Timestamps:
00:38 | Positive Feedback
06:22 | Invest, Diversify, and Leverage
09:23 | Communication is Key
11:45 | Indulge in Books Any Way You Can
16:03 | Listen Up, Son
19:04 | Connecting the Dots
21:13 | A Rise in Confidence— And Prices

Resources and Links:

[00:06:42] In terms of property, we do this with our clients. It's really interesting when you're sitting in front of clients, and I'm sure you've done this, I'm sure people listening have actually had this conversation before. But to be quite, frank, quite simplistic about it, you've got a few options. You can do nothing, you can invest in shares, or you can invest in property. 

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 back with John Russell, financial adviser and property investor. He shares the eye-opening compliments he’s received, the influences behind his property philosophy, and the great advice he received from his dad which led to him to help a $20M business turn a $100M a year when he was just 23 years old.

Russell has a series of aha moments rather than just one, but they all stem from the same place.

John Russell:   

[00:00:38] Just the feedback that I've gotten from my clients, having them sit in front of me and say a couple of things has really just been eye opening, and something that really made me believe in what I do, and believe in property as an investment vehicle. And it's twofold. 

  

[00:01:05] One was actually a doctor. They said to me, 'It's funny, you probably get complimented all the time for helping people grow their wealth, but you never actually get complimented for stopping people from making mistakes.' That was a very good compliment. And it's very true. 

[00:01:31] Look, we get compliments all the time on helping people into the market, whatever it may be. But because they never make the mistake of getting the wrong property after they do get educated around the do's and don'ts, they sort of then go, 'Oh, okay.' No one thinks to thank us for the times where they could have very easily made mistakes. But this particular client is well in tune with what they were about to do, and thanked me for it. So that was a bit of a mind altering moment. 

[00:02:17] And also a phone call I had recently with another client, where he turned around and said, 'Look, everything that you have told me, and everything you've said, I have to say, has turned out better than what you said and what we could have imagined.' So that was also a huge compliment. And a huge compliment to the work that I put in, the effort that I put into my role. Someone saying not only did I do my job, but it's better than just the numbers that I've showed them, or the photos that I showed them, it actually affects real life people, which is great.

There’s one strategy that he relies on the most, and it’s one you’ll know well.

John Russell:   

[00:03:39] There's quite a few strategies you can put into play. And definitely looking at it through the most simplistic eyes, the best way to put it, is that the education around growth over yield is a very interesting conversation to have with clients. And sometimes I feel like there's not an enormous amount of education around that. And probably not enough. 

 

[00:04:18] I always say to my clients, between a good and a bad property, there might be a couple of grand different contented yield per year. In terms of growth, if you're looking over a 20 year period, you might be looking at half a million dollars difference. So it's really, really vitally important to look at the areas in which you buy in. Because, we all know, location, location, location. It's going to deliver up to 80% of your returns. 

 

[00:05:04] Not necessarily the product type that we're looking at. It's the suburb. The suburbs does the heavy lifting when it comes to investments. And look, we can't do anything, we're beholden to the market. As stockbrokers are with the shares, we're beholden to the market, when it comes to property. We can only put our best foot first when it comes to the research that we have. And really focus on growth properties. 

 

[00:05:37] For my clients, anyway, I deal with what we have accumulated. So people in their 30s [or] 40s and early 50s, they're people that want to grow their wealth over that 10 [or] 15 [or] 20 [or] 30 year period. And they do that the best way, through focusing on a growth asset and knocking off the debt at the end when their tax bracket's lower, through retirement and all that sort of stuff. There's a lot of different strategies, clearly, in there to think of, but the main thing is focusing on growth properties.

Tyrone Shum:   

[00:06:22] Let's jump into the mindset side of things. I'd love to hear a little bit about your reasoning behind why you jumped into property, because as you said, there's so many different asset classes, like shares and businesses and so forth. But why in particular property? And how does that benefit you as well?

John Russell:   

[00:06:42] In terms of property, we do this with our clients. It's really interesting when you're sitting in front of clients, and I'm sure you've done this, I'm sure people listening have actually had this conversation before. But to be quite, frank, quite simplistic about it, you've got a few options. You can do nothing, you can invest in shares, or you can invest in property. 

  

[00:07:18] In terms of investing in property, I feel comfortable gearing, so borrowing money to invest into property because there's no margin call attached to my investment. My clients share that view. Obviously, otherwise, they wouldn't be here. So to me, things like negative gearing, obviously borrowing to invest, utilising equity, all that sort of stuff plays a big part in creating a growth asset and getting greater leverage to a greater chunk of asset class, if you will. That's only really possible considering the risk factors with property. So for me, it's a bit of a no brainer. 

  

[00:08:16] For any wealth accumulator out there, I think a very good starting point is to invest in property and have that be your leverage point in the market. And forward, I believe in pure diversification. So not just preaching property. I believe that there is certainly a place for shares. Do I like to give that advice? Yeah, I can buy 10 if I want. But I'm more focused on the property side of things.

Tyrone Shum:  

Russell has had many mentors and influences over the years he’s been in both property and finance.

John Russell:   

[00:09:23] There's a few people at PricewaterhouseCoopers that helped me along, a few of the directors and partners there. Working for Deborah, that was through RE/MAX, that was an experience as well. And since I've been in financial advice or moving into a financial advisor role at Nexus after spring, I had the opportunity to work with Steven Vick who's involved heavily with National Property Advisory as well, a founding partner there. So he has been a massive influence on my property philosophy and my comfortability around property investment. 

  

[00:10:25] And probably not necessarily the way I deal with clients— that's very, very much me. I've got my own unique way of how I deal with clients. But certainly being able to explain things in a clear and concise manner. It's something that while I was a decent communicator previously, certainly, I've learnt a lot from Steve when it comes to communicating something very well. And very definitely to clients so that they understand clearly exactly what I'm talking about.

Coming up after the break, we hear how Russell’s sporting heroes work into his approach to life...

[00:13:35] Roger Federer is an example of that. He played soccer, he played basketball, his mum was a tennis coach. So he ended up playing tennis, but she tried to push him out of tennis actually, and into soccer. So he learnt tennis by basically being better at other things. The reason why I think I like it so much is I do look at myself in a similar way. 

What his studies and years in accounting taught him...

[00:17:17] There’s a balance sheet for a reason. And if you can read a balance sheet you can read a business. If you understand that, I think if you can apply that to other areas of your life, you'll be very successful.

He shares his plans for the near future and reminds us about the early bird and the worm.

[00:21:40] Speaking to a developer yesterday, they've gone from 14 sales last January to 54 sales this January past. So clearly 500% up sort of thing. The thing is, there's confidence everywhere in the market, Brisbane, particularly at the moment. 

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

Tyrone Shum:  

A big fan of Audible, Russell is slowly but surely getting back into reading physical books as well.

John Russell:   

[00:11:45] The two books I'm reading at the moment, one is Shoe Dog by Phil Knight. It's the Nike story, the memoir, which is pretty good. It's a book about entrepreneurial spirit, and all that sort of stuff. 

[00:12:02] And the other one's by Robert Iger, called The Ride of a Lifetime. And that's the CEO of the Disney Company. And that's all around working your way up, working hard for a business. And really, really focusing on the company, putting it first and making sure you're just good at your job. And knowing they can point to you and go, 'You didn't do this, you didn't do that' sort of thing. 

 

[00:12:34] So they're the two that I'm reading at the moment, but there's a heap of other ones like Talking to Strangers by Malcolm Gladwell, I loved all the zig ziglar stuff about sales. They're great. And one of my favourite books actually, is called Range. It's by David Epstein. It's great. It's not property specific at all, actually. But it's around the idea of those people who grow up as prodigies in sport, who focus purely on one sport. Tennis players, for instance, or basketballers or whatnot. They just do one thing, as opposed to those who try their hand at a heap of different things. 

[00:13:35] Roger Federer is an example of that. He played soccer, he played basketball, his mum was a tennis coach. So he ended up playing tennis, but she tried to push him out of tennis actually, and into soccer. So he learnt tennis by basically being better at other things. The reason why I think I like it so much is I do look at myself in a similar way. Probably not to Roger Federer's standard. But certainly in terms of his ability to learn different things and being able to then apply them to the one thing and be the best at it.

Tyrone Shum:   

While he’s generally against the idea of deciding on your life path at 16 or 17 years old, the best piece of advice he’s received was regarding university studies.

John Russell:   

[00:16:03] My father said to me, 'Do accounting. It'll open up so many doors.' And it has. It's opened up a heap of doors, working for PwC, being able to then, in one way or another, helped run a $100M a year turnover company at 23. It helped me understand real estate and helped me understand the ins and outs of real estate. It guided me through financial planning. 

[00:16:41] Because I understood that everything has to... I hate to say it, it sounds like a bloody quote or something like that. But everything has to balance. Everything comes down to balance. Whether it's investments, whether it's health, relationships, it's all off one tree, in my opinion. And you've got to always find that balance. And that's a good thing that accounting teaches you. There’s a balance sheet for a reason. And if you can read a balance sheet you can read a business. If you understand that, I think if you can apply that to other areas of your life, you'll be very successful.

Russell credits success in part due to his inability to sit still in any area of his life.

John Russell:   

[00:17:53] It probably comes from my Tourette's, I'd say. As a kid, I couldn't sit still anyway. And, like, these days, I just find it hard to sit around and not do anything. I love to get out and walk. I love to go for a walk with the dog, go for a run with my wife. I played basketball a couple of times a week, I stay busy at work, keep very active and just really an insatiable thirst to want more is why I kept moving. And it probably also stems from all the health sort of stuff, in that in life you can do one of two things. You can move forward, or you can sit still. And like I said before, I just can't sit still.

Tyrone Shum:  

[00:19:04] If, say, you met yourself 10 years ago, what do you think you would have said to him?

John Russell:   

[00:19:10] It'll all be okay. Another book I love, by the way, is the Steve Jobs book. And the whole idea of... he talks about in his Stanford commencement search, that you can't connect the dots looking forward, you can only connect the dots looking back is, I think, just so, so valuable. 

  

[00:19:42] And Bob Iger actually touched on this in his book as well. The idea of moving forward with investments, with life, with anything, is move forward, take opportunities. Whether that's taking the option to buy a property, to go for a run, to eat healthy at lunch. No matter what it is. There's always an option there. And I think if I go back 10 years ago, the advice I'd give myself is 'Do what makes you feel good. Do the right thing. It's always going to be right. Do the right thing. Do the thing that you can thank yourself for in 10 years.’ Always keep it in the back of your mind. I think sometimes the easiest way is not always the best way. And that's often the case, it’s the opposite.

Tyrone Shum:   

With buying his dream home on the horizon, he has a lot to be excited about in the near future.

John Russell:  

[00:21:13] Leveraging that to purchase more property, certainly is something that I would love to do. And helping clients as well. At the moment, there's lendings coming back hard. Property prices are surging, they're going up. There's confidence in the market again. 

  

[00:21:40] Speaking to a developer yesterday, they've gone from 14 sales last January to 54 sales this January past. So clearly 500% up sort of thing. The thing is, there's confidence everywhere in the market, Brisbane, particularly at the moment. There's a lot of great opportunities in Brisbane. So over the next couple of years, it'll be very much focused on— if it's left in a couple of years— basically collecting whatever is leftover in terms of the leftover stock for damn good prices, might I add. 

 

[00:22:32] And moving forward then, trying to capture off the plan opportunities early. And probably now is a great time to look at them. So you're getting into the market today and not having to pay for it until tomorrow or a couple of years down the track. I think that's certainly what I'm most looking forward to. So I'm looking forward to the opportunities that will come out of the next five years in terms of what's coming onto the market in Brisbane, Sydney and Melbourne.

Thank you to John Russell, our guest on this episode of Property Investory.