Property Hub - Investment Insights & Inspiration - Get Invested: Part 1 - Max Phelps on Spending, Fast and Slow

Starting point is 00:00:00 So the guy that wrote Catch-22 was at a party for the Wolf of Wall Street guy, Jordan Belfort, whatever his name was. Yes, yeah. And at that stage, Catch-22 had been a multinational bestseller for multiple years, been made into a movie. They've since made it into a TV series and done a whole lot of stuff. So the guy had done quite well. and somebody at this party said to him, he said, do you realise that Jordan made more money last week than you've made in 20 years of royalties from Catch-22?

Starting point is 00:00:33 And he turned around and said, yeah, but I've got one thing with money that he will never have when the guy's gone. What? He said, enough. Welcome to Get Invested on the Property Hub podcast channel, the leading weekly show to help you unlock your full self-health and wealth potential. I'm your host, Bushy Martin, and each week I go deep with the best investors, experts,

Starting point is 00:01:00 leaders and founders to find out what it takes to break free from the grind, discover freedom and live by design. Subscribe now and join me and get invested in the life you really want. Let's get started. Hi Freedom Fighters. How often do you find yourself wondering where all your money goes why is it that you just seem you just can't seem to get ahead that your money's already spent before you even get it and regardless of how much you earn or your income increases you just never seem to have that bit extra to save or invest if this is you then you're not alone and despite what you keep hearing and are constantly told it's not your fault now you can blame technology marketing society at large and even your own brain

Starting point is 00:01:44 for this, because they all try to keep you spending, despite your best intentions and efforts. In today's frantic world, where everything is just a quick plastic card, tap, tap, tap away, it's all way too easy to be swept away by consumerism, instant gratification, and invisible mounting debt. And we increasingly feel like we're just not getting hit as fast as we should and could be. Our money, like sand, just seems to slip straight through our fingers. leaving us wondering where it all went and how can we get things back under control. And none of this is surprising, given that we're also facing ever-increasing housing costs, whether we're renters or mortgage holders, and inflation just keeps pushing up the cost

Starting point is 00:02:28 to just about everything else. As I quote in my book, The Freedom Formula, actor Will Smith once said that we spend money that we don't have on things that we don't need to impress people who just don't care. So what can we do to stem the tide of ever-rising lifestyle inflation? If you listen to most of the financial commentators in the media, you can be forgiven for thinking that you're the problem and you simply need to change your attitude to money. Following this line of thinking, the obvious, logical, rational and overly simplistic solution to your money woes is just to spend less and save more, to cut out unnecessary purchases and spend only on what's strictly necessary after searching out the best value. Now, this sounds easy in theory, so why doesn't it work for most of us? Now, you'll be interested to hear that based on the experience of today's special guest, only about 10% of us behave rationally with money all day and every day.

Starting point is 00:03:25 And this shrinking minority are normally referred to as scrooges, tight arses, accountants or financial planners. Meanwhile, the remaining 90% behave normally. They want stuff, they seem to have money, and the mass is too hard, too boring and too time-consuming to calculate the consequences of every single decision that we make. So where does that leave you if you're struggling to get ahead, if you find you're consistently missing your savings goals or your credit card debt just isn't shrinking despite all of your best efforts? Well, today's guest and I don't believe that the solution is depriving yourself of last pleasures or forcing yourself to live a miserly existence. Instead, it's about understanding the deep-rooted psychological

Starting point is 00:04:07 factors that drive our spending money habits and learning how to harness them to create a life of financial stability and true abundance. As you're about to hear and enjoy it's about slowing down your spending and setting up structures that trigger you to think before you spend so you can make better decisions each and every day and ultimately to get more out of life. And to help you with all of this fellow mortgage broker and active property investor Max Phelps joins me to enjoy a great discussion on our shared vision of waking up and shaking up hard-working Aussies like yourself and thousands of others to get your money shit sorted and to get invested in your future. Now Max is also a money coach as well as a fellow author so after unpacking the nitty-gritties of

Starting point is 00:04:52 his own personal professional and passive money and investing journey we're going to delve into his recently released new book Spending Fast and Slow where he introduces you to a system that triggers you to think before you spend so you can make better decisions every day and ultimately to get more out of life. As we explore the fascinating intersection of psychology and money, discovering how our brains are wired to approach financial decisions both large and small, as he shares his tried and tested system to spend less, save more, and to stop worrying about money. So I'm really looking forward to this great conversation. So welcome and let's get invested, max thanks so much for having what a great intro thanks bushy yeah my pleasure mate i yeah really

Starting point is 00:05:35 enjoy enjoyed just sort of i've only honestly skimmed through the book but there's some really great stuff in there that i know everyone's really going to uh enjoy so right off the bat i want to encourage people to grab themselves a coffee but uh for those that don't know you max can you start off by giving us a bit of a rundown on what you do differently and as importantly why you do what you do yeah so in terms of what i do differently so yes i'm a mortgage broker like you are but um everything for me is about the long term it's about where do you want to take your life um and um why i do what i do is i want to help people get to where they want to go because i've been extremely fortunate in my life having grown up in the country like you did uh although with eight

Starting point is 00:06:21 brothers and sisters which i don't think you had um my sister's one at 12 months so i i had similar understanding of what a big family is about yeah but you know you grew up in a big family with no money out in the bush and you know the whole thing stuff we're talking about today is just pipe dream pie in the sky now i'm sitting here you know this is my home i'm sitting as a background backdrop here and i've got a great life i'm really happy and what makes me happiest now is actually sitting down with people, helping them set their own goals and have the life that they want. That's why I go to work when I don't have to. Absolutely love that. Well, I'd love for you to unpack a bit of a reader's digest of your journey so far, if you can. And I want you to sort

Starting point is 00:07:06 of take us through both personally, professionally, and passively, where you've invested your time and money over the years and why, and how's this then led you to where you are and what you're going today, mate? Well, when you grow up in a family with no money, the first priority is not being poor. And that was the focus. So like, how do I not be broke? And I was lucky enough to get a great job with a multinational company called Unilever and was joined their sales and marketing team. And a good salary was the answer. So get a good job and you'll be fine. Now I was lucky enough as well to uh when i came backpacking to australia um i met my wife uh when i was only 21 um and we've been together 34 years now uh 34 years in two weeks time congratulations thank you

Starting point is 00:07:57 um but but initially it was just uh how do we uh not be poor by earning money and that was it um i wanted to invest in property i played monopoly as a kid i wanted to do that sort of stuff but they just never seem to be it never seemed to be possible um and we had kids really really straight away i was 23 when i became a dad um and so you've got the pressures of family and a growing career uh and a wife taking matley back when matley was like two weeks if you're lucky and paternity leave it's like well if your wife's in labor you can take the day off mate we won't count it you know that was it um i love it i love the fact that people get paternity leave Now, I think it's amazing. I would have loved to have done that. But yeah, so for me, it was putting my time and energy into my career. And the multinational gave me great opportunities. I worked for them in the UK, in Sydney, in Brisbane, back in Sydney again, Bangkok, Ho Chi Minh.

Starting point is 00:09:01 and 15 years I spent on the career path and gave me a great foundation. And I did quite well out of it, but ultimately I was made redundant and decided I wanted more out of life than just working for money. And so I decided to start investing in property and become a high school teacher. Interesting. Well, I'm going to circle back to that because what I'd love to sort of break into it a little bit because we're often an outcome from nature and nurture of our upbringing. So how has your upbringing, given that you're one of nine, affected who you've become and your approach to money? Well, look, firstly, two different facets here because I've got, on the one hand, my mum, who was an amazing budgeter. When you're raising

Starting point is 00:09:51 it, my dad predominantly earned below minimum wage. He was self-employed a lot of the time and earning below minimum wage and my mum managed to feed and clothe nine kids admittedly we did often wear hand-me-down clothes and i and i was i'm big brother so i my hand-me-downs weren't my sister's clothes they were from a guy down the street you know um and in fact there was a guy that i was at school with and he refused to wear his older brother's clothes because there's like a seven eight year age gap because they were out of fashion and i wore his brother's out of fashion clothes. So I grew up, but my mum talked about money constantly. She was always going through a book. She wrote down everything. If there was five pence missing from a purse, she'd have all

Starting point is 00:10:34 the kids lined up that were old enough to stand. Who's been in my purse and had the money? And we'd be panicking about, you know, I went to the shop and I paid for the papers or I got the loaf of bread. I know that I've got that written down. That was this much. No, no, no. The price went up. oh i didn't get that and then she'd adjust the books and we'd be going again but every penny counted my mum used to say waste not want not and i never really understood that phrase properly until much much later waste not i understood you don't waste anything you eat everything you never leave it leave anything and i had a problem with food for many years because my attitude to food was if if someone's left something on their plate it's like oh you don't want that can i have it

Starting point is 00:11:16 we're more similar than i thought because that expression waste not whatnot was exactly how i was brought up to that so uh everything you're saying is resonating perfectly with my own upbringing but it was the one not bit i didn't understand properly and it was want not means don't want for things but it was something that came from the fact that we didn't expect lots of stuff at christmas we didn't expect stuff up you know birthdays were when you got new undies and i got thousands of hankies and i got and i i love football you'll call it soccer but you're wrong um which is a round ball so i i would i would get a football every birthday and every christmas i'd get one and by the next birthday or christmas it'd be punctured or lost or something

Starting point is 00:11:58 and i'd have to get another one um and so that it is always i got a football that was a birthday for me football and a bit of chocolate but few clothes that's me um but it just meant that i then i got in the habit of like i don't really need stuff i don't need it it's not important to me it's not valuable but i i am one of the tired asses i am one of the scrooges that that i don't like spending money it makes me feel uncomfortable um and so i do tend to you know do things on the cheap but my dad was very different to my mum my dad the best financial decision ever made was to say to my mum i'm no good with money when i get paid if i give you my money can you make sure everything gets taken care of and if i need some money to go to the pub

Starting point is 00:12:43 just give me some money and i'll be fine best financial decision he ever made and he meant he couldn't ruin the family finances because money in his hand was gone he also talked about traveling and he wanted to travel when he retired and to me that felt like an awful long way off and so that's why i i came backpacking to australia i traveled through asia i traveled through america when I was young because I wanted to experience stuff before I got too old to do it. And so I've got this dichotomy between spending money on travel, but being a tight ass the rest of the time. Yeah, I love that dichotomy actually, because some really good fundamentals that were baked in pretty clearly from your good mother. You mentioned earlier that you made

Starting point is 00:13:28 the decision to jump off the corporate bus and then leap into property and into teaching, which is an interesting combo. I'd love for you to share why teaching and then jump into why property because that's something that, as you know, Australians have a big love affair with, but there's only very few that go much beyond buying their own home. Can you take us through your thinking on both of those? Well, as part of my job in the last four years that I was with Unilever, I did a lot of training. I did a lot of sales training, negotiation training and and also i had a very in vietnam i had a very big team i'd like 50 people through my team about 11 of them reporting directly to me so i did a lot of training a lot

Starting point is 00:14:14 of mentoring people and i wanted to do that and i i wanted to be able to travel and of course for me teaching was like well i can go and be a teacher and then i get my school holidays i can spend time with the kids go traveling but i know the teaching doesn't pay well enough so i need something else that pays better and so um i i remember years and years ago i was on a course and i don't remember who the guy was but he used to say um do the job that you love but find a way to make the money that you need and so for me property was the way to make the money that you need um and i think it's a great philosophy which is you know do what you love because doing what you love is what you it's what you wake up to do every single day and so teaching i thought i'd probably enjoy it and i

Starting point is 00:14:59 did i loved it i did i did two years of high school maths teacher teaching sweaty teenagers how to do pythagoras and whatever um you know and i love the challenge of it every single hour of it was just you know on your feet like how can you get this get this into the kid's head and they're just not getting it and then how can you get them to remember the stuff that you did last time And I love that challenge, and I totally enjoy doing that. Yeah, I love that. I'm going to spring this one on you, Max, but what's something unique or interesting about you

Starting point is 00:15:33 and your background that you've never shared publicly before? Well, you see, I mentioned my wife a couple of times. So we met when I was 21, and we've been married now for almost 32 years, together for 34. And now she is a shopaholic. She's much more like my dad with money. She can't be doing with money. And I can't change her.

Starting point is 00:15:54 I can't make her stop buying stuff. I can put in place structures that help her understand what she's doing. And that's what the book Spending Fast and Slow is really all about. But something that I've never really talked about is the fact that I actually, I left her in just before her 10th wedding anniversary. Boxing Day of, what would it have been, 19, I can't remember what year, yeah, 2001 it would have been, I think. Yeah. And I left it because I thought there was someone else that was more interesting.

Starting point is 00:16:29 And it's that being tempted by something. But you know what, the best decision that I made at the time, we're always going to be tempted, anyone in a long-term relationship, somewhere along the way, someone's going to bat their eyelids in the right way and make you feel a bit special and feel like you need to do something else. And the best thing I did was instead of acting directly on that and going ahead and sleeping with someone else, I said, you know what, I'm going to move out of home, take a step back,

Starting point is 00:16:56 and then I know that I need to make a decision, either come back home or go ahead with someone else. And I was very open about it with both my wife and also my girlfriend at the time. Crazy that that was the case. But I did that. Three weeks later was our 10th wedding anniversary, and my wife, I guess, seduced me again and reminded me what it is to be married.

Starting point is 00:17:21 And now we've been together for, yeah, 30-odd years. But most people think, oh, you've been together, you know, wonderful relationship. It's like, yeah, but we're all tempted. And every relationship has those challenges. There's no doubt about it. But I've got to say, you know, I want to thank you for being open about that because not many people would.

Starting point is 00:17:44 And great respect for the fact that you've, you know, sort of recognised the opportunity and done the hard work, which it always is. Every relationship is hard work and that's where the satisfaction comes out of it. Do you reckon that's been the most challenging you've been in your life so far? I reckon it's probably one of the most challenging. There was another one that we got hit with later on. I mean, coming back to England after training as a teacher in England, I was told I couldn't teach because the qualification was no good.

Starting point is 00:18:15 And that was kind of tough. And I fell into mortgage broking as kind of a fill-in to kind of until I could teach again. But I went with a franchise organization. And then three years in, they went belly up. and and they gave me the choice between staying with them and as you know as mortgage brokers we get paid a trailing income you stay with them and keep your trail and you'll be sold on to someone else or leave and walk away from three years of um of building up the business which way did you go well i started golden eggs uh straight away um so golden eggs was actually

Starting point is 00:18:56 born in November 2011, they went belly up. They went into administration in October the 17th, 2011. And two weeks later, I gave them my two weeks notice. And then I waited until the end of the two weeks notice, started up Golden Eggs. And that's my business. And I've been trading under that name ever since. But it then allowed me to then focus more on investors and focus more on doing things my way rather than doing things the way that they wanted me to. Yeah, I love that. Before we get into that whole arena, I want to sort of drill into your property journey in a fair bit of detail if we can. And so just by the way on that, Bushy, you also know that when you're a mortgage broker, there's a huge lag between when you're paid, when you do the work and when you get paid.

Starting point is 00:19:44 When the administrators stepped in, they said, we're not paying for anything prior to today. So not only did they stop our trail, they stopped every single deal that we had. So I had to go on zero income for three months until I could get things back on track again. That would have been financially extremely challenging at the time. wife and three kids to support my wife working in the business with me that was our sole source of income good great if i look at that combination of the the challenges with your relationship and the challenges you had around that that business exercise what were the uh the greatest learnings and best changes that came out of that do you think yeah it's funny that it's committing to

Starting point is 00:20:24 something is a is a powerful thing to do an incredibly powerful thing to do whether it's committing to a relationship or committing to a business it's just going you know what i'm in i'm going to do this it's a very powerful thing and then you have to make it work and things don't always work out the way you think they're going to at the start but when you make that commitment then you've got to do the work to make to make it happen um and and for a lot of people i know and i know i was this for 15 years i i didn't make a big commitment to do anything much at all and the problem if you don't make a commitment to do anything much at all then guess what you do not much at all and you chase the next shiny thing that comes across the across the horizon yeah

Starting point is 00:21:09 spot on uh no and and i guess that you know that my take home from reading that is that that long-term commitment whether it be to your business your finances and the relationship is ultimately the exercise that will uh strengthen your character and resilience and ultimately get of whatever you'd like to call sustainable success. So I love you sharing that. I want to circle back a little bit there and get you to talk about what does money mean to you, Max? It's just a tool.

Starting point is 00:21:41 That's all it is. It's a tool. It's a tool to do a job. We need money to pay our bills. We need money to do the stuff that we like, but it's just a tool. It's not the be all and end all. I used to be interested in chasing it.

Starting point is 00:21:54 There's a lot of people in our profession and that's all they do is chase the commission chase the deals, but it's just a tool. And if once you understand your own self better and you know what you want, then you go, well, how much money do I need to do what I need? And I don't need really all that much. I'm happy to buy cheap T-shirts and I love where I live

Starting point is 00:22:19 and this costs us a lot of money to live here, but it's just a tool and we use it to get the things that we want And if we need to make more, we make more. But obviously, it's much better for me. We hit the point a while ago to get our passive income up. If you can get your passive income up so that you don't have to work if you don't want to, then you can choose to chase the dollars. Actually, one of my favorite quotes is from – I always forget his name. Is it Tom Heller?

Starting point is 00:22:49 The guy that wrote Cash 22. Oh, yeah. Yeah. So the guy that wrote Catch-22 was at a party for the Wolf of Wall Street guy, Jordan Belfort, whatever his name was. Yes, yeah. And at that stage, Catch-22 had been a multinational bestseller for multiple years, been made into a movie. They've since made it into a TV series and done a whole lot of stuff. So the guy had done quite well.

Starting point is 00:23:15 and somebody at this party said to him, he said, do you realise that Jordan made more money last week than you've made in 20 years of royalties from Catch-22? And he turned around and said, yeah but I've got one thing with money that

Starting point is 00:23:32 he will never have. And the guy's gone, what? He said, enough. And that's what, for him, he had enough, he was fine, he was happy but but jordan didn't have enough he had to keep chasing more dollars he had a business bringing 25 million dollars a year passive income but kept chasing more and ended up in jail it's spot on and i think the real prize is time not money it's yeah i'm in choice to do the things

Starting point is 00:24:01 that are important to you and and that's a really good segue i'd love for you to share your vision of what your ideal lifestyle looks like because you're probably living it right now from what you Yeah, I am. What does that look like, and what have you invested in to help make that happen? Yeah, so, I mean, our ideal lifestyle is, you know, living in a place with amazing views. You know, one of my favorite things to do is wake up in the morning and open up the blinds and just look outside and just see the water, and it's just phenomenal. and when you've grown up in out in some you know crappy little place in the bush and you're suddenly looking at this amazing view it makes you feel good already to start the day um i walk

Starting point is 00:24:46 to work so i i live six kilometers from my office i'm in the office now this is just the home backdrop but um it's six kilometers and i walk some days and i cycle some days it means i get my exercise it means i'm out in the open and i don't set an alarm uh is one of my you know one of my things i don't have an alarm i wake up when i wake up i walk to work if i take an hour to walk to work that's fine if i take an hour and a half because i stop and do a workout or make some videos on the way that's totally fine um you know i'll stop and have a cup of coffee but i love doing the job that i do so i come to the office every almost every day some days i take i take days off you might call them the weekend um but but i don't take my every weekend off and i don't take every

Starting point is 00:25:36 day off on every weekend i normally work because i like it i come in and i can spend time with someone try to help them and if you've got the time and if when you've got time and energy to help other people that's worth so much more than than fancy cars fancy clothes you know it's a hollow feeling of just chasing the next thing as opposed to you just made an impact on someone's life someone just went wow I understand something I didn't understand before and that's both with the clients that I help and also that you know if I make more money now it goes straight back into the business I'll hire another staff member train another person that means another person can help more people and and on we go yeah i love it and then the holidays you've got to take breaks

Starting point is 00:26:19 of course and i know travel is a big part uh to you and kelly as it is for my wife uh sonja and i yeah there's no greater learning opportunity to work out who you are and and what's really important to you than and going somewhere else uh but i i and and i agree with you max i think true fulfillment comes from giving freely to others without ever expecting anything in return and the level of satisfaction that comes out of it you just can't put a dollar against it quite frankly but to have the freedom to do that is a is a wonderful gift in itself but i know that to help make that happen not only have you got your money shit together but you've all also invested quite heavily in property over the years so i'd love it love for you to start i have i was

Starting point is 00:27:08 a late bloomer to the investment game and i missed more opportunities than i than i took um you know i'll never forget sitting down in my living room um 20 something years ago and having some and the guy was a property spruiker that one of these people that tries to sell you some off the plan stuff yeah um and i knew full well that his stuff was priced you know he was 40 grand more expensive than a unit down the road. And I remember well and truly, this is in Dulwich Hill in Sydney, which is about, you know, eight kilometres out from the city. And it was a two-bedroom apartment at $220,000.

Starting point is 00:27:46 But I knew that I could get one for $180,000 if I bought an established one. So I didn't go ahead with it. But I didn't buy the other one either. I didn't do anything. I just didn't know. That's a pretty common exercise as well because it's always… 800,000 they're worth now. 800. It wouldn't have mattered when I paid 220 or 180. It's worth 800. Well, let's dive in there because I'd love for you to unpack for us the nitty gritties of your

Starting point is 00:28:13 property journey. But I want to start with why did you decide to invest in property at all? And were there any initial fears or concerns that you had before you took the leap? Apart from playing Monopoly as a kid, I wasn't a reader. The only books I read were the ones I was made to read in high school and then on my 32nd birthday my wife gave me uh rich dad poor dad yeah um fantastic book read it cover to cover in a couple of hours and then she got me the whole rich dad series and i started reading other stuff and i was and i thought this is i've got to do this i've got to get into property but it was another what six or seven years before i did anything um and so i saw like i say saw lots of stuff and thought about lots of stuff and

Starting point is 00:28:59 didn't act on any any of it what held you back what what held you from pulling the trio do you think oh it was it was the fear of getting it wrong it was like i say that you know you don't want to get ripped off by someone so you don't do when you know someone's trying to rip you off you just don't do it but i but i didn't i didn't bother getting myself educated i didn't speak to a mortgage broker. I didn't even know such a thing existed. And to be quite honest, it probably didn't exist very much back then. Mortgage brokers were kind of a very niche thing. And even now, 80% of brokers are just interested in getting you the loan. They won't sit down and take the time and understand what you're trying to do with your life and trying to help you get

Starting point is 00:29:38 there. So if I'd have met someone like me, and that's what drives me more than anything now, is that if I'd have met someone like me when I was 32, I would have bought that bloody property. I'd have bought the 180 grand property down the road or an even better one because I'd have known how and I didn't know how I didn't know that I could just you know use the equity in my home to do stuff that that my income was going to be enough to make it work and that rent was going to cover the mortgage I didn't know how to do it um yeah well take us through the nitty-gritty I've got a degree in economics so you know it's like a lot of dumbass or anything I just but I still didn't know how to do it yeah and that and that that fear is is the big hurdle for for a lot

Starting point is 00:30:18 of people because that's what you you know you just don't know what you don't know therefore the the default position is to do nothing uh because you think it's safe at doing nothing but when you and i know and by the way that's part of our human nature is is is like stay in the safety bubble of what we know and what we understand and don't step out into the unknown world um and uh you know so i didn't do anything until i was probably 38 39 before i finally went and you know i got made redundant and i went right part of this is i need to supplement if i want to be a teacher i can't live i can't support a family five as the main breadwinner in the household um i can't support a family of uh five on a teacher's wage um especially not a trainee teacher's wage i need

Starting point is 00:31:02 to make some money and so i've managed to save up um we've started saving the good thing i did start do at 32 was we started saving money we've never saved money yeah we bought a property but we never saved money we didn't even save the deposit we bought our first time on a credit card we put the deposit on a credit card a five percent deposit on a credit card yeah yeah um so unless you got started though that's that's the key bit you got on the ladder i got on the ladder but i really got on the ladder because it was i was trying to game the system because unilever them move me up to Brizzy. And they had a rule that was, if they moved you, then they would subsidize your housing costs. Well, I knew Sydney was a lot cheaper than Brizzy, but I knew if they

Starting point is 00:31:46 were moving me to Brisbane, I'd have to come back. And if I bought a house in Brisbane, they'd have to subsidize my move back to Sydney. So I knew I had to kind of act then. So I was acting for all the wrong reasons but that's what i did and so i got me my first property um and then my but that was a home and then we had to sell that to move to sydney and we got we got the upgrade from the company and then the investment i i then had i was like i was now i've got i need the money i need the income and so i started buying cash positive investment properties um in the north of england that made more money i still got mortgages because i was working there but but they were very cash positive. And so it was able to supplement my income. Yeah. Take us from there. So you did a

Starting point is 00:32:32 few of those by the sounds of things. Can you sort of thread the needle on what you did? So the funny thing is, once I bought the first one, it's almost like the floodgates open. It's almost like my brain's, we can do this. Oh my God. You can finance your property. I did one. I did one in January. I did another one in July. And by then I'd left the UK. We'd moved back to australia but i was still getting paid a teacher salary up until the end of august because there's summer holidays in the in the july august period and uh and i was literally uh on my way back to australia we stopped off in vietnam where we used to live to catch up with friends and i was in a bar going to the bar to order drinks for my wife um and saw a message saying

Starting point is 00:33:13 saying that there's another property available and i went i like that and i bought this property via text message from a bar in – from like taking no action at all for like years and years and years. And text message, oh, I've got another one of those. It's like playing Monopoly, Max. Exactly right. And I thought, oh, I can use my teacher's salary still because I'm still getting paid in the bank account.

Starting point is 00:33:34 Yeah, it'll be fine. Got myself the loan, bought another property. But then we moved back to Australia and sort of had to start again with the whole – became a mortgage broker, get paid for six months. um and the big thing for us then was that and this is something else i learned on the way is that often we make mistakes with property because even on the property we live in because our family needs change and and we had teenagers in the household and when you're living in a household which has got enough bedrooms but only one bathroom you need another bathroom and you

Starting point is 00:34:07 typically need another living space to cope with teenage kids so we didn't really like the the area that we were living in as much as we – we didn't want to end up in that area. We wanted a place with a bit more space, but it was going to cost us so much more money that we thought, you know, we're going to sell the house, throw that money into property, and start renting. And so we've been rent-vesting since 2010, so that's 13 years ago. Sold the family home and then had to buy – and went to buy property, and America was where it was happening at the time.

Starting point is 00:34:39 Their market was in the toilet. Property prices had fallen 75%, not 7.5%, not 25%. They had fallen 75%. I couldn't get a mortgage, but you didn't need one. So we just went and took the cash. We still had a sizable mortgage back then, but we took the cash, put that into a property in America, bought 11 units. So three blocks of two fours and a three, 11 units in Phoenix and Arizona, and that pretty much set us up. We went from having three investment properties to 14 in the space of about six weeks. Yeah, I love that. I did the same thing. My wife and I jumped on a plane. As soon as the GFC hit, we thought this is a once-in-a-generational opportunity, given how far prices had fallen. and we spent three months over there having a really good look

Starting point is 00:35:33 along the east coast before we bought a bunch of properties. But I must say it has been a little bit challenging because while the yields were incredible and the growth in value, just going back to what the long-term average was, you didn't make big money and it was great exchange on the Aussie dollar. Yeah, it was parity. Yeah, and so, you know, dropping back to 75 cents is you've built in 25% increase in equity straight off the bat.

Starting point is 00:36:03 But I must say, yeah, the quality of professionalism in the States versus Australia is like chalk and cheese. You didn't get burned by a property manager as well, did you? Oh, how many? How many? Oh, my God, they ripped me off. Yep. Six months I was with a property manager, 11 units.

Starting point is 00:36:21 Guess how much rent I received on 11 units with no mortgage on in six months. Not only did I not receive a dollar, they reckon i owed him 10 grand yeah that's yeah that's the that's the uh hard part of it but but again useful warnings and and what it reinforced to us is just how how good we've got it here in this country uh from the worst property manager in australia is still amazing by new at standards totally agree so if if you look at your your property journey uh and and it sounds like your initial property investments were cashflow driven. Has your strategy changed at all? Oh, yeah. I mean, those first properties I bought in the UK were, as it turned out, garbage.

Starting point is 00:37:07 One of them I've actually just sold. One of them was a house I bought, great, like 8% yield. So, you know, and back when mortgages were 5% and dropping down to 2%, and 8% yield was phenomenal. Wow. 15 years i've owned that property for it's got up in value from 75 000 pounds to 105 000 pounds so 30 000 pound not even a 50 growth in 15 years out um so i i you know just i would never do it again like the pure cash flow um so so now what we do is um we look for places we think are where the area is fundamentally undervalued. So we think there's a bit of upside there. And then we do a small lot subdivision. Buy a house with a big enough

Starting point is 00:38:00 block of land, you can put another house on there, and then you'll make money just on the biddle. And then you'll also make money if you ride the wave because the property prices were fundamentally undervalued in the area. Yeah, I love that. If you look back on your property journey so far? What do you believe are the keys to being successful with both money and investment and why, Max? Well, firstly, you ought to manage the money properly to start with. You can't invest in property if you don't build up some equity or have some savings. And so that's why we went wrong for the first 12 years. But secondly, find some good people. I mean, it's not hard nowadays to find a good mortgage broker.

Starting point is 00:38:45 And they're a great start, you know, especially if it's someone like, you know, yourself or myself, where we care more about the client's outcome than lighting our own pockets. And it's all about, well, what do I know that I can share with someone that will help them feel like they've got the confidence to do what they need to do to make stuff happen? And then just doing stuff, because sitting on the sidelines is a poor man's game. And we regret, we don't regret the things. I might have bought that property up in Grimsby in the north of England. It even sounds like a terrible place. Grimsby. Sounds grim, doesn't it? But I still made £30,000 on that place, which is about $50,000 on it. I still made rent every year on that property, even though, relatively speaking, it was a bad investment compared to what I could have done instead. whereas the the 220 000 unit in dullet chill that i didn't buy i know how much i lost on that one that's like six hundred thousand dollars that's what i'm like by on that one i just didn't do it i just sat there no i love that so you if you sort of you've had a chance to rub shoulders

Starting point is 00:39:59 with a lot of people over the years and and with your own journey you what what qualities and character traits do you think separate great money managers investors from the rest then max Yeah, so there's two slightly different things there. Managing money is a different thing, and it's a learned skill, as is investing, is a learned skill. But certainly the great money managers accept the fact that they're never going to be very good with money. Don't try and change yourself to be good with money. It's not going to work. You can't change your own psychology.

Starting point is 00:40:34 That's what the book's about. So accept that and then put in place structures to make it difficult for you to spend your own money. The second thing is then invest. Invest in something. If shares is your bag, go invest in shares and buy something. But buy it for the long run. Don't buy it and go, oh, I'm going to buy some shares this week and then sell them next week because they went down in value. There's a great book actually called The Ulysses Contract, which is all about set your course.

Starting point is 00:41:04 We talked earlier on, set your course, stick to that course. If it turns out it was wrong, figure it out in five or ten years' time. Don't just think it's wrong because it doesn't look great today or tomorrow or next week or the week after. You've done the course. The only way it's going to work is if you stay the course. And so that's what great investors do is chart a course and then stick to it. Most people don't start that first step of actually even charting a course.

Starting point is 00:41:33 they don't set themselves any goals and if you don't set any goals well what are you hitting anything and everything and the next thing exactly right not yeah yeah beautifully said that if you are sort of reflecting back then max if you were starting out again would you have invested any differently or or done anything differently with money on youtube earlier i mean the first property investment i looked at i was still at uni and i didn't know how money worked me and a mate walked to a bank and said, we've seen a house, we were renting as students and he had a bit of money behind him and his family. And we could have probably bought a place together if we'd have understood how things worked a bit better. And if mortgage brokers were a thing back then,

Starting point is 00:42:13 and we could have bought a house for 12,000 pounds in an inner city area where they would be worth, you know, in pounds, obviously probably 250,000 pounds today, but we didn't do that. So start. Assume you don't know and talk to people. Get a good mortgage broker. Buyer's agents. I didn't even know buyer's agents were a thing. In America, you can't buy property without a buyer's agent.

Starting point is 00:42:39 I didn't even see them. But you find the buyer's agent and they go, oh, we'll show you this one. We'll show you this one. I don't want to buy that one. So why don't I want that one? Oh, let me show you why you don't want that one. It's like, oh, God, I would have bought that one. If you hadn't said anything, I would have bought it.

Starting point is 00:42:52 but you know buyers agents are amazing in in property um accountants can be worth their weight in gold um you know but but we assume you know and i'm terrible for this assuming i can do it i know how to do this i'm smart enough i can do this myself it's only when you talk to someone who really knows their stuff you go oh god what an idiot i was yeah like an idiot but well there's no yeah that's exactly and there's a lot of aussies who just don't trust anyone particularly when it comes to their money and that that becomes a hurdle as well because if you don't trust anyone you don't do anything which comes back to what you mentioned and that's what that you know go go go back i didn't trust that spruiker i knew he was selling me some

Starting point is 00:43:35 overpriced crap you know the fact is i would have made money but the fact is i could have also lost a lot of money and i could have been in in a difficult situation because that guy was there to sell me stuff and this those people exist in australia today you want to find out where are you getting paid how are you getting paid um whoever you're talking to how are they earning their money and why are they doing what they're doing um and if you understand why they're doing what they're doing you understand how they're getting paid and you're prepared to pay the cost or or you know do whatever then then you know learn from other people there's so much more available in books and podcasts and all that sort of stuff available today that just simply you know

Starting point is 00:44:12 it probably was there but it was so much harder to find 20 30 years ago it was you had to really make the effort and and and it's almost flipped the lid now there's almost too much information so you get totally confused with the complexity that's associated with it but the the fundamentals haven't changed and if we go back to the you know i had my own kiyosaki moment in the in the 90s and that that completely flipped the lid on my my thinking and actions from that day forward it really was a paradigm shift in the way I saw everything from that point on but I really appreciated you sharing all that before we go to a break and then get ready for the next episode where we're going to deep dive into your fantastic new book is there

Starting point is 00:45:00 anything that we haven't covered that you want to say before we do that yeah I'm not quite sure We've done a fair bit so far. Are there any money management tips or hacks that you've personally picked up and sort of researching your mother's ability to put things in little brown paper bags? Exactly. So my mother put everything in little purses. So like I say, the best decision my dad made was going,

Starting point is 00:45:31 you have the money because money in your pocket makes no sense. And that's what one of the driving forces behind the book is that most of us manage money in an awful way at the moment. Go back to when we got paid cash. People knew you had to take the cash home and hide it. Now, we open up a bank account. When we get our first job, we have a debit card linked to that bank account. We have a pay going into that bank account. And from there on in, we never make the change away from that stupid habit.

Starting point is 00:46:05 But we're now managing money according to our employer's pay cycle, which doesn't make sense to a human being. And also, whatever we do after that, we've given ourselves access to all of our money, just like as if my dad put his whole pay pack in his back pocket, and it doesn't make any sense. Take the money home, hide the money home, walk out the door with a little bit. How do we mimic that in the modern world? that's the driving force behind spending fast and slow and and hopefully we'll get more into that later but it's it's the nuts and credit cards credit cards i could you know there's not enough pairs of scissors in the world to cut them all up um they've got to get got to go they're awful things they mess with your heads and people don't understand why and the psychology

Starting point is 00:46:57 tells us why they don't understand why it's because they believe that they're a sane sober irrational human being and therefore they make sane sober rational decisions when they use a credit card and all of the studies show that they don't they're licensed to poverty there's no great and we're really going to dive into all of that and the psychology around the the you know money in our our minds and when we break down your book but i really want to thank you for taking the time to share the ins and outs of your own personal journey max and if anyone would like to ask any further questions or leave comments about this, I want you to just join and jump into our recently launched Property Hub Collective Interactive Facebook community, which you can click on the

Starting point is 00:47:37 link in the show notes, where you can keep the conversation going with other like-minded, hardworking Aussies. So we now look forward to continuing the conversation in part two of our great discussion, Max, where we're going to deep dive into your great new book, Spending Fast and Slow. So thanks again for joining us today. Thank you so much. It's been a blast. Thanks for tuning in to Get Invested on the Property Hub podcast channel, your home for property investment insights and inspiration and don't leave yet until you've taken the next step towards living by design by getting my award-winning book get invested absolutely free when you sign up at knowhowproperty.com.au or bushymartin.com.au

Starting point is 00:48:16 and finally make sure you subscribe to property hub to get your weekly dose of get invested inspiration, along with every episode of Realty Talk, Australia's leading property show for red-hot property investing news and insights, direct from industry leaders and influencers. Remember to always get invested in your knowledge, and I look forward to seeing you next time.

Property Hub - Investment Insights & Inspiration - Get Invested: Part 1 - Max Phelps on Spending, Fast and Slow

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