Start out with the right mindset for success in property!
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In this episode we talk about:
- The standard format for the Everyday Property Investing show.
- Refinancing and cross colateralisation.
- The importance of mindset and getting your mind ready for investing.
- Principles of successful people
- Napoleon Hill – Think and grow rich
Think and Grow Rich in Property – Podcast Episode 2
This is Everyday Property Investing episode two. The show empowering everyday people to create wealth and achieve financial freedom, so get on board! Everyone can be a property investor. It just takes a little knowledge, a little support and some action. So get stated with us today!
Hi and welcome, I’m Den, and I’m really excited about bringing you today’s podcast. In today’s episode, we’ll talk about the mindset you need to start your journey in property investing and our quick tip will be one of the most influential books you’ve ever read. I’m joined by my co-host Kaz.
Den: Kaz, what have you been up to lately?
Kaz: Hi Den, well I’ve just been, actually we’ve been looking at refinancing, which has been kind of exciting. We’ve had a look at some of the values of their properties have actually increased, so that’s been really good and we actually decided that we would try and pull a little bit of equity out and see where we got to. So one of the, I actually learned quite an interesting lesson from this because I sort of have, I have this picture in my mind I’ll just describe this to you. I have this picture in my mind about little houses that I can pull all the equity out and push it all into a little equity loan and this is where we would use that money in the equity loan to go and purchase another property. And that’s how our loans have been structured and we did that, obviously in conjunction with our financial adviser and mortgage broker. And so we’ve got this house loans set up and then the equity loan for that purpose but all in my head they all fit into this equity loan but actually when I went to go and do this refinancing exercise what I found out was that the equity loan had been secured by one of the properties, but the other properties you know, weren’t linked at all to that, so I couldn’t actually pull the equity out and push it all into one equity loan. I was going to have to get another equity loan or cross-collateralize my loans, so that multiple houses were securing one loan, following me?
Den: Yeah, I was wondering what cross-collateralization is? So that’s when you’ve got one loan but it sort of, the security for that loan is the few different properties at the same time?
Kaz: That’s right, yeah, in my little head that was kind of how things worked but we hadn’t actually cross-collateralized at all so if I wanted to pull equity out all the houses and put it into my equity loan, I was going to have to change how things were structured. Now there are pros and cons to cross-collateralization (if you can say it), and you really have to have to think about whether you want to do this or not because what it does is, although it’s great it kind of simplifies things because you can tip all the money from all the different houses into one area, it also opens you up to a bit of risk because what your doing is giving the bank a bit of control over more properties, that you own. So if something happens and things went a bit pear-shaped, the bank could decide to come and take a few of your properties.
Den: So, if you cross-collateralized, right, can you every say to the bank, “All right now I just want this property”. Can you sort of reverse it or is it something you need to pay off the loan and then open a new loan or don’t you know yet?
Kaz: That’s a great question although I don’t actually know the answer to that. So we decided at this instance as it turned out, we decided, in this instance, we didn’t need to access all the equity from all the properties to get the money that we needed into this account. We only actually needed to, we had enough of the growth in one of the properties that we could just get enough out of that and that was fine. So we didn’t get on the path at this point in time, but it is a good question and one that we should actually probably try and find out about, but, that’s what’s happened but the up-side of all that story is that we’re in the market and we’ve got some money!
Den: Oh, congratulations!
Kaz: Yeah, so we’re really excited about that so time to get back into the research phase, which we’ve been out of for a little while so that’s going to be a bit of an exciting time for us. What about you Den, what have you been up to?
Den: What I have been up to, well we’ve obviously a little bit on the same boat, we’ve both have a little bit of luck with property values going up, so one of that properties has recently gained considerably in the market. And what that means is not only is it worth a bit more, but when it’s worth more and the rent hasn’t gone up, the yield is less. So we’re still getting the same amount of yield or the same amount of rent but with the value being more. It’s quite possible that if we sell it, we could put the money to better use. So, with that in mind we’ve started having a look at selling. So that’s something I really don’t have much experience with, so maybe you’ll come along and enjoy the journey of me selling a property but what I’ve done is I’ve interviewed a few agents, I’ve had a look at the market, I’ve had three people go and value the place, and now we’re looking at potentially putting it on the market. Now, with the reasons why we’re doing it, ah obviously if the property value goes up then we can make a profit. Now, one of the things that we can do is use that profit. Now remember we’re going to be taxed on it, but use that profit to pay off your home or, to gain us some security somewhere. And one of the things that we’ve both talked about that’s really important to us in investing is that we get ourselves some security. So, we could potentially stay in the market, we could potentially loan against it. But we feel at the moment we’re looking for some security so we going use it to pay down our debt a little bit. What we can do after a while if we want to is say, okay no we’ve still got this equity, we can keep building. But I’ve read quite a lot of books that say things like you can buy, you know, fifteen thousand properties in ten minutes or whatever they are and they’re all a little bit too gung-ho for me so what we’re looking at doing is just making sure we move, we keep going forward, we keep investing, but we keep a level of security. So, this is probably providing an opportunity for us to really lock-in a profit. So that’s going to be great, so we’re really excited about that, and also I’ve started interviewing real estate agents and doing all that sort of stuff so it’ll be pretty interesting.
Kaz: Oh that’s a really interesting point you make though about there are a lot of people who say you should never sell and you should buy and hold and never sell because you’re taxed on it. But that’s a really clear example of looking at your own personal circumstances and seeing what you need. So you guys are looking for security and this is an opportunity for you to pay down or pay off your own home and give yourselves some of that security, and that’s where things fit in for you so I think it’s really important to bear in mind that, you know, you can read a lot of points on how to do things, but how to do things for you is not always the same.
Den: Awh yeah, look, you are always the driver of your own journey. You are the person who is responsible for it and you are the person who is going to benefit from it. So I think it’s true, I originally went into this with the attitude that I would buy and hold forever. And now I think I realize that there might be times that according to your circumstances where it suits you to buy and sell, or it suits you to do something else, or develop or whatever, there are heaps of options. And I think the most important thing is for everyone to understand their situation is unique. They can’t just go and buy the same property that someone else was buying that was a great property for THEM. They can’t go and just grab any information and say that it’s going to suit them. You’ve got to know what’s going to suit you, so my whole attitude towards this buy and hold sort of psychology has changed because the circumstances have changed, and might be there’s an opportunity there the sell as well.
Kaz: Okay, so we’ve got a little bit of a special announcement, I just wanted to let people who are listening, who may have actually listened to podcast one, and only heard Kaz and no Den, I want to let you guys know go back and download it again from iTunes, because we’ve done a little “switch-er-oo” in there and we brought Den into the picture and we re-recorded it, so go back and download it again. Have a listen Kaz and Den – Podcast One.Feature Segment
Den: Alright Kaz, so it’s time for our feature segment. And our feature segment today is about getting your head right for investing. So, tell us Kaz, how do you get your head right for investing?
Kaz: I think one of the first things you need to do is call yourself a property investor. So even if you haven’t got any properties yet, you are making a conscious decision that you are going to invest in property, and you’re going to start yourself along the journey of educating yourself and deciding to set some goals for yourself. So it all starts with getting your mind into the framework of “you are going to be an investor; you are an investor.”
Den: Okay, so what does it actually mean to be a property investor? What sort of things does it do? How does it change your mind once you’ve called yourself to be a property investor?
Kaz: So one of the first things I think that you really need to do is to educate yourself. And that involves, I mean there are so many places you can go to find information: books, the Internet, in the community, there are groups who meet and talk about property on a regular basis, you can read magazines and newspapers, you can go to seminars, you can even watch TV shows. What are some areas or places that you’ve found to find good information Den?
Den: Well, first place I probably go is to look on the Internet. So I’m the sort of person who’s likely to jump on line, do a Google search and have a look around. And there are great websites that are available; you can jump online there’s domain.com.au, there’s realestate.com.au. There are thousands of great websites, really, that you can log on, do a search for property or property information or how do I buy my first property, or anything like that. Now, the problem with the Internet is that you log on and there can be a lot of difficult to read or misleading, or horrible stuff, so that normally takes a little bit of a keen mind to work through. But generally, if you go to your domain or your real estate property, that can be pretty good. Another place that I like to go is looking at magazines. I subscribe to a property investing magazine. If I’m ever in a dental surgery or in a, you know, like doctors writing room or something, I’ll always have a look for the real estate magazines before I worry about the gossip magazines, and I think that’s one thing that a real estate investor would do so I do that. So they are probably the two places that I would look before I look somewhere else.
Kaz: I think one of the first things I do and I think a lot of people might go along this path also is to get some books. There are a few really good books out there and that’s such an inexpensive way to get yourself educated, to get yourself immersed in the topic. Uhm, there are few books, and actually if you check out the website www.everydaypropertyinvesting.com we’ve got a couple of reviews there. I think three reviews are up at the moment of various books that we’ve read and started out with, that we both think have something to offer for someone who is just getting started.
Den: Yeah, I’m actually the sort of person, I don’t read a lot. I’m not a keen avid reader, but when I do read I normally read for knowledge rather than for pleasure. And one of those books in there is the book by Margaret Lomas, it was fantastic and it really was the sort of book that I wish I’d read five years before I did because it gave me, I thought great advice. I felt that Margaret had a very similar mindset to me and it was a really great thing for me to read.
Kaz: I agree, ah that was one of my first ones as well and I think that’s the thing that really got me really kick-started because up until then you know you just need so much money to get into this and you need to buy a house that’s you know, mega-bucks and stuff, and when I read that book I thought hang on a minute, you know, you don’t have to buy really expensive property to start out with, you can get started with anything and that was the thing that really kick started my journey as well that book..
Den: Yeah yeah, great message, that is. I’ve heard it said recently you’re not investing in diamonds and pearls, you’re investing in bricks and mortar. So what you do is you look for a property that’s going to help you financially. You’re not looking for a multi-million dollar you know, block of apartments on a beach.
Kaz: What about seminars Den, I’m actually interested to find out, have you ever been to any seminars, either those, you know, the free ones that everybody tries to get you to sign up for or get you on the email list for or a paid seminar, have you ever been to any of those?
Den: Look I have. I’ve been to trade shows and I’ve been to seminars. And I’ve found I quite like going to trade shows because although it’s really obvious that people are trying to sell you things, and one thing I find maybe a little bit confronting is when I walk in somewhere and I think everyone just wants a buck rather than, actually you know, my going there for a good reason for myself. But you can pick and choose who you go and see and who you speak to and what you ask, and you can suss people out, so I think trade shows can be quite good and often you can just walk in and have a look around. Seminars to me can be a great place for information and I know there are certain companies that put together really great seminars and they’ll have a property manager speaking, and now have a tax agent speaking, and now have some investors speaking and so they can put together a really good program that, that gives you a good idea. Now generally, it will give you a, a certain narrow slice of the market so it’s an opportunity to find out quite a bit about one particular area. Now I find with seminars, you’re better off going to a seminar for people who want to help you invest rather than people who are trying to sell you property. So, something I’ve found in the past is you go to a seminar and this business will give you a great rundown on how the properties that they’re selling you will make you rich. And I just can’t help but feel that if those properties were going to make someone so rich they wouldn’t be selling them. So, so my feeling is go to someone who is reputable, who is actually trying to help you with your knowledge rather than necessarily trying to sell a property.
Kaz: I think that’s a really good point because I know that when we first started out wanting to invest, we decided to look at companies who could help us out. And that was one of the key things that people who want to, people who are selling you property have their own vested interests in selling you their property. Ahm but people who are selling you their advice, they have a vested interest in you succeeding, so I think I’m much more in a place where I think that…
Den: Ab-absolutely! And certainly people who are helping you and, and helping you with your property journey who aren’t actually selling you the properties. The mark of their success as a business is your success as an investor. Okay, so what you’re saying Kaz really is, that when you call yourself a property investor what it means is, that you’re starting to make a conscious decision that you’re going to get educated. You’ll look at books, the Internet, maybe involve yourself in a community, maybe go to a seminar or show, something like that; magazines, maybe even TV shows. Alright, now another thing I think you need to do is actually start setting some goal that’s never too early to set a goal. And I know we’ve both read a great book that can really help with it. Tell us about it Kaz.
Kaz: Absolutely, there’s a, there’s a book in, some of you may have heard of this, it’s called Think and Grow Rich, and it’s by Napoleon Hill. Now this is actually quite an old book. It was actually written in 1937, so when you read it just bear in mind it was written in 1937 so the language and the formality of the language does reflect that time. However, the message is as relevant today as it was when it was written. It’s actually a book that’s in the public domain so you can actually get hold of it for free these days on the Internet and we’ll put a link to it in the show notes, that you can get from our website, so that you will know where to find it. Basically, Napoleon Hill, he studied a group of successful people and, people of his time, and he identified a set of principles of success that were common to these people. And it, it’s really interesting book actually and they actually, sort of marketed it really well too, because they have this concept in their about The Secret, and what is The Secret to Success? And each sort of section of the book, each chapter of the book eludes to this Secret, but they never actually say, “This is the answer!” They kind of keep you guessing along the way that if, if you don’t get the secret, if you don’t read this you don’t get it, just Google what The Secret is and you’ll find out, but you’ll probably get it that, I mean, it seem the title, it’s in every chapter so you’ll get it.
Den: So you’re not going to spoil it by telling everyone what the secret is…
Kaz: No, I’m not telling you the secret
Den: Leaving people in suspense!
Kaz: But it does go through some really interesting principles, principles of success.They include things like desire and definiteness of purpose, so knowing what you want and the desire to possess it. And that’s really important. They also talk about faith, visualization and belief in attainment. Knowing what you want, believing you can achieve it, and having the desire to go out and get it. They talk about a few other things; specialized knowledge, imagination, planning, which is really important, setting goals, making a decision or making decisions, persisting and the power of master minding – so getting with other people. The power of thought combined or people’s thoughts combined is greater than one person of, of their own. So some of the main points I want to highlight – these are just some of the principles they talk about in the book. But the main point I want to highlight from this book, which I think are really important to us is, you need to know what you want to achieve, so this is relevant in property investing; you need to know what you want to achieve and you need to believe that you’ll achieve it. And you need to be able to see what it looks like in your mind and set yourself a plan for going out there and getting it. But, all of that aside, I mean those are really important steps, that the main thing that happens after all of that is, you need to take action. Because you can plan and plan if you don’t take action nothing’s going to happen. So you need to take action until you succeed. And that’s the main sort of principle of the book. Know what you want, know that you – know how to get it, get yourself a plan, take some action, get out there and do it. So I strongly recommend that you get yourself a copy of Think and Grow Rich.
Den: Fantastic. Now that actually reminds me of one of the things I wanted to say, and that’s about, making decisions and doing stuff. You’ve you got to make decisions and you’ve got to do stuff. And you know some decisions will be great, and you will be really pleased you made the decision and everything will go well and you’ll think that’s fantastic. Some decisions aren’t so great, but what you get from them is an experience. So as we said, when we bought our first properties, we did not have the level of education that we wish we had. And we made bad decisions, and they’re decisions that we’ve learned from. I know I’m never going to buy a place off the plan again, some people may and that might be great and that might work for them. It didn’t work for me and it caused me a great deal of stress. So, I’m not going to do that. There’s decision making that will involve a gaining of experience and it’s really important that you get that stuff. Now hopefully one of the decisions that you’ve made that will help you get experience is listening to this. Because we’ve made the mistakes, you don’t have to. But it’s a really great thing. The other phrase that I like or saying that I like is, that it’s much easier to steer a ship that’s already moving than one that’s still in the water. It’s really hard to get moving. But once you’re in the practice of making decisions and doing something, it’s very easy, just to say, “Oh it doesn’t look like that’s going to work, I’m going to do this.” It becomes a really strong habit and you become very powerful because you’re used to making decisions.
Kaz: So I just wanted to summarize there – our main points;
you need to call yourself a property investor,
you need to make a conscious decision to educate yourself,
you need to set some goals, and then
you need to make decisions and act.
So, just wanted to, raise the point around goals hitting, it’s, that’s a really important part because acting in a purposeful manner is what you need to be doing. So as much as you need to start acting, it helps to have a plan. It really helps to have a plan. So, in our next episode we’re actually going to launch into how to set goals for yourself. I mean, ahm you can apply this in any area of your life and obviously we’re talking about property investing so we’re going to be talking about setting property goals. But, goal setting is so relevant and, and so useful in all areas of life so that will be in our next episode.
Kaz: Okay, so today’s quick tip if you haven’t already guessed is a book, Napoleon Hill’s Think and Grow Rich. Now it’s free and available for download as a pdf, and you can also get it as an audio file, so if you’re anything like me I love to have audio versions of things, I drive a long way to work in the car sometimes, and when I’m driving it makes me feel like I’m not wasting any time because I’m using that time. Also when I go out for a run, I take my little podcasts and listen to informative audio shows, so grab a copy of Napoleon Hill’s Think and Grow Rich now. If you’re, obviously if you’re listening in the car or you’re going for a jog, this next tip is probably not for you. But if you’re listening to it at home, grab yourself a highlighter because it really is the sort of book that you should come back to regularly to remind yourself of the important concepts, and then make sure that you are continuing to follow up on what they talk about in the book. So, if you do have the opportunity to sit there and go through highlight those sections that you find really relevant and that resonate with you then I suggest you do that. So our action for today, download or buy yourself a hard copy of Think and Grow Rich. And as I said there are links in the show notes head on over to www.everydaypropertyinvesting.com and sign up for the email Newsletter that way we can let you know when there’s a new episode available and subscribe to a podcast in iTunes. Now one more thing, we’d really love to hear from you. We’ve been receiving a few emails and we’d really love to get some of them right out on the show. So send us some more emails, send us your emails about anything you want, any questions you think that you like to have answered, or any terms that we might have talked about on the show that you weren’t sure of, or even if just want to sure a success or experience then just send us an email and commence at www.everydaypropertyinvesting.com.
Den: Yeah, we’d really love to hear from you. Oh Kaz that about wraps it up for today’s show, so thanks everyone for listening, thanks for your time and look forward to next week.
You’ve been listening to Everyday Property Investing, the show empowering everyday people to create wealth and achieve financial freedom. Please note that this show provided general advice based on personal experiences and is for educational purposes only. We’re not qualified accountants or lawyers or licensed to provide professional financial advice for you. We strongly advise that you employ the services of qualified professionals and seek their advice that is specific to your own personal circumstances.
You can visit us at www.everydaypropertyinvesting.com.
See you next time!