Tyrone Shum of Property Investory and I Take a Look at the Game You Need to Play to Improve Your Investing
What I love about this interview is that Tyrone shares how “the game” really impacted his perspective on investing and is eager to share it with other investors.
– why it’s called the “The Million Dollar Mixing Game”.
– mhow the game evolved,
– how it applies in real life, and
– why it’s important to explore investing in different markets.
00:00:00 – Intro
00:01:53 – The Concept of the Game
00:03:54 – How the Game Evolved
00:07:46 – The Real Life Case Study in the Game
00:13:13 – Influencing Your Mindset and The Way You Think
00:15:03 – Evaluating Your Assets
00:16:01 – Exploring Different Alternatives
00:20:40 – Investing into Different Markets
00:25:43 – Why it’s called “The Million Dollar Mixing Game.”
00:26:18 – Outro
Q: Can you share the concept behind the game we played at your latest Freedom Warrior Intensive?
- Full disclosure, the game was actually created as a filler at my mastermind events – it started as an idea to bring people’s energy up after lunch.
- Usually, after the lunch break, people are a bit sleepy and tired. So, the game was a way for me to create something engaging.
- During the first reiteration of the game, people got so fired up and worked up about their perspective on the right way to invest, and it was super interesting to witness.
- So, over the last three years, I’ve progressively upgraded the game and made the deals more complex.
- I call it the “Million Dollar Mixing Desk Game”, and the crux is figuring out how to bring a level of realism to investing and how the play of strategy can massively influence the outcome.
- The theory of investing is great, but the game is designed to shift their focus from investing in autopilot to thinking about the strategy.
Q: How has the game evolved over the last three years?
- I strongly believe that there’s no right or wrong when it comes to investing. Investors usually make decisions based on the best information they had access to at the time, or preferences or even what they’ve been exposed to up until that point.
- So, the first time we tried the game, I wrote up six deals on the whiteboard: three were local, and three were international. And I essentially told the group that they each had a and asked them how they would invest amongst the deals.
- Once they had written down their answers, everyone had to come together and share what they did with the $1 million.
- I genuinely thought that each person would have similar answers in how they invested the money, but this group was super passionate, and they all had such different thought processes behind how they would invest and what outcomes they thought they would get.
- The game started with a relatively short investing time of five years and basic deals. From there, it evolved into more deals to more than six deals to invest in. I took it one step further and started layering the deals with some economic turbulence and personal circumstances.
- So, it essentially evolved into a card game that now required people to invest on behalf of a real-life case study instead of investing for themselves.
- It’s a very engaging game that allows for more thinking and reflecting instead of just a rote application of what you already know.
- When you’re not investing for yourself, you’ve got to consider other people’s risk profiles and perspective.
- It’s also great to have people working in teams when playing the game because it exposes each member to the different thought process behind money and investing.
Q: Can we explore one of the real-life case studies in the game?
- Yeah, so this particular case study is based on a real-life couple, Sergio and Lumi.
- The game aims to get them safely and quickly to the position where they hit their financial goals – which is essentially game over.
- After the shock of the COVID-19 pandemic, both Sergio and Lumi were super worn out. They had a consulting business that they ended up shutting down for three months (although they’re back to running at 70% capacity now).
- They’ve done a small amount of investing and had a small portfolio of property, but they were ready to get more serious about their investment journey at this stage.
- They’ve come to you for guidance on how to get to their goals while still having around $250,000 per year to support their lifestyle.
- I outlined their borrowing capacity, savings ability and current earnings.
- I also placed a limit on how big their alternative portfolio could be: they like the idea of investing in the alternative market, but they don’t want more than 50% of their portfolio in that market.
- The commercial property they own has a single tenant, and the lease expires in 14 months, after which the tenant isn’t going to renew.
- In real terms, any sale would take 12 months to finalise, and any residential sales would take around six months to finalise.
- Their theoretical business value was $750,000, but it was a particularly difficult business to sell, so it shouldn’t be something we rely on.
- I then gave a list of five properties that Sergio and Lumi hold, and the instruction was to get them to the passive income of $250,000 per year in five years.
- The game is played round by round. So, when you first get into the game, you see all these deals, and you’ve got to decide what your first move is going to be in year one.
- Interestingly, this case study shows that Sergio and Lumi had four investment properties and their home but not a huge amount of cash. So their wealth was tied up in the properties.
- They’ve been investing for about 15 years, and they’ve created a portfolio worth $33.7 million, but their net cash flow was around a negative $8,000 in total. They did have around $3.7 million in equity between those properties.
- So there’s an overview of who they are, their current financial circumstances, and their financial objectives.
- What was fantastic about this particular game for me was that every team had a different approach. There were about five or six approaches, and no two teams had the same strategy.
- What’s fascinating about this is that different people will apply different tactics. And the fact that they were investing for somebody else makes it even more real because you have to be more responsible.
- I think more people are attached to reality than others, but it’s a fun way of looking at the different possible ways to skin the cat.
- Traditional wisdom advocates for accumulating lots of properties and never selling them.
- But now, I advocate looking at your portfolio at least every 12 months and evaluating what you have, what it’s giving you and whether you’re moving in the right direction.
Q: What I love about the game is that you lay out many different options of alternative strategies to generate 20% – 30% return per year. Can we talk a bit more about that?
- One of the challenges for new investors is learning to cut through the noise around the supposed right way to build wealth.
- If you’re new to investing, one of the best things you can do is speak to as many people who have the results you want and ask them how they got there.
- You also need to consider that the markets continue to evolve. For example, 30 years ago, it was super easy to find investment opportunities in Australia. But, these days, everyone is interested in being an investor, so it’s a lot harder to find deals where you can generate higher than the average returns.
- Part of the reason that I started to look at other markets for the alternative stuff is that these deals are much harder to come by in Australia. They definitely exist, but they’re just not as easy to get into as it is in other markets.
- In the USA, the market is significantly more flexible and creative than the Australian market, and the risk on many of the strategies is actually very low.
- I like investing in the States because the deal flow for these alternative strategies is significantly more plentiful because such a tiny fraction of their population are investors.
Q: Investing in US markets actually helped us get out of the rat race in the game, and we ended up exceeding the $250,000 annual passive income goal. So, can we delve a bit deeper into the benefits of investing in the US market?
- When you’re only looking at local real estate, you have to play the long game. There’s no question that most investors know that buying and holding is a long play.
- If you stick to the traditional course of action, 20 to 30 years is a really long time to wait to get to where you want to go.
- Since my pathway deviated into incorporating a small component of alternative, I realised that you could get a super meaningful result in less than five years, and that’s what your team ended up doing during the game – you were able to start paying down Sergio and Lumi’s investments and increase their cash flow.
- Depending on how much headspace you give this, you could get a great result in two to three years and get a return of at least 8% to 12% each year consistently and reliably.
- For many people, that’s life-changing, and it’ll give them the freedom to make decisions about how you spend your time living your life instead of carrying around this huge property portfolio that you hope will pay off in 30 years.
Q: Just to round up the whole concept of the game, why did you call it the Million Dollar Mixing Desk Game?
- I wanted people to think about a music mixing desk and all the little buttons that you can use to adjust the sound quality.
- If you bring that metaphor into investing, there are so many little levers that we can pull and adjust that allows us not to be singular in our approach to investing. And you can really bring depth to your investment if you understand that there are all these levers you can pull.
- So, the game takes all the theory away and makes it super practical, and from that, you’re able to start thinking about different ways to achieve your outcome.
If you’re interested in understanding how to create wealth through alternative strategies, please check out my programs, where I help you catapult your investment income and blend strategies to shave decades off your timeline to financial freedom.
Or, you’re welcome to get in touch today, book a call with me, and I would be happy to talk you through it – no obligation!
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