Property Investory
How Salena Kulkarni Replaced Her Income 15 Years Ago With Investment Returns
January 31, 2021
Salena Kulkarni is an alternate strategy advisor in property investments and the best selling author of The Freedom Warrior. After exiting the corporate world 15 years ago, which saw her working at multinational companies such as Deloitte, she has focused on her growing portfolio and mentoring other business owners and individuals in attaining financial freedom.
Join us in this episode of Property Investory to hear how Kulkarni recovered from a huge loss in the joint venture of a million dollar development. You’ll learn how she got involved in investing over 20 years ago, the harsh lessons she has learnt since and much more!

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Transcript:
**SHORT SNIPPET**

Salena Kulkarni:
(33.12): People need to focus on their relationship with money and their capacity to digest past pain and loss. Everybody loses money from time to time. If you don't, you're not really trying hard enough. 

**INTRO MUSIC**

Tyrone Shum:
This is Property Investory where we talk to successful property investors to find out more about their stories, mindset and strategies.

I’m Tyrone Shum and in this episode, we’re speaking with active investor and property strategist, Salena Kulkarni. She shares the ups and downs of her illustrious career in the corporate world, leaving senior roles for family life and, what happens when a multimillion dollar subdivision turns into a disastrous joint venture, where the other party took all and fled.


**END INTRO MUSIC**

**START BACKGROUND MUSIC**

Tyrone Shum: 
With a wealth of knowledge to share, acquired over an illustrious career that saw her working all over the world, Kulkarni is passionate about helping business owners achieve financial freedom early on in their property journey. 

Salena Kulkarni:  
(00:23): I [present clients with] alternative strategies, by giving them access to highly curated, non traditional property investment opportunities. I divide my time between supporting clients and spending time finding the best deal makers and advisors out there.

Tyrone Shum:  
One rule that Kulkarni lives by, which has obviously made her very successful in the industry, is to walk her talk. She is adamant that in order to be effective and share her wisdom, she must have laser-like focus when she is working.

Salena Kulkarni:  
(01:11): I generally don't start work before 10 in the morning and I'm usually gone by three. I also don't work Fridays. I love just talking to people one on one about where they're at and where they're stuck. I've spent a lot of time, doing a lot of different things and as a result I've got a great capacity to diagnose where people are experiencing friction. On top of that, I think my superpower is probably making friends with people. So the thing I'm probably most proud of is that I've got a fantastic network of really A grade people who support me in the program and the work that I do.

Lightbulb Moment in the Face of Tragedy

Tyrone Shum: 
Kulkarni considers the professional path that she took, which has ultimately got her to where she is today, to be very meandering.

Salena Kulkarni: 
(02:27): I was actually born in the UK and we migrated to Australia when I was nine. My ethnic origin is Indian, but I never really grew up there. We moved to a small town called Lithgow, which I'm sure many of you know and then eventually settled in Canberra. I had originally wanted to become a vet, but realised I just didn't have the stomach for blood and guts and decided to study accounting as a bit of a stopgap until I figured out what I really wanted to do.

(03:12): It was probably when I was 10 and being confronted with my father's illness that was the subconscious driver to understand how to build a great relationship with money. This is because I saw the impact that his illness had on him. I don't think accounting was ever the right fit for me, so I jokingly call myself a reformed accountant now, even though I'm still a chartered accountant. 

Tyrone Shum:  
(03:45): I'm curious to learn more about the change or the migration from the UK to Australia because you were there for nine years after growing up there. What was your childhood like over in the UK before you moved?

Salena Kulkarni:  
(03:59): I would say my childhood in the UK was idyllic. We lived in a small country town and I'm guessing there would have been maybe 300 people in this town. There was one fish and chip shop, one tiny supermarket and that was all. The move to Australia came about because during that period of time – I don't know if you know much about the thatcher years – it was a pretty grim time to be living in the UK. 

(04:28): Unemployment was very high and although my father was a double engineering degree holder, he had been unemployed for six months. I think he saw an opportunity to come to Australia and took it. He saw it as a fresh start, but we literally came here with a handful of suitcases and nothing else. We moved into a government house in Lithgow and I don't have any bad memories of it whatsoever, but I knew It would have been pretty rough by modern standards. We had a small kerosene heater [and I remember] it [being] freezing cold all the time.

Tyrone Shum:  
(05:07): Still is though at this time of year.

Salena Kulkarni:  
(05:11): Still is, yeah. I have great memories of Lithgow but it was probably around that time, in transitioning to Australia, that my dad found out that he had a major illness and was told that he only had a few months left to live. He then took the opportunity to move us to Canberra and his primary concern was how we were going to survive after he passed. 

(05:38): Fortunately for him, some technology was created and he got told, 'You've got another three months', then it became another three months. I mean, ultimately, he went on to live another 30 years, which was the shocking part. But the technology that kept him alive, no one really knew much about so we didn't know, but it definitely flicked a switch in him. 

(06:04): My parents both really sheltered my sister and I from all of that, so we didn't know, but when he was diagnosed, we sort of saw the overnight change in him. He went from pretty happy-go-lucky to completely preoccupied with money and whether there would be enough.

Tyrone Shum:  
(06:23): Wow, that is an inspiring story. I'm really also wondering, if he lived on for another 30 years, that must have made a huge impact on your family's situation and how everything must have changed. If he was told he only had three months, he must have been doing whatever he could to provide?

Salena Kulkarni:  
(06:39): Oh totally, you don't realise until you're staring death in the face, what matters. I think the lesson that I took from all of that was that I never wanted to be in a situation where I've got to worry about money. But I think it was probably more subconscious. At the time, I understood the fact that he might not be with us for a very long time. He got in the Guinness Book of World Records for surviving with this condition past a certain point. So although it was a difficult time, I never felt like I was missing out on anything or in need of anything.

Growing up in the UK

Tyrone Shum: 
Kulkarni recounts some of the cultural differences that she remembers from her time growing up in the UK. Some lighthearted and some more serious.

Salena Kulkarni:  
(07:38): Life was very innocent. One of the things that I love about the UK, which we don't seem to have here in Australia, is that they provide hot school lunches. It's almost as if that's the norm and only the posh kids got to bring a lunch box with a sandwich and [an] apple from home. So, you know, I remember begging my mum every now and then to let us take a lunchbox. 

(08:05): But even at the poorest of poor schools, they would provide a hot lunch every day. I guess depending on the school, it was either great or it was okay, but I have great memories of that. The only thing that I remember leaving a very strong impression on me was the liver that they used to serve with gravy. That was the only meal that we all used to baulk at. But otherwise, it was all really good food. 

(08:33): I think the only dark cloud that I remember from that time was that it was definitely a time of, I would say, ethnic intolerance. I do remember being teased quite a lot and even at times when I was young, experiencing racism. It's one of those things, I think [it’s in] my nature is to focus on remembering the good stuff, so I have a bit of a shocking memory for specific, bad experiences. But in general, I think it was a great experience.

Tyrone Shum:  
After moving to Australia, Kulkarni’s family spent some time living in Lithgow before moving to Canberra. Describing it as a simple life at that time, she still feels that Canberra is one of Australia’s best kept secrets, in terms of places to live.

Salena Kulkarni:  
(09:15): Look again, Canberra has come a long way since the early 80s. Perhaps I wouldn't have settled here if circumstances hadn't unfolded the way they did. But back then, it was just a nice place to live. It was very much a government town, with a very public service sort of mentality. There was a very, very small Indian community here where everybody knew everyone. It was life as usual. 

(09:54): We rented for a long time and then eventually, I think later on we bought. I had no ill feelings towards Canberra, but yeah, my memory of Canberra was that it was probably no different to many other towns.

The Work Never Stops

Tyrone Shum:  
After graduating from high school, Kularni went on to study commerce economics at ANU and moved to Sydney. She would eventually get an exciting opportunity at an industry leading company.

Salena Kulkarni:  
(10:24): It was kind of like an unconscious career evolution [after i graduated from university]. I did accounting as a stopgap, couldn't figure out anything else that I wanted to do, so I thought, 'I'll finish this'. I ended up getting a job offer from Deloitte, at a time when jobs were pretty thin on the ground. We were in the midst of a recession. Even at that time, Deloitte had just had massive redundancies internally.

(10:59): So we were being brought on as the grads for slave labour. I definitely gave a pound of flesh for the first couple of years while I did my chartered accountancy designation and worked. It was really hard. It was so much fun but it was not uncommon to start work at eight in the morning, finish somewhere between 10pm and 2am, go home, study and then get up and do it all again. But I guess when you're young, you just do it. Everybody else did it, so you just do it.

Tyrone Shum:  
(11:38): Yeah and when you think about it, when kids party hard all night long, It's kind of no different in that sense because we can last for that long. But for us now, I can't imagine doing that.

Salena Kulkarni:  
(11:49): Oh there's no way. I think I definitely chewed through a lot of fuel at that point.

Tyrone Shum:  
(11:56): Yeah, absolutely. So I guess from that point onwards, how long were you actually working at Deloittes for?

Salena Kulkarni:  
(12:03): So I think I was there just over three years, got my chartered accountancy and it was sort of a trend at that time to go overseas and do a gap year. I had gone into the workforce when a lot of my friends had gone travelling. So when I finished that, I decided to go travelling the world. I kind of feel like I might have done it the right way around because back then, I had friends working in pubs and things like that for 3–5 pounds an hour. I went into the workforce as a chartered accountant and I was earning megabucks doing amazing roles.

(12:45): Going overseas really gave me an insight into how the world sees Australians, like we're definitely perceived as having a fantastic work ethic. So it was very easy to be kind of pulled out as a bit of a diamond in the rough amongst a whole lot of prospective employees. I worked in some super senior roles for my age that I would never have had that opportunity to do if I'd stayed in Australia. 

(13:14): So on a career level, the move overseas really catapulted my career in terms of money and work and still gave me that freedom to travel and do what I wanted to do. So that was a fabulous experience and I did that for another three and a half odd years before I kind of said, 'Okay, I'll come back to Australia'.

Tyrone Shum:  
(13:36): So which countries did you go to while you were travelling for those three years?

Salena Kulkarni:  
(13:40): I worked in London, I worked in New York and Hong Kong, parts of Europe. I also worked for some big multinationals. I always found that part of the challenge for me with accounting is that I can do the detail, I just really don't enjoy it. So the roles that I used to be attracted to were more where I was the liaison between the business and the accounting department or the business and the IT department. I think I've got a natural interest in problem solving and the elegance of solutions. So I found myself in lots of roles where I was sorting out problems.

**ADVERTISEMENT**

Tyrone Shum:
Coming up after the break, we hear about what sparked Kulkarni’s decision to come back home after spending three years travelling overseas.

Salena Kulkarni:
(16:52): My dad wasn't in the best of health and I kind of felt like I'd been away for over six years at that point. I just wanted to spend a little bit of time here and maybe relocate. 

Tyrone Shum:
We learn about how her first property purchase was a fluke and turned out to be a gem, tripling in value at the time when others were doubling.

Salena Kulkarni:
(23:28): I had done a bit of investing in terms of other markets, shares and things like that, but that was the first property I bought. So I got a friend to come around and see a bunch of houses with me and it was at the beginning of the boom period.

Tyrone Shum:
How a disastrous joint venture taught Kulkarni and her husband some painful lessons. 

Salena Kulkarni:
(31:55): John and I have worked through a lot to mentally digest that. But now when I look back, I think there's been so much gold from that experience because it just taught me a lot about things that might have been overlooked, precautions that could have been taken. 

Tyrone Shum:
And that’s up next. I’m Tyrone Shum and you’re listening to Property Investory.

**END ADVERTISEMENT**

Blast From the Past

Tyrone Shum: 
Although they didn’t have any family around when growing up in London, Kulkarni still made the time to revisit her hometown while living in London as an adult. This was both a cathartic and melancholy experience.

Salena Kulkarni:  
(14:49): We didn't have any family in London and I always felt that that was part of the challenge my parents had, where it was just the four of us with no support. We've got quite a bit of extended family settled here in Canberra now, but my parents had no support and no help from anyone. So when I went back to the UK, I did go back to the town that I grew up in, which, sadly, had been extremely overdeveloped. 

(15:20): Lots of new housing estates, all the fields and trees and places that I spent time in as a kid were all gone. The primary school felt tiny, microscopic, I almost couldn't believe that there were so many of us that fit in that school. I really loved it as an experience, but it was also sad to see. I'm a very sentimental and nostalgic kind of girl, I definitely love my 70s music and I love things from the past to be the way they were.

Tyrone Shum:  
(15:56): I'm very much similar in that way. I grew up in the 80s and every time my wife and I have a look at the things that we grew up with, like 90s music and stuff like that, we just think, 'Wow, it is just so different to how it is now'. I wish my kids could try and appreciate what we had, just a simple telephone. 

(16:16): You look at our mobiles nowadays, our children take them for granted because it's got everything on it. But back then we were not able to just pick up a phone and instantly call or message people, you actually had to dial a phone, especially with the internet when you think about it. All those dial up modem speeds, it took a while.

Salena Kulkarni:  
(16:34): Absolutely, couldn't agree with you more.

Learning About Other Cultures

Tyrone Shum:  
(16:36): A lot has changed, wow. So going back over to London and experiencing it for yourself as an adult, [as well as obviously] travelling [and working overseas] for about 3 years. Why did you decide to come back to Australia after that time?

Salena Kulkarni:  
(16:52): Look, it was probably family based. My dad wasn't in the best of health and I kind of felt like I'd been away for over six years at that point. I just wanted to spend a little bit of time here and maybe relocate. The plan had been to move to Sydney or Melbourne but as it turned out, I just found some interesting work here and one thing led to another and then I just found myself staying here.

(17:21): Then my now husband moved here to be with me and set up his business here, so then we sort of got stuck. But life is long, there's plenty of opportunities and you know, we're definitely entering another phase where we might see ourselves moving elsewhere. Who knows?

Tyrone Shum:  
During her travels, Kulkarni learnt many new things and was exposed to many different cultures. She found that it was a time of real personal growth.

Salena Kulkarni:  
(18:04): [In terms of relationship building], especially in cities like London which is such a melting pot of different cultures and different people, [it was a phenomenal experience]. It's a very transient population. So I think one of the big takeaways that I had from that experience is the capacity to cope with change, to roll with the punches and to understand that the one thing that's guaranteed is change. 

(18:45): From a personal resilience point of view, I think I grew up a lot in that time. I think up until that point, to some degree, I was and I still am a little bit of an innocent. Back then, people might have called it naivety. So I'm less naive now, I'm still innocent, but less naive. But I definitely think that experience of being out of home, having to figure out life as a grown up is really when you decide who you're going to be and what matters to you and what your values are.

(19:23): You're in an environment where you're being invited into different people's worldview and I think part of the challenge of young people in general is figuring out whether they align with that worldview, or whether they feel differently. I think when I was younger I was very impressionable, but fortunately, I had enough of a moral compass to keep me on an even keel. It was definitely a great period for personal growth and evolution.

Starting Businesses

Tyrone Shum: 
Kulkarni had very clear goals of starting some businesses upon her return to Australia. With an entrepreneurial streak and already a tonne of valuable experience, she found there was no time like the present.

Salena Kulkarni:  
(20:15): Part of the reason accounting never felt like a good fit was that it lacks creativity. It's very black and white and very linear. I had a couple of businesses that I started and then moved on from. I started a day spa, which I looked into franchising and then [ended up selling]. So I did a bunch of things that [helped me really explore] what being an entrepreneur meant. In hindsight I picked a lot of stupid businesses, like the day spa experience, which seriously shaved five years off my life.

Tyrone Shum:  
(21:07): Wow. Why, what happened there?

Salena Kulkarni:  
(21:11): Oh my God. Well, that was meant to be an experience of being the silent investor. Just to give you context, we'd done this beautiful fit out and got this premise and all this equipment. Then two weeks before we were due to open, the girl that I was supposed to be partnering with said, 'I've changed my mind. I'm going overseas'. We had appointment books filled and it was a very, very steep learning curve. I got to the point where, by the end of that business, I learned a lot. But I also learned about staying in my lane, because that was not my lane.

Tyrone Shum:  
(21:47): I totally understand. I mean, could that have happened? Did they invest any money into the business before they ran off? 

Salena Kulkarni:  
(21:57): No, I was the money, they were the skills. It felt like an equitable arrangement at the time, but I realised that if you don't have skin in the game, it's a difficult partnership to have work.

Tyrone Shum:  
(22:13): Yeah, I understand that. I've been in those situations before, so I can feel for you. It's tough.

Salena Kulkarni:  
(22:18): It was tough, yeah. 

How Her Property Journey Began

Tyrone Shum:  
Kulkarni shares how she snagged her first property, with the help of a very sympathetic real estate agent. With her only real experience of investing being in other markets and shares, this was a win.

Salena Kulkarni:  
(22:34): When I got back to Australia, I actually moved back in with my parents just because that was my motivation for coming back to Canberra. In an Indian family especially, the expectation is that you live with your parents. If they had their way, I'd live with them forever. They built this house with the fantasy that my sister and I would move in with them along with our husbands eventually. 

(22:59): As much as I love my parents, at that time it was like having a straight jacket on because my gorgeous mum would say to me at night, 'What time you're going to be home? Are you in for dinner?' When you're used to just coming and going as you please, it wasn't so much a restriction, but it definitely cramped my style. So I think I lasted about a year. Then they went away for a weekend and I went 'I'm going to start looking for a house'. 

(23:28): At that time, which was in 2000, the cost to own a house, versus the cost of renting was about the same. So at that time, I just went, 'Oh, well if it's about the same, I'll just buy'. So I got a friend to come around and see a bunch of houses with me and it was at the beginning of the boom period.

(24:01): I walked into the very first house on the very first day that I started looking and went, 'Oh, this house has a lovely energy'. The real estate agent had been a single woman and had been taken advantage of and she felt very empathetic towards me. So she whispered in my ear, 'Selena, this is what I think this place is worth. Why don't you put in an offer?' I didn't even have finance organised or anything and I put the offer in.

(24:28): I don’t even think that real estate agent took higher offers to the owner to try and support me, but I got this house and it turned out to be an absolute gem. In the time that most properties doubled, this one trebled in value, so that was a fluke first purchase. But after that, I think my now husband came to Canberra in 2001 and he was very clear that property was the pathway to growing wealth. I was just like, 'Whatever'. 

Taking the Reins

(25:06): When he started buying a couple of properties, he eventually hit his limit and because I was working in management consulting at the time, earning a pretty good income, he needed me to be part of the journey, otherwise he couldn't do it. He would put paperwork in front of me and I would blindly sign it. I literally had no interest. The most important thing for me was that I didn't want to risk the house. So I don't know what we signed.

(25:34): I had no interest until about 2004, at which point I went, 'Crumbs, what have we done? What are we doing?' I was pregnant with my first child and I thought that I'd better have a look at this now. Once I started to look at what he was doing, I realised what was happening. That was the sliding door moment of, 'Okay, I need to give this more attention'. 

(26:06): I educated myself in every way possible. I bought courses, I met people, I looked everywhere and found mentors, which is probably the biggest influencer for my success. I kind of said to my husband, 'Step aside, I'll take it from here'. He was more than happy for me to do that and that was the start of the journey.

Tyrone Shum:  
(26:35): Gosh, that is amazing to hear. I'd love to hear that from my wife too. Wow, that's phenomenal. What was your husband doing at that point in time?

Salena Kulkarni:  
(26:45): John is a chiropractor and he runs a really great business, he's very successful in what he does. But he's got a different energy to me, he's very grounded, he doesn't like to stretch himself or stress himself out. Whereas I've got the high energy, high excitement personality. So he was more than happy for me to just take the reins and it kind of became a bit of role reversal. 

(27:14): It was me putting things in front of him to sign and just saying, 'Just sign here, please'. It's kind of been that way ever since. He just trusts that I've got the energy and the experience now to just run with stuff.

Boom Period

Tyrone Shum: 
Having purchased her first investment property over 20 years ago, Kulkarni’s portfolio has gone up and down since then. Using those alternative methods that she teaches to her clients, she is currently more focused on simplifying her portfolio, rather than its volume.

Salena Kulkarni:  
(27:56): To be frank, back in the year 2000, you could almost throw a dart at the map of Australia and do okay. So there's a lot of people who made a lot of money during that boom time and attribute it to high skill, but really for a lot of people it was the right place, right time.

Tyrone Shum:  
Her property journey was not always smooth sailing, as she recalls a painful experience back in 2008, that probably caused the biggest fracture in their wealth creation to date.

Salena Kulkarni:  
(29:04): We had started to dabble in some small scale developments and I got introduced to a fellow who claimed lots of things at the time, but we basically embarked on a joint venture with him, developing a parcel of land on the Central Coast.

(29.37: It was huge and it would have been very lucrative. But even with all the due diligence I did and all the legal documents I put in place, I couldn't have anticipated that he would basically scam us. At that time, we had just paid off our house and we had quite a good portfolio of properties. We were in this great position, so what we ended up doing was refinancing to do this development. 

(30.07): It was a stretch for us. It was a multimillion dollar subdivision and he basically fleeced us and took the lot. That was a very, very painful lesson to recover from, both financially and mentally.

Tyrone Shum:  
(30:28): Wow. So learning from that lesson there and if you wouldn't mind sharing more details behind it, how was this person able to fleece you and get away with all that? You sound like you would do a lot of due diligence to make sure you were covered. But how was that possible?

Salena Kulkarni:  
(30:48): He was very, very clever. So it didn't happen overnight obviously, he spent quite a lot of time getting to know us, he got to know my family and he adopted an almost fatherly demeanour with me. He just talked a big game and took me around to see deals which he claimed were his. I would probably say it was that experience which ended the naive period of my life. 

(31.24): I'm pretty vigilant, like I did a lot of due diligence. The deal itself stacked up, but in the end, it basically came down to the fact that he had access to the funds and just drained them. Even after that happened, we tried to go around and communicate and get the funds back, we got lawyers involved and went to ASIC. We did all this stuff, but at the end of the day ASIC [basically] said, ‘Small fry, we’re not dealing with it’. 

(31.55): The lawyers said [that we] could chase this for a very long time through the courts and spend 10s of thousands of dollars and still not get the result. So we let it go. John and I have worked through a lot to mentally digest that. But now when I look back, I think there's been so much gold from that experience because it just taught me a lot about things that might have been overlooked, precautions that could have been taken. 

Recovering from a big loss

(32.24): Certainly after that point, the journey was about, ‘How do I recover from this?’ Luckily, we had a bunch of other things happen that kind of helped us mend that damage. But when you think back to that point in time, several hundred thousand dollars was a lot of money. For anyone! Even now that's a lot of money, but back then it really hurt us. 

(32.49): We effectively lost our house. So that was a big one to recover from, but that's why I'm now such a huge advocate for people making sure that they digest the pain around any kind of financial loss. I've supported hundreds of investors whose relationships have broken down over insignificant sums of money because they just weren't able to digest the loss. 

(33.12): People need to focus on their relationship with money and their capacity to digest past pain and loss. Everybody loses money from time to time. If you don't, you're not really trying hard enough. There were a lot of lessons around both the due diligence side of things, the precaution side of things and also just learning to pick yourself up, dust yourself off and move on.

Tyrone Shum:  
(33:40): Just curious, what would you consider to be a precautionary lesson that you could have done differently or a lesson to learn from that?

Salena Kulkarni:  
(33:55): I think there were just nuances in the actual contract that could have been better dealt with. If I'd really wanted to, I could have gone back and really had a go at the lawyer that we used. So one thing that I do differently now is I don't quibble with people on fees for anything, I just pay the fee because I want the absolute best protection. 

(34.22): Whereas when you start out you're often looking to save money, cut corners and you look for cheapest property managers, the cheapest conveyances and the cheapest legal support. I just think you get what you pay for. So I've learned through that experience, that vetting deals and doing good due diligence is the cornerstone of getting the right results.

Tyrone Shum:  
(34:48): I feel the same. I've been burnt a few times by going for a cheaper option and it comes back to bite you in the end. You think you’re saving a few bucks here and there, but in the end it costs you a lot more than a few dollars.

Selena Kulkarni:  
(35:00): 100%, yeah.

Tyrone Shum:  
(35:02): I think you have to go through that lesson to really learn.

Selena Kulkarni:  
(35:05): Exactly.

Tyrone Shum: 
Kulkarni had a moment of clarity after completing a development in Melbourne that saw her and her husband making a $500,000 profit, in a very short space of time.

Salena Kulkarni:  
(00:40): You might look at that on the surface and go, 'Wow, what a great win', but it was actually a really painful experience. The builder went bankrupt, just prior to completion which meant that I was flying down to Melbourne every week to try and push it along. It was a great outcome overall, but moreso, it taught me a lot about the importance of defining what success looks like, as an investor. 

(01:07): I made the decision from that moment onwards, that I wasn't going to expose myself to that level of risk again. Since then, I've done a lot of small scale developments but with a significantly lower risk. You would understand that even within investing, there's such a spectrum of investments that require virtually no effort through to those where you're super active. 

(01:37): I think the aha moment that came to me was in 2009. We had a really good portfolio at that point [and] it was a mix of commercial and residential property. I started to really use my accounting skills to project at what point we were going to be financially free. We had a high net worth and we'd already been investing for nearly a decade at that point. When I did the numbers, I realised that in order for us to replace our living expenses and have that freedom to step off, it was [going to be] be another 25 years. 

(02:14): That's when I went, 'Oh, god. This whole fixation with net worth being the ultimate metric can't be right'. Around that same time we had just bought a commercial property here in Canberra and the banks had basically turned around to us and said, 'Look, no more. We're not going to give you any more money right now'. I had a choice at that point, to kind of hit a wall and then go, 'Well, we've done pretty well, let's just sit on what we've got and wait that 25 years', or ask the question, 'What else?' 

(02:54): I think one of the skills that really good investors have is that capacity to be tenacious, to be determined and to ask the question, 'What else?' The aha was recognising that property is a long game. Yes, you can make chunk deals and I get that, but driving up my net worth wasn't going to get me any closer to my dreams around financial freedom. So I started to explore other opportunities, other markets, other ways of doing things. That's how I stumbled into the alternate space and that was the sliding door moment in terms of a new game for me.

Stuck in the rat Race

Tyrone Shum:  
Although one would think that it’s a high net worth that enables you to reach financial freedom, Kulkarni has other ideas about what a high net worth can really mean for the rest of your future.

Salena Kulkarni:  
(04:00): I think it's all well and good to say you've got millions of dollars of net worth, but you have to work. I've worked with so many people who have staggering net worth, way more than me and they are in so much financial pain. They have to keep hustling, they have to keep working to support their lifestyle. Or, eat the cow, meaning sell down assets to get off the ferris wheel. 

(04:27): So one thing that I would say I've really embraced is the idea that yes, you have to do the hard yards and you have to use traditional investments to build up your capital base. Property for me is definitely the best vehicle to do that, so there's no avoiding that. But I think what happens is people hang their hat on this idea that they have to [reach] a certain net worth to have it be game over for them. What I’m experiencing and what I'm doing right now is showing people, you don't actually need as much of a net worth as you think.

(05:09): Part one of the game is to build a capital base. Part two of the game, as far as I'm concerned, is how you take that capital and start to turn the dial and put a tiny percentage of your portfolio into alternate to ramp up the cash flow, so that instead of waiting 20–30 years to replace that income, you can do it in a really short space of time, like 3–5 years. 

(05:35):  
Once you've done that, part three of the game is how do you turn all of that income into annuities and a family bank and all of those things that people give lip service to around legacy? But how do you make that really concrete and real? 

Tyrone Shum:  
(05:51): Wow, I love that three step process. It's so simple and clear and I think a lot of people can easily follow that. That's why I think a lot of people follow what you've been doing. What I'm just curious about, is what you said in part two, which is to actually turn them into alternate sources to be able to generate more cash flow. How do you go about doing that? What kind of sources are we talking about?

Expand Your Cash Flow Through Alternate Strategies

Salena Kulkarni:  
(06:18): Back in 2009 when I hit that wall, I just started looking at what else was out there. I think the thing that probably had the [biggest] impact in my world, was looking for people who had the results that I wanted. I searched the globe, I didn't restrict myself to Australia and New Zealand. I thought, 'What are people doing in other parts of the world?' I found mentors and people in other markets and I got a chance to look over their shoulder and just see what they were doing. 

(06:56): [I would say that] following the models that somebody else has already created, is definitely better than trying to do it yourself. I started to hear about opportunities, even here in Australia you hear about opportunities that don't come onto the market, that are off market, that are out of the reach of most people who are trawling the net looking for opportunities. 

(07:24): I looked at the European and the US markets, but what I liked about the US market, particularly at that time from a mechanics point of view, [was] that [it was] very similar to what we have here. The strategies exist in Australia as they do over there and I think the Australian market is fantastic for building up capital. It's awesome. In fact, there's not many markets in the world that match it. 

(07:58): But, for cash flow it's terrible. I mean, the typical cash flow, for properties held without any debt – so no encumbrances at all, is between 1–2.5%. If you own a million-dollar property, I [personally] think that's a pretty terrible return.

Tyrone Shum:  
(08:17): It's crap.

Salena Kulkarni:  
(08:18): Yeah. So by putting small amounts of money into some of these alternate strategies, where I could all day long, get 8–15% net returns, you can start to see that you don't need to put a whole lot of money into it in order to [multiply] your cash flow [by five]. That's why that market is so exciting [at this] point [in time]. The reason it works is because our market is all about capital, because it [has] become very efficient. 

(08:48): There are so many people who are interested in property and you have to fight for deals here. So even though you would still say it's not as efficient as the share market, if you look at it on a global level, Australia has a very efficient property market. In the States, it's a very different matter. There's this space of real estate investing in the market, which is incredibly inefficient and because of that, it means that there are all these unconventional opportunities, which are just not available to the masses. It's really the playground of the ultra wealthy.

Commercial Properties

Tyrone Shum:  
(09:23):  Wow, it's fascinating to hear that and I think that's the reason why people have looked at alternative places, even for myself in the last couple of years or so. Capital growth has increased so much and it has become so expensive to purchase property, especially in Sydney and Melbourne. One place that they've talked about is moving into commercial space.

(09:41):  Commercial has been a very, very big area that a lot of people talked about last year. It's probably slowed down a little bit due to covid unfortunately, you will have experienced that because you've got commercial properties in your portfolio as well. From there it's like, 'What next?' You could look at commercial [properties] and get great returns, but you still have [to] put a lot of capital in there. [Also], the banks only provide certain LVR's and you can [still] get capped out from there. 

(10:07): I know I personally looked over in the states and when I was looking at some of the deals, even [just] hearing [about it] from a few people, I could pick up properties for $50,000–$60,000, even up to $100,000 recently. That would still include close to about a 15–20% return. I'm like, 'Wow, why am I not doing that?'

Salena Kulkarni:  
(10:25): I agree with everything you're saying and what I would add is that a lot of my clients have commercial property. Yes, it has been the flavour of the month for the last couple of years and I do like commercial property, but it's a game of snakes and ladders as well. Higher returns, but often associated higher risks and most of the people that I work with who own commercial property, at best, after they service their loans, they're making 3–4%. 

(10:56): So we're still talking, a marginally better step up, but still not epic money. The deals that you're talking about in the States, which is buying property, is only one out of the eight strategies that I've started to focus on. So when I started over there, I thought that was what everybody meant by US real estate, that you just buy properties. But managing property from afar, tenants and toilets and all of that stuff, is a big headache. I got so many cuts and bruises along the way. 

(11:31): What I believe now, out of all the strategies in the alternate space, is that owning direct property is my least favourite out of all of them. What's really exciting for me about the alternate opportunity in the states is that you can put small amounts of money into each deal. You can put as little as $5,000–$100,000, depending on the opportunity. 

(11:56): You can do true diversification, you can diversify geographically, from a liquidity point, from an exit point of view. There's so many different layers to it. In Australia we talk about diversification and what it really means is, 'Well I bought a house in New South Wales, so let me go and buy one in Victoria now'. In the alternate space, because the dollars per deal are so small, it's really about diversification across strategy and all those other things that I talked about.

(12:25): So the idea of owning houses is great, but it's [at the] bottom of my pile now, in terms of the strategies. I want to control the deals, I don't necessarily want to own and be responsible for the tenants and maintenance and all that rubbish.

Controlling, not Owning

Tyrone Shum:  
With a focus for alternate routes in property investing and the wisdom to know where you can mitigate risk, Kulkarni focuses on a number of strategies which each have variations within.

Salena Kulkarni:  
(13:02): There's the traditional one that you're talking about, which is just buying property. You go to a bank, you get leverage and you purchase or you just  purchase in cash. There's probably four buckets of strategies which include direct ownership, lending deals where you become the bank, joint venture deals, meaning you partner with someone and you get paid a rate of interest. 

(13:35): So it's a hybrid between a lending deal and a direct ownership deal and you get a share of the profit at the end of the development. Then the fourth bucket is syndications, where a group of you go in on one specific project. I'll add a fifth bucket, which is the main bucket that most of my guys like, which is the small private funds. This involves a bunch of people, but the fund manager has the capacity to get involved in multiple projects at the same time, could be business loans, multi unit complexes, all sorts of things.

Tyrone Shum:  
(14:17): In those cases, especially for example, going to a syndication or fund manager, in Australia there are obviously slightly different rules and regulations surrounding those.  How does that work overseas?

Salena Kulkarni:  
(14:31): From which sense?

Tyrone Shum:  
(14:33): I guess in terms of regulation, like with funds here, they're quite highly regulated and you have to go through quite a lot of paperwork.

Salena Kulkarni:  
(14:43): Yeah, well I'm not setting up the funds. So it's not me that runs the funds and I don't get paid based on anything anyone invests in. So one of the attributes that I really think is important that you develop as an investor, is being very agnostic. Meaning that you remain unbiased by everybody else's opinion and what the market is saying and really being able to understand and look at deals on their own merits. 

(15:10): So [you’re quite right], the funds over there are extremely well regulated. But a lot of these small private funds, they operate in a space that is too small for the big hedge funds. They're also way too big for your average mum and dad investor. They're very nimble, they can take on big deals, small deals and each fund has their own flavour of what they do. 

(15:42): This comes back to your network. One thing that I prize is my network and a lot of the guys that I work with that run these funds, they won't work with you if you're just some unknown off the street. They're a very insular, private network and when they say, 'Look, there's a deal here', they'll fund it really quickly, they don't need anybody's money. So they're not the sort of people that will go out looking to the public to raise money. It's a very private network. 

(16:13): The interesting thing is because we are described as aliens, a lot of those opportunities are like, if you were a local, they'd say, 'Are you a sophisticated investor? Have you got a net worth over this?' But because we're foreign, they don't care.

**ADVERTISEMENT** 

Tyrone Shum:
Coming up after the break, we hear more about the returns that Kulkarni sees and why that shouldn’t discourage you.

Salena Kulkarni:
(17:25): I know it sounds like they must be super risky but in all seriousness, when you unpack the deals you will understand how the strategies work and you [will] also understand that these deals don't need a rising market or care whether there's economic turbulence. 

Tyrone Shum:
We’ll also hear about what Kulkarni has been up to in the last 15 years since exiting the corporate world.

Salena Kulkarni:
(22:03): For the last six or seven years, prior to starting the Freedom Warrior program, I was helping people find things in Australia and pointing them in the right direction. I'm not a buyer's agent, I just used to hand them on to people who were buyer's agents.

Tyrone Shum:
What formula she uses to calculate expected net worth and how effectively you are creating wealth...

Salena Kulkarni:
(26:45): There's a formula that I kind of put my own spin on that I pulled out of that, which is, if you take your average household age and multiply it by your average gross household income and divide by 10, that should give you your expected net worth. 

Tyrone Shum:
And that’s next. I’m Tyrone Shum and you’re listening to Property Investory.

---> Insert Money Partner midroll: https://drive.google.com/file/d/1NMacx0rmmhvqUDB-ecQe3zuqzIFZoBWO/view?usp=sharing

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Opening Yourself up to More Returns

Tyrone Shum:  
The returns that Kulkarni sees would be much higher than average, as she takes a slightly more aggressive approach to investing. 

Salena Kulkarni:  
(16:51): Typically, on the more traditional stuff, you can get 8–15% net returns. On some of the joint ventures and other lending opportunities, by the time you factor in your profit share, you can get returns of 18–24% because of that market inefficiency.

(17:25): I know it sounds like they must be super risky but in all seriousness, when you unpack the deals you will understand how the strategies work and you [will] also understand that these deals don't need a rising market or care whether there's economic turbulence. When you contrast that to the uncertainty in our market right now, you start to see that the relative risk is actually lower than what we experience in the Australian market.

Tyrone Shum:  
(17:52): Yeah, I would have to agree with you because I'm already involved in those types of markets here. People [always] ask me how I'm able to get between 15–30% returns on these deals that I'm working on right now. They're secured and there's a lot of possibilities, there's just more to it. People just don't believe it. I can understand, because we've all been conditioned to believe that in this market, you expect maybe 3% return at most in Sydney markets.

(18:21): Up in Brisbane, you might be able to get a 7% net yield, and you go, 'Okay', that's what everyone expects. It's just [about] changing the mindset and then really understanding and unpacking the deal. I think that's where you've kind of gone further because it's a matter of opportunity costs. If you're going to invest your money and put it in something for the next 10 years, potentially in those 10 years, you could have actually compounded say a 15% return, instead of a 7% return. 

(18:49): At the end of day, which is going to perform better? Well, I think the obvious answer would be the second one because it compounds at a greater rate. So it's really just about changing your mindset and working with different people to understand that. Once they understand that, it actually does work really, really well. Is that what you've kind of experienced as well from your side of things?

Not Relying on the Markets

Salena Kulkarni:  
(19:08): It's such a great point you raise and I'm all for healthy scepticism. My training has made me a very conservative person and yet, people are so suspicious and sceptical about these opportunities. What's it called when someone trolls you? I've had people definitely troll me and say, 'Oh, this has got to be a scam', but I have zero involvement in the investments that the people around me make.

(19:45): My role is to support and give them access, but I don't get paid and I don't have any involvement. I love Australian property and it is awesome, as I said, for building capital. But I got tired of relying on a rising market to make money and it's hard work finding good deals in our market. 

(20:06): So right now, my plan A is building cash flow through these alternate strategies, which by the way all exist here in Australia, they're just not plentiful. But finding consistent deals is not as easy as it sounds and my worldview is that the world is full of undervalued opportunities and that's all I'm doing. I'm tapping into those, there's no smoke and mirrors, they exist, it's just that they're not mainstream.

Tyrone Shum:  
Kulkarni exited the corporate world 15 years ago, after working as a chartered accountant and being employed by a number of publicly listed multinational companies around the world. 

Salena Kulkarni:  
(21:09): I don't even know if I'm employable to be frank. I say that to my husband, like if I ever had to go back to a job, I don't think anyone would give me a job [since I’ve been out of the game for so long].

Replacing Your job with Investment Returns

Tyrone Shum:  
This big change was brought on by Kulkarni’s decision to not only be home to raise her children, but also to focus on the property side of things when they started to provide the best returns.

Salena Kulkarni:  
(21:30): I've done lots of things [in the 15 years since leaving my job], I was an avid share trader, I've tried lots of things. It was never the case that I set out to start a business in this, I just started to have people ask me, 'Well, how did you do that? Could you help me with this?' It just sort of evolved from there. 

(22:03): For the last six or seven years, prior to starting the Freedom Warrior program, I was helping people find things in Australia and pointing them in the right direction. I'm not a buyer's agent, I just used to hand them on to people who were buyer's agents. I think of myself as a strategist because I have that problem solving ability, but it's really only in the last two years that I went, 'I don't actually want to work that hard'. 

(22:34): I want to work with fewer betters. I want to work with people who get the concept of what I'm saying, which is that you don't have to wait till you're 65 to retire. You can get there in the next 18 months, two years if you do the right things and you embrace some of this alternate stuff. So my attitude is, 'I'm driving this bus and I'm going in this direction, if you want to join me on that journey, jump on the bus'. That's kind of where I'm at.

Tyrone Shum:  
(23:09): Fantastic. That's what it sounds like, [that] you're genuinely there to help people from the heart and you've got a strong reason behind that because you've achieved it for yourself. You've built a portfolio, you haven't had to work for the last 15 years. There's already proof there that you're genuinely here to help. I know a lot of successful property investors who are in the market doing exactly the same thing and they're really, really passionate and wanting to be part of that. 

(23:36): Once you've reached that point, where you've got enough success it's about whether or not you just want to continue to enjoy your life, or you go out and leave a legacy and help others. I can see that's where you're going down at this point in time. So it's great.

Salena Kulkarni:  
(23:48): Yeah, I think I help on two ends of the spectrum. I help business owners who are wanting to build that exit ramp from their business and they're worried about whether or not they'll sell or not. Then at the other end, I love working with teenagers. So I've done a lot of work in the teenage market, just helping them understand the basics of stewardship, investing, looking after money and understanding that you can be the driver of your own financial success. It doesn't matter what you earn and I never had a high income I should add, ever.

Spend Less Than You Earn and Invest!

Tyrone Shum:  
Even after spending a small fortune on every property course and book that was out there at the time, Kulkarni still says the single biggest driver of her success was the mentors and masterminds that she engaged with.

Salena Kulkarni: 
(25:24): There's probably been a number of people along the way, but they weren't famous. They're not like celebrities or anything like that, they're just regular Joe's who happen to have a great capacity to create wealth. It's effortless for them and there's no charge around it, they're not stressed about it and they're not money hungry. I think alignment on the values front is really important. So I'm actually relatively frugal, so I found that a lot of the people that I took on as mentors were also relatively frugal. 

(26:03): The purpose of money is not necessarily the fancy homes and the big houses and all of that. It's really that capacity to influence that matters the most. So mentors, many and varied, from the wealth space. I've also had a long love affair with all things yogic. I've had some phenomenal mentors in getting your headspace right.

Tyrone Shum: 
By putting her own spin on some teachings from a classic property investing book, Kulkarni is able to remember the basics, whilst also tweaking it to best suit her own style of investing.

Salena Kulkarni:  
(26:45): It's a very old style book, but it's one that you've probably read, which is the Millionaire Next Door. It's old, it's like 25 years old or something like that. But I think the principles in that book still stand true today and there's some great things in there. There's a formula that I kind of put my own spin on that I pulled out of that, which is, if you take your average household age and multiply it by your average gross household income and divide by 10, that should give you your expected net worth. 

(27:30): Now, because of the way that the property market and affordability has changed, I have actually changed the formula a little bit and I say, your average household age multiplied by your gross income, divided by five, that's my take on that. But that should give you your expected net worth. Now, if you're above or below that, that gives you a barometer as to how effectively you are creating wealth. So I love that book. I just think it's got lots of great concepts and is just a reminder that there's no magic formula, it's just, spend less than you earn and invest.

Having a Confident Mindset

Tyrone Shum:  
She admits to feelings of the imposter syndrome plaguing her from time to time, but finally feels – as a whole – comfortable in her own shoes.

Salena Kulkarni:  
(28:19): I think the biggest part of the journey for me has been the head game. Getting your head in the right space and being clear about what matters. I think I've wasted a lot of time going down a lot of rabbit holes because I wasn't sure and I didn't back myself. It's a little bit like the experience of seeing things on Facebook and Instagram. It just looks like everybody else has the perfect world and the perfect life and it's probably as I've gotten crankier and older that I say, I just have to back myself a bit more. 

Tyrone Shum: 
So what plans has she got for the future?

Salena Kulkarni:  
(29:28): Lots of things. Well, one thing that's kind of on the radar in terms of goals for the next 10 years is a move to somewhere coastal. My husband and I both love places like Newcastle and he's a real beach goer. So something like that is one thing that I'm excited about. But if we're talking [about] wealth and property, I love the idea that I've got a plan A, B, and C. 

(29:55): Plan A is to continue to build cash flow through these alternate strategies. I'm not over exposing myself at all, I've still got a great portfolio of assets here in Australia, which is my plan B. Then my plan C is obviously all the traditional things that I don't really believe in, but super and all that stuff. 

(30:19): I can't even tell you. When you know that there's going to be money coming in whether you get out of bed or not, whether the market craps itself and obviously, the last year has been a very scary time for a lot of people. But if you knew that even if the wheels came off the economy, even if it wasn't business as usual tomorrow and you still had money coming in and you didn't have to eat the cow, I just think that's such a freeing place to be. I just wish that for everyone. 

(30:53): I feel really sad, I spoke to a guy earlier this week who was 70, such a sweet guy. He's been running a business all his life, is barely making ends meet and is now at the point where even at age 70, he knows he can't step off. I have real empathy for people who feel that they've got a higher purpose, but just can't work out how to access that.

Opportunity Meets Preparation

Tyrone Shum: 
(31:18): So, the last question I've got for you is, out of all your successes, you've built a great portfolio, you found alternative ways to do things and you've helped so many people around the world in Australia. How much of that success is due to intelligence, skill and hard work? How much of that is due to luck?

Salena Kulkarni:  
(32:18): I genuinely believe I'm a very lucky person. I have massive gratitude for the journey that I've been on and the people that I've met. But I think there's that definition, which I'll probably get wrong but, where opportunity meets preparation, the intersection of those two things is really the dictator of the results that you get. So I would say it's probably where those two circles meet.

**OUTRO**

Tyrone Shum:
Thank you to Salena Kulkarni, our guest on this episode of Property Investory.