You've got to show serviceability. So therefore you can't suddenly become a full time investor, even with the cashflow from real estate. Straight away. So leaving one of the big mistakes I've seen people do is leave the day to day workforce too soon. Because you need to build up A strong residential property portfolio. But you also need to have financial buffers in place as well to see you through because last year or two has just shown us what happens to your mortgage costs. Even if you, I mean, a lot of Americans have long term fixed mortgages here. We don't have our fixed mortgage rates for longer than five years, but there's also things that come out of the blue, unknowns, uncertainties. It's not simple. So yes, now I don't need the income from my business, but I actually still do have a national business that fortunately does bring me income in, but it's allowed me to, I don't invest for me anymore, Derek. I don't even invest for my kids anymore. I'm investing for my grandchildren. I pay my grandchildren's school fees. That's pretty expensive when I've got four kids and my wife, Pam's got two. So we've got 11 grandchildren between us. So we're allowing it. Kids to have the sort of lives we didn't have.

Derek:

Amazing. Yeah. And I appreciate that. And I can tell that you're also the type of person that would be sure to not just pass along ownership and finances and resources to your kids and then their kids. I have a feeling that there's some education that goes along with it and some legacy, like there's intention behind it. At least that's the way that most people are doing. And I suspect that you've got the same outlook as well. We have set

Michael:

out. Ownership structures up that, they're in what we call trusts here, so that, it's not in my own personal name. I think you know the concept that wealthy people own nothing but control everything, and that's what we've done. So we haven't given it. any properties to our children, yet they all six of them live in very nice accommodation. They couldn't afford, they pay us rent, but they pay us half the rent of the minimum going rent, so that they're basically being able to enjoy the lifestyle that, We couldn't, but they still have to pay something for it. And similarly, we're helping pay for the grandchildren's private school fees. Having said that, a number of our children have invested in property themselves in real estate. So Half of them are interested and learned, and the other half couldn't be bothered. You know what? All you can do is lead by example.

Derek:

That's all right. I, you know, right now my wife and I, we don't have kids, but from the people that we do know, everyone says that every child is different. Even if they come from the same two parents, they all have different mindsets, mentalities. Attitudes and everything. So it's really fun to, to see that as well play out. It's not

Michael:

what you leave your children. I believe it's what you leave in your children. So it's the conversations you have, the discussions you have, the

Derek:

examples you show a wonderful, excellent, just a quick, you know, another pivot here. Obviously, psychological psychology is really big in long term success and real estate investing, or even investing in general. That's what Warren Buffett. Has, quoted, or I don't want to say he quoted, but he credits a lot of his investing success to his ability to be patient. Right. And as you mentioned in the first couple of sentences in this podcast, that the people that are patient, end up making money from those who are impatient and that exchange happens. I wanted to talk about for aspiring property investors or for property, for aspiring people who want to get into real estate, what type of attitudes or psychologies should they develop to be successful in today's market and the market that's coming up? Because it's so dynamic and wild. What advice can you give them?

Michael:

Well, I think the first thing is to have a plan to know where you want to end up because property investment is a process, not an event. So people get excited when they go out and look at real estate and go to open homes and get loans and buy property. It's a long term journey that we've already mentioned last 20, 30 years. to get financial independence and the properties that you eventually buy should be the physical manifestation of a whole lot of important decisions you make and you make in the right order. So you've got to first understand where you want to be, what amount you want to live on, what your time frames are, how long you've, got to do that. Um, and don't get distracted by the latest or the latest idea. It's difficult, but you've got to not make your 30 year investment decisions based on the last 30 minutes of news. And I think we've already mentioned, it's important to recognize that real estate investments in game of finance with some houses thrown in the middle. So you've got to also have a sound financial strategy and the strategy isn't the lowest interest rates. I like having the concept of having a financial buffer in place to buy. You time to ride the ups and downs of the property cycle, and you also got to have risk mitigation strategies, owning the right properties. You can't expect quality returns, premier returns from secondary properties, own them in the right entities. And that's often hard when you start off because the easiest thing is to buy them in your name or your, and your spouse's name. But then down the track to change ownership structures is difficult. So get good advice. get a team around you. If you're the smartest person in your team, you're in problem.

Derek:

Yeah. I love this. I love this, Michael. The only thing I would add to this, because everything you said is right on, I would reemphasize the importance of having a strong financial foundation because a good offense is a, or an excellent defense is a wonderful, is a good offense, right? So having strong like finances so that when a storm does come, And it doesn't wipe out your investments. You can go through to the next cycle and enjoy the fruits of, you know, whatever that in cycle brings you, you just have to be ready for it, right? You have to have the finances to be able to sustain that. So that's true wisdom right there now. Oh, go ahead. I

Michael:

know you want to think it's also important to recognize that not every property is what I would call investment grade. Any property can become an investment. You keep the landlord out and you put a tenant in and it's an investment. But again, We all are kept out at a particular level of finance capacity. So whether you own one property or a commercial property or a multi family property or five or seven, you're always going to have a limit. So rather than it doesn't matter how many, I often ask clients, how many properties are you going to need to get financial freedom? And then they say something and number it. I say, no, it's actually a trick question. I'd rather own one shopping more than 20 individual properties in. In a secondary location. There's not how many. So I guess one should recognize then that in America, there are so many multiple markets there. There isn't one US market or one can I one Canadian property market or one Texas market. So therefore, understand what makes an investment grade property, one that outperforms and only by quality assets. Look at quality over quantity.

Derek:

Very well said. I couldn't agree with you more. Going through some of the things I'm going through right now, having to learn that the hard way, it's such great advice. So those out there, please take heart. All of this is fantastic wisdom that will never get old and will always apply. So thank you, Michael, for all of that. Now I know, we could continue going on for probably a few more hours to talk about this stuff. But we do, we're, we are coming up towards the end of the show and I want to move on to our rapid round, which is five questions that we ask every one of our guests and they're meant to be answered in about a 30 second timeframe. So if you're ready, we're going to go ahead and rapidly ask. Let's go. All right. Number one, name any resource that was or still is essential in your journey to achieving freedom.

Michael:

Listening to other people's podcasts, talking to people is useful, but I actually am an auditory learner. So I like listening to podcasts.

Derek:

Excellent. Fantastic. I second that for sure. Number two. If you woke up and your business was gone and all you had was 500, a laptop, a place to live, and some food, how would you first start to rebuild?

Michael:

Well, I actually went through something similar when I went through my divorce and what I call my asset reallocation program. So what they didn't do was take away The headspace and the mindset. So what I ended up doing was because I didn't have the money, I didn't go bankrupt, but I didn't have the money to invest as much as I would like to, I actually showed other people how to do things. And by teaching other people and helping other people, they paid me a fee and that got me going

Derek:

again. Amazing. Number three, what does your self reflection and goal setting practice look like if you have any? Say that again, please. So what does your self reflection and goal setting practice look like if you have any, or whatever you've used to get you to where you are

Michael:

today? Well, it's actually changed over the years. Again, I'm in a different position, but every night before I go to sleep, I actually in my mind turn off by thinking of what my highlight is for the was for the day. And most of the time it has nothing to do with money or a good deal or anything like that. It's the time I've spent with my grandchildren. And every morning I think of three things. I start the day with gratitude by basically thinking of three good things that happened. The day before I used to do it in three good things. One thing I was grateful for, but I'd always come up with the same thing. So now I have to think of three things that happened the day before, just to start off thinking, gee, boy,

Derek:

I'm lucky. That's, that's a great hack. I always, struggle with the gratitude at the beginning of the morning. And I would just think, what am I grateful for in general? And you're right. I keep coming up with the same thing, but if we focus on yesterday, that'll hyper focus me. on gratitude in future days. So I think that's a great and it

Michael:

also helps you during the day because you think about, Hey, this is good. I'm going to think about it

Derek:

tomorrow morning. I love it. And a gratitude, a mind filled with gratitude is not they can't be negativity either. It just doesn't exist in the same space. So. Great stuff. Number four, what are the core work habits that you attribute most to your success over the years? So do you have like a routine or something that you attribute to your success? I'm very

Michael:

disciplined in my work, so I'm able to work. And, but I think two things have. Help my success. One is I've always had business coaches. I've been prepared to work 20 years now, and a number of them have grown and outgrown them and moved to others. So I've always had coaches and mentors and being prepared to pay for it. I think that's probably the biggest secret of my success. I

Derek:

love it. Number five, what tool or process has become one of your favorite tricks, basically, to save time, money or energy that you use every day? Almost,

Michael:

I use the program called Trello, to manage a whole lot of, things online. But the other trick I only learned recently, rather than to do lists, cause I've had a lot of to do lists is I use outlook as a calendar. And if I have a task I want to do, I put it in. It is an all day task right at the top of my outlook calendar. And it actually stays as you scroll down, it stays up there. So it's not, it got to be done at 10 a. m. Today, but it's something I do today. I've got to remember it and it stays top of mind that way. If I don't do it, I just slide it across to the next day. So I've actually, rather than having what. But, I still do use paper, unfortunately, occasionally, as well.

Derek:

No, that's okay. That's perfect. I think the fact that you found something that works for you is awesome. And, I would highly recommend Asana. If, especially if you've got like a staff member, because it's really easy to share, just like with Trello. Trello

Michael:

is a similar thing, yes. Yeah,

Derek:

similar. Yeah. and so I just love that I could talk about those productivity hacks and, you know, time, you know, it's time saving stuff. Cause that's my, that's another one of my jams, but, definitely, appreciate all of that for sure. And, you know, Michael, like I said, we could be talking about this for hours and I really appreciate you coming on the show, but before we end the show, why don't you tell the listeners, how they can find out more about what you have going on, and if they want to get in touch with you.

Michael:

Well, again, most of your audience is going to be in the United States. So my. Daily Propertyupdate. com. au has some things that are relevant with regard to the psychology of success. But one thing you should do now at the beginning of a new year to give yourself the opportunity of making 2024 the best year ever is get a copy of Rich Habits, Poor Habits. You can get it online, get it on Amazon, Kindle, whatever. Rich Habits, Poor Habits or you can go to richhabitspoorhabits. com and you'll get the learnings from Tom Corley and myself. A lot of other people have, got that. Last year alone, 35, 000 people in Taiwan bought that. Amazing. And I know how many they did because I got the royalties for it. That's

Derek:

amazing. Congratulations. I love it. Actually, you know, Michael, we're going to link to that in the show notes. So when this podcast is released, you should be able to, or you listeners, the listeners should be able to find that in the show notes. They can click on all the links you provided, in the production, process that we had prior to this. So Michael, man, thank you so much for coming on the show. It was a pleasure to have you here and crazy that we're talking across the world right now, from Texas to Australia. I love it. My

Michael:

pleasure. And, I don't mind that you have an accent and I don't. It's

Derek:

beautiful. Thank you, Derek. Thank you so much. And for the listeners that have listened all the way to this point, we want to thank you guys especially. Thank you so much for listening. Wherever you're listening to this or you're watching it, please like, subscribe, comment, thumbs up, hit the bell symbol. Interact with us however you can because the more you do that, the more we appease the algorithm gods. And the more that we get, we'll get more people like you listening, and then we'll get more incredible people like Michael to come on the podcast. So thank you so much for listening and we'll see you guys next week. Thank you so much. Yeah.