Tyrone Shum of Property Investory on Building His Property Portfolio and His Introduction to Alternative Investment Strategies
On this week’s episode, Tyrone Shum, of the Property Investory podcast takes the time to speak to us about how he learnt about money and how it ultimately led him to the path of building wealth through property investing.
What I love about this interview is Tyrone’s story behind:
- how he found himself on the property investing journey,
- the most significant challenges he has faced;
- having a network of mentors; and
- his introduction to alternative investment strategies.
00:00:00 – Intro
00:02:08 – Tyrone’s attitude to money during his upbringing
00:08:50 – Tyrone’s journey as an entrepreneur
00:16:07 – Early investment decisions and what to learn from them
00:21:02 – How new investors can overcome challenges
00:25:07 – The greatest tension in Tyrone’s wealth-building journey
00:31:05 – Building cash flow with alternative investing strategies
00:36:59 – Dealing with scepticism about the alternative space
00:40:58 – Who should consider alternative investment strategies?
00:43:04 – Tyrone’s personal challenges
00:45:22 – The meaning of financial freedom
00:47:03 – Final words of advice
Q: What were your attitudes and feelings towards money when you were a kid? How was money spoken about in your house?
- My parents were initially immigrants from China and Hong Kong. My father was the one that initially came to Australia with roughly about $200 in his pocket. That’s all he had.
- He landed here in his early 20s to try and set up a life for his family – we come from quite a large family.
- When my father came here, he worked three jobs just to survive and send money over to his family in China. He was working at a restaurant; he was a watchmaker and all sorts of other kinds of jobs.
In a period of time, he was actually able to bring across my uncles (his brothers).
- So, from that very young age, he had to learn very quickly how to survive – especially when his English wasn’t so great either.
That’s where his value of money comes from – he just wanted to have a really good life. Now he lives a great life because he has built up enough money in long term investments.
- When I was growing up, he was running a business, so around the table at dinner time we’d always talk about business.
- I pretty much absorbed all that information. And at the same time, my father was quite stringent with money – he just didn’t want me to spend it on things that were wasteful, only the things that I needed.
- So that was ingrained in me at a very young age, and through that, he taught me the value of money.
- I also had to learn how to be independent from a young age because my mom passed when I was eight years old, and my dad worked very hard.
- But other than that, yeah, the value of money was driven home then – especially around the dinner table and when we went and bought things.
Q: You got involved in property and wealth at quite a young age. When you think back to that time, was it by design or do you think there was just a series of events that led you in that direction?
- I tell you the events that lead to it – it’s very clear in my mind.
So, I think because my parents were driven for me to have a better life than they did, although if I think back to it, we did live a very comfortable lifestyle.
- At that time, when I graduated from uni, they had three properties in their portfolio and were living by the water in Sydney. It was a great life. I know what it’s like to live in that comfortable place.
- I knew we were quite well off from the front side of things, and I wasn’t so concerned. I think what made me think much more was that my father ingrained in me to focus on my studies, complete high school and go to uni and work with what my strengths are.
- So, I was very keen on computers at that point in time. What really interested me was that I could actually learn about how they are put together and all that cool stuff. What I didn’t realise was the course that I had enrolled in was more of a mass programming type of course. That’s where I struggled because I didn’t have that expectation.
- Among other things, I also wasn’t focused, or disciplined so I landed up failing my first year.
- That first year really hurt me. It got to my heart emotionally because I didn’t know much more than that. I was very sheltered – I just knew I had to go to uni and do whatever.
- When it actually hit me, I thought it was the end of the world. Looking back at it, it sounds very silly, but when that’s all you think about, and that’s all you know, I felt like I had failed in life.
- My father was, as you can imagine, really angry and that’s when it really hit me. It was so impactful. I was emotionally drained and stuck in a rut. It made me question if this was really what I wanted to do.
- I had a really great aunt – she was actually the first one in our family to complete tertiary education, so she understood exactly where I was coming from. And she said, “look at the end of the day it doesn’t actually matter what you achieve right now, what actually matters is the change in your mindset for later on.”
- She recommended a book, “Rich Dad Poor Dad”, which was extremely impactful and shifted me onto a whole new trajectory.
- It gave me the inspiration to think about the other opportunities out there. I realised I wanted to run a business – I had an entrepreneurial spirit.
- That’s where I started the journey of running numerous businesses. I had a vending machine business, a web design business. I went into property and did subletting – lots of different things.
- It gave me a lot of broad strokes to see where I really wanted to end up.
- Ultimately, it landed up with me going back into business and doing property. And that’s where my passion really lay.
Q: In terms of your journey, what I am interested in unpacking is what were some of the earlier decisions you made in your investing that had a big impact?
- Because I was a strong saver, I was able to put quite a lot of money aside while running all those businesses, so my aunt had said I’d be able to move out and live off my savings.
- So, I moved out and rented a 4-bedroom place in Epping, and I sublet the other three rooms out, which basically covered the rent. So I had a lot of freedom, which was amazing.
- That’s what started the journey. I realised it was possible to do. I always had this fear behind me that I wouldn’t have had enough. But this taught me that the essential things in life are food, health, your mental capacity and well-being and family and friends around you.
- If you have those basic components, you don’t actually need much.
So at that point in time, that’s where I decided I wanted to learn more about property. That’s when I heard about Steve McKnight. He has been a great coach and a mentor for me. I learnt so much from him, and that’s where that journey started for me.
- I started to buy those cash flow positive properties.
- Unfortunately, I got stuck with my first property after putting a lot of money in it. After five years, nothing was happening with it. That’s when I decided to sell it and invest in a property in Sydney. That’s where things changed as well.
- So, I guess my journey started at a very young age after stepping out on my own and learning from successful people.
- It was also such a different time back then – there wasn’t much competition in the property market.
Q: In your opinion, what do you see as the big challenges for people coming into investing now, and what would your advice be on getting off on the right foot?
- That instantaneous mindset brought on by technology where people want to be able to make money right now. And it’s not realistic.
- That’s the biggest challenge because wealth building is long-term. And the thing is a lot of people have overlooked the fundamentals. They have gone straight over and just started into a renovation and not realised that there are a lot of fundamental steps that need to be done first.
- I guess I was really fortunate in that I did actually start those fundamentals. I brought my first property, worked with the tenants, learnt like a property manager. I also went into real estate to become a real estate agent and really see “behind the scenes.”
- Those are some of the fundamental things that people need to learn. If you’re starting out in investing, I would not jump in to anything that would potentially be high risk.
- The safest and the easiest route is to work closely with someone who has the expertise in purchasing a good property under market value. And then from there, hold onto that property and watch it grown for the next 10- 15 years – build wealth slowly.
- I know it sounds really plain, boring and simple, but that’s the reality.
- You’ll find that if you buy property in the right locations, usually around the capital cities, things will just happen automatically. From there, you’ll be able to leverage, and that’s what I think many people don’t realise.
- It’s usually that first property that is the hardest to get.
Q: What do you think has been the greatest struggle or tension in your own wealth building?
- I think the distraction part.
- I invested in that first property and said I’ll let it grow and wait to see what happens after that. But, then I got distracted with my businesses and invested all my time and efforts in there.
- And then come full circle, I ventured back into property because that’s where my passion lay anyway.
- I think for me, you have to set your goals out and be clear about where you want to be at the end of the day.
- While I did that initially and reached out to Steve for expert advice, I didn’t follow all the way through. I lost my way because I started getting involved in business and so forth.
- That changes your mindset and your skillset because you end up focusing on other things.
- If I had stayed focused and kept on the property path, I think I would have been a lot further than I am now.
- So, I think the lesson to be learnt from that is to stay focused.
- If you’re thinking of using property as a vehicle to grow your wealth, I would first set a goal, sit down with an expert and work with them to try to unpack it.
- I had interviewed lots of young investors who, at 28, set a goal to have 20 properties by the time they were 30 or 35 years old. And because they actually had fantastic mentors and a great team around them, they were actually able to achieve that goal.
- Set your goal and stay focused – don’t get distracted by shiny objects.
Q: I’d like to ask you what have you done in the space of alternative investment strategies?
- This is the fun part!
- I was recently involved in a development deal which was a great opportunity for me because I was a profit share. It was very simple, actually. We would renovate, sub-divide and then sell it off. The process was quite easy to go through. But the amount of time that was involved was quite a challenge. And that was something I wasn’t expecting because (1) we were dealing with the pandemic and (2) the council was quite slow on approvals. So it took a long time to get things done.
- So, 18 months later, the project that should have been 9-12 months, still isn’t finished.
- That’s when I realised that being stuck on a project from the beginning to the end doesn’t make sense because the whole idea is to generate money much faster by moving the velocity of money through rather than being tied up in 1 project.
- You want to be able to get in the project, make your profit and move onto the next one.
- At that time, another developer approached me and said he had deals we could get in for six months and get around a 30% return. And I thought, wow! I could do this day in and day out. It just makes absolute sense.
- The reason why these types of projects were possible was we didn’t have to wait for the sales of the property at the end of the project. We could actually get refinanced out.
- In other words, the banks paid us out to do the construction.
- At this time, I had to make a decision to make some changes in the way I was investing, and when he introduced me to these kinds of opportunities, I thought it was a no brainer. It’s securitised and has a lot of potential to do this over and over again.
Q: How do you cope with the scepticism?
- I think what it is, why a lot of investors have come to invest in Property Investory is because of the trust.
- I have been very fortunate to surround myself with a great bunch of experts, and because of that, Property Investory has a very strong reputation in the market of trust and brand. That has definitely helped.
- It also helps to be able to say I’m an investor just like you. I’ll only recommend a type of deal if it has worked for me.
So, that’s where the scepticism is brought down.
- But also to present the facts and walk them through step by step and be upfront. There are going to be objections and risks involved. In any investment, there will be risk; it’s just about how much you can mitigate that risk and reduce that worst-case scenario.
- And if you do have that worst-case scenario, what’s your exit plan? You have to have at least two exit plans to make sure everything is covered.
- And that’s what we make sure of whenever we are analysing these deals.
Q: Do you have any views in terms of who these types of strategies are a fit for?
- A lot of the investors that we’ve been working with are looking to mostly put into their retirement kitty like their Self Managed Super Funds.
- There’s also been a numerous amount of investors who have had a lot of cash sitting there since they’ve just recently sold off property and they want to actually keep their money moving rather than just having it sit there in a bank while they wait for their next opportunity. They just want to turn it over and get some kind of good return from it.
- We actually did a calculation: if you actually invested, let’s say $100,000 compounded at 30% per annum, in 10 years you’ll have $1 million. And that’s just it compounding without doing a single thing.
- It just goes to show the amount of power compounding has if you do it correctly. It’s very passive, and I think that’s what attracts a lot of these investors to come in and pick up the deals with us.
- They get assurance that they’re going to get something back at the end because they’ve got security and at the same time they are getting a high rate of return compared to putting it in the bank.
Q: How would you respond to people saying you’ve got it easy?
- Well if people knew me personally and knew my family background, you’ll know that every day I face challenges, not just with the property but also with the struggles that I have with my family.
- I’ve also got a child with special needs, and that takes up a lot of our time.
Life isn’t as easy as it sounds. It looks great, but I do struggle because at the same time there are so many balls I have to juggle.
- It’s great because I love what I do, but at the same time, for me, I live a very normal life. I think that’s what people don’t realise.
- I do this out of the passion for being able to share the knowledge and get information out there to help others.
- If people think Tyrone’s got it all, it’s definitely not like that – it’s a struggle for me on a constant basis, and I’m just also going on the same journey as everyone else.
Q: So, to finish off, what does financial success mean to you?
- I think it’s about having the comfort of not having to worry about having to find the next money to be able to live.
- Financial freedom, in simple terms from what Robert Kiyosaki says, is, if you have more than enough passive income that covers all your daily living expenses – that’s financial freedom. The rest is pretty much the cream on top.
- If that’s financial freedom, then I think I have achieved that at this point in time.
- But, the bigger picture is me being able to help so many other people.
- Once you’ve achieved financial freedom, and you’ve got what you need, what do you do in life? What’s the next step?
- You have to leave a legacy to help others.
- On a final note, it’s great that we can learn all these things, but it’s also about taking action and taking that leap of faith at the end of the day!
In this week’s episode, I talk...