\nOur 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.
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Kevin:<\/b>\u00a0 Our featured guest this week is John Fitzgerald. John is a renowned property expert, public speaker, and philanthropist. He\u2019s had decades of experience in real estate, as you\u2019re going to hear in our chat.
\nFounder 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\u2019s most highly respected property investment companies and has helped hundreds of Australians, thousands maybe, become millionaires through effective wealth building.
\nNow, John regularly conducts his wealth-building workshops across Australia, educating people, using his successful strategies that he\u2019s used to build his own wealth. He joins me.
\nHi, John. How are you?
\nJohn:<\/b>\u00a0 Kevin, great to be with you again.
\nKevin: <\/b>\u00a0It\u2019s been too long.
\nJohn:<\/b>\u00a0 It\u2019s a fantastic job you guys are doing in putting all that out there to people. I think it\u2019s great for people just to tune in and just be aware of not just what\u2019s out there but education, education, education. We just need education. It is important.
\nKevin: \u00a0<\/b>It is very, very important as we\u2019re going to hear about your development. John, born in Melbourne, I believe, 1963, not giving too much away there.
\nJohn:<\/b>\u00a0 Correct.
\nKevin:<\/b>\u00a0 Completed secondary school in Ballarat.
\nJohn:<\/b>\u00a0 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\u2019s in bloody Ballarat, which was the most coldest place in the world. I couldn\u2019t get out of there fast enough.
\nI left there at age 16, and I\u2019d 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\u2019ll know what I\u2019m talking about. Those winds go straight through you.
\nI got up into Queensland at age 17. I started working in real estate when I was 17. My mentors \u2013 and I really credit my mentors with everything \u2013 were Jewish, mega wealthy, hundreds of millions, billionaires, and they just taught me the basics of real estate and also the basics of success.
\nTo me it comes down to two things: success is just repetition and there\u2019s only truth in numbers, and that\u2019s 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.
\nKevin:<\/b>\u00a0 When you came to Queensland, you would have arrived around about the time when the boom was on, I guess, if that\u2019s my understanding.
\nJohn:<\/b>\u00a0 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 \u201978 to \u201980-81. 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 \u201981, \u201982. But then there was quite a significant downturn and a recession in the 1980s that lasted from about \u201981, \u201982 right through until about \u201987, \u201988.
\nKevin:<\/b>\u00a0 I got into real estate in \u201988, 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\u2019d paid for them some five or six years earlier. It was an interesting time to cut your teeth.
\nJohn:<\/b>\u00a0 I\u2019ll tell you a funny story about that because a lot of people talk about all that. I had a lot of property in 1986, \u201987, \u201988. 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\u2019ll go back to land per square meter.
\nI was buying land per square meter in \u201985, \u201986, \u201987 for about $16, $17 a square meter. This was in Brisbane, in and around Brisbane \u2013 about $16, $17 a square meter.
\nKevin:<\/b>\u00a0 Wow.
\nJohn:<\/b>\u00a0 And in 1988 it was still worth $16, $17 \u2013 just nothing happening after two or three years. Like you, everyone was despondent. Everyone was scratching their heads. \u201cThis is no bloody good, blah, blah, blah,\u201d and all that sort of thing.
\nThen 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.
\nWe saw exactly the same thing in the outskirts of Sydney just last year, in 2015, interestingly. I know there\u2019s 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\u2019s 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%.
\nYes, \u201988, \u201989 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.
\nKevin:\u00a0 <\/b>Interested to hear from you why when you arrived in Queensland, you choose real estate \u2013 or did real estate choose you? Was it just so much in your face that you really had to get involved in it?
\nJohn:<\/b>\u00a0 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\u2019re positive people. They\u2019re out there doing things. They\u2019re not negative and they\u2019re not not doing anything. They\u2019re self-motivated people.
\nIn real estate, you get paid by what you generate, and I actually liked that. I didn\u2019t 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\u2019t like that. I still don\u2019t like it. I still don\u2019t like the concept of hourly. I find that a little bit demotivating in a lot of ways.
\nI 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 \u2013 self-motivated, building, developing, creating, pioneering \u2013 and I like that sort of people.
\nKevin:<\/b>\u00a0 You left school at age 16, jumped on a car\u2026 Well, no, you hitchhiked to Queensland.
\nJohn:<\/b>\u00a0 Yes, I did.
\nKevin:<\/b>\u00a0 By age 20, you\u2019d syndicated well over $5 million worth of developments, and you\u2019ve gone on. Your company now, JLF Corporation, you\u2019ve been responsible for transacting thousands and thousands of properties. You\u2019ve developed about 8000 to 10,000 yourself, have you?
\nJohn:<\/b>\u00a0 Well over that now. I\u2019ve probably done 12,000 properties. I\u2019ve 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.
\nKevin:<\/b>\u00a0 Just in doing some searches that I\u2019ve done over the years, the name JLF comes up quite often, JLF Corporation. How many companies are involved in that now?
\nJohn:<\/b>\u00a0 I have about 26 companies, and I\u2019d actually like to have less, to be honest. In the \u201980s and the \u201990s, your accountants and solicitors were saying \u201cSet up a company \u2013 protection, tax,\u201d all that sort of thing. It\u2019s 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.
\nIt 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.
\nKevin:<\/b>\u00a0 Well, that\u2019s what drives your business, isn\u2019t it?
\nJohn: <\/b>\u00a0Just 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\u2019t grown as much, but Sydney has gone off the charts and Melbourne has gone off the charts.
\nI looked at that, and I thought, \u201cHow fantastic is that for her to have done that in the last year?\u201d I really felt proud for her.
\nKevin:<\/b>\u00a0 There must be a lot of that, too, in your business that you see.
\nJohn:<\/b>\u00a0 It\u2019s great. It\u2019s fantastic.
\nKevin:<\/b>\u00a0 You and I have spoken in the past about the book that you wrote, 7 Steps to Wealth. <\/i>That\u2019s the program that you\u2019ve done. You deal with a lot of investors. Where do you see the majority of them go wrong with their strategy?
\nJohn:<\/b>\u00a0 That\u2019s the point. They don\u2019t 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\u2019s a mistake. Property is not short term, Kevin. As you know and I know, it\u2019s long term. It has to go through a cycle.
\nThe other mistake is that 50% of people who buy an investment property buy an apartment. I don\u2019t really want to bag apartments, but if you\u2019re buying property, the only component of the property that grows is the land. When you buy an apartment. you just don\u2019t get any land content. They\u2019re great to live in. Apartments are great for location and they\u2019re okay for a lot of things, but as an investment strategy to build wealth, you really need the land and the land growth.
\nSo when you look at it you say, \u201cWell, investors 50% of them buy apartments and 50% of them sell within the first five years.\u201d It\u2019s not really a well thought-out strategy. Then you get to how many investors own two properties in Australia, and that\u2019s only 2.5% of all Australians. And then how many are in four or more, it\u2019s a fraction of 1%.
\nThey\u2019re the ones who I think have a strategy \u2013 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\u2019s the key.
\nWhere do people go wrong? They just think, \u201cI\u2019ll just buy an investment property because that\u2019s the thing to do.\u201d It\u2019s just like saying, \u201cI\u2019m going to put my runners and go for a run.\u201d I think you\u2019re better off sometimes thinking, \u201cWell, look, what do I want to achieve from this because I don\u2019t want to hurt myself?\u201d
\nKevin:<\/b>\u00a0 I know, John, as part of what you do in your company, you\u2019re 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\u2019s go back to when you were a kid. What were the conversations like around your table?
\nJohn:\u00a0 <\/b>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\u2019s accountants said to her, \u201cMary, you should sell that house because you\u2019re not going to be able to afford that\u201d \u2013 because dad had menswear businesses, a couple of shops that were going okay \u2013 \u201cAnd you need to get in,\u201d and all that sort of thing.
\nShe said, \u201cNo. I\u2019m not going to do any of that. I\u2019m going to hold on to it. I\u2019m going to finish the dream, and I\u2019m going to do the hard yards.\u201d 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.
\nI think really what she engrained in me is do the work: do the hard work, take a position, and take a long-term position \u2013 and that\u2019s really what I try and counsel people. A lot of people think, \u201cI want to make quick money, so unless I make money within 6 months, 12 months, or 18 months, I don\u2019t want to do it.\u201d Really, it\u2019s just a fool\u2019s strategy.
\nPeople 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\u2019re living in this nice house.
\nKevin:<\/b>\u00a0 A very gutsy thing that your mom did.
\nJohn:<\/b>\u00a0 It was.
\nKevin:<\/b>\u00a0 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?
\nJohn:<\/b>\u00a0 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.
\nHe 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.
\nMy second mentor was a guy called Michael [14:56 inaudible]<\/b> 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 \u2013 office parks. They had $500 million dollars\u2019 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.
\nI 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.
\nKevin:<\/b>\u00a0 Have you got a mentor today?
\nJohn: <\/b>\u00a0Yes, I have actually. My great mentor today is Nev Pask. Nev\u2019s in his 80s, and he\u2019s 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\u2019s been in BRW\u2019s rich list as one of the billionaires or close to a billionaire.
\nI really like him because he really is Mr. Land and he\u2019s a very humble person. He\u2019s a guy who I enjoy spending time with. Same sort of attributes \u2013 always very positive, always looking forward, very disciplined, self-motivated, just all of that \u2013 but a great land man. He\u2019s developed in and around Brisbane, Melbourne, lots of land, and he\u2019s got a great company that is run by his son Dean now.
\nKevin:<\/b>\u00a0 What do you believe are the essential qualities of successful people, people who are successful no matter what they do?
\nJohn:<\/b>\u00a0 Look, I think first and foremost, it is important that you team up, that you surround yourself with other successful people \u2013 because success breeds success. The first thing is don\u2019t try and do anything on your own. I have people around me and I\u2019ve had people around me for 20 or 25 years, and you develop communication and you develop some good foundations with them.
\nThe 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, \u201cI\u2019ll buy a property there because I really like that area. I see new caf\u00e9s going in, new this, new that,\u201d all that sort of thing. But the numbers don\u2019t necessarily support that. Because little caf\u00e9 areas\u2026 And a good area is Main Beach on the Gold Coast. It comes and goes. It was trendy five years, and now it\u2019s not because a new trendy area goes.
\nBase 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\u2019re probably the two things that I notice about successful people \u2013 and I\u2019ve met a lot of them. I\u2019ve met most of the Australian property billionaires and they surround themselves with good people, and those good people are very good at numbers.
\nKevin:<\/b>\u00a0 John, we\u2019re out of time. Thank you so much for spending so much time with us today. It\u2019s been great talking to you, and all the best. We didn\u2019t even get to talk about your philanthropic work, but congratulations on that, too. I know you\u2019re a great giver to the community, as well.
\nJohn:<\/b>\u00a0 Good on you, Kevin. It\u2019s been great chatting, and I look forward to chatting again soon.<\/p>\n","protected":false},"excerpt":{"rendered":"
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