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How the rich got that way – Michael Yardney

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You can learn lessons from the fortunes and misfortunes of Australasia’s richest people. This year, there were more billionaires than ever, and a quarter of the BRW Rich 200 list made their money in property. Michael Yardney shares his thoughts on how they did it.

 

Transcript:

Kevin:  While the studies show that the rich keep getting richer around the world – we’ve talked about that on the show before – the recently released BRW Rich 200 list gives us a bit of an insight into what’s happening to the fortunes of Australia’s wealthiest individuals. I know Michael Yardney from Metropole Property Strategists follows this very closely.

Hi, Michael.

Michael:  Hello Kevin. I saw you didn’t make the list again this year.

Kevin:  No. No, I didn’t.

Michael:  Neither did I.

Kevin:  As hard as I try. Oh well, we can always live in hope. I know you’re fresh off your Wealth Retreat, as well. This is a fascination, just watching what the rich do. I know that you follow it, because there are a lot of lessons to be learned from this.

Michael:  You can learn lessons from their fortunes and their misfortunes. This year, there were more billionaires than ever, and a quarter of the Rich List made their money in property, with Harry Triguboff – Meriton’s founder – claiming the top spot.

Interestingly, a good lesson for those interested in property is that the 50 property Rich Listers are now worth a collective $58 billion, while the resources Rich Listers – who were pretty high on the list in the past – have fallen back and aren’t worth even a third of that.

Kevin:  Interesting you talk about Harry Triguboff, and I have followed him with great interest, Michael, as I know you have. It’s interesting in that he’s not only a developer, he’s also an accumulator, because when he develops a block, he will actually keep and retain a certain number of those in his own portfolio.

Michael:  Kevin, that’s one of the characteristics of the rich people. They build their asset base. If they have a public company, they build their balance sheet, they understand the power of cash flow, but they also understand the importance of building their asset base. A great observation, Kevin.

Kevin:  Yes, thank you. Michael, the observations you’ve made watching them, what are they?

Michael:  I think one of the good observations to support the things that you and I are interested in is property is still the number one source of wealth. Over time, the industrialist and the mining billionaires’ fortunes wax and wane, but over all the years I’ve been following it – and it’s well over 20 years now – the property moguls on the Rich List have always been there and they’ve been steady. I think there’s nothing wrong with watching what other successful people do and applying those principles to your own life.

Kevin:  We mentioned Harry Triguboff there; he’s certainly an inspiration that proves that anyone can really do it.

Michael:  You’re right, Kevin. Some people inherit their wealth, and most people in the Rich List actually came from working class backgrounds and had no tertiary qualifications. You’re right; Harry Triguboff was actually a Chinese-born son of Russian migrants, and he studies textiles and worked overseas. He didn’t even get into his first property deal until his late 20s. Other Rich Listers have also proven you don’t need to have a private school background or an elite education. That’s not a requisite in Australia.

Kevin:  You and I have talked about this on many occasions, and I know you’re a great believer in the fact that the markets move in cycles. Obviously, the wealthy understand that, as well.

Michael:  They do, and they have the long-term view. Sure, at the moment the stock market is flat and Gina Rinehart who had the top spot for five years in a row now is on the fourth spot, but I’ve always found successful businesspeople and successful investors, they think in the long term. They take advantage of opportunities to buy assets when they’re on special, so it’ll be really interesting over the next couple of years to see how these counter-cyclical investors fare in future Rich Lists.

Kevin:  The other observation to make, too – and probably incorrectly – is that they make it look so easy. Is it easy to become rich?

Michael:  The rich work hard for their money. You’ll find plenty of people on the Rich List still working and making money at an age when most Australians are actually looking forward to or are already in retirement. You see, it does take time to become uber-wealthy, unless somebody has left you a handsome inheritance, and that hasn’t happened to you or me, has it?

Kevin:  No.

Michael:  Harry Triguboff has been on every Rich List since its inception 33 years ago, and it’s taken him all that time to get to the top. They work hard, they continue working, but he’s doing it because it’s his passion, not because he sees it as work.

Kevin:  Yes, exactly. Michael, I guess it’d be fair to say, too, that these people don’t necessarily follow the hurdle, just listen to the publicity; they are prepared to take some risks.

Michael:  Many Rich Listers took risks early in their career to get their enterprises going, but interestingly, one of the trait of successful businesspeople and these entrepreneurs is to preserve their wealth. Once they have an asset base, they actually stop taking risks. They actually make their millions and then reinvest their money back into their businesses and build their asset base. They realize that you don’t have to take risks to become wealthy once you have an asset base, Kevin.

Kevin:  What are some of the other attributes you’ve noticed in these people, Michael?

Michael:  I think one of the core traits of successful people is the ability to take a good idea and keep repeating it over and over again. They don’t try to become an expert in a hundred things; they find one thing that they do over and over again. That’s why they become an expert. But often, they take it to different areas, different locations. One of the concepts I’ve noticed is that many of them are now moving into Asia, where there’s obviously a growth market. I’m not necessarily talking about property moguls on the Rich List, but just other successful businesspeople.

Kevin:  What about growth over cash flow?

Michael:  We mentioned before that they’re trying to build their asset base, so while they recognize cash flow is important, most of the Rich Listers concentrate on building their balance sheets even more than they do on their profit and loss.

I think another trait that Harry Triguboff and all of the Rich Listers have exhibited is that they have a good team of people around them. I remember reading a quote from Harry Triguboff saying that he pays really good money for his team, so he should listen to them, otherwise he’s stupid.

Kevin, you’ve often heard me say if you are the smartest person on your team, you’re in trouble. A good trait to remember is get some good people around you, get good mentors and listen to them.

Kevin:  And above all, I guess they take action, don’t they?

Michael:  Yes, they do. They started with a dream, they started with a vision, they created a plan, and then they actually stopped dreaming; they took action.

Kevin:  What about the age of them? Have you noticed anything about how old they are, Michael?

Michael:  Every year, there is some new young blood coming in and some of the old, established money stays there, so a lesson for everybody is you’re never too young or you’re never too old.

Looking at the property debutants in the Rich List this year, Tim Gurner is only 34, and he’s already made a $460 million fortune in property. At the other end of the spectrum, the oldest property expert in the Rich List, Stan Perron, is aged 93, and he’s been in that list for many years as well.

I think there are some really good lessons to learn and to aspire to, Kevin.

Kevin:  Indeed there are, Michael. Thank you for your insight, always great talking to you. Michael Yardney from Metropole Property Strategists. Thanks, mate.

Michael:  My pleasure, Kevin.

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