Episode 22 Students Reveal Secrets To Success In … really struck a chord with me in how I could actually achieve win, win situations and ultimately make something out of it along

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Episode 22 – Students Reveal Secrets To Success In

Creative Real Estate Investing

The Complete Transcript

www.CreativeRealEstate.com.au

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Rick: Benny Chislett, how is it going buddy?

Ben: Welcome to Creative Real Estate.

Rick: I tell you what. We have something really creative today.

Ben: Well we are not in your bedroom like usual. That’s a start. Everyone

just heard the laughter so they can sense there is an audience here

today.

Rick: I can. This is a fantastic day on live radio. I will tell you what is good

about live radio. We have all of these people one, two, three, four,

five, six, seven that we are going to interview today and if the listeners

could see just how good looking they are.

Ben: Well that’s true, but these are people that have been out there in the

trenches, applying some of these creative strategies and actually

making some really good money out of it Rick.

Rick: Well you know what we should do? Why don’t we find out like where

they started because a lot of people have really interesting

backgrounds. We might start right here with this really highly intelligent

gentleman called Greg. Greg, how are you?

Greg: Great Rick, how are you doing?

Rick: Okay, do me a favor, just for the benefit of all of the people who have

their ears pressed up against the car radio. Tell us about where you

started and how you got into this bizarre road of buying and selling

houses to make money.

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Greg: Well Rick, I started into properties like the normal person would be

doing, or what I thought was normal. It didn’t work for me. I had

probably for about 10 or 15 years, different properties and it just wasn’t

getting me towards the goals that I wanted to achieve. I started

looking around for a while and I saw yourself and your strategies and

that really struck a chord with me in how I could actually achieve win,

win situations and ultimately make something out of it along the way. I

was working pretty long hours. I wasn’t seeing my family as much as I

wanted to and my goal was actually to create some time freedom and

some financial freedom for myself so I could spend the time with my

family, so I got into this business.

Rick: Let me stop you right there. I tell you what begs an interesting

question. Do you know how you said that you are doing the negative

gearing for about 15 years? During that time, did you make some

growth or did the properties double and triple in value? Did you make

a whole lot of money doing that?

Greg: No, any money I did make got eaten up with capital gains taxes and

other things along the way. They would just sit there for a long time. I

would end up pouring a lot of money into them. At the end of it, I really

didn’t make much money out of it at all.

Rick: It is funny. I have so many people that have these negatively geared

properties. They will say, “What happened to the capital growth? I

need that to pay for the negative gearing.”

Ben: They burn the wick at both ends. Here is the thing Greg, when you

actually got the properties to start with, you would have invested in

them having a goal in mind. Obviously a wealth goal of some sort. Did

you buy them for capital growth? Is that the reason?

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Greg: Yeah, that is really what it was Ben. It was for capital growth.

However, the capital growth that I achieved was not what I had

envisioned or been told was possible. They said seven percent a year

and I didn’t actually experience that. I actually only experienced

probably three or four a year in that time. Even now, it is a lot slower

than it was then.

Ben: Rick inflation is about 4.8 percent? It has actually gone backwards.

Rick: When you started putting this together, and you said you know what, I

am going to go and get this financial literacy to put it all together, but

knowing that is back 10 or 15 years ago. Where did you go then to get

the information on how to build this empire?

Greg: When I was going the negative gearing?

Rick: Yeah.

Greg: I went to financial planners. The financial planners put me into a

couple of places that were inflated in price. I was pretty inexperienced

at that time. Obviously the capital gain took a lot longer to get in those

circumstances. I was just pouring money into it, year after year. I was

really not getting anywhere. I ended up selling them out in

disillusionment because it just wasn’t achieving after six or eight years

at each time, or 10 years at the other one.

Ben: Before you sold them out Greg, how long did you have them for?

Greg: One was six or seven years and the other one was about 10 years.

The capital gain was there, however what happens without giving to

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much detail is the tax laws in this country, the capital gain on that was

depreciated over those years. What I thought I bought for $300

thousand, was actually de-capitalized before my capital gain was taken

from $200 thousand. The gain I actually got was maybe about 60

grand, on top of the 300.

Rick: Let me stop you there because this is where people get caught, right?

They will get the house for 300 and they think the capital gain is the

difference between the 300 and the new value of 400. Even though

they have depreciated the product, the government says you have

depreciated it down to say, 200, now the capital gain is the difference

between 200 and the 400, which is 100, which is the difference

between when you sell it for 300 or 400.

Ben: You are exactly right. They get you on the way in and the way out.

Greg: That is what I became disillusioned with. I thought there has got to be

a better way. I started looking and this is what I found.

Ben: So how long Greg, from being disillusioned, to finding a better way?

What was the time gap in between all of that?

Greg: I had some personal development work to do in my mindset. I set

about that for about two years. That is about the time it took, two

years.

Rick: Let me ask you, before we go forward let's just hear from Tim. Tim I

think you were actually in a bank for a while, weren’t you?

Tim: Yeah, Commonwealth Bank. I finished UNE to be a financial planner.

Not the one that sold you the property. I suppose I quickly realized

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that financial planning doesn’t seem to be about helping people. It is

more about selling people product. That was not really what I wanted

to do, but also working five days a week to earn $43,000, which was

my starting wage, wasn’t a lot of fun really. I started doing Rick’s

strategies just in my part time, just on a Saturday. My first year I made

$110 grand from doing just one day a week, whereas my job I was

working five days a week for $43 grand. I didn’t really need my

commerce degree to work out which was the better option.

Rick: It is funny that you talk about financial planners. I said to a financial

planner I said, “What is your financial plan?” He said, “To create

wealth.” I said, “How do you do that?” He said, “Well, you buy my

products.”

Ben: That’s funny. So Tim, how long did it take to actually gain the

confidence? Even though $110 versus $43 thousand is pretty

straightforward, but there is still the security of having a pay cheque

every Friday coming in. How long did it take to get the confidence to

make that leap to get out of the bank?

Tim: Pretty much from the day I started doing this sort of stuff, it was about

12 months. My last day in the bank, I did my third deal. That was sort

of my send off. Then from there, it was probably another couple of

deals before I really knew exactly knew what I was doing. I had

enough confidence I suppose to quit my job, and say I know if I can do

it in one day, without knowing anything and barely stumble through it

and make $110 grand, surely I can. Even if I just replicate that, I am

still doing a lot better than I was.

Ben: One thing with that, I think a lot of people when they go full time in

something, when they are out and about on their own in real estate or

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something else, they have the little birds in their head filling their heads

with negative things if something goes wrong. Did you ever

experience that kind of thing, when you had to take the leap?

Tim: Oh, of course you do. Everyone always tell you, go to school, get a

job, go to UNI and you work at the bank. That is a secure job. You will

never lose it and you are going totally against that. Of course, you are

going to have all of these, “you shouldn’t do that,” “Oh my God, how

dare you do that,” and there is all of that negative talk. For me, I just

saw it as this isn’t your traditional losing money in property didn’t make

sense. I am making money. If it is making positive cash flow and I am

making money from day one by doing this, how can I go wrong? It is

putting money into my pocket, rather than taking it out. That helped

me make that decision to move forward. Yes, it is a bit of a leap.

Rick: Is it fair enough to say that every transaction you have made starting

from the beginning, you have only made money on?

Tim: A 100 percent of them, yes.

Rick: So you have never actually been in a losing transaction?

Tim: Never.

Rick: It is pretty hard to change back to the old way isn’t it?

Tim: Yes, I haven’t had the urge to lose money.

Rick: It is like people are dying to get on the Titanic. Okay so Wayne, you

were in like IT. Were you doing IT for a long time?

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Wayne: I was doing IT for about 10 years. I moved down to Melbourne when I

was trying to do manufacturing to get away from my family, which is in

IT. It didn’t work. I ended up in IT.

Rick: When you have family reunions, do you all sit around computers? I am

just wondering because I have never been in IT. People that I meet in

IT, I always envision that they are all sitting around with their laptops.

Ben: They have a family reunion every night. They just go on Facebook.

Wayne: We have very quiet family reunions, yes. I traveled around a bit with

IT. I was doing consulting. I was doing Melbourne, Sydney, up to

Singapore. I was all over the place.

Rick: Did you like it?

Wayne: It was good for the first couple of years. Then it dragged and the hours

were getting long. I got married and they got even longer. I just

decided that was it. When I came back to Melbourne, I would find

something else.

Ben: Greg had that two-year gap between finding what he wanted to do.

How long was it for you?

Wayne: It wasn’t very long. Through my years in IT, I had been trying to

cultivate that mental attitude. Once I got involved with some of the

strategies, it took me probably six to eight months to put it together.

That really worked for me. I was out there straight away, trying to call

buyers and talk to people.

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Rick: That is interesting. That eight months would have been a grueling eight

months in the sense of oh my God, does this work or does this work.

How did you keep yourself in a motivated state to keep going? They

do say that the average person will try maybe three times, if they can’t

make it work, and if it is too hard, they give it away. What kept you

going for the eight months?

Wayne: What kept me going was seeing people that had done it. I listened to

you, Ben, and others like that who had actually been out there, done

this and made a success. I knew it could be a success and I just

decided that if they can do it, I can do it.

Rick: See I told you Benny, if we made some stuff up, people would believe

it. So what happens, you are out in the game, you are doing a few of

these transactions, is it fair enough to say that the longer you have

been going, the more profitable your transactions have gotten?

Wayne: Yes, definitely.

Rick: Why do you think that is?

Wayne: It is skill. It is knowing who you are talking to and knowing what you

are talking about and it is confidence. Before I was a little afraid to ask

for too much. Now I am much more confident. My time is valuable.

Rick: It is kind of like it is your way or the highway. Would you do real estate

any other way?

Wayne: No.

Rick: Okay.

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Ben: It is interesting isn’t Rick. So far, everybody has said that they wouldn’t

go back to the old way.

Rick: I don’t know any business that say, you know what, I have been

making money in this business from day one. I think I need to get a

new business that loses money from day one. You can’t go that way

can you.

Ben: Well you know what I have found that is very interesting is, if you go

and see an accountant or a financial planner, they will say you have a

high income so you better be negatively gaining. I don’t know why

they stick you in a property, when they could actually probably stick

you into a business and get a lot more deductions.

Rick: Thank you. I get a lot of that. If they stick you in a business, the paper

deductions and the losses aren’t real losses. You get much better

paper losses than you do on property. I always wondered why they

don’t do that. When I was in the states years ago, I had to try to

explain to Americans because American property guys would say,

“hang on, so you are getting this piece of property and then you lose

money for at least 15 years and that is profitable, right?” I used to say

if you want losses, why don’t you just do it in businesses. Businesses

always have funny losses. It is hard to explain actually.

Ben: They can have manufactured losses, Rick.

Rick: Well that’s it. In property, they are real losses. They are hard to

explain.

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Ben: And then you have to work twice as hard to find the tax deduction that

you were trying to avoid paying more tax.

Rick: It is an interesting concept, yes. Now you were in property before you

got into these strategies. You were actually in property for a while

haven’t you?

Male: I went to every seminar, whether it be paid or free. Every so called

expert wanted to get a room full of people and tell us about their best

way to do it. I don’t think any of them was a waste of time. I got a little

bit out of every single one. I was lucky enough to go to a seminar that

you presented and it chimed with me at the time. I thought I could

accelerate my portfolio.

Rick: Okay, when you were doing properties before, were you doing like

property developments or renovations or buy and hold?

Male: It was buy, renovate and hold.

Rick: So this was just adding another set of toolsets?

Male: Yeah, now we still do a little bit of that. Now when we acquire the

property, we acquire them using strategies that we have learned from

you. Even what might from the outside look like a standard transaction

would still save tens of thousands of dollars.

Rick: Just from how you put it together.

Ben: You are kind of picking things up for nothing now and adding some

value to them.

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Male: Even when we use the bank, the bank generally pays us to buy

property these days. Some we hold on to ourselves and some we sell

off.

Ben: Fantastic.

Rick: The banks actually pay you money to buy properties?

Male: Yeah

Rick: That is pretty cool. The Greek banks were doing that for a while.

Male: When I first started, I got very busy very quickly because we were

offered the chance to go to New York. We hit it really hard and bought

a lot. The bank was on board and helped us with a few of them. I only

really started to get really good at it, once the banks started not being

on board.

Rick: People say, "What makes you go forward?"I always say, when you

can’t go back. When your back is up against the wall.

Ben: I once had a guy give me $200 thousand bucks and said, “Can you go

put this into houses and do stuff?” It sat there for nine months

because I didn’t know how to put it into something because I started

with no job. I couldn’t borrow any money so every deal was done. I

couldn’t work at how to use money on a property deal. I had to give it

back. I didn’t want to risk losing it because I had never actually

invested money into property deals to make it work. It is funny what

Nathan said, as soon as the wick dried up, he had to get creative. You

have to find another way.

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Rick: So do you still sort of do a little bit of everything?

Male: Yeah, I do. As you know, we have other businesses and stuff. We try

and mix it all up to maximize our profits and the best return we can for

the dollar.

Rick: Okay, James what were you doing before you got into this way of

buying and selling houses? Before you got into this way of buying and

selling houses had you every bought or sold property before?

James: I had bought one house.

Rick: Bought one house?

James: Yep

Rick: All right.

James: I actually bought that and got a pretty good discount on that one. I

renovated it, refinanced and got all my deposit and the renovation

funds back and put eight grand in my pocket. I thought this was pretty

good.

Rick: And that was the very first house you had ever done?

James: Yep.

Rick: All right. How did you build the portfolio that you have got now? What

was the journey to doing that?

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James: Basically I just used the strategies that you teach. I just looked at

finding people that wanted to sell their properties, try, help them out,

and help other people in. That is sort of how I got what I got now.

Rick: When you started my strategies, you were married. Did you have one

child or two?

James: I had two.

Rick: Let me ask you something. How does that work? You came home

one day to go, listen I have this new idea. They say, "How does this

work?" I say, sweetheart no money comes in the front door for a while

as you practice this new idea. Usually you haven’t got family. How did

that work with your wife just getting that thing started?

James: I was actually working and doing this for about nine months. She

backed me and said yes.

Rick: What sort of work were you doing?

James: I was working at Woolworths. I was driving the forklift there.

Rick: You were driving a forklift?

James: Yeah. I was pretty good at that.

Rick: Really? Do you need a special license for that?

James: I have got one, yes.

Ben: Do you ever run over anyone on the forklift?

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James: No, there are a few accidents here and there.

Rick: Can I just tell you, many years ago when I was 21, I had a job as a

customs agent, they actually taught you this. What happened was…

Ben: You were a customs agent?

Rick: I was for a very short period of time. It took at least four months to

sack me. What happened was, we were down at the Wharfs down

here and we were actually waiting for this Volvo to come out of this

container. This guy bought it from Sweden. He was really particular

about it. They were showing me how to drive the forklift. I was racing

around, just down here between the containers with the forklift, right.

Just as I came around the corner, they were just taking the Volvo out

of the container, and straight through the driver’s door. Very strong

cars, Volvo’s. You would be surprised. I just had to mention that to

you because I had just a great time on the forklift. Anyway, back to

houses.

James: What I was actually doing was, my wife was actually working at

Holden, so I was doing night shift there and working two or three days

Woolworths’, until Holden’s had a package for the redundancy. I

decided to take that. I had some money, put that in my pocket, walked

straight back into Woolworths’ full time, and thought I have some

money and I need to learn a way of being able to improve that.

Rick: I am going to ask you this because you have gone from knowing

nothing of these strategies and working full time job. When did you

have time to absorb this or practice this craft?

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James: What I did for about probably the first year and a half without fail was

Rick’s CDs were in the car. Every time I rode in the car, I was listening

to Rick the whole time. I didn’t want to talk to anyone else about what I

was doing. I was just trying to copy what Rick said.

Ben: That is the fastest way to success is listening to Rick. That fastest way

is to surround yourself with the subject matter that you want to do and

block out.

Rick: I always say, "If you want to do anything and do anything well, live

it."Make it a party. It doesn’t matter what it is. Just live it. Just drown

yourself in it. It becomes part of you.

Ben: You find that athletes do the same thing. Athletes that are training for

an even or whatever it is, do nothing else but that.

James: I play Tennis overseas.

Rick: Did you really?

James: Yea

Rick: I’ve never had done that.

James: It was 99, 2000. I was about 6 months over there. Trying to make

some money

Rick: I was a ball boy

Rick: Let's just keep it back on the real estate. I don’t want to forget what

show we are on. When you are doing houses now, tell me how you

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might be doing your houses now a little bit differently then how you

were doing them in the earlier days.

James: I actually found it quite difficult going from playing tennis and using my

body and being a laborer. I was always using my body to make

money. I made some good money.

Rick: My God, I am glad there is a radio here. Imagine all the imaginations

out there.

Ben: We might lose sponsors after that.

James: It was actually a very big shift from going from physically doing

something to mentally creating something. I had a really tough time

going from making $25.00 an hour to $25 thousand on a house, just by

having some skills.

Rick: Can I just say to you. I remember I think for a lot of people, if they are

going from a nine to five job and you know every Wednesday or

Thursday, there is a certain amount of money that is going into the

bank account to pay the bills and now you have gone to nothing. It is

an abstract and an idea in your head. You are hoping like heck that it

works, that is a very big shift.

Ben: You learn a lot about yourself during those times. You learn everything

about yourself during those times.

Rick: Yea

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Ben: So James let me ask you, the first time that you got one of these

cheques in, your very first cheque from doing something creatively

where you invested no money. Describe the feeling for everybody.

James: It was pretty amazing because it was probably about eight months

worth of normal work. I didn’t have the house for that long, so I

actually made more money during that period than if I was working. I

guess it was surreal thinking that I could actually achieve something

like that, with the background that I do have with not many social skills.

I didn’t really talk to people, then going to helping people the buyer and

the seller, and then making money.

Ben: How did you feel when you were looking down? Did you get a real

cheque or was it wired to your account?

James: I could have got it sent to me, but I actually went there and picked it up,

photocopied it and then to the bank.

Ben: I reckon if you asked everyone about their first cheque, because we all

really needed the money, I bet everyone went and picked it up. Now

Sally, you came from which country?

Sally: From Serbia.

Rick: Now you have been doing the house business for how long?

Sally: About five years. With you about five years, but we did something

before.

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Rick: Okay, give me a couple of years before that so the people listening can

get an idea of who you are, where you are from and what your

background is.

Sally: Would you like just the house business before or the whole lot?

Rick: I guess the last five years.

Sally: Oh, okay. We worked our normal jobs and we decided that is not

enough. We wanted to try something else, we tried negative gearing,

and we also donated some money to a share market.

Ben: Sally, with the money you donated to the share market, was it Joe’s

idea or your idea? I am not trying to start a war here.

Sally: Don’t get me started doing that.

Ben: I usually say that females make better share traders than males.

Sally: So yes, when we attended our boot camp in 2006, we were negatively

geared up to our necks.

Rick: How did you move yourself from that position? I get it, when you are in

it. How do you now move yourself from that position? Was it a case of

putting everything on the market and selling it?

Sally: Well we did sold all of our negative geared properties, but it didn’t

make any sense after we heard what you were saying in the boot

camp. These days, there is not any other way to buy property and to

deal with the properties, but to do the strategies.

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Rick: How do you explain to people, when people say, what is it you do?

How do you explain what it is you do?

Sally: I am helping people to solve their problems, and I am helping people to

find a house if they can’t get the house right away.

Rick: Okay, now have you found that because you have come from another

part of the world that has either helped you or hindered you in this

direction you have taken?

Sally: Well that helped me because my brain wasn’t conditioned the way it

has been conditioned for people who live here. I was ready to do stuff

differently. It wasn’t that bad for me.

Rick: That is interesting isn’t’ it. I know when I went to the United States, I

listened to a lot of stuff the Americans used to do, and I used to do

things differently. They would say, “Why are you doing it that way?” I

couldn’t get them to understand that having apartment buildings that

what they would do is keep one vacant. I would say who’s is this.

They would say this is for the girl that collects the cheques. I am like,

that is all she does. They are like yes, she collects the cheques. I was

like, why don’t they put electronic deposits into people’s accounts.

They would say, “oh no, people won’t pay their rent if it is electronic.” I

am like, “Why not?” Because no one has ever done it that way, if it

worked, they would have done it. They had a second vacant one,

which was the guy that takes all the maintenance requests. It was

some funny stuff. They wanted to change it, and they couldn’t get their

head around it the whole change. They had saltwater pearls and

freshwater pearls, and I want to make them into saltwater pearls to cut

down on the filtration equipment. It is just getting people to change

stuff when it is different.

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Ben: I want to ask Sally a question. I want to ask her about when you sold

your last negatively geared property, how did that actually make you

feel? Besides good, what was the…?

Sally: I felt like dancing because that one was really badly negatively geared.

It has been sold to us by a real estate agent that is the one of the plan

that you bought.

Rick: Let's talk about the plan opportunity just for a few minutes.

Sally: That was our retirement plan.

Ben: Really so you didn’t get it with the intent to actually sell it before you

settle on it?

Sally: No.

Ben: Talk to us about how the purchase came about.

Sally: Well, that was the period when we were looking for the properties to

invest and then they will go up in price within seven years.

Rick: Was this a Queensland property by any chance?

Sally: It is. There was one very nice piece of property. I wanted to say

piece of something else, anyway the real estate agent says it is a

building to be built. It is going to be close to the beach and it is

phenomenal.

Ben: Did you need to get in early so you capitalize on today’s price?

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Sally: No, it wasn’t that story, but we had one of those as well.

Rick: So actually that is an old journey and you are not going back there

again. Now you do everything positively. Jovan, you were in IT?

Jovan: Yeah, I was.

Rick: Let me ask you something. Did you work for Wayne?

Jovan: No.

Rick: So you were doing IT, and was that one of those things that you

enjoyed doing or wanted to move away from?

Jovan: I love it. It was my hobby, my job and I enjoyed it. I was working in IT

hours and hours. I loved it so much that I decided that I wanted to

leave my country and fly 20 thousand kilometers to another country to

work even harder and more.

Rick: So you seriously bought in to those pressures didn’t you?

Jovan: Yeah, apparently it was booming. There was so much more work to

happen, it was the Olympics and everything.

Rick: Okay, so then you got here to what you are doing. When you came

here, did you move back into IT in Australia?

Jovan: I started working in IT straight away and it was pretty much what I

expected. Working hard and working harder. A thing, which we have

noticed, is here we have only two weeks, four weeks annual leave and

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then there are four school holidays. We had two years old and there

are four times two weeks. We simply didn’t have anybody. No

grandmothers or nobody to look after our child. I realized it is nice

what I am doing, however I don’t really have time to spend with my

family. That was a big problem. When I looked at the prospect and

everybody told us to go to school, get a piece of paper, get a good job,

climb up the ladder, and become a manager, a manager’s manager. I

looked into the corporations where I was working for. I was looking at

my general manager, which was my natural step in five years. I saw

him sitting there day after day, overworked, stressed, with a mortgage,

and with marriage problems. I said, "Do I really want to be

there?"What I am currently doing is just moving myself to be him in five

years. I realized I don’t want to be there.

Ben: Rick that is interesting what Jovan just said because you find most

people come through initially to start a business like this, thinking they

just want the money. The money does give you some choices, but

then when you actually dig a little bit deeper, the real reason is exactly

what Jovan has just said. It is to give you a bit more quality of life.

Time with the kids, less stress and all that kind of stuff.

Rick: Yes, it is really interesting. When people get into small business, they

are going to make money. That gives me more time, more choices

and blah, blah, blah. Have you got that because I am going into a

business that was meant to do that, that makes the money? They are

making the money, but they are not getting to do the things that money

is all about. I tell you what Bennie; I think we have actually come to

about the end of another. Isn’t it funny how quickly time flies?

Ben: It just flies. I bet everyone would like to listen to us for hours Rick that

is another thing. If anyone has liked what they have heard today and

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would like to find out a little bit more, they can go to

creativerealestate.com. You know, people are actually sitting there

talking about every word we are saying?

Rick: Is that right?

Ben: You can download those transcripts.

Rick: We have got the transcripts that they can actually download on the

website.

Ben: There is someone sitting there typing it out as we speak. You can

download them at www. Creativerealestate.com.au. If anyone wants to

send a quick question in, you can send a question to support at

www.creativerealestate.com.au. Until next time Rick, we are going to

go back to your bedroom next time. Unless we can rope another live

audience in.

Rick: I will see you next week Bennie.

Ben: See you later Rick.