Our feature guest this week is John Fitzgerald. John is the founder and CEO of Custodian Wealth Builders and helped thousands of Australians begin wealth building and achieve financial freedom. John’s main qualification for teaching people how to build wealth is having built wealth himself. Hear his story.
Kevin: Our featured guest this week is John Fitzgerald. John is a renowned property expert, public speaker, and philanthropist. He’s had decades of experience in real estate, as you’re going to hear in our chat.
Founder and CEO of Custodian Wealth Builders, John has helped thousands of Australians begin wealth building and achieve financial freedom. Today, Custodian Wealth Builders is one of Australia’s most highly respected property investment companies and has helped hundreds of Australians, thousands maybe, become millionaires through effective wealth building.
Now, John regularly conducts his wealth-building workshops across Australia, educating people, using his successful strategies that he’s used to build his own wealth. He joins me.
Hi, John. How are you?
John: Kevin, great to be with you again.
Kevin: It’s been too long.
John: It’s a fantastic job you guys are doing in putting all that out there to people. I think it’s great for people just to tune in and just be aware of not just what’s out there but education, education, education. We just need education. It is important.
Kevin: It is very, very important as we’re going to hear about your development. John, born in Melbourne, I believe, 1963, not giving too much away there.
Kevin: Completed secondary school in Ballarat.
John: Yes. I actually grew up in Moorabbin in Melbourne. I was one of five kids, and dad died when I was eight in a car accident. So mom shipped the three older boys off to St. Pat’s in bloody Ballarat, which was the most coldest place in the world. I couldn’t get out of there fast enough.
I left there at age 16, and I’d never actually been outside of Victoria, so the first thing I did when I left school a month after was hitchhike up to Queensland. I think I just did it to thaw out. If any of your listeners from Ballarat, they’ll know what I’m talking about. Those winds go straight through you.
I got up into Queensland at age 17. I started working in real estate when I was 17. My mentors – and I really credit my mentors with everything – were Jewish, mega wealthy, hundreds of millions, billionaires, and they just taught me the basics of real estate and also the basics of success.
To me it comes down to two things: success is just repetition and there’s only truth in numbers, and that’s what they taught me day one. They said to practice repetition, you have to have good habits. Just interesting little things like that that are important.
Kevin: When you came to Queensland, you would have arrived around about the time when the boom was on, I guess, if that’s my understanding.
John: There was a 1980 boom, and it was interesting because, being in property yourself, you study cycles. And the market, studying the cycles, boomed really in Sydney in ’78 to ’80-81. Queensland and Gold Coast particularly went through same sort of cycle a little bit later, but certainly I was at the tail end. I got in 1980 and really got my teeth into it in ’81, ’82. But then there was quite a significant downturn and a recession in the 1980s that lasted from about ’81, ’82 right through until about ’87, ’88.
Kevin: I got into real estate in ’88, and that was actually a very good time to be in real estate because you learned some great skills. It was a pretty tough time having to tell people that their properties were worth less than what they’d paid for them some five or six years earlier. It was an interesting time to cut your teeth.
John: I’ll tell you a funny story about that because a lot of people talk about all that. I had a lot of property in 1986, ’87, ’88. I talk about property and I talk about specifically land per square meter. RP Data and all the people who do median house price, unit price, and all those sorts of things, no one ever gets down to really the land price per square meter, but I’ll go back to land per square meter.
I was buying land per square meter in ’85, ’86, ’87 for about $16, $17 a square meter. This was in Brisbane, in and around Brisbane – about $16, $17 a square meter.
John: And in 1988 it was still worth $16, $17 – just nothing happening after two or three years. Like you, everyone was despondent. Everyone was scratching their heads. “This is no bloody good, blah, blah, blah,” and all that sort of thing.
Then all of sudden, someone must have rung a bell at the end of 1988. I think it was when Expo started, and the Japanese started coming into the Gold Coast and South East Queensland. That land doubled in less than one year. It doubled in less than one year. It went from $16, $17 a square meter to over $30, $35 a square meter.
We saw exactly the same thing in the outskirts of Sydney just last year, in 2015, interestingly. I know there’s been a boom going on in Sydney. We bought about 400 blocks of land, and we put small houses on them. We bought land for around about $400 a square meter, and now that land is $1200 a square meter. It’s actually tripled in the last three or four years. At the same time, the Sydney median has only gone up by probably 65%, 70% and units have gone up by 25%.
Yes, ’88, ’89 was a massive boom particularly in Sydney, but a massive boom in South East Queensland on the back of not only the cycle turning over and recession and everyone kicking back in but also the Japanese coming in and buying.
Kevin: Interested to hear from you why when you arrived in Queensland, you choose real estate – or did real estate choose you? Was it just so much in your face that you really had to get involved in it?
John: I ask myself the same thing. I chose real estate because of the people in it. I really actually like the people in real estate. They’re positive people. They’re out there doing things. They’re not negative and they’re not not doing anything. They’re self-motivated people.
In real estate, you get paid by what you generate, and I actually liked that. I didn’t want to be on an hourly rate, at $8 an hour or whatever it was back then, where if you work hard, you get $8 an hour, and if you slack off, you still get $8 an hour. I just didn’t like that. I still don’t like it. I still don’t like the concept of hourly. I find that a little bit demotivating in a lot of ways.
I looked at an industry that would compensate me for how hard I worked and how smart I worked, as well. Real estate is good like that. The people who you migrate to are really great people – self-motivated, building, developing, creating, pioneering – and I like that sort of people.
Kevin: You left school at age 16, jumped on a car… Well, no, you hitchhiked to Queensland.
John: Yes, I did.
Kevin: By age 20, you’d syndicated well over $5 million worth of developments, and you’ve gone on. Your company now, JLF Corporation, you’ve been responsible for transacting thousands and thousands of properties. You’ve developed about 8000 to 10,000 yourself, have you?
John: Well over that now. I’ve probably done 12,000 properties. I’ve bought, sold and, developed over 12,000 properties. We do 500 to 1000 a year, every year. I try and build my own portfolio, so I have a massive land portfolio as well myself. Really, what I do is I tell people to do what I do and then they buy alongside me, most of them.
Kevin: Just in doing some searches that I’ve done over the years, the name JLF comes up quite often, JLF Corporation. How many companies are involved in that now?
John: I have about 26 companies, and I’d actually like to have less, to be honest. In the ’80s and the ’90s, your accountants and solicitors were saying “Set up a company – protection, tax,” all that sort of thing. It’s actually simplified itself a little bit more now, but we still have a fairly complex group structure. We have assets and businesses in four states of Australia. Then we have a finance business, funds management, and various other things we own and operate as well.
It is a little bit more convoluted, but I like actually still getting out, walking over land, and still talking to clients about them building a portfolio, which is really good.
Kevin: Well, that’s what drives your business, isn’t it?
John: Just on that, Kevin, I have a great story to tell. We do a portfolio review for our clients, and some of our clients have 15 or 20 properties. I have a female client. She has a good portfolio. I sent her a review yesterday, and her properties last year alone went up by $554,000. We revalue their assets every year, and her properties have grown by $554,000. She has properties with us in Sydney, Melbourne, and Brisbane. The Brisbane ones haven’t grown as much, but Sydney has gone off the charts and Melbourne has gone off the charts.
I looked at that, and I thought, “How fantastic is that for her to have done that in the last year?” I really felt proud for her.
Kevin: There must be a lot of that, too, in your business that you see.
John: It’s great. It’s fantastic.
Kevin: You and I have spoken in the past about the book that you wrote, 7 Steps to Wealth. That’s the program that you’ve done. You deal with a lot of investors. Where do you see the majority of them go wrong with their strategy?
John: That’s the point. They don’t have a strategy; they just buy property. The numbers on people who buy an investment property are really interesting. About 8% of Australians buy an investment property. Now, 50% of them sell that property within five years, so that’s a mistake. Property is not short term, Kevin. As you know and I know, it’s long term. It has to go through a cycle.
The other mistake is that 50% of people who buy an investment property buy an apartment. I don’t really want to bag apartments, but if you’re buying property, the only component of the property that grows is the land. When you buy an apartment. you just don’t get any land content. They’re great to live in. Apartments are great for location and they’re okay for a lot of things, but as an investment strategy to build wealth, you really need the land and the land growth.
So when you look at it you say, “Well, investors 50% of them buy apartments and 50% of them sell within the first five years.” It’s not really a well thought-out strategy. Then you get to how many investors own two properties in Australia, and that’s only 2.5% of all Australians. And then how many are in four or more, it’s a fraction of 1%.
They’re the ones who I think have a strategy – the fraction of 1% of Australians who buy property. They have a strategy to buy property and use that property to buy more property and get some growth, to actually build wealth out of it. I think that’s the key.
Where do people go wrong? They just think, “I’ll just buy an investment property because that’s the thing to do.” It’s just like saying, “I’m going to put my runners and go for a run.” I think you’re better off sometimes thinking, “Well, look, what do I want to achieve from this because I don’t want to hurt myself?”
Kevin: I know, John, as part of what you do in your company, you’re an educator. I think as parents, we have a responsibility to educate our own kids about wealth, about how to build it from a very young age. Let’s go back to when you were a kid. What were the conversations like around your table?
John: My mom was actually really good. This is quite interesting. When dad died, he had a house halfway under construction. Then dad died while the house was halfway under construction, and mom’s accountants said to her, “Mary, you should sell that house because you’re not going to be able to afford that” – because dad had menswear businesses, a couple of shops that were going okay – “And you need to get in,” and all that sort of thing.
She said, “No. I’m not going to do any of that. I’m going to hold on to it. I’m going to finish the dream, and I’m going to do the hard yards.” She ended up taking a third mortgage on that house and really stretched herself, but it really did pay off for her. Then she went on and bought other property and worked out how property cycles and how you have to do the hard yards, you have to take a position, and take a longer-term position.
I think really what she engrained in me is do the work: do the hard work, take a position, and take a long-term position – and that’s really what I try and counsel people. A lot of people think, “I want to make quick money, so unless I make money within 6 months, 12 months, or 18 months, I don’t want to do it.” Really, it’s just a fool’s strategy.
People who are successful are people who persist and people who really do the hard work, the hard yards. That just sums up mom. The discussion around the dinner table was we have to share the food around the five or six of us because we’re living in this nice house.
Kevin: A very gutsy thing that your mom did.
John: It was.
Kevin: Who was your first mentor? Where did you draw your inspiration from? You mentioned there about when you first came to Queensland, it was the people you were working with in the industry. Would they have been your first mentors?
John: Yes. I had two great mentors I talk about. One was George Margolis. He started in real estate in the 1960s, built up a massive portfolio, owned a lot of property along Cavill Avenue in Surfers Paradise, and then made the classic mistake of selling the commercial property, which was income-producing, and putting it all into land in Gladstone.
He lost a lot of his portfolio but still kept his real estate office, his real estate agency, and a little bit of stuff. He still kept his good humor, his hard work, and his daily habits. He became my first mentor who taught me to do the hard yards.
My second mentor was a guy called Michael [14:56 inaudible] and he owned a company called Daneford Limited, and they built most of the high-rise on the Gold Coast but also massively developed a lot of Sydney and all around – office parks. They had $500 million dollars’ worth of projects on the go at any one time. Michael was a big visionary, and I think he gave me that big vision to look beyond yourself. He was the one who actually told me when I was 25 to set up a school for youth at risk.
I think the collection of George and Michael were just great inspirations to me because they were both people who were always positive, always looked forward, always got up in the morning, and they were self-motivated. I just think they were just good foundations for all of us.
Kevin: Have you got a mentor today?
John: Yes, I have actually. My great mentor today is Nev Pask. Nev’s in his 80s, and he’s Mr. Land in Australia. I think he would have developed personally more land than anybody else. I was honored that he let me interview him for the front cover of a magazine recently. He’s been in BRW’s rich list as one of the billionaires or close to a billionaire.
I really like him because he really is Mr. Land and he’s a very humble person. He’s a guy who I enjoy spending time with. Same sort of attributes – always very positive, always looking forward, very disciplined, self-motivated, just all of that – but a great land man. He’s developed in and around Brisbane, Melbourne, lots of land, and he’s got a great company that is run by his son Dean now.
Kevin: What do you believe are the essential qualities of successful people, people who are successful no matter what they do?
John: Look, I think first and foremost, it is important that you team up, that you surround yourself with other successful people – because success breeds success. The first thing is don’t try and do anything on your own. I have people around me and I’ve had people around me for 20 or 25 years, and you develop communication and you develop some good foundations with them.
The second thing is know your numbers. Data is really important, so know your numbers and base your strategy on numbers not on stories. So many people think, “I’ll buy a property there because I really like that area. I see new cafés going in, new this, new that,” all that sort of thing. But the numbers don’t necessarily support that. Because little café areas… And a good area is Main Beach on the Gold Coast. It comes and goes. It was trendy five years, and now it’s not because a new trendy area goes.
Base your strategy on numbers and you surround yourself with good people. When I say good people, good people who will test those numbers with you. They’re probably the two things that I notice about successful people – and I’ve met a lot of them. I’ve met most of the Australian property billionaires and they surround themselves with good people, and those good people are very good at numbers.
Kevin: John, we’re out of time. Thank you so much for spending so much time with us today. It’s been great talking to you, and all the best. We didn’t even get to talk about your philanthropic work, but congratulations on that, too. I know you’re a great giver to the community, as well.
John: Good on you, Kevin. It’s been great chatting, and I look forward to chatting again soon.