Welcome to Prosperity Point, our monthly property podcast.

JR Prosperity Partners
Prosperity Point Podcast: Episode 01 – Welcome To Our First Episode!
- Well, ladies and gentlemen, welcome on board. It’s actually officially episode one and I couldn’t be happier than having our own guest Jack Kumar who’s our Managing Director at JR Prosperity Partner is with us. Jack, let’s kick it off.

– My pleasure.

– I’m so excited. I wanted to talk about a variety of things today that we can share with our whole audience and greater audience as well. But first of all 2020, right? What an interesting year it’s been so far first of all, and I wanted to touch base on the fact that it’s also our 10 year anniversary in terms of your business from way back in 2010. So tell me a bit about that. How’s the journey been for you so far?

– Wow, wow. You know Sean, this morning when I was driving here, all I could think of is grace. I was thanking God, thanking universe, thanking everything that, you know, 10 years ago what I was thinking, my thinking has expanded a much larger scale. But at that time, what where we are now it was, you know, miles away, miles away. And it was out of your imagination. And all you had at that time was faith that, you know I trust in the God trust in the universe, I’m on a journey and never quit because the grace will be always there with you during the challenging time. And there have been some very exciting times. Some have been very tough times but to be very honest, you know, that is the time you test during your challenging time. Is it real? Is it a wish or is it a goal? You know, if it’s a wish, then during challenging time, you hit the turbulence and you say, oh, you know what? I choose the easy part then you go all the way around. But when you have a strong faith, you say it does not matter, it doesn’t matter what happens. I just have to keep going and so I’m so thankful and grateful that 10 years have been very blessed for the company and I’m surrounded with such wonderful people, Sean, including you and everyone else in the office, I feel, you know, I feel so happy to walk into the office and seeing everyone’s smiling faces.

– Nah, that’s good, that’s good. But you mentioned something really important about, you know, when the tough times come in and I’m a big believer in one of our core values because you train us not only on, let’s say a few business principles and a few, you know, sales principles in the investment world that are quite important but you talked about persistence. That’s probably my favorite value out of the five core values that we have. So persistence is something that I’ve seen. I feel it’s and shed some light on this as well from your side. But I feel persistency is a vetting tool to see if people are really worth the next set of levels of rewards or next set of levels of challenges. Because I feel life’s a little bit like a game. Do you feel what I mean?

– Life is actually fun. Again, how you name your life, that’s how you’re gonna live your life. Persistence is, you know, the going that extra mile. That’s not the case, it’s about consistency. Are you gonna do it every day? Or are you going to do it only when you feel fun when you feel like doing it, are you gonna do it then? Or are you gonna do it even when you feel like no, today I’m having a worse day but I still have to keep going. It’s raining outside, if I have to go for a walk, you go for a walk. You don’t care if it’s raining or sunshine.

– Yeah, sunshine and rain that’s interesting because we’re coming out of the back of what has been one of the most shocking events in the world I would say. you know, looking at 2020 being the year of, it’ll be always known as the year of COVID and the year of lock downs, the year of Australia’s first recession in a while, so forth, so on. So leading a business in a turbulent time like this, you know, what was that motivating factor that kept you positive, that kept you still going and not only still going actually, flourishing at a time when around us the headlines tell us otherwise.

– Yeah, to be very honest, you know, as a normal human being, then the COVID hit, that this challenge came. I haven’t seen in my career and I think a lot of people haven’t seen this turbulent time in their lifetime. At that time, because one of my value is about family, you know, protecting my family. And I see my office as an extended family. And I remember the conversation happening when we went into the lockdown with my wife Ruchi and she’s been wonderful support. I said, Ruchi, this time is not about the growth but I want to make sure my family’s protected, my extended family’s protected, my JR family’s protected whatever it takes, I don’t care, you know. So I was thinking two years ahead that even if it stays for two years, I have to sustain my family. I have to look after my family, that kind of gave me an energy to say, you know, pull up my socks and say, you know, and interesting kind of things happens you know, when you shift your energy and actually the curve it was a turning point for the business and for my personal life at that time, because you realize that how important things are when things are going all right, you just sit back and relax and your energy is not vibrating on a higher level. You know, you are cruising but when things happens, your energy starts vibrating. And that time you can take that energy either into a negative direction or a positive direction. And that attracts where your energy focus is, where you put your energy there. So that’s why if a challenging times comes use that energy because we are gonna vibrate see, we don’t know that’s a positive or negative. We have given the names for it that it’s an energy only.

– That’s right.

– So when you know that it’s a vibration happening and you feel like oh, you know, and you shift that towards, wow, let’s see you know, let’s accelerate towards this, not this. So it’s all about how you see, what’s your perception of seeing things. You know, when I was growing up, I always had, my best ever mentor was my uncle, my dad’s younger son. Anytime I watched him, anytime whenever a challenge happened he used to say, oh, okay, no worries. Let’s roll up ourselves and let’s jump into it and let’s act. Let’s not sit back and worry about it, just to act. So I think that’s exactly I did. And other interesting thing happened for my personal life was you know, I got the opportunity to pause. I always heard about this time, miraculous time in the mornings, I don’t know if you are called in India, it’s called Baramulla It happens from 3:30, to before sunrise. So that is the time I always want to get up in the morning. So during that time, I took the opportunity to get up very early, just to get up at 3:30 in the morning and just meditate till sunrise. That put me back into tranquility, peace and stable. And then that’s the time you realize that, okay, I can switch this energy because until you don’t realize, you don’t know. So once you do that then consciously you’re putting that energy here like, you know, consciously you’re changing gears.

– You’re right. So this happens during the meditative process, is that what you’re talking about? Like, I know you love your locations. So if I’ll, because I’ve been blessed enough to know you for a long time personally, as well as in the business now. And I know as your life has progressed, you’ve progressed in terms of location as well. So you’ve had on your goal set, on your mindset to be closer to the water. You like the water, right? So do you do those meditations close to the water where you get to enjoy a bit of sea breeze in the morning as well?

– I love my water actually. And it’s interesting actually. It’s a very humble feeling. Every time I go up for a walk and look at the water because it wasn’t dream once. I remember, you know it was a very painful for my family ’cause I loved water and I remember I wanted to see sunrise. So at one stage of my life before moving there, I had no idea that I can achieve moving there because it was too far. But I used to make my family get up early in the morning, wake them up, put them back in the car, they are in the sleepy state, take them to Bondi, to look at the sunrise and saying wow, you know, God, one day I wish I can walk everyday here. And look, going every time when I go this morning walks, I see wow, you know, is this real? Is this real? Living that life and it’s real, it’s real. You can always and I lived with this mantra, whatever your mind can conceive and believe you can achieve from thinking grow rich.

– Of course, I think that’s how we connected from day one, isn’t it? Way before when you saw me growing into the young man that I am it was all about saying this person aligns with that level of spirituality and we’ve always noticed that once you focus on bringing your yourself back to base or back to heart, we noticed that results are just a part of the process, right? I’m a big believer in, you know, hold that vision, but trust the process.

– Trust the process. Sean, I’m glad you mentioned that, you know, you connected, in fact I connected with you. The day I remember I was sitting with your parents and you walked in and we started talking about this subject. And you were like talking forever and I was literally happy and impressed that wow, look at this kid, look at Sean. Look, he knows a lot more than a lot of people don’t know. But that time, you know, I was very happy but also, you know, knowing is one thing and now working with you for last three, more than three years now, is it?

– More than four.

– More than four years, yeah. I see that you not only talk, but you live those principles. That is amazing.

– Yeah and I feel like getting into things like personal development, spiritual growth. I’m a big believer in also the fact that if you’re seeking the truth or you’re seeking certain principles whether it be for success or for something else, it is also looking for you and it meets you halfway. Most people think about the end goal and they think okay, we’re trying to build a sustainable business or I want to build up my book of clients to another level. They think about the end goal and they go, wow, that’s so much work, I can’t be bothered now, do you know what I mean? So but if you go and you take that step or it’s like, how we watched you know, yesterday you were doing, we all, you know, hung out in the office and we were all doing another viewing of the secrets, right? Something that we’ve seen numerous times but we did it again except with the whole team. And you can see that some people resonate with it a lot and the others sort of don’t resonate with it as much. And it’s normal because not everyone’s operating on the same frequency I feel. And sometimes not everyone vibrates along with the same intentions as well.

– I think my opinion it is to do with your growth. Are you growing through your heart or through your mind? If your mind is growing, then this becomes voovoo because this is analytical brain who only works on facts and figures. Show me the truth, show me the facts, show me the research the scientific mind, which telling you and then if things happens, you believe.

– Right, yeah.

– But we’re here, it works differently, we work on faith. And you say, I believe I know it’s gonna happen, you just do it. And you know that yeah, someone somewhere is watching you and they will hold your hand when you require it.

– But that’s the essence of faith, right? It’s like when we’re planning out, you know investment deals with a few people that love the analytical side of things, they love the numbers. And we love the numbers too, because the way I see work in what I do day-to-day for living is one foundation, which is return on investment. What’s your return on investment for your time? What’s your return on investment for your tax, your portfolio, so forth so on. So there are people that love, let’s say the numbers and the sad part about the numbers is it still can’t tell you what the future holds. There is a gap, there’s history trends, right? There’s trends of economic recessions and what typically happens when we bounce back. That’s why I was reflecting to, you know, earlier on in the year, when we’re having coffee early this morning coffee’s still going well so feel free to have some. What I was reflecting on was when we knew that in March, when we had done the filming, the whole world was at a pause, but yourself, Munzurul and James who’s our JRFS broker here with us at JR group, we had had this expert panel discussion and Munzurul was talking about, he was planning on maybe not investing for 2020, but the fact that this thing happened is the perfect time to pull up your socks and take an action. And I’ve always believed that action is that trigger that brings all of those manifestations faster, or it brings or pulls them into your roadmap where you can see things clearly. I think 2020 is unfolded to be such a good year for yourself and myself personally and professionally. What do you reckon?

– It’s been a great year, actually both professionally and personally. But don’t take me wrong. Numbers are equally important as having faith but don’t get lost just in the numbers because the numbers will give you confidence, right? But the numbers will give you the confidence to act and you have to act at that time. So if you don’t act, so biggest analogies you know, when you don’t feel like not doing anything, go for a run. When you go into that level of head that, you know, your head talks over your heart and you, go for a run. And I have realized that as soon as I go for a run and now my heart is pumping, so my focus have all gone from here to here. And in that point, you realize that oh, this was not as important as I was thinking. And then you shift. That’s why you need to know, when you need all those external helps to help you to act. That’s the time you listen to the books which you have read before, but the essence of the book comes to you at the right time to give you a message. So this is what you have learned. So the biggest thing I believe is building anything. One thing that stops everyone is action.

– Action, yeah. And I think action comes down to decision making, right? So there’s this one guy that I’ve been following closely on his journey of growth as well over the last few years, I’ve told you about it numerous times, Patrick Bet-David from the USA who I love, who’s got his own you know, successful Valuetainment channel. And he was talking about the one principal he wanted his kids to be instilled with from a very young age. And the principal he was talking about was the ability to make decisions or the ability to make good decisions at a very young age and think rationally and act on it. So I feel what happens is in the world that we’re in today, because there are 10,000 different options of building wealth. There are a million ways of saving, you know, let’s say saving taxes or starting a business, earning passive income. Because at the end of the day it’s all centered around giving us more choices, right? Giving us that’s what, the core principle of financial freedom is, it’s about saying if I had all of the finances that I would like so that I can do whatever I want with my time. So when we’re thinking about what’s available in the marketplace today in the open world, there’s so many things. So why are people still stuck in analysis paralysis? Is it because there are 10,000 options and no one has the time or the resources to go through every single one? What I tell the people that I work with is you have one lifetime. There are a few things that are proven out there such as, work hard, save and you described it this way which is budget, save, invest and make. It’s a simple philosophy, but it’s true. Guess what percentage of the population actually budgets and sticks to it? It’s probably less than 3%. Less than 3% keep a budget and stick to it. People have everything mentally. It goes back to the goal-setting principle as well. But what do you think can help people have a bit more comfort saying, if they’ve never done something before, how can they still take the courage or develop the courage to getting into something new of investment or building wealth is something they’ve never done before?

– I think they’ll develop few philosophies. One of the philosophy which I developed in at my early stage and I listened to his tapes, numerous times, Jim Rohn most people know about his name. He is the father of, you know, personal development. And one quote that stuck to me and I kept on repeating during my, you know, good times, bad times was it’s not the blowing of the wind that determines your destination. It’s the set of the sail, right. They’re always gonna be wind, you know, political wind, social wind, sometimes relationship challenges. Sometimes, you know, everywhere, things are not going the way you want to go. But what you do is you have to be composed, stay calm and keep moving. Set the sail and don’t worry about this. If we keep moving with the wind we are gonna be just like that, hanging there, hanging there from here to here, but there is no progress. So philosophies, I love developing philosophies for. So I remember a couple of months back, you know, me and my son was going for a cycling. And his, at that time, he was eight year old, now he’s turned nine. I’ve wanted to make him develop those philosophies. I said and we were cycling and the hill came, you know, you have to climb the hill and he was like, nah papa I don’t wanna go. I said, let’s keep going, let’s go. And we went up and then after that the hill came downward and we went down with the full speed.

– Like a free flow.

– Free flow and he really enjoyed. And at the end of the hill, we stopped and I said, wow, this is an opportunity to you know, give some learning smart to my son. I said, and again, going back to building the philosophies first, building the foundation don’t worry about the numbers that will come but have that foundation clear. So I said to my son, you know, when you were going up, it was so painful, you didn’t enjoy it, right? But how about when you coming down the hill? He said it was so papa, it was so fantastic. I was thrilled. And at that time, something came in my head to say, Yash, it’s no hill, no thrill.

– Oh well, that’s a nice one. I really like it.

– So in life when you’re going through hill, start enjoying, start seeing that. Oh, okay, I’m going through hill because the life is gonna be always hill and thrill, right? So when you go through a challenge, start thinking that, oh wow, something good gonna happen. So I’m going to hill but core purpose the thrill is coming as well. And the next time when I went for a cycling again, we went through the same challenge and my son came up because this time we were going through a bigger hill saying, I was so happy to see that he adopted that. And he shared back with a different way. He said papa, you know, the bigger the thrill

– The bigger the hill.

– The bigger the hill, the bigger the thrill.

– Yeah, that’s right, that’s right. And it leads back to the same thing about persistence, right? You keep pushing and then you have a, it’s what we call a breakthrough.

– Breakthrough, so that’s why I’m saying that in the investment world, clear your foundation. Clear your philosophy first and clear your psychology first and then once that’s cleared, it’s like you know, set of the sail, when the challenge hits you know that it’s okay. Because that’s a part of the life because life’s not gonna be sunshine every single day. There’s gonna be some clouds as it is today. Sometimes it’s gonna rain, sometimes it’s gonna be storm, sometimes strong winds, but we know that that’s only temporary.

– That’s right, that’s right.

– So you have to enjoy both good and bad.

– And even when working with clients that are building a portfolio because that’s one of our, you know, business aims is to whoever we work with, you know, we know that one investment doesn’t make you financially free, especially with how expensive things are today. So we’re looking at helping people get on track to building a sustainable portfolio. So I sort of openly tell people now that it’s not, every day is not sunshine and rainbows, right? They will be a challenging time, but in those times you need to, you need to have your contingency plans also mentally prepared for from day one. For example, you know, you’ve heard of this saying, proper preparation prevents poor performance, right? These are like five Ps. And it’s something that I got from Patrick Bet-David as well. What I realized was, if you put in the right contingencies, events like even COVID, let’s say everyone lost their business or they lost their jobs. If one of your philosophies was, set aside 10% of what you earn no matter what and don’t put it into credit card debt, don’t put it into car loans. Don’t, you know, squander the wealth pretty much. What I realized is people would have already had that buffer in place, that even if there’s a stormy time or a tough season, it wouldn’t allow you to be wiped out. So that’s something I think you practice on a day-to-day basis or a year to year basis, like you said, two years in the business you’re always gonna make sure that your people are okay.

– Yes, I always had a buffer say a two years is something have a challenge, you know, I can sustain my family. I can sustain my extended family. So having that buffer is so, so important. And my philosophy is if you are investing every investment put at least a six months to 12 months of reaping. You know, have the buffer, start with a small buffer, you know, 5,000, 10,000 and have that cushion in place. So you know that if there is no tenant, there is gonna be a vacancy. As I said, they’re gonna be challenges. You know, what if the market don’t grow for a short period of time during this challenging time when things are not about growth it’s about sustainability. So I think more than growth, sustainability is more important than growth. cause the growth is come, the growth is natural. If you can sustain during the time, what happens after recession, expansion. But if you can hang in the game during recession, the expansion gonna happen automatically.

– Right, that’s so true. And I’m a big believer in this concept. Building wealth or being wealthy and being broke, two things, opposite sides of the spectrum. They happen slowly, but they happen slowly and then suddenly.

– Wow, you know what you said there, it’s interesting. It’s in the beginning, you cannot notice where you’re heading.

– That’s right.

– Either a good path or bad path.

– That’s right. If you’re heading towards, I always like to draw but in this podcast I won’t.

– Next time we’ll get it with a whiteboard and the backdrop.

– If you are here. So if you’re moving that way and if you’re moving this way, if you look at this angle. In the beginning, there is no difference, but from here to here, there’s a massive difference. And when people look back, this is a curve of 20 years, 30 years, your lifetime curve, it all started here. It never started here, where you end up was started here. So if you move this way, eventually you will see some people will come back and say, you got lucky, but lucky was, he was already moving to that part, which you cannot see in the beginning, in the first 10 years is just the beginning, it’s just the beginning. 10 years is just for you to start noticing. And in business world, I got a very good advice. They say to build a sustainable business it requires quarter a century. So we are only 10 years in the business. So we got, this is the exciting time now ahead.

– Yeah and too many people lose before they get those bigger awards or hit the bigger, I would say challenges in life, where they get the opportunity to prove themselves not only to their own families but to their colleagues or their fellow business people that they work with. I feel too many people don’t give it 10 years, too many people don’t give it 20 years in one industry. That’s why people talk about, you know, what’s the superpower you wish you had. And a lot of successful people choose the superpower I wish I had was focus. So how do you stay focused in a world where we get a ping or we get a ding on our socials, or if we’re working from home, there’s something there that’s distracting us from not only our work or our investing or our business how do you stay focused at a time where the society we’re in is built around distractions? Is it just called personal discipline or is it something we’re seeing beyond the distraction?

– I think it’s your personal discipline but how do you build a discipline? Is bringing a habit of pausing, we never pause. You know what I mean in the investment world is I know a lot of times when a client sit down with you sit down with us, then you do a next take analysis and they’re like, wow, I never thought that. And they’ve been 20 years in working already and they never paused. And when you pause and you put an importance to that factor, you say that, this is important to me now. So when distraction happens, you go back through that event. This is important to me. This is what I decided I want to go there. So when a distraction happens and a interesting thing drives you back there, you pause and reflect that, am I heading on the right direction? If not come back to focus that’s when you bring your focus back to here.

– You know, after we do all sorts of things for our clients here at JRPP, right? So after a strategy session and they see that next stage be put into action from an investment path, what I get from a lot of people is this the sigh of relief going, I’m glad I saw what the future holds because if I didn’t see the path I was heading towards, right? People are just running this, you talk about it all the time in the live events that we do. We’re running this rat rail or this sorry, this rat race or this hamster wheel. And we keep going without pausing. When people see the strategy session saying if we, technical failure time, our cameraman just notified us that the whole thing just cut off, so wherever were, we’re gonna go back to what we were chatting about. It happens but we have to keep moving forward.

– Keep going.

– So thanks for the suggestion there Jimmy, you’re a top bloke, I appreciate it. There’s no, yeah. If you wanna pan around and show him , you can, maybe later we’ll bring him in. But yeah, going back to what I was saying, they get that huge sigh of relief. And you’re talking about where we’re giving people hope at the end of the day, which is really important because a lot of people have fears, subconsciously deep down given up, or it’s not that they’ve given up, but they feel like I’ll do it next year, I’ll do it next year. We have this procrastination mentality now that is it’s not going to kill me if I do it next year. But next year becomes five years, becomes 10, then you have to give up almost, right?

– I am a big fan of how things get compounded. And actually there’s a book called "The Compound Effect" from Darren Hardy. He had put it perfectly. It’s just such a small book. If anybody wants to read, I would highly recommend for you to go and buy that book and read it because it’s a lifetime principles, lifetime principle it’s a small book, but it will make the big difference. It all talks about compounding, life is compounding. And one of the examples he talks about is, if let’s try here. If there was a dollar and it’s gonna double every day for the next 30 days, would you pick that? Or if there was a million dollar or $5 million which one would you pick?

– I would definitely pick the dollar.

– You’ll pick the dollar, but most people will be tempted to go for 5 million so instant gratification kicks in. And this is the principle that will keep you separated in long-term. What wealth are you gonna accumulate? How healthy you’re gonna be? How fantastic your relationship’s going to be, all is in this book, in this one principle. So if we do a math on a dollar, it’s gonna double every single day and if you take it for two days, it’s gonna be $2, third day four, then eight and 16. After 10 days, it’s gonna be only $512. And then you start looking the person who is enjoying the life, the person who took the 5 million.

– Or the 10 million.

– Or instant gratification

– Or the 20 million as well.

– Or instant gratification who went bought that car on a bad debt, who went and, you know some people borrow money on for traveling. I hate that. But you know, you look and then see look, wow that guy is enjoying his life. And guess what? I should have taken that. I should have taken that. So that always the instant gratification kicks in and most people give up and they go back to what other other peoples are doing. They try, they say, yeah, the book was fantastic, I’ll understand your principles, make sense, I will do it, they’ll give it a try and then give up, why? Because life is not as exciting as it looks in the beginning. In the beginning, you have to. So 10 days, 512. Do you know what that becomes after 30 days?

– Yeah, I sort of remember, but it’s in the hundreds of millions.

– Yes, $536 million. So now compared to 5 million, 536, this person obviously gonna call you lucky. But if you were giving up in that 10 year this is a 30 days, but if you take as a 30 years life, right? 10 years and that’s when most people give up. 25, if you ask every single person who is in the age of 20 to 25 who would like to be financially free? Where they, you know, leave that fantastic, nice, amazing life, everyone would say yes. And they are going for it. And from 25 to 35 in that rat, most people have realized that, you know, what I was dreaming was fantasy. It was not fantasy, you are there. You just have to continue going. And most people at 35, they changed direction.

– That’s right.

– And they say, okay, it’s okay now, I’ve done and then we start putting back to our kids or, you know, this event happened because of this, that’s why I changed my everything. But that same event, you can take it and say you know, I want to move into a different direction now. So compounding

– Compounding and building wealth. I mean, it’s almost as boring as watching the grass grow but have you ever seen after a rain comes in or a period of good grace like we were saying? Have you seen how high that lawn gets the grass just goes from here to here. That’s the effect of, I would say the compound effects and too many people here they don’t bother actually, you know taking the time to build something sustainable because of what you said, instant gratification. The holidays is just here, the car is just here. You know, we know mortgages go for 30 years now, or they’re sanctioned for 30 years, but takes us on average now 39 years to pay because, hey, we wanted that car, let’s finance it on the mortgage. Hey, we wanted the holiday, let’s borrow against equity for the mortgage. Now costs go down in value, but you get something out of it. Travel, you’re not getting anything back except your photographs these days. So yeah, there is an element of personal discipline. See Jack, you know, I really admire the fact that as a leader, you’re not only, you know, walking the talk you’re not only an investor yourself but you definitely instill in everyone that you meet no matter what level they are on that journey, I admire the fact that you share these sorts of principles with even when I was up and coming as a consultant. You had shared these principles with my clients whether they were experienced investors or not. You talk about the 80-20 rule, the Pareto Principle you know, 80% is psychology and the 20% is the mechanics. So, you know, what do you see as the future holding for us at the JR group over the next 10 years now that we’re finished out our 10 year milestone?

– As I said it takes a quarter century to build a successful business. So we are just 10 years in the business. So the exciting time starts and there are 15 more years to go to make it big, make it huge. Yeah, we call it JR tower.

– JR tower, that sounds good. And I’m excited to see all of our extended family which is extends now to our clients as well as being part of that family and taking part. So that’s good. We can talk for hours on end like we do late nights and like we do early morning sometimes but I think our tech guys giving us a bit of a wrap up. So what we’re gonna do is ladies and gents, thank you so much for joining us on episode one. It was an absolute pleasure bringing this to you all and stay tuned for more obviously, but this was fun Jack. I wanna do it with you again and I know you’re gonna be a recurring guest with us now.

– It’s just a fun time. I was literally thinking, you know, I don’t know, you know, free flow, I don’t know what we’re gonna talk about when you know our tech guy said that it’s already half an hour gone, I said, wow, time flies.

– Funny thing is sorry to cut you off, but we had a whole list of questions here that we didn’t even reflect on because I wanted it to feel like this. And I know it’s your first time you’ve done a free flow conversation for a long form way of doing it. And I really appreciate it. I’m looking forward to have you on for some more specific or more technical topics next time around. But we wanted episode one to be a combination of the spirituality, combination of the business wins and what to do in the tough times because it’s our 10 year anniversary that just passed by two months ago. So congratulations.

– Thank you, thank you Sean.

– Thank you so much.

– There are great times ahead for us and for our clients and for our members. And I just want to say that if you have ever dare to dream, if you have dreamt, don’t give up on your dreams, keep going.

– Let’s do it.

– Cool.

Hide transcript
JR Prosperity Partners
Prosperity Point Podcast: Episode 02 – Top Finance Tips With James Brunacci
- Good morning ladies and gentlemen. It’s my absolute pleasure to have the head of JR Financial Solutions which is ahead of mortgage broking and lending James Brunacci with us this morning. James welcome on board-

– Thanks Sean. Prosperity Point Episode two. I couldn’t have hoped for a better guest actually than our very own financial wizard. So let’s get straight into it. What do you see happening in the banking industry over the next five years?

– It’s too early in the morning for that. I’ve only had half of a white mocha.

– So tell me about this. Let’s get started with the soft stuff first. So you said it’s up to me to decide what I surprise you with in the morning. So you were too polite to go for a scotch first thing in the morning.

– I could say to be clear your asked me for a scotch in the morning and I turned that one down.

– So now everyone knows that I’m okay to have a scotch at 7:30 am which you’re too polite to say yes to, which is good. But with regards to our white chocolate mocha now. What are your thoughts? How do you find it? If you could describe it in a connoisseur sort of way.

– Well you talked this right up. You said you had this every day. I have mocha from time to time. But, I’m really impressed. I love white chocolate so it sort of worked. I used to have a little white hot chocolates from Clay James when I was like 12.

– Yeah.

– They were my favorite thing. I don’t know if they still got them. I haven’t had one in probably 10 years.

– I think where I learned about the white chocolate mocha was when I combined my love for hot chocolates and coffee at the same time.

– Yeah.

– But I needed something with a bit more caramel sort of essence. A bit more vanilla drip to it. So I can’t complain. And yeah, you’re right. This is my daily coffee and I have a little time-saving mechanism because I’m so close to the shop. I’ve been going there for the last five years.

– Yeah.

– Every morning I actually give them a call. I just say, "Hey, good morning. How’s it going? There you go. Yep, sure. Cool." "Your coffee will be ready in 10 minutes." So I save a lot of wait time of coffees in the morning and then I just get all these angry white-collar professionals just staring down at me because I go there I pay, take my coffee and then I’d jet straight to work. So I did the same except today I had to order two.

– Yes.

– So they were asking me-

– confused everybody.

– It confused everyone, exactly. So they were asking, is that for you or T? And I said, it’s not for me or T. It’s actually for my colleague for the episode. So here we are. And we were talking about… First of all you’re an absolute legend. Thank you so much for making it despite your hiccup last night. Do you want to tell everyone what happened and your passion for your indoor football?

– So Sean’s been setting up this podcast for a good what? Four weeks or three.

– Yep.

– Had to move it from the original date. We’re going to do everything locked in for today. Last night nine o’clock I’m playing 6-a-side outdoor and I suffered a bit of a mishap. The shoe is gone. The foot’s about three times its normal size. So I had to get the wife to drive me into the office today.

– If you’ve been literally-

– Jumped up the stairs She wheeled me into office.

– And you’ve been wheeled around everywhere this morning so far.

– It’s not my most dignified morning.

– But you’re here-

– I’m here.

– I did it for you. You know.

– And you were first-

– Such a good thing to do.

– We’ll give you that your first in best rates.

– Awkwardly standing outside the lift unable to hop through the door.

– Yeah. But thank you for your commitment. And what I wanted to get from I suppose that the chewing your brains aspect is just a bit about… First of all 2020 has been a crazy year.

– Yes.

– For everyone. And there’s been a lot of learnings I find. And I feel that you’re such a value add to a lot of the clients that we pass on to JR Financial solutions because you take an approach of education along with the finance service. Is that because you’re passionate about what you do personally like you actually love the world of lending and finance or is that because you prefer the service side where you actually help clients understand exactly what they’re getting into. Or is it a mix of both?

– Yeah it’s a bit of both. What got me into mortgage broking was that need, that desire to sort of educate people. I think money is something that we all deal with every day. But so many people just really don’t understand how it works. What strategies or structures make a difference. What ones don’t. People would be happy to take their car to the mechanic but it’s very hard for someone to go on pay money to get advice on money. Something about it doesn’t feel all right. So mortgage broking was a real opportunity for me to be able to do that without having to charge people for it. It made it much more accessible. I could help out family and friends in a way that is harder if I had to send them a bill at the end of the session. So that education side is probably the number one thing that drove me into mortgage broking. And that I really love about the industry. The problem solving side it’s just a fun part because with it-

– Yeah.

– Every person has got a different situation or a different scenario that comes up. And you literally just matching their list of issues I guess. We’ve all got issues don’t we? Their list of issues against the list of lenders who might be able to take it. And try to convince someone that you really do want to lend to this person. It’s a fun game at times.

– You’ve instilled in me I think just personally even when I was personally working with you for one of the deals you’ve instilled in me that in the lending world it’s more about painting the right story as opposed to just ticking all the boxes.

– Yeah. Absolutely.

– Do you see that being a good thing for lending in general? Or do you see that as it should be more black and white where if you tick those boxes then you do get access to a certain bit of lending or do you believe more in building that right story? It’s like in law as well.

– Yeah.

– We’ve studied law, right?

– We have.

– We’ve got equity and then we’ve got common law.

– Yeah.

– There’s a big difference there?

– Absolutely.

– That’s a really interesting one. So on one hand, if you’ve just got black and white rules you end up with a lot of borrowers that miss out. They should be approved then they don’t get approved because missed this box by a fraction. You needed 50,000 in savings you had 48,000. I’m sorry that’s a decline. Silly stuff. I’ve had clients before that have for example missed a few payments on their credit card. But overall they’ve got the money in the bank. They’ve got the history. They’ve got the job. It makes sense. So you do want lenders that are going to be able to sort of work outside the box there but at the same time when you submit a deal that meets policy and the assessor comes back and says I don’t like it. I don’t know how many worse things there are in lending than that. So it does go both ways. What you really want is a good mix of lenders.

– Yeah.

– So you want those lenders that really just the box tickers. Tick tick tick. And you made your banks often fit in that category. Does it make policy? Yes it does. Approve the deal. But then a lot of your mid-tier lenders have that more creative approach where you can go and you can tell the story. But at the end of the day you’re talking about someone wanting to borrow half a million $1 million dollars. It’s a lot of money to lend based on a few pieces of paper. You might see a payslip and a bank statement. But if that lender doesn’t feel like they know you then would you lend half a million dollars to someone that you’ve never met and never going to meet?

– Well if we’re banks this is a different story. I’d love to be a bank first of all which I’m not. But if I was a banker I do completely understand where you’re coming from.

– Yeah.

– When we’re talking about lending and ticking the boxes I’ve realized that of the last four years working with JR the more experienced the investor I work with the less they care about bank loyalty. But bank loyalty used to be something back in the day. Like when do you think the last time bank loyalty really was a thing in Australia

– Putting a year on it is probably tough. But I would say that the internet killed bank loyalty. And as the internet has taken those strong hole it’s killed it more and more. In the past your bank manager was the one that would approve your deal. So if I know you and you know me and you come and ask me for money you don’t necessarily have to prove that you can afford it. I’ll show him look you don’t have a job right now but you’re good for it. You’re going to get your home. And I wasn’t quite that bad. But it wasn’t far off to be fair particularly in some countries like America.

– Yeah.

– But as the Internet’s come in you’ve seen a lot more people playing the system. Learning the rules and trying to manipulate it. And that’s where you saw regulators like ASIC come in bring in their responsible lending acts and things like that. That suddenly put the emphasis on the bank to make sure that you could pay a loan back. So if your bank manager approved you and then you let him down and didn’t pay it back well he wasn’t coming to you and apologizing. Right?

– Yeah.

– But now the banks lend money and you stop paying. The first place they look is should they have not lent you that money? And they can end up in court and paying fines for that. So that’s really… That’s narrow the lending market. But then at the same time as the lending market’s narrowed. You’ve got internet ads and online banking and everything that has made it so easy to switch. But at the same time banks are paying to attract those customers.

– I think so.

– Rather than paying to keep their current customers. Because people are comfy. If we don’t pay for you probably you won’t move. And if you do we’ll just pay to get you back later. But in the meantime we’ll just milk you for the money so we can get our other customers cheaper. I mean it’s an approach that works. They’re not doing it blind. They’re making money from doing it. But I think because it’s changed over the last say 20 years or so it means that people are just dying to catch on to the fact that being with a bank for 15 years is hurting them or helping them. Really. Yeah.

– The same customers I see that are with the same bank for more than three to four years. I think 99% of the time could get better deals elsewhere.

– Not 100%.

– So it’s not that easy anymore as well when you just call up your current bank and say, "Hey this competitor is offering me this. Could you match it?" I think that bank answer is always no most of the time. Right?

– Depending on where rates are going it’s usually not no. Banks will help out but I describe this to clients as a game of poker. Right? You’re calling your bank and you’re saying, "Hey. Your rate sucks. How about you give me a better rate? And I won’t leave." And they’re saying, "Well you’re not going to leave are you?" "I might leave." And somewhere in the middle they’ll give you a rate. So something that we’ve actually done in the past is where a client will come to me and they want a refinance. The first thing we do is we go back to that bank. Can we get a better rate there. The bank will say, "Look, send it to the team. We’ll find out for you. You have a 20 basis point discount." And then no worries. That’s not good enough. We’re gonna go to the other bank. The other bank approves it. Logs to discharge authority. And suddenly first bank comes back like, "Oh, you had a 20 point discount. How about an 80 point discount? And we’ll give you two grand."

– Right. There you go.

– So stuff like that is rampant. And really what that comes down to is whether you wanted to stay with the bank that was willing to screw the first time. For rule of thumb I remember learning from my mentor back in the day was that you should change banks roughly as often as Australia changes prime ministers which unfortunately at that point was about once every six months. But in theory that actually means once every three years or so.

– Yeah.

– If it’s more than two years, like more regular than every two years, you’re gonna start building a bit of a bad rep for yourself with the banks. They’ll see it. Had a mortgage, paid out a mortgage. Had a mortgage, paid out a mortgage. You can find that they may not want to lend you as much or as easily or give you as good a pricing. But at the same time if you’re there five years or more you’re almost certainly paying too much.

– And is that the same? Does the same go for like private banking clients as well? Or is there like an extra sort of service that the other banks sort of can’t offer?

– Private banking is really different. On one hand you’re bringing a lot more money to the table which is more money to the bank. On the other hand you’re also really time pull. So probably you don’t want to leave.

– Yeah.

– But then they’ve got to consider whether somebody else will come and just do all the work for you. It’s the same game of poker. It’s just got slightly different hands that have been dealt.

– Okay.

– And that poker game is like it’s logical when you get to see it. If you’re sitting on a property that you owe 95% on the bank’s not gonna give you a better rate. They know you can’t leave. Right. If you’re sitting on a property at 20% over here you’re probably going to have pretty good bargaining power. It’s hard for them to guess that you’re not going to leave. So the strength of you as an applicant really does make a difference in that. And that’s the number one thing they’re looking at in their retention terms.

– Yeah. You mentioned something interesting about when lending happens let’s say you’ve got ASIC that looks at who approved and then they can breathe down someone’s neck if they’ve done the wrong thing.

– Yeah.

– Do you feel those changing attitudes if passed on to our clients which is the general misconception I hear more often than not is well banks don’t really like lending anymore. And I couldn’t disagree more because I realized that if you’re a strong applicant on your own I feel a bank would still lend you based on your numbers and your story. But I feel the attitude shift is still that banks don’t like lending anymore. What do you think being in the businesses of lending… How do you think that attitude shift can be a bit more clear for everyone out there?

– Yeah. I think the attitude shift hasn’t been so much they don’t like lending as there’s just so many more rules. So you had your responsible lending that came in the end of 2009. And then over about six or seven years that continued to get more and more intense. ASIC started looking more closely at these lenders and what are you doing? And then suddenly we have a Royal commission. And now the lenders are freaking out because they know they’ve got dirty laundry in there.

– Yeah.

– So they’ve tried to clear all that up and tried to show the Royal commission that actually look at us being super tight on everybody.

– Dirty laundry there.

– Also true actually. They look a little bit too deeply. Westpac and CBA-

– I’m so much shocked-

– But yeah. So in the lead up to the Royal commission or the lead up to the final report you saw lenders sort of go to a whole new level of strictness. It was a bit crazy to be fair. And that’s slowly starting to come back.

– Yeah.

– But again it wasn’t that they don’t want to lend. It was just that they all wanted to lend differently. So I’d work with a panel of roughly 50 lenders.

– Wow.

– I didn’t find that the loans that could get approved changed particularly. It just the number of vendors that would do it. So where in the past year out of the box scenario might’ve had 10 or 50 lenders that were keen now you had two. All right. Or three. You had to know who they were. You had to know how to package it. And they all had special rules. Which meant that it was very very hard for an individual to go straight to a bank. The rules are the same. I don’t play by special rules. But which bank are you going to go. If you happen to get it right, beautiful. But if you get it wrong five times now your credit files hurt. Now you hold jaded about it. Probably just give up and don’t go ahead. So similarly to the same way an accountant or a lawyer does something that you could have done yourself you just didn’t have the time or the knowledge to do it. Same idea.

– Yeah. That makes sense. It makes sense. And talking about things like interest rates now tail end of 2020 we’re at a historical low interest rates right? And banks are passing on a lot of these cuts. Where do you see the interest rate environment sort of heading towards over the next three five years given what its historic trend has been over the last 10 years? What do you think is going to unfold in the interest rate space for specifically home loans?

– Well I think we got a really good signal on that from the RBA just recently. They’ve refused to cut the interest rate to zero which is good. I think negative interest rates have not helped any nation that they’ve been implored in. But at the same time and at the risk of a little bit too much economics the way that they’re buying government bonds on the secondary market is specifically designed to drive down fixed medium-term interest rates. That sort of three to five years. So they’re trying to make sure that there’s cheap money available for a long time to come as long as anyone can see. So there will be a time. And I warn people about this all the time. If you’re taking a 30 year mortgage interest rates are not going to be at 2.5% for all of those 30 years.

– Yeah.

– But are they’re going to be there for the next five years? Yeah. I would expect so.

– Yeah.

– And beyond that which of us can see beyond that really?

– Yeah true.

– I’m just guessing at that point.

– True. But when we’re looking at what it used to be let’s say 20 or 30 to 40 years ago when we were looking at it being 16% 17% 18% and that was the norm.

– Yeah.

– Right now the norm is around that three is believable. Two is really low. So they can see being believable going back up to that three four mile. But do you think we’d have the tendency to go all the way back up to 17% 18% anytime in the next 40 years?

– I can’t see that happening personally. But I’ve lived 40 years. Same goes for you.

– That’s true.

– But the thing is that there’s these wide economic forces. Okay is it impossible that interest rates go back there? It’s not impossible. But look at what else was happening at the time. You had high wage growth.

– Yeah.

– You had high asset price growth. The whole economy moves together. You didn’t… If we suddenly like jumped today to 15% interest rates half the country goes bankrupt. Right. Nobody can afford their mortgages But that wasn’t happening 40 years ago. People were still paying their mortgages. You could still afford to do what you were doing and live your life. The whole economy moves together. So I don’t think like crazy interest rate changes like that is something to be worried about. It’s not going to happen overnight. And if the economy is in an environment where that could happen a lot of other things are going to be benefiting you as well.

– Yeah. I see that if we’re looking at wage growth as well I think that’s important that you mentioned that point. We’ve got what I think some of the slowest wage growth in recent years now.

– True.

– A few reports that have come out. One thing that I’m happy to see though is that a lot of the deferrals that were taken up during coronavirus are actually back to full set of repayments. Is that right?

– That’s true. This data is all buried in the annual reports from the banks.

– So it’s not out there in the media full steam ahead just yet.

– You could find that information if you really felt like some light nighttime reading. But the one that interested me the most was ANZ who publicized a lot of this stuff. So they granted about 90,000 Homeland deferrals.

– Okay.

– For between three and six months during the first few months of COVID and of those only 11,000 have continued now. So we’re seeing a 10% roughly and continuation on those referrals which is cool. But then of those 11,000 only 500 have actually asked for hardship assistance.

– Wow.

– The rest of them expect to be fine. They’re just not quite fine yet. Which I think really indicates a strength in the market then. And something else that I wrote to a few of my clients about now at the time was that the profit reports from these banks came out and all of them are showing big drops in profit. Which makes for great headlines.

– My next question to you.

– Yeah, okay.

– Because I loved-

– ask a question I’ll answer.

– All right. Well how do you think… Well given that the banks are showing less profit tell us the real story behind the scenes because you actually had a look at where the money’s going.

– Great question sure.

– Yes, thanks.

– I wasn’t expecting that one.

– That’s really interesting to me when I came out. You saw the big headlines saying that profit drops 50% like CBA puts aside $3 billion for COVID losses might even be more than that for CBA. And it makes for great media. These huge losses that the banks are making. But when you actually look at what these are they’re projected losses for the future. And so they’re not money that the bank has lost in the last financial year. They’re money they’re worried they might lose in the future. And when you add that projected loss back into their profits because they’re just claiming that at the tax deduction. Suddenly their profits look pretty much identical to last year. Which admittedly wasn’t an amazing year in banking on the back of the Royal commission. But still to have gone through COVID and to have not changed your profitability at all.

– It’s phenomenal.

– It’s pretty pretty amazing. And I mean I just wish that I could be a bank and not pay tax on $3 billion of income just because I might lose it in the future.

– I like how this conversation has already referred to us both liking the idea of being a bank. It always comes down to that, doesn’t it?

– I don’t think it’s a foster money-making strategy than being a bank.

– Yeah. Yes, of course. In terms of balancing the ever evolving changing world of lending which is what you probably have to stay on top of I think you have to do a lot of CPD in your world where you’re keeping up to date with certain changes in rules or you’re keeping up to date with certain regulatory bodies. Is there a lot of that going on the way that GPs would or accountants would have to keep up to date with a few things?

– It’s interesting right. For our space. So yes, absolutely there’s safe bidding. And similar amounts to an accountant or something like that. I think GPs do a bit more but that’s good because they keep us alive.

– So they say.

– We are all dying so maybe not.

– There you go.

– But most of the work that we do to keep up to date is more to do with understanding how lenders are changing their rules. Any of 50 lenders that all feel like changing their rules every week or two. There’s not an official CPD measure for that. But my goodness. Like that’s what takes up all the time. Staying on top of that stuff because it’s a game with constantly changing rules.

– Yeah.

– Keeps you on your toes.

– Yeah, definitely. And in terms of working from home or working from the office a lot of people have got this split going on now. What have you enjoyed over the last few months? Do you prefer having a bit of a mix? Do you prefer enjoying staying at home and zooming it up with clients? Because I know we personally like face to face interaction and feeling that energy with people especially if it’s the first time we’re meeting them. And once that relationship is set you can then carry on with email trails and phone calls and so forth. So what’s your preference.

– Yeah. Look, I’ve certainly enjoyed spending time at home. And my wife’s been at home for like eight months now. Not quite. About eight months. But there’s nothing that really beats the sort of being in the same room as someone being able to understand them. I’ll start at the beginning. My role is to understand you understand what you need understand who you are and how to position that to a bank. So as soon as we’re able to get back in the office and back in front of people I was absolutely chasing that. I don’t think Zoom can really match that.

– I think so too. We’re going to go for a chocolate break. And there’s the chocolate. It’s just like magic. Chocolate with a white chocolate mocha.

– Hope you got some good sponsorship money from Gloria Jean’s and-

– Cadbury.

– Cadbury this morning.

– This episode is proudly brought to you by Gloria Jean’s Stan hope. No, I’m just kidding.

– But also you just gave them the advertising they would have paid for.

– Well what do you think I get my free coffee from? I just keep endorsing. I send the referrals they throw with free coffees.

– You know, it’s really funny. I keep telling my clients about these Rewards Points and Reward Vouchers right. So loyalty points for flights or loyalty points for coffee. So I’ve spent probably the last year and a half or the last two years with getting coffees regularly from Gloria Jean’s. And I’ve got this loaded card now. And I’ve got approximately about 35,000 or 40,000 Gloria Jean’s points on there. So I did the math. I think I’ve loaded that card to the point where I’ve got free coffee a day for 40 days straight.

– Not bad.

– That’s like two months worth of morning coffees almost, right? And maybe even a bit more. If I just get the small ones instead of the large ones. So I’m very proud of my ability there. But here’s what always happens right?. I feel every time I rack up enough loyalty points the world and the economy decides to throw a spanner in the works and Gloria Jean’s changed its loyalty card. So I have to now transfer those points onto a new card which I just haven’t had the time to do. So I haven’t been racking up points for the last two weeks. And every time I went into Velocity I used to fill up with BP. And then BP stopped velocity.

– Don’t talk to me about velocity.

– Yes.

– It makes me cry at night.

– But I heard… Or I didn’t hear this. Maybe a little buddy told me that nothing’s actually going to happen to our Velocity points. I think they will still be able to be used. Is that right? Or you cross that scene at all?

– Yeah I don’t know. I spent a good like three years collecting Velocity points like got my credit cards with the 75,000 bonus and everything.

– Oh my goodness.

– I know. I have like 300,000 points.

– Yeah.

– And then they go on and shut down. I can’t transfer them to KrisFlyer. I can’t do all the things. I’m not good friends with Velocity right now.

– I don’t think a lot of people are.

– I just want to know how many actual dollars you spend at Gloria Jean’s to get 40,000 reward points.

– Well if I spill those beans out I’ll be sad. It’d be a lot. I could have maybe half a property deposit because I think the points racking up has only been for a year and a half but the actual commitment spend has been for about six years. Daily. Every single day. And I think the inflation on the coffee hasn’t been too bad but it’s still been about $5 96 years ago.

– So your endorsement was actually stan hope Gloria Jean’s

– Yeah.

– Brought to you by Sean Floyd. Funded their own business.

– They’ve got a great team that they’re all very annoyed at me because I annoyed them in the morning for that coffee to be made before I reached. It is what it is. I can’t complain. What’s new in terms of just your personal planning your personal business vision over the next coming years. Do you see yourself taking up any interesting projects? Do you see yourself trying a few things over Christmas this year that you wouldn’t have tried before? What’s going to new in 2021 for James Brunacci?

– Yeah look probably one of the biggest things on the horizon there is we’re looking at bringing a trainee on into the business. So working with other experienced people in the industry is one thing. But to train someone from scratch most likely a school leaver or something like that should be a really interesting next step for the business next step and for me professionally. Being able to pass on some of that knowledge and that passion for the industry. So yeah really excited for that. I think with the gradual loosening of some of the restrictions as well it’s becoming a real market where people are keen to take that next step to save their interest to buy that next property. But navigating those releasing restrictions is complicated. So again. Sort of really focusing on how we can make that experience work for people. Yeah. That’s where it’s got the business where it is now. And I think that’s really going to be the main focus for next year. But speaking of personal I heard that you picked up a new toy a couple of weeks back. I haven’t met this new toy yet, but.

– Yes, yes. The new toy is in the secure Batcave across the road. I don’t intend to bring it down to this car park just in case some of the angry lawyers are dented up. But it’s been a very very fulfilling few drives to work and a few drives on the weekend I’ll be honest. The new toy is great sir.

– Do you want to tell us where your new toy is.

– It’s a product of delayed gratification instead of instant gratification. So I’ve made sure I ticked a few boxes first but I’m very proud to announce I did pick up an AMG C 63 Coupe and it’s been keeping me happy and it’s been keeping my neighbors unhappy I would say. So luckily all my neighbors are my friends so they were quite happy in the beginning but the noise does get to people sometimes. But I love cars. And I think that the biggest spend in my life dollar wise would be cars more than property even I feel. Because that’s just how passionate I am about sports cars. And I know you love cars as well. When talking about daily drives and enjoying Canyon rides actually I’ve been driving up close to where I used to grow up near Wilberforce Road and Park road.

– Yeah.

– So I’ve been enjoying those roads and I think that’s where everyone goes for a good drive, right? So I’ll be enjoying this Christmas for sure. And because we’re not leaving Australia I’m more than happy staying on the roads. But we’ll definitely drive safe. There’s no speeding going on whatsoever.

– I was going to ask you about the removal of the warnings on mobile speed cameras. How does that tie in with your C 63. Of course very safe.

– There’s going to be actual removals-

– Yeah they’re taking them away. The no warnings on mobile speed cameras and they want to triple the alarms on them.

– Wow. Okay. I’ll probably have to go far away then. Get out of town for real.

– That’s where the reckon are going to be though.

– Oh.

– There was one of the regional MPs was really upset that it was going to target regional drivers too much. So pick out what’s a safe place for you. That’s where your bi turbo is really gonna work its best.

– Well, the best thing about the C 63 S ride is that you can have a lot of fun in it without actually speeding. You can have a lot of fun going from a dead stop to just 60 and that’s enough-

– That’s true. but you get the whole grumble effect. And these are essentially big German muscle cars that handle quite well. But the car that I’ve got a bit too tail happy. So if we give it too much it’s not really going to be in control. And they’re not meant to be known for control. Like if I wanted control I would get a Mazda MX-5. You know what I mean? Or a Porsche-

– No offense to you MX-5 drivers out there.

– No of course I was actually praising them. The handling is better than my official. They corner better than mine as well.

– It’s true, it’s true.

– But we’ll have to just see what’s next, I suppose. So maybe what we’ll do is for our next podcast catch up. We’ll do it while we’re in the car with a few GoPro’s. And we’ll drive up to-

– Car chats with James and Sean.

– Car chats with James and Sean. And then we might have a scotch. Probably not on the AMG C 63.

– Good decision.

– But we will definitely have a large white chocolate mocha I think.

– Car karaoke.

– Car karaoke why not? I think these will fit quite well.

– Snooker table would.

– What I love is the fact that there are backseats but they’re not really that usable. So I don’t have to invite too many people to come in at once. Just one nice passenger that I like which is more often than not my partner. And then we cruise around town which is good. Speaking of personal acquisitions what was really interesting for me to see was everyone in my close circle and even in the office you and myself we all acquired during 2020.

– True.

– Which was…

– And we acquired at times where the confidence level wasn’t where it is today.

– True.

– And I think we’re seeing the rewards or the benefits from something like this. Do you see property being a vehicle that you personally will continue to keep acquiring over time and keep cultivating and restructuring? Or do you feel… Or are you one of those guys where it’s just five and I’m done or 10 and I’m done and that’s enough for me and then I’ll focus on other instruments. Or do you generally don’t mind property as a personal investment tool for your success?

– I think I’m getting there. I’d be in trouble if I sat here and told you Sean look I think property’s a scam. I’m not into it. But no of course. I see property. I’m quite pragmatic with property and I think if you’ve seen some of the webinars that I’ve done before I see it as an investment vehicle the same way I see shares or bonds or gold or anything like that. The key difference with property is its gearing.

– Yeah.

– So the same amount of money I can invest in six seven eight times as much property as I can anything else. So to me that just simply makes it a very sensible asset to be picking up. I also look around and I’ll say that the government is specifically legislated to protect property.

– In Australia for sure.

– Absolutely.

– We learnt that this year didn’t we.

– We have so much of our National wealth caught up in it that it’s something that government protects. So if the government is going to go out of their way to support an asset class I want to be on board with that. And so absolutely I see that being something that continues. And I’ll also say there’s a really good way to create a legacy. And you look at some of the people whose parents or grandparents owned land in Bondi or land in Chatswood. And the impact that that’s had on them now or even more recently families that had acreage in Schofields or in-

– Oh, the Box Hill averages right now have just gone on another level.

– That’s right. So like all that stuff is pretty incredible. So yeah.

– It reminds me of that story that Munzurul was telling us-

– It was what I was thinking of. from March this year before the pandemic really took its full effect on the workforce. We realized that there were these people that were complaining about properties in Bondi that were just annoying to keep. And imagine if they held it now they’d be sitting on millions.

– Yeah, absolutely.

– So of course I see property being a good tool purely because of the leverage which is what you said. I put down my 10% or 20% and then the bank gives us the rest which is great.

– Making money with other people’s money.

– Exactly.

– Number one rule of have a income creation.

– Yes, yes exactly.

– And another thing that would be really interesting is there’s a lot of younger professionals out there that are earning more that are now of the realization that renting while investing. So virtually rentvesting is actually good thing for their lifestyle.

– Yeah.

– And it’s actually good thing for their wealth building. What’s your comment to high-income young professionals out there that are paying too much in tax that do want to invest that do want to get properties but still want to live in rent in maybe Manly or rent in Cremorne for example rent close to the city or closer to Para. What’s your advice to people like that when they are on board with rentvesting. Or they might be considering rentvesting.

– Yeah. I think people over complicate a lot of these things. People think about it too much. In practice what you’re looking at is rental returns. So if you buy a property in Cremona in the inner city what’s your rental return going to be? The answer is going to be-

– Really low.

– It’s probably going to have a two in front of it.

– Two point something percent, right?

– Yeah.

– If you buy a property in Queensland anywhere Victoria almost anywhere your rental return even at its worst is going to have a three in front of it.

– That’s right.

– Right. So straight away, you’re going to be better off financially buying investments and renting in the lower rental market than buying in that market and having a non tax deductible debt that burns you then. The math is very straightforward. The problem is the lifestyle. Do you want to be in that renting lifestyle? Right. And that goes both ways. But I see it the same as anything else. Do you buy your 90 inch TV thinking this is a good investment? I’m really excited for the future capital growth of this. The same thing goes for your car. Did you buy that thinking I can’t wait to get ahead in my life because of this car. Of course not.

– I was only thinking I’ll get to where I have to go faster. That’s it?

– But all these purchases people still make.

– Yeah. You still buy the TV, you still buy the car. So you still buy the house. But people need to see it as what it is. It’s a lifestyle item. It’s a cost to your future wealth. In exchange for something that makes your life easier now. And once you start seeing it like that those decisions are easy. You don’t go and buy your car if you don’t have the cash for it. You don’t think oh I can’t live my life unless I have this nice car. You work in your life. And then when you have the ability you buy the car. Same thing for a house. Renting is financially better. But at some point you will reach a position where you want that stability of a house or you want that lifestyle improvement of a house.

– Yeah.

– So you buy it. But as long as you see it as what it is not a waste of money but a cost to you. That makes the whole decision-making a lot easier. So if your pure goal is I want to get ahead financially. Absolutely. That rentvesting and particularly for people living in Sydney makes so much sense.

– I think so too.

– Yeah. Absolutely.

– I really think so too. And the other fun part is before we wrap up I could talk to you for hours and hours and hours.

– And we have.

– Yeah, we have. We always have But what’s good piece of advice you’d give to someone who’s out there right now young let’s say from between the age of 30 and 40 or between the age of 25 and 40 and they’re thinking about how can I get ahead right now even if I’m not in the property market. What are some tips you’d like to share for people to prepare to be in a position to get into that first property or that first investment?

– I think the most important piece of advice that I ever heard was that the investment that you make is just a pathway to get where you want to get to. Yeah there are better paths than there are worsts paths but it’s just a path. The number one thing that will define your financial situation is your relationship to money. How do you personally relate to money manage money deal with money? If you’re sitting there and you’re not saving anything you don’t have a good relationship with money. It’s controlling you. Right? If you are sitting there and saving comfortably and controlling your money well you will create wealth. You will be wealthy. If you invest it well you’ll be more wealthy. If you do nothing you’ll still be wealthy. I see clients that have that good relationship with money come to me with no properties but $100,000 $200,000 in the bank.

– All the time.

– Right?

– Yeah.

– Is that person going to be wealthy even if they do nothing and just keep saving that money.

– Yeah, they will. Right? They’ve saved for 10 15 years and they’re in that position. If they keep saving they’re going to retire with $600,000 $700,000 in the bank. Is that going to be enough for retirement? Probably. But could they have left a legacy instead? Could they have created flexibility for themselves in their life and for their children? Absolutely. So that relationship with money would define your financial success. The pathway will just amplify that.

– Makes sense.

– The number one tip that I would have for a young professional is to spend the time seek out the advice seek out the knowledge to sort out your relationship with money and how you control it. Once you’ve got that everything will fall into place for you.

– That’s awesome. That’s actually a good piece of advice I reckon. Seek out the right people build that team and then execute take an action on it.

– Absolutely.

– Don’t just dwell on it for the next 10 years and keep saving.

– Absolutely.

– What we’ll do is probably the next time we catch up we’ll wait till your foot gets better so that we can-

– I’ll walk into the next one.

– We’ll drive around town and then enjoy some crackles and pops for our next podcast. I think that’ll be fun.

– Apparently I’m not a good passenger. According to my wife who I passengered with for the first time in a long time this morning.

– This morning?

– What was the feedback?

– A little bit controlling apparently. I liked the drive.

– Yeah.

– Well James you’ve been an absolute pleasure this morning-

– Thank you Sean.

– I really appreciate your time. And I look forward to having many more of these with you but I couldn’t have hoped for a better opening to our subsequent set of talks.

– Yeah.

– And I look forward to learning a lot more from you into the future as well.

– Thank you very much for having me. Appreciate it. Let’s do it.

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