Many people have this romantic notion about self-made millionaires… That they pulled themselves up from nothing and went on to achieve enormous success.
This idea is a myth.
There’s no such thing as a self-made millionaire. Everybody who achieves any level of success in life has had support along the way.
The same goes for the most successful property investors.
They have communities and teams around them who help them to succeed. Tack Lee and Hoe Ping are members of the I Love Real Estate (ILRE) community. And they can show why that’s so important.
For over 10 years, Tack and Hoe have had a simple mantra when it comes to property investing:
Stretch to grow.
The idea is to stretch what you have in your portfolio so you can grow it.
But for years, that mantra didn’t quite work out for them… because they didn’t have the right education and support.
Before ILRE, the couple had tried to become successful investors on their own.
However…they started with shares.
Shares are a much more volatile proposition than property. It sure gave them a crash course in investing, though.
However, they soon decided that shares weren’t for them and switched their focus to property.
And again… they didn’t get it quite right.
Tack says the early philosophy was to buy, buy, buy without worrying if the properties had a negative cash flow.
That philosophy helped them build a portfolio of 19 properties. However, they also had a negative cash flow of $110,000.
Worse yet, the couple were reduced to a single income, which put them in more trouble. And with two children to raise on top of all of this, they knew something needed to change.
That’s why they attended an ILRE seminar in 2016.
They attended the ILRE boot camp in October 2016 and signed up to Platinum right there.
Their first course of action was to go through their entire portfolio. This was something they’d never actually done before!
They looked at each property to see if it had any merit. If they didn’t see a way to make it positive, they sold it.
Doing this helped them cut down on the negative cash flow. And for the properties they kept, they carried out renovations to make them positive.
This was a difficult period for the couple. They’d spent so much time building the portfolio that it was tough for them to take an axe to it.
But to manufacture growth, you sometimes have to cut the properties that aren’t going to fulfil your purposes.
With the existing portfolio trimmed and secured, they started looking at new projects.
Two purchases followed, for a total of $1.28 million. Each received renovations, with the total cost coming in at $120,000. Now they were worth a combined $1.66 million.
That’s not a bad start…but Tack and Hoe still had this capital growth mindset. The couple decided to keep both properties, even though they generated negative cash flow.
They then turned their attention to their principal place of residence (PPR). The goal was to turn it into two properties. Again, it was a high-cost job. Tack admitted that they listened to their hearts over their heads.
But after a lot of problems with water and the council, that project will soon generate $30,000 in positive cash flow.
However, they still had negatively geared properties in their portfolio to worry about.
That’s why they decided to turn to Airbnb. Using that service, they’re able to generate more cash from the properties they have in their portfolio. And they’re slowly turning their negative cash flow issues around.
The couple now has an established renovation strategy, and they understand the importance of positive cash flow. Plus, they’ve got a big support network behind them that will only help them to stretch and grow.
Tack and Hoe have a few other projects in the pipeline that they’re working on right now.
The difference between these and the previous ones is that the couple is shooting for positive cash flow from the start.
One of their new projects will generate about $55,000 in positive cash flow. Add that to the $30,000 from their PPR project, plus their work with their other properties, and you can see that they’ve turned things around.
There are some important lessons to learn from this story.
The couple’s problems started because they bought properties just to build a bigger portfolio. Unfortunately, they paid no attention to cash flow, which meant they bled money.
With ILRE, they’re untangling that mess to create a positive cash flow portfolio.
However, it’s much better not to be in that position in the first place. Never buy a property solely to make your portfolio bigger. You need to be able to manufacture growth for everything you buy.
Tack and Hoe had a 10-year goal when they started investing.
They reached that goal…only to find out it wasn’t the right one.
Education isn’t just for helping you create a strategy. It’s also for helping you understand what you want your outcome to be. Only then can you set goals that will help you create the life you truly want.
You need a ruthless streak as an investor. If a property isn’t delivering what you need from it, that property has to go.
Hesitation only caused the couple’s negative cash flow problem to grow worse. They struggled with the idea of cutting properties from the portfolio they’d worked so hard to build. But it needed to be done.
Be clinical and take action at the right time. The longer you delay, the bigger your problems become.
Tack and Hoe know that they’re not out of the woods yet.
There’s still a lot of work for them to do before they achieve their goals. However, they’ve taken action and learned from their mistakes.
They’ve almost undone the negative cash flow problem that their previous strategy created. And with their new strategy in place, they’ll have a positive cash flow portfolio soon.
Now, they’re able to stretch to grow the right way!