From divorced and broke to real estate success: A story of resilience and financial freedom with Tony Harrington

Hello and welcome to the Property and Lending Show hosted by Kyrillos Mansour (KM), Fadi Youssef and Mark Kilada

This podcast episode is brought to you by First Brick Property Buyers Agency and Powerloans 

This week we have a very special and amazing guest on with us 
Tony Harrington
This is the story on how Tony went from divorced and broke to real estate success, and his mission to help others become financially free!

Want to reach out to Tony?
Find him here
http://www.yourpropertyinvesting.com.au/
https://www.facebook.com/yourpropertyinvesting.com.au

If you would like to get in contact with KM, Mark or Fadi, you can find them here:
hello@firstbrick.com.au (KM)

Mark@powerloans.com.au

Fadi@powerloans.com.au

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Transcript

KM: Hello and welcome to the Property and Lending podcast. Join the me, as always, Mark and Ferdy. How are you, gentlemen?

Fadi: Yeah, pretty good, how are you?

KM: Excellent. Mark, how are you?

Mark: Good.

KM: We usually ask you for your tip of the week, but today we've got a special guest. So I'm going to save you the embarrassment because I know you haven't prepared anything and we'll move on from that. And we've got a really cool guest today. I'm really excited for this conversation. I think everyone listening to this is going to really enjoy it as well. Our guest today is a PIA, an accredited property investment advisor. He also graduated from the school of life. He's also written three books. First one is called you can do anything. The second one was called don't blow your dough. And the third one was the Tradies Financial Freedom Blueprint. He loves his family, loves to play golf, loves footy and he loves the beach. So that's his dating profile and he goes a little bit more about his story here. And our special guest is Tony Harrington. Tony, how are you?

Mark: Hi, I'm great, thanks, Kayam, and great to be on board. Thanks, guys.

KM: Thank you, mate. Thank you for joining us on short notice. We only actually linked up the other day, so we appreciate that. Tony, you've got a pretty cool story. I'm really excited to hear it and get into it. Might just ask you to, if you don't mind, share your story and where did you come from, what did you do and how did you get to where you are today?

Mark: Fantastic. Love too and thanks for having me on your show. Yeah, look, guys, I grew up just a basic working class family. I was one of eight kids and my mum and dad worked really hard and my whole family was just taught as we grow up, just work hard, work hard, work hard, right? And I got into construction at about 16 years old, worked on building sites for many years, but I never ever was taught anything about money. I could make money, I could always have money, but I wasn't actually taught what to do with money, how to grow money, how to create wealth. And it was sort of a 20 year journey into my working life that I got well into my thirty s and I was completely broke. I used to blow my money, I used to bet on the horses. My goal used to be I was going to win off the bookmakers and then I take that fortune, I'd go to Las Vegas and I'll clean up a casino. Right? That was the money plan that I had at the start. Needless to say, it didn't work out too well and I don't know too many rich punters, mate, to be honest with you. Look, I bought a franchise in 1994. I thought I'd try and get out of the building industry and I bought this business, but I got completely ripped off. There was a few of us that lost a lot of money, lost every cent I had. My wife left me at the same time and I was left over three kids as a single dad. And my kids were eight, seven and three at the time. So I did what I did what I know best. I went back into the building industry, went back to work and I started again. I was completely flat broke. So ended up started to do some personal development guys. That was sort of the turning point. I read a book called The Psychology of Winning by Dennis Whiteley. And in that book it spoke about goal setting, planning ahead, self motivation, positive motivation, all this sort of stuff. Why didn't somebody teach me this at school when I left school at 15? Why didn't someone teach me this when I was at school? And that was the start of a new journey. So from there I started to read books, I started to go to some seminars and I started to pick up some knowledge and that was the key. And so eventually I saved a deposit, bought the first family home, and from there, early 20 00 20 01 20 02 I started to invest in property. I didn't have anybody guiding me, I didn't have anybody helping me, I had nobody teaching me. But I sort of picking this up as I went. I'm an in the street sort of guy. I read Dolph de Ruse book. Escapes me at the minute. Dolph de Rus is the guy that never ever had a job. He just got into real estate when he was in uni and he never worked ever a day in his life. I just forget the name of the book, but anyway, it sort of taught me enough about the basics of property to get started. So I got in and bought my first investment. Then I bought another. Then I subdivided one and I didn't know about property booms and all this stuff. But from 2003 onwards, the property market took off. The next thing I got a hoop of equity. And that was just the sort of start of it for me. So from there I really met somebody who sort of altered my journey as well. It was a tax accountant that was really switched on to property and property investing and how this whole game works. And he used to get me in his office and he'd get me up on a whiteboard and he draw all these pictures and diagrams and show me how to reduce tax and how depreciation works and all this sort of stuff that I'd never even been exposed to. And all of a sudden my tax return started going up by 510, 1520 grand. And all of a sudden you start parking that money back into real estate. Next thing you're playing a completely different game. And again, I said to him, I said, well, how long is this thing going on? Why didn't someone teach us this type of stuff when we're going out earning money and starting to work? So the journey just sort of evolved through there. Wrote a couple of books along the way. And I got myself to a point where twelve years ago I got to a point where I thought, you know what? My key market that I sort of focused on when I started this business was to really get involved with trade tradies in the construction industry. Because I've got a 40 year history with the construction industry since I was about 16. And so I decided I quit $100,000 a year job on the spot. And I went out and I started a business to go and teach and coach and educate tradies in the construction industry, how to do better with their money, how to invest in property, pay less tax, and pay the houses off faster. I didn't know the first thing about building a business. I don't come from a business background. And again, I just went out with just passion. I go, I'm just going to go out and start doing this. And twelve years later, I've written three books and I've got coaching programs and all sorts of stuff. So it's been an interesting journey, and I know a lot of the people that I deal with and maybe a lot of your listeners out there as well. Came a lot of people have probably got a lot of fear about wanting to get started or how do I do it, how does it work? Will I lose money? Will I get ripped off? People got all this stuff going on, and I think if I'm going to offer a bit of advice straight off the cup would be surround yourself with people who know what they're doing. Surround yourself with people who know how to set up finance, people who know how to find the right properties, people will know how to deal inside the property industry. And if you can find those people, then your chance of success will be really accelerated as opposed to doing it the way I did, going out on your own and trying to do the best you can with what you know. But I think the fastest path for anyone out there is to build a team around you and make sure you've got good people sitting beside you.

KM: That's a very amazing story, so much in there. I've written like 400 questions down during your during your story there.

Fadi: So I'm just about to say, who's going to start the questions, man? Because that was incredible. Men even that timeline even pulled through. That's an incredible story. So I'll let Km start the questions. I'll jump in later on.

KM: I will just ask one from my 400. I'll let you guys jump in. I guess my first question, and my main question is, you were trading for 18 years, I think you mentioned, and you obviously made a lot of money during that time, and as you said, and you had nothing to show for it, there was no assets, right. It was just money in, money out. Evan, you've decided you start investing in property. Evan, I think you said, is it four employees, four properties employees? Is that what you said?

Mark: Yeah. When I started out, was there a.

KM: Strategy behind four in four years, or did you just pick and go or how did you decide how to buy those properties and and where to buy and what was the strategy behind that look?

Mark: Yeah, basically, what I did, the the very first property I bought my own home. What I did, the the specific area I wanted to buy in, I studied that market for three months. I went to opens, I went to auctions, I spoke to real estate agents. I went and seen what was selling for what price, et cetera, et cetera. So by that time, I had financing in place, I had my deposit in place. So when I came to purchase the property that I zeroed in on, I basically negotiated with the agent. And here's the question that I said to the agent at the time, I said, tell me, why are they selling? Why is the owner, why are they selling? And she said to me, they've already bought another property, they got an unconditional contract, and they need to have this place sold and settled within 30 days. So my opportunity there was, I'm going to offer a low ball price, right, and if I can buy this thing under market value, because I had a really good understanding of that area, that location, and what was a good buy and what wasn't. At the time, I was able to buy that property around 25% under market value. So I put in an offer that day, I said, here's my offer. This is the price. I've got a deposit. It will be in their bank overnight. And I said, I want an answer by 05:00 today. So what I did, I took the vendor's position where they had a bit of urgency. I created the negotiation tactic of being able to offer a ball offer, but then I put a timeline on the deadline and said, tell them they've got till 05:00 today because I'm looking at another property around the corner. They came back to me. They didn't accept that offer, but they bumped it up by about 5000. We done the deal by 05:00. That up. So I bought my first property, 2020, 5% under market value. That's how I started. Now, nobody taught me how to do that. It was just instinctive of me to do it. So from there, I already had instant equity. And then the market started to go up as well. But I didn't even know the markets were going up, right. I didn't know about market research. So what happened then? I zeroed in on another property and I found an agent at the time, and I won't mention who, who basically said to me, I said, Look, I'm looking for a deal where I can buy under market value. And he said, Look, I've got this property, the vendors are pretty desperate. DA DA DA DA DA DA. So I looked at this house and I noticed on the house that it had had another room that had been built extended on it, but, but I noticed on the section 32 that on the floor plan, there's no extra room. So I called up the agent and I said, listen, tell me there's something weird about this house. There's an extra room built on the back, but it's not on the section, it's not on the floor plan, the section 32, right? So I rang the local council, I said, no, we know all about that place. The guy built that room without any permits, so it's got to be demolished. So again, I found my second property, I found an opportunity. I can go and basically put in an offer and do something with this. So what I did, I wrote up a list, because I was in the construction industry, I wrote up a list, I'm going to need a bobcat, an excavator, I'm going to need this, that, and I just listed this whole bunch of items up of what it was going to cost me to demolish that room. There was a concrete slab there as well, so I don't know what's in the concrete, so that's got to be jagged, this room. So I went back to them and put an offer in and again, I put that one around 45, 45 grand under what they were asking based on this $25,000 cost to remove this room. So, lo and behold, they came back to me and again, I gave them 30 day terms as well. Sorry, I got 60 day terms. I wanted early access after 30 days because I wanted 30 days before settlement to get in, do the demolition. I was going to build a carport and then I'm ready to go and put a tenant in it. So that deal went ahead. But then I met a fellow who said to me, mate, you got a really good sized block, you could probably subdivide it. So I didn't know anything about subdivision. So I had a chat to this fella and he come along and he goes, yeah, look, you'll get a subdivision on this, you can build a three bedroom unit. So I got the first property rented out, had that happen. Then I went to cancel, got plans and permits for the second. We built the one at the back. So all of a sudden, I've gone from nothing to three properties in a couple of years. But what I also did on that particular property, again, I've created instant equity. I've got an uplift of about $150,000. Now I'm going back in the early 2000s. Right. So when I'm talking price points, it's very different to today. So I was able to create instant equity straight away, and then I learned a little bit about well, now you leverage off of that. Right. So I sort of how would I describe it? I just learned by doing I was just flying by the suit of me pants. I didn't know what I was doing and it was just happening. Right. And that's how I picked up the first three or four going along that journey, along that path.

KM: Yeah. That's amazing. I mean, you said you didn't really know what you're doing, but the key takeaway from what I heard was that especially on the first one, you studied the area for three months. You didn't just go in and buy something. You so you may not have had the the formal training, but you were still educating yourself before you made a decision. The other thing was obviously purchasing under market value, giving you that instant equity and that instant ability to leverage and refinance and go again. So that's my key takeaways from that, which is it's what we tell our clients and everyone that listens to us every single episode is you got to educate yourself. And buying undervalues is extremely important to help you build a portfolio. So it's cool. It's pretty in line with our mantra, I'll let 30 and Mark jump in before I get carried away.

Fadi: I love what you said as well in regards to you left the construction industry and then you started actually helping people in that industry in regards to learning how to invest your money into property. And you also brought up a few good points in regards to we learned none of this at school at all. And I've only purchased my property. I purchased my property through Km. I think I moved in the age of 34. I was only 34 because up to 34, I was pretty much in the same position where I just got my money. Didn't really know what to invest in. But how have you found that in regards to education? Obviously you've got education going at the moment. You're helping traders. I used to work in the trading thing where not a lot of people knew what to do with their money. So I love that aspect. And how does that stop you? Was it like, overwhelming? At the beginning? You said that you didn't have any business experience, but it sounds like you made a success going in. There just the passion that you got.

Mark: For I'm pretty lucky. There fadi in the sense that I'm very well known in the construction industry. I've been in this space for 40 years. I've got a lot of contacts, a lot of connections. And I really zeroed in on the commercial sites right. Because that's where I had a big network of people who knew me. But what I had to do when I started the business, I didn't know how I was going to build or run a business or how a business works behind the scenes. But I knew that from a business perspective that there was a market there for me to tap into. And I knew I could go out and help up a lot of people. But I had to spend six months with no income going out, selling what I was about, going out, promoting who I am, what I want to do, how I want to do it, because I was trying to crack a really tough market, right? The trading industry is a really tough tickets. It's not a walk in the park with these guys. You got to get in, you got to build their trust, build the trust with them, build a relationship, and you can sort of launch from there. So for me, the first six months was really all about that. And then even when I'm bringing clients on, I didn't have coaching programs back in those days, I didn't have all the stuff that I've got today. It's just grown and evolved over time. But I was lucky enough to get enough clients through then. I had to build relationships with project builders, developers, finance brokers. I had the legal conveyances. I had to build this team around me as well at the same time. And I guess I'm the type of person that I've been doing personal development for 23, 24 years. That's what turned my life around. That's what changed me all those years ago from where I was blowing all my money. I worked it out between nine and 81 and 2000. I had $750,000 pass through my hands physically in earnings and paying stuff, right? I blew the lot. I lost everything. So the minute you've got a goal, the minute you got a vision, the minute you got a target I wanted to look after my family, look after my kids. I never wanted to go down that path again. I wanted to get to a point where I didn't have to work a job. I was sick of working on building sites. I didn't want to do that anymore. So because I had driving passion to do that and I took a risk by stepping out and go, you know what, I'm going to make this happen. Somehow you just find a way and if you persistent enough and you hang in long enough, opportunities come, things happen. I wouldn't have dreamt that I'm sitting here on a podcast with you guys twelve years ago when I started out, right? So I had to get in and build that and make that happen. Then I've got a business mentor, coach and a social media type person who's helping me out now. And I've got people around me there who are showing me how now to build and grow and expand a business. Whereas beforehand. So that relates directly back to what I said to your audience earlier on about the fastest path to success is to get the right people around you. So it's no different when I'm here now talking about my business or your business. The better people that we can get, then the faster your path is going to be to success. So any one out there that's thinking about wanting to invest in property and doing something and building a property portfolio, the first thing they need, they need to have a clear vision of why do you want to do it? What's in this view, what's your biggest cause? What are you trying to achieve? What's going to drag you through it and keep you going when times get tough or something goes wrong or you hit a hurdle or an obstacle? And for most people, they won't even get to that point. I might talk to 5100, 200 guys in a room, right, and I'll have everyone sit there, they'll nod their head, they go, yeah, you're right, mate, you're right. But when it comes to stepping forward, fill your form out, give me some details and I'll help you out. They drop the head. They don't want to face it. They don't want to face the reality where they're at. They don't want to face or their fears kick in, so they stay stuck. Instead of just taking a step and having a look and at least investigating, hey, what's possible? Hey, how does this work? Can you teach me? Can you show me? A lot of them are that narrow with their mindset. They're that closed in that they just don't see that, right? And they all stay stuck. So one thing I learned early on is that I can go and speak to 100 people, but there's probably one or two in the room, they're going to step up and do something and really want it. And so, again, it's all been part of the Journey party. Nothing fazes me. I'm not scared of stepping out, like when you guys do it. And one of the things I said, well, if you're going to step into something that's a bit unknown, the question you should ask yourself is, what's the worst thing that could happen? Because when I took my job to start this, the worst thing that could happen was, hey, didn't do any good, didn't make any money, people didn't like, whatever, well, I'll just go back and work on building. That would be it.

Fadi: Yeah, that's pretty similar to how I'm.

Mark: Very.

Fadi: Big on mental health and it sounds like you've overcome quite a bit and you're obviously showing how well you've done so far. And obviously, including myself, we meet a lot of people, as you said before, there's a lot of customers that you meet, but that might say they're ready to go ahead, but they haven't pressed the button to actually go ahead and do something about it. How did you because you're a great example. How did you get over that hurdle of you're down on yourself? Like, whether it's self love, self care? Did it start with taking your kids out? Obviously you did it for your kids as well, to try and build a future for your family. But what was it the kicker that you were down and out and then all of a sudden, look where you are today, basically, like, how did you get overcome that hurdle in regards to pushing the button and going ahead and building an empire?

Mark: Basically, look, at the end of the day, it become about a bigger vision. It become about a bigger vision for me and my life. Setting up my help of my kids. I've now got grandkids and things like that as well. Right? So it became this pool to I wanted to get so far away from how I lived. That was the thing. It was like, I can't I can't go back down that path anymore. I can't I'm not going to track. I'm not going to I haven't gambled for 25 years, have not had a bet on a horse. Right? Just stopped doing it, just completely cut it. And I decided to build and put money over here. And it was a personal development development journey as well as a property investment journey. So I'm still doing personal development today. I do mindset stuff. I do meditations. I do affirmations. I write goals. I have visual things around me that show me what I'm looking for, what I'm shooting for. It's all mindset, man. At the end of the day, with every client that I've had on board so far in my career as doing the coaching that I do now, I'm dealing with mindset from start to finish. But what I focus on is I try to understand where people are at, where they're stuck, what are their pain points, and what holds them back, what stops them from going forward. Part of my first meeting process when they do meet with me, that's part of my process. I want to understand all of that first. Tell me what your fears are. Tell me what you're scared of. Tell me what you're worried about. You are going to invest five years ago. What stopped you? The minute they tell me all that, I then know how to address it because I've either been through it myself personally, or I can share experiences where I've helped people through stuff like that or I'll give them strategies about how we I'm worried about tenants wrecking my property is a big one, right? Well, stop watching A Current Affair and today tonight and get to the reality of that properties for 23, 24 years and had one issue in 24 years, right? But we have our insurances, we have this, we have that. This is where we do risk it. We buy in these areas here, right? You got it. So I handle a lot of their objections at the first meeting, right? I said, just put it on the table, let's deal with this stuff. Because if they don't, they'll be stuck for another 510 years, right? I also want them to feel a bit of pain of what being stuck is doing to their lives and actually where it's going to take them, 1015, 20 years. So I want to get them to the point that they sit there and go, you know what, if I keep staying the way that I am, life is not going to be very good. I need to do something, I need to change it and I need to do it now. And that's when I know when I've got that click, that's when I know I've got someone who's committed to say, you know what, Tony, we're good to go, let's move, let's do it. Right then. My job then is to guide, coach, facilitate, educate, hold their hand through the whole thing and make sure it's as good a journey as what we can make it, right? And you guys know, being in the space, it's not always straightforward. **** happens, you just got to deal with stuff. But you have a look at times like now where inflation is going up, where cost of living is going, interest rates are going up. Now, people have seen interest rates go up for twelve years. We've had twelve years of downward rates. There's a lot of people out there in shock because they've never experienced interest rates going up, they've only seen interest rates going down. So now their mindset has got to flip around and go, holy ****, I'll sell my property. Well, don't sell your property. Put your rents up. And $50 a week had it rented out in three days. And I had three different tenants to choose from. I'm not stressing about interest rates. And they'll settle at about four and a half percent, five, maybe, whatever. So we're looking at seven. Big deal. I'm not in it. I'm not in it for the cash flow, I'm in it for the capital gross. So I educate around all that stuff and I know I'm sort of going a bit all over the shop here, but in answer to your question, there fadi it's all mindset, it's all it's up here, everything is up here. And if they can't get that right, and dated their money, their day to day household budget, they're not going to handle investment properties. But the other thing you have to show them is and you can do it through PIA's or various other things, but you have to show them how the numbers inside a property actually works so they get it. Does that make any sense? Yeah, definitely.

Tony: I had a question focused around sort of the lending, around the properties maybe that you personally own, or whenever you speak to clients about it, just your appetite with it very everyone's appetite. Towards lending is very different. But I always like asking this question to people that have a big portfolio because we would have had to deal with the lending process many times. Very common question that Fedi and I get as brokers is a customer that has the minimum deposit and they're happy to move forward, but they don't have to copy lenders mortgage insurance or they wait six months, maybe twelve months, to avoid lenders mortgage insurance and stay out of the market for an extra year, maybe more, and continue renting. So just wanted to get your two cent about that. Whether are you sort of more for the idea of minimum deposits, LMI and as many properties as possible, or let's avoid LMI, it's inefficient sort of way to buy. What are your thoughts on that?

Mark: Yeah, I've done LMI before. If it means I get a property, it means I get in the market, it means I get a purchase. And if that means I look at LMI sometimes avoid it if you can. Right? Obviously it's a cost you don't want to incur if you don't have to. But if it means the difference between getting in a market today or sitting there waiting for another twelve months where a market might go up five, seven, 8910 percent and say if it's on a $500,000 deal, it goes 10%, there's 50 grand. But if it cost me seven or eight or ten in LMI, it's a cost of doing business. And I always look at LMI along those lines that sometimes you got to do what you got to do, right? Sometimes you got to bite the bullet and go, you know what, suck it up. But you're absorbing a bit of LMI, but also you got to look at the tax side of it. Can you claim some back? There's a whole range of different things that fall into play here but if it means getting in and getting in the game, then I'd say go ahead and do it. It's just a cost of doing business.

Tony: Yeah.

Mark: What would you rather do?

KM: All three of us took our heads at the same time, the exact same mentor.

Mark: A lot of people that are looking at it from that perspective, they've got the lenses on the wrong way. They should be looking at the potential of making that deal happen. And where would that deal be in six months, twelve months, two years, five years, ten years from today, right? As opposed to oh ****, there's a cost in your Vlmi, but the LMI is factored into the cash flow anyway, right? So if you know your cash flow and you know what your day to day, week to week expenses will be, if it's a negative property per se with today's rentals, most of them are easily neutral or even coming out positive out the other side. In a lot of cases, depending on where you buy and what you buy but you factor it in. It's a different way of thinking about it. A lot of people look at the negative side to property, the negative side to financing, the cost. The cost. The cost. But there's a cost to life. You want to be fit and healthy. The cost is you got to go to the gym and work out three or four days a week, right? You can't just pick up a dumbbell once and go, hey, yeah, ****, now I look like Schwarzenegger. There's a cost to live in a healthy life. You got to eat the right friggin food. Right? So there's a cost to investing. Investing, I tell everybody this. Investing isn't just a simple, little easy flat line art, nice and cruisy. Everything always goes smooth because it doesn't. Stuff is going to happen and you have to learn. This is where the psychology and the mindset comes in. You have to learn to deal with stuff as it happens. The economy changes, government changes, legislation changes, banks and financing changes all the time. Interest rates are moving. There's all these different dynamics in play that are happening. You just have to learn to deal with it and adjust. I'm taking one of my properties right now. As soon as the tenants move out, I'm fully furnishing it and I'm turning it into a short stay accommodation. I've done a deal with the agents who specialize in this space, and I'm going to turn that property from $28,000 a year in rental income to $65. Now, think about that for a second, right? What's my outlay here? I'm probably going to spend 15 grand on the furnishings, etc, etc, etc. Right? But to go from 28 to 65 grand a year, what does that do number one, for my cash flow, but then what does it do for my borrowing capacity?

Fadi: Yeah.

Mark: Right? So people get stuck on the problem. I like to go and let's look for the solution. Let's look for the answer. All right. How do I beat rising interest rates today? That's one way I'm going to beat it. When my tenancy leases came up on a couple of properties, I jumped the rent 150 on one or put one up 180 on one. Got them both all rented out within three days. I'm thinking about how do I counteract high interest rates? People think they're high, but if you ran back in the late 80s, interest rates were 1718 19%. Right. So six, sevens, eight isn't high to us.

Tony: Yeah.

Mark: How are you guys finding the generation that haven't really seen interest rate rises? How are you guys seeing that?

Tony: Oh, they're getting the life, like, every time. Like, especially DC. I was reading something saying, like I think it was $28 billion worth of mortgages are coming off fixed rates this year and coming off 1.98 1.87 2.19% to 5%, plus where their repayments are going to more than double. Every time we have the conversation with someone and we show them the product comparison with the newer payments and the competitors and their offerings. Every single time, they're like, oh, but I'm much lower.

Mark: Now.

Fadi: This is something Mark and I have been aware of during COVID is that a lot of people I love how you said that you've gone for generations and you've seen the high interest rates. I remember my parents in the 17% to 21% back in the then, my parents were still stuck on a fixed rate for a couple of years at 8% in 2009, 2008. And once these rates went down, when the rates went below 3% into the twos and then into the ones, I was like, mark and I were like, all right, we need to start reminding customers that prior to Coburn, we're locking in rates for three years at 3.75%. And that was considered an incredible rate to get at the time, 3.75% for three year fixed, and the variable rates at the time were around the 4.2 to 4.5%. And now you're having customers that were on those rates prior to it, but in total shock because you're going what Mark said, you're going from a 1.75 to 1.2 to now to five, five and a half. I reckon it will be six in a couple of months. And it's a major difference, especially if you purchase a very high amount on a property and your loan is above a million dollars, it's about $1,600 difference, your monthly repayment.

Mark: Yeah. And also prior to covered, what I used to see a lot of out there, folks was that a lot of people never had cash buffers. And one of the things that I'm really big on, if my clients are in a position, is to make sure if you're going to invest in property, let's make sure you've got a cash buffer that's just parked underneath it, just in case it doesn't rent out for a month or something happens, whatever. Keep a cash buffer in your personal life as well, because if something happens to your job, your employment, or you get injured or a family member, you've got to have a buffer of money sitting behind you. My business, I've got buffers behind my business. So when COVID hit, I couldn't get on any building sites because of all the oh and s and all this so different had to go a different but I've got cash buff for sitting there because what they do is they destress your financial position and they do stress your life when you're involved in investing. And it's really important that people understand that. And again, that all just relates back to the psychology of it, right? If you can sit there and know that you've got 20 grand, 30 grand, whatever, just parked, it's flush. You're not going to stress and freak out, you're going to be able to cruise, because, you know, you can buy time with that. If you need to move and adjust and the loans. It's interesting to get you guys and your perspective on it, because I see the same thing and now you'll start to see people start to panic a bit.

Tony: Yeah, we're doing the same thing. Like when the rates were in the ones and the early twos, and the buffer that the bank was applying at the time of service release, only two and a half percent on top of that. So people are getting upset if they can afford this rate at three and a half or maybe 4% or something. Now, when the rates are a lot more than that, anyone that sort of borrowed at the absolute peak at their maximum two years ago, they call us to refinance and they're in mortgage prison, they can't move, they're literally stuck. We literally just reprice the loan with their existing lender because no lender can you won't service with any lender. And obviously it's very shocking for them because only two years ago they were able to take that out. It was approved, no problem. So back in two years ago, mainfair, every time we were doing this, we would sort of say all of this to the customer so that they understand if you hit your maximum, rates will go up one day. This we're historically low now. Please don't understand. This is normal. This is not normal. When it goes up, you will struggle to make the repayment if you're buying a absolute maximum. So always try to leave that buffer. Like you're saying, cash buffer is always great as well, but at very low interest rates, not borrowing an absolute maximum as well. And keeping a buffer there is always stake as well.

Fadi: We're turning away customers. Where we forward is going to be too hard. You don't want to put them in that sort of position. Position. So we were trying to put ourselves in a position where we were saying no, which is unheard of, but we'll say no to customers because you just be on our conscience knowing that in a couple of years they may not be able to afford those sort of loans. And Mark, I think one of the lenders actually recently I was just doing a borrowing capacity for a customer. The assessment rate for one of the lenders I saw was at 10.19%. Just think about what Mark just said now is that they'll testing at about 4% just a couple of months ago. Now we're at an assessment rate of a maximum. Minimum is about what? Month 25 7.5% assessment rate. And now we're looking at ten point 19% assessment rate. And that should tell a lot of customers out there, just the general public, that's what's happened in the last two years and this is the reason why. And I love what you said, down to mindset in regards to what you're doing in that cash buffer. The cash flow is a big one for me as well, in regards to even if you're buying a first home. Just make sure you've got 1015K or 20K in the bank account for your furniture. A rainy day, your car might break down, you need to go overseas as an emergency, whatever it may be. That cash buffer or that cash flow there is so vital, especially in this day and age, that we're living with inflation going up. People are saying, look, I moved into my property and I was buying vegetables on a weekly basis, $90 in vegetables, and all of a sudden I'm like, $160 in vegetables. And then I'm going back to Maccas and getting a meal from 1595, like I can't afford pretty much doubled my vegetables. It's pretty scary. It's like something that Mark and I know kmsen, with the property marketing, got absolutely nuts in the last two years. And that's why I love what you're doing, is that you're basically having an education system in place and especially helping people. That, again, Mark and I have customers, and Kms customers that comes up to him and they actually don't know, but they're actually in a very good position, but they believe they're not, but they're actually in a very great position, or they're actually very close to position they want to be at, but they just don't know. They haven't been educated, they're not understanding of the actual industry. And that's why I actually enjoy and love what you do in regards to you're actually opening people's eyes in regards to, no, you can actually do this like everyone else does this. What we do is not different, what we do is not special. Everyone can be doing what we're doing.

Mark: Yeah, I think you've hit the narrow right on the head. They don't have the knowledge or the education on how it all actually work. They don't understand the finance side of it, they don't understand the tax side of it, the depreciation side of it. They don't know how the cash flow in an investment property actually works. So therefore, I found over the years, a lot of them are thinking, well, gee, I've got 400,000 debt on my home. Now I'm going to have another 400,000 on, now I've got 800,000. But they're two very, very different types of debt. I mean, I've got young people now, young tradies, who are earning really big money, and they're basically quite happy to buy their first properties as investments. They don't want to sit there with a 30 year mortgage now, like they've seen all these other people do. They want to get three or four or five investments under their belt. They're happy to rent out with their mates and live in the city and do their cafe latte thing that they all do these days. And they're happy to go down the investment path because the minute you show them the difference between buying it as a home or buying it, some of them did the first homeowner thing that moved out after twelve months and turn them into rentals. But they made 150 grand uplift because they got into the market early, got in and did it, and now they're renting them out for 500, $600 a week. I found in life that when it comes to money, finance, investing, most people haven't even sat down and thought past this weekend because they're working, they're trying to earn a living, they're trying to look after their family, they're doing the day to day stuff. They're that busy, then, ****, I just can't wait for the weekend, not go out, have a beer, whatever they want to do, right? They're not focused. 10, 20, 30 years ahead. It's too much for them, right? And a lot of them sit there until they wait, until they get into their 40s or their fifty s, and then they go, oh, ****, hang on a minute, I still have 350 on my house. ****, haven't got much super, what am I going to do? Right? And it's a tough one because as you guys all know, we never got taught any of this at school. We didn't get taught when we were young. And we only know what we know based on our family, our peers, our upbringings. And people are out there doing the best they can. I get it. And now tough times are hitting. Now economic times are really going to shift. They're going to see some big **** happen this year. And part of my gig, the reason why I started doing what I do, is because I know that 90% of people aren't going to have enough super when they retire, right? And I know for a fact that there's no control over super. There's no control over your stock markets, the economy, the government's, world events. There's no control at all. And my personal think tank at the moment really sees some really **** times ahead for the stock markets this year. So I go property because I can control the game, right? I can control what I'm doing with property. I can put rent up, I can subdivide, I can build one out the back, I can add a room on, I can go up, but I can control the game with property, but with super, I don't control the game at all. And that's why I've always said to anyone that I've dealt with, have your home and get it paid off that suite, have your super. I'm not against super. Have super. Because really, if no people never had super, most people wouldn't have any money, right? They'd have nothing to live on. Have your home, have you super that, by geez, get one or two investments of some sort beside you, so that now you've got more security, you've got more expansion. And look, I've been buying gold and silver for quite a while now, right? I'm not sitting here telling people what to do. This is just personally what I did. And I've parked a fair bit of money and surplus cash in gold and silver and stuff like that, because I can see different things are happening because of the circle of people that I deal with. But the average person sitting at work is reading the newspaper and they're watching the news tonight at 06:00. They're not getting the stories because they're watching the wrong stuff and they're learning from the wrong people, and they're getting fed the wrong bullshit. As people like us that are in the game on the ground floor 24/7, we know what's happening, we know where it's gone. We're in there. Right? But the average person in the street, they find out when it's too late. That's the sad part about it.

KM: Yeah. I think it goes back to the first tip that you gave straight off the bat was surrounding yourself with people. What they talk about, people in the industry, people with that knowledge and the expertise of gaining that knowledge yourself. And that's why we obviously have our pod. And something that has been mentioned a few times already today is no one teaches you this at school. And one of my passion projects that I'd love for it to take off is teaching a financial course at school, teaching kids at schools the basics of finances, so that when you graduate school and you get a job or you have a heck stat, what does this all mean in the grand scheme of things? The other thing as well is that you said no one really looks past this weekend. And in terms of their finances, the first thing we do when we speak with a customer, literally the first step is we ask them, why do you want to buy real estate? Or what's the goal? And no one ever has the answer, which we know. We ask them that question because it gets them thinking, why do we actually want to buy this and what we want to achieve? Because without that, we don't really know what we're doing. And you kind of just fluffing around and you don't really end up with the best result. But 100%, I'm very much on with what you're saying, what Fed is saying, and agree and love what you're doing. And speaking of what you're doing now, right now you are helping people. And do you want to just elaborate a little bit on exactly what you're.

Mark: Doing to help people?

KM: And if that resonates with someone, they want to reach out to you as well, how you can help them and how they can find you.

Mark: Yeah, love to. One of the first things that I do, I just jump on a call with people or I jump on a zoom. It used to be a lot of one on one meetings, but we don't do a lot of that anymore now since the COVID days. But it's really number one, just to have a chat about someone's personal situation. Where are you? What are you trying to do? Where are you trying to get to? Where are you stuck? And just get a good understanding of what they're about and then help them say, well, look, I can give you a couple of simple steps. A lot of people I see, I send them away. I go, Look, I think the first thing you need to do is just go and do a complete reassessment of your day to day, week to week cash flow. And I've got this cash flow calculator that I do with people and I send them off. I go come back and we'll review it. And I'll sit with them like a client. Today I rejigged their cash flow with them. This morning I pointed out about five different things that turned their cash flow from around about $12,000 a year, positive to $36. That's a $24,000 increase in cash flow just by making some adjustments to what they were doing with money. Now they've also got to go off and see finance broker, get their loans reduced. So it's going to be a better figure again once they get that sorted. But they're all over the shop, right? So if I can get people based and get them set up and get them functioning the right way and get them thinking the right way, that's my first objective. And then if they want to look at property and investing and whatnot, well, then I've got my coaching programs that I bring them into and I practically give out that coaching and do the programs practically for free, right? I don't make a big buck off of that. It's not what I'm there for. I want to attract for me, I want to attract the right people with the right mindset who have got the right focus. Because as you guys will know, if you're in finance, the last thing you guys want to be doing is dealing with people who are half hearted. They won't make a decision, they change their mind, they pull out halfway through you all the trouble of putting in finance applications and hang on, I'm not doing you're like me. We're working in a world and environment where our time is precious and we don't want to be wasting it on people who aren't serious about wanting to do well or do better in life, right? So basically, I pick and choose who I want to work with. To be honest with you guys, I'm boutique. People deal with me direct, one on one. When they're dealing properly with me, I oversee the whole thing on every aspect of the business. If they go on to see a finance broker, I need to know what's going on, what do they do and how they setting it up. I'm involved in the whole thing, but I specialize in the property space, but also the coaching side of it as well. And I really only want to work with good people. I'm not putting other people aside. Other people come to me. They get on my database. I give away a lot of good content, a lot of good education. I'm always teaching people stuff. But the people who can't become one on one clients with me, they're the people who get me direct.

KM: Amazing, I think. I know you have this, so I'm going to ask a question, but do you have a philosophy for life that.

Mark: You can share with us? Yeah, absolutely. I'm a big believer that life is about getting yourself to a point where you're free to do the things that you love and the things that you enjoy, regardless of what anybody or anything else or any other thing says. So for me, right, my number one value in life is my health and wellbeing. So by creating this business, I've now created an environment where I go down the boxing gym two or three days a week. I go swimming at the pool. I jump on me, push by and go for a ride. I play golf two or three days a week. I work my own hours. I can do this this afternoon. I can work till 09:00 tonight. I can get up at 05:00 tomorrow morning. Like, I've got this flexibility. I can spend time with my kids, my grandkids. So for me, it's about finding a way to live your life the way you want to live, regardless of what anybody else says or thinks. Right? Because what are we all brought up and taught, right? Go to school, get an education, get a good job, work hard, buy a house, have some super yay, you'll be right. Most people work in jobs they don't even like. For what I've had, people say to me, I don't need a house. Why do I need to own a house? Everyone says, Go buy a house. Well, what do I have to do? What everyone else is, I'm happy to rent. I'll go and buy five investments, or I'll go and buy a camper, man, and take my kids around Australia. But there's different ways and different choices. But we're all conditioned and brought up the same way. Right? But I was always a bit different to the mold. I didn't want to conform to what everyone else was doing. I've always done things a bit different, done things my way. I did it in sport, I do it in life. And I don't stress, man. I live day by day. Seriously. I'm not highly money driven. I don't need to make tens and hundreds of millions. That's not my goal. If I can use my talent and skills and my knowledge and my know how to help you or someone else live a better life and do better in life, that's where I get my enjoyment. It's not like I see the money where I get paid for doing things, but the money doesn't excite me. It's the fact that, hey, we've got this person started. Hey, look, these people have got their first property. Hey, look, they're paying down their house fast. That's the stuff that makes me happy. Because you guys may or may not know, but the building industry across Australia, there's 214 suicides a year and there's 85,000 attempts per year, right? It's a great industry that they earn great money, but I can tell you, separations, divorces, suicides, financial stress, it's off the charts. So why am I doing what I'm doing? I want to get all of my programs, all of my stuff inside that industry so it becomes something standard that every trading in Australia can get access and get to hand. So my bigger vision now that I'm talking about, that's why I'm doing what I'm doing. Because we're actually part of our roles. You may or may not understand this, but I think part of our role is to help people on their journey so that we save lives, we save families, we save marriages. And by educating people the way that we do, guess what? They can then teach that bit of noise to their kids who can then go and teach their kids and we break this stupid cycle that we're all following the same monkey see, monkey do and they're all ending up in the same they're following the wrong plan, they're following the wrong strategy. But because they're so conditioned by school and by their upbringing and by media and by governments and stuff, that's why they caught in that path. But it was personal development mindset that got me out of it and it's personal development and mindset that keeps me falling down and keep going down the same path. I've had roadblocks, I've had obstacles, I've had people telling me, don't bring this in, don't do this, don't do that. Whenever I hit a brick wall, I've just thought of a different way, going down a different path. And actually, things have always worked better. So you'll find that obstacles in life sometimes put you in a better place, make you a better person, make you more resilient, make you more persistent, give you more motivation, make you more determined. And you just step up and go, look, I'm hell bent that one way or another, I'm going to get this stuff into the industry, and I'm going to get it entrenched in there somewhere. That's where I'm at. 100%.

KM: I have so many more questions. I know Fedi and Matthew, but I think that was a really cool way to end this episode, genuinely. Tony, thank you so much for joining us and your story was really, really amazing and I think it's one of our best episodes we've ever recorded and I think people listening to this will really enjoy it and take a lot out of it. We'll put all your details in our show notes as well. So if anyone does want to contact Tony, the details will be there. And Tony, if you can send us a. Photo of yourself as well, so I can use it and let people know who we have on this week through our socials. That'd be great, but yeah. Thank you so much.

Fadi: I think we need a part three.

Mark: And four and five.

Fadi: This one's not enough. We're going to need a few more episodes. I've enjoyed this one.

Mark: Yeah, thanks, guys. Look, so avoid, too. I just talk off my head, I talk from my heart. I don't have any notes or anything sitting in front of me. Look, sorry about the lighting. It's a bit darker. The power went off just as we'll go on light. So it is what it is. But, yeah, look, thanks so much for the opportunity and I think any way that we can spread a message that helps people, inspires people, motivates people, gives people a bit of knowledge, and you guys are all doing the same stuff. Cheer dos to you guys as well. It's been great to connect today and thanks so much for the opportunity to come on and have a chat with us. And I'm happy to do it again, too. No problem.

KM: Looking forward to it. Thanks, Tony.

Fadi: Thank you.

Mark: All right, then. Thanks so much. Cheers.