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PodSpirations: Let’s first of all talk about where you have come from, and then work our way through what you refer to as your 3 successful lives.
Kevin: I come from extremely poor parents, we only rented, and my bedroom was an open side verandah which is still there at Newtown road Bega…where the cheese is made.
One of my school mates came up just last year and said to my wife that “Kevin used to walk around school telling everyone that he is going to be a property millionaire” he said “the amazing thing was that no one laughed at him because everyone believed it”, and I was just so convinced that I would be a property millionaire.
I had a painting on the wall that I’d got out of a book somewhere which had a lot of houses over shops and I’d go to sleep envisaging that I was buying one, then buying the next one, then the next one and that’s when I was 8. I got that inspiration from the woman’s weekly who did a series on Australian millionaires and the thing that was common to all of them was they made their money out of property.
And so I zeroed in towards that, and, I was a bit inspired by mum who was saying how good property was and she wished she had a house, so one of my aims was to make sure I bought her a house which I did by the time I was 21.
PodSpirations: So you were 8 years old when you had these thoughts in mind…how many 8 year olds think like that!
Kevin: I was lucky I read the "Woman’s Weekly" I suppose and got inspired into it, at the same time, I wasn’t a nerd or anything, but it took up to the library and found these encyclopedias down there and of course, we couldn’t even afford encyclopedias, so I did all sorts of reading in there and I got a hold of "How to Win Friends and Influence People" and read.
That when I was 8, and I got carried away with psychology, and I found that you use that for the rest of your life…. It’s a great tool, so I recommend anyone to read ‘How to Win Friends and Influence People’
PodSpirations: What in particular did you get from that book?
Kevin: It’s just how to treat people and understand their emotions, what their going through, how to work with them and not against them, and that immediately someone says no to you or whatever, it’s not a fence between you and them. The fence should be shifted to the side and you should understand their position and what they want, and cater their needs and I think the art of being wealthy is just simply learning the art of what people want, and supplying it.
PodSpirations: In your successes, is there any stand out moments where you have taken that advice from the book?
Kevin: All the way through. When I wanted to make money out of property, I knew I had to learn. I took long service leave from where I was working and went full time into real estate and got a job, commission only. With a real estate company and just learnt all about real estate and never made a cracker for 3 months and the day they were going to sack me, I started making sales.
I would have been the most surprised person in the world if I’d been sacked because to me I was just doing my apprenticeship, I was learning where the bridges were going, where the roads were going, what the prices were and I didn’t think I was technically equipped to advise people where to buy until I had done all my homework, so I’d gone heavily into debt to make sure I kept food on the table, and I was just so convinced I'd be successful and luckily I started landing sales the day I was supposed to be sacked.
PodSpirations: What happened there, anything in particular that sparked that turn around?
Kevin: Just product knowledge, and I think that’s the basis of wealth is you’ve got to supply need, so you have to find out what the need is then you’ve go to supply it genuinely so you have to have a full knowledge and the facts to supply that, so I was able to show people logically why this was a great investment and they should buy, and they did, and then I could use them to talk to their friends and so in 6 months, I became the sales manager.
PodSpirations: So to continue with your first successful life, you were in a position to retire in your 20’s?
Kevin: I retired at 27 and I’d been working in real estate for about 7 years then, I had a goal to retire at 27 and I did, and it sort of coincided with Whitlam raising taxes and we were taxed 1 day in the week, it was 20% of the workers money and I thought everyone would revolt, I certainly did, so I refused to pay tax, I resigned, and I really thought it would last for 1 or 2 years and then I’d have to come back again, but I devised the Kevin Young Retirement plan, and it works and I was able to stay retired for 20 years.
PodSpirations: So you had built up your wealth prior to 27 and then it was the way that you managed that wealth that kept you retired for 20 years.
Kevin: Yep. The traditional thing is to live off the rents and you can’t, that’s a furphy, because you can't, because you are virtually on the same money as a pensioner, with the added worry to that, that you are going to be hit with expenses to pay for carpets and plumbing and all sorts of things. So what you really need to look at is the capital growth as the source of your wealth and you don’t get capital growth if you’re selling your properties and of course initially that’s what I was doing, I was selling, there was no capital gains tax, and I was living ok.
PodSpirations: And how many had you bought and sold up until this period?
Kevin: When I set my sights on retiring, I bought and sold over 600 times, and the beaut thing about knowledge was that everyone I sold to got a good deal. I invented what they call the ‘Tick and Flick’, but warn people you can’t do it any more…. It sound exciting but you can’t do it. What I did back then, I did a lot of research which people aren’t doing today, I found areas where there were under supply and people could buy off me, I could put a small but reasonable profit margin on, leaving something in it for them, because I’d chosen the area correctly, and I’d buy and sell on the same day, so I’d get a 90 day purchase agreement, settle within that period, and people would use their money to pay my vendor. The reason I could do it then and you can’t do it now, is that the cost of buying and selling was extremely low, the government greed wasn’t as high as it is today so it was a small addition to pay. Also, the biggest cost in those days was the legal profession, charging probably about 4 times more that the stamp duty and I did all my own legals, so I cut that cost out of it, so I was able to do a good deal for the people buying off me and a good deal for myself. And then when I retired I was selling and I could see that eventually I’d run out of properties, so I’d have to devise a better way, so that’s when we came up with the Kevin young retirement plan and the idea was to borrow off your assets, never sell them, and just rely on the increasing value and never pay them off. I got divorced twice during that period and that really tested the plan because I was able to loose a lot of assets, but still stay retired.
PodSpirations: At what age did you put that goal of retiring at 27 on yourself?
Kevin: When I was 20 and I was fortunate that I met a guy who’ name is Merv McCullock, he used to sell insurance, and he said to me that we know we are selling insurance to people who will retire at 65, and be dead at 67, so all the way through their life they’ll pay this money in to get this money when they retire and they won’t be able to take it. He said but we know that if they retire at 55, which was quiet outstanding thinking then back in the 70’s, he said we know they live to the same age as a woman which was then 78, so he said I’m going to retire at 55, so I thought if it’s good enough for him, it’s good enough for me, so I worked out a strategy that I could retire at 27 though, so I did.
PodSpirations: Had you been working on the strategy long before putting it into practice?
Kevin: It sort of evolved, because I did retire on the basis of selling properties and then I realized Id eventually run out of properties so I had to come up with another plan, so I came up with the idea of just holding them and borrowing on the increased value, and it’s that way to go.
PodSpirations: So that’s chapter 1, in the next 20 years of retirement, was the bankrupt business you bought the second successful part of your life?
Kevin: I got rather bored of being retired, so I liked economics when I was a kid at school and I pondered the idea of being an entrepreneur so I bought a bankrupt neon engineering business and It had $30,000 worth of debts, which back in 1973/74 was a lot of money, probably like $150k today I guess, and I bought it for a dollar and told creditors I’d pay them off, and turned the business around and turned it into the biggest competitor that Claude Neon ever had.
PodSpirations: What was the basis of turning that business around?
Kevin: I think you have to be dedicated and get used to knock backs and get up and get knocked down and get up again, and I think in the first 6 months, I lost a further $30,000, just making mistakes and learning, because I got a guy in from Claude Neon who was the top salesman and wasn’t selling enough and the manufacturing side I didn’t know and a lot of mistakes were being made there. I just had to learn from the ground up, the whole business and I’m not good with my hands, but it was really a lot of fun, because for the first time I was climbing ladders and going over the side of tall buildings and doing things I’d never done before, so I thought it was rather a lot of fun, but then I got serious about it when we started to lose money and had to change things around which we did.
PodSpirations: So you start off with 30k in debt, go a further 30k into debt…. Isn’t it just as easy to give it away…. Cut your losses?
Kevin: I think one of the motivators for me, it always has been the fear of failure and I’ve never been associated with failure and I’ll go to any lengths to avoid it. I think to be successful in business, you’ve got to expect failure, but you’ve got to pass it, get up and have another go. Someone once said first off they’ll ignore you, then they’ll mock you, then they’ll attack you and then you’ll win…. You’ve just got to keep going, going and going.
PodSpirations: The third success, The Investors Club, that’s the next chapter?
Kevin: Yes, I was 47 and all my old school mates from primary school and high school, we met every year and I just couldn’t understand why they weren’t doing what I was doing, and one day one of the guys said ‘but we’re not rich like you’ and I said “well I was poorer that you, why aren’t you doing what I’m doing?” and they said “well we can’t afford to”. So then I thought, I’d come up with a plan to help them, so we had a meeting in 1994 on the Gold Coast, and we sat down and for the first time they really got serious about actually trying to improve their life.
At that stage I was looking at a syndicate to combine their wealth to get them going, problem there was you couldn’t attach the Kevin young retirement plan to it. Because you had to sell, pay capital gains tax, which diminishes your wealth, pay selling fees, real estate agents fees, so we had to give that a miss, then we looked at various other alternatives, and none of them sort of worked, and the following day we went to play golf and I got kicked o ff the course for not having a shirt with a collar on it, so I adjourned to the dining room with a bottle of red wine, copious amounts of ice, huge amounts of paper and I did our first computer cash flow, which is the basis of what the Clubs all about today.
And I was able ignore 99% of the properties and focus on the cream, I would actually get each of these guys into their own property in their own name which meant as it went up in value, you could borrow the increased value, and live on that tax free, so threes no selling fees involved, there no capital gains tax involved, and it’s just all pure wealth for them.
So that was the start of The Investors Club.
PodSpirations: So that was 13 years ago, with half a dozen people, where does it stand today?
Kevin: We’ve had 8000 properties bought through the Club and were gearing up for about 2000 properties now a year going through the Club. We’ve got 720 millionaires that I’ve made as of April 2006 and my aim is to create 90,000 millionaires.
PodSpirations: Why that figure in particular?
Kevin: Well when we started the Club back in 1994, I did a lot of research and part of that was getting a research officer at the Australian Bureau of Statistics in Canberra and at that stage there were 90,000 Australian millionaires, so I thought if I could double the number of millionaires, that would be a good aim and I thought the toughest would be the first thousand. Once I get the first thousand established, it’d be like a snowball rolling down the hill, it’d get quicker and quicker and quicker, then get the next thousand in a third of that time.
PodSpirations: Across the 3 successes of your life, who are the mentors to you that have played a part in your success?
Kevin: No one at all accept Merv McCullock who set me the goal of retiring early and got me thinking about it as a reality, and most people are inside the box and they don’t look outside the box and for the first time, that got me outside the box and thinking well you can retire early. And once I started thinking about that, I came up with this plan of retiring when Whitlam made tax 20%, I spat the dummy and thought, well I’m going to make it now and then I had to make it work… and it did.
PodSpirations: What would be your top 3 secrets to success?
Kevin: I think you’ve really got to have product knowledge, you’ve got to know it back to front, so there Knowledge and Research and Persistence and 90% of the failures I see are people who just got knocked down and never got up again, you’ve got to get up, get knocked down get up, get knocked down, just be persistent.
PodSpirations: In the many interviews you have done, do people knock you for what you are doing in The Investors Club?
Kevin: I’ve been treated very well by the media, unfortunately I’ve just had 3 of a hundred interviews that later twist the stuff around and they have done that genuinely believing that I’m ripping people off and that I’m a 2 tier marketer and all those things but it’s not until after they print an article that they get a lot of abuse from my investors and realize they’re wrong. Unfortunately it’s just those 3 people have done 1 article and 1 article only, but it just hangs around for years and years and it does a lot of damage. An article in a particular magazine cost me a million dollars to keep the doors of the Club open, it was so devastating. And yet when you read the article, there was nothing much in the article, but the heading was all very bizarre, like “Bees to the Honey, is the Club ripping people off?”, all those sort of editorial items look bad, but when you read the article, there wasn’t much in it anyway. And that caused a lot of damage to a lot of people, a lot of people wanted out of contracts and I let them get out of contracts, in fact, one of the things I like about the Club is we uniquely have an out clause that even up to the day of settlement, if they want out, they can get out, the vendor can’t force them and so we let a lot of people out of course and a lot of people never came to us because they saw that article and the reported rang me up and apologized, but that doesn’t pay the bills does it.
PodSpirations: Well there’s another great example of a time when a lot of people would throw it all in and give up, so even though this cost you a million dollars, how in yourself did you keep going?
Kevin: I get inspiration from the members and when that article came out, I was in Adelaide and one of the guys came up out of the crowd when we were milling around talking and slapped me on the back and said don’t let the bastards beat you. He said “when I read that article, I immediately cancelled my subscription to that magazine because I bought through the Club and it’s been very successful and the headings are just crap so if that’s crap and I know its crap, why should I believe anything else that they print, so I cancelled my subscription. So wherever I go around, everyone is just so happy and positive, that’s inspirational to me and keeps me going.
PodSpirations: Earlier you mentioned the book “How to win friends and influence People”, are there any other great books that have contributed to your successful way of thinking?
Kevin: When I was young, I used to read only practical books, and I still don’t read fiction and one that really had an effect on me was “Power of Positive” thinking, and that’s probably in its 10th edition now.
PodSpirations: What do you see as the Downfalls of success?
Kevin: The Tall Poppy syndrome in Australia is terrible, in America if you are successful you get lorded and held up as an example to other people to emulate you. In Australia, your attacked and as I said like the article in the magazine, and 3 years before that in the paper, seems to be based just on envy, that you’re achieving something, there’s got to be a fault with that somewhere, And we had an attack from ASIC, they investigated is for 6 months, I asked them to investigate us because the paper said it’s a good idea to ask them to investigate because they’ll give you a clean bill of health which I found out later was a furphy, they were just trying to get some substantiation for their article. All ASIC could find was no complaint from any consumer, but I lost money on 2 very popular benefits that I provided to members. If you didn’t have a tenant, I’d pay the rent and if you put your deposit in and pooled it, we’d buy a development site and you become the developer and you’d take the developers profit, so on both of those plans, I lost money because nothing ever gets built on cost, there’s always cost overruns and I paid the cost overruns, so you were guaranteed to buy it at wholesale price. I lost money on both those benefits, but they hit me with a surprise writ, again the tall poppy syndrome, they just wanted some scalps, so they can go back to parliament after the HIH scandal where they didn’t act, and say “look, we’ve taken action against 34 companies” which they did in parliament and the action against us actually hurt the investors.
PodSpirations: To have your time over again, is there anything you’d do differently… anything along the road you’d approach in a different way?
Kevin: I’m very happy with my life in the way it’s gone, and I think when you make so many decisions you’re going to get some that are going to come back and bite you and you’ve just got to accept those. I’ve been taken for a million dollars by trusting someone, so would I turn around and stop trusting people, I don’t think I would, I’d still trust people, I’m probably to trusting, so I don’t think I’d do anything different.
PodSpirations: so what valuable lessons have you learnt as a result of mistakes in the past?
Kevin: Where I lost a million dollars, I just didn’t research the project enough, I didn’t get the knowledge enough, so I really breached my own criteria of doing all those things and I guess I was just motivated by greed. I was told that it was a million dollar under priced by the site and entering an unconditional contract over the phone, and it come back and bit me, because it was infact not under priced at all, it was over priced.
PodSpirations: Do you have a situation of Life Clarity?
Kevin: I think that would be when I was 8 when I read that article and convinced me that property was the way to go and no one could get that out of my head, that was the way I was going to go.
PodSpirations: Like we said before, you must have been a much switched on 8 years old to recognize that?
Kevin: Poverty is a good motivator and I was rather good at sport and I was a kid at school and when we had sports days and we had to go away, I had to borrow blazers off my mate Vic Reed who had a nice blazer, we couldn’t even afford blazers, I used to run in school races in bare feet, other people had running shoes, I had the open verandah for my bed and Bega is rather cold as you could imagine, so when you are in that situation and you want to get out of that situation, you start looking for lifeboats to jump into.
PodSpirations: What is your Why? You are obviously in a position where you don’t have to do another thing for the rest of your life if you chose not to, why is it you continue to do what you do?
Kevin: It’s not money, I think its job satisfaction, tonight, we’ll be going out and meeting probably about a hundred of the investors we’ve helped and we’ve taken over a restaurant in it’s entirety and we’ll be moving them around, talking to them all, we get them to play musical chairs and meet other investors and talk to them, and constantly, I’m getting some nice great exciting success stories of how their life’s changed so I have the best job in the world, It’s changing peoples life’s for the better.
PodSpirations: How does that make you feel when someone comes up and shares their success story with you?
Kevin: It’s exciting, particularly when some people come to you and they’ve got tears in their eyes about how their circumstances was looking terrible, disastrous and all they were looking for was the pension, and we’ve turned them around and now they are approaching millionaire status or are millionaire status. It’s inspirational in itself, its great stuff.
PodSpirations: You have the goal of creating 90,000 millionaires, is there any other goals you are currently working on?
Kevin: One big goal I’m working on, is I’ve been promising myself to work every second month, and I seem to end up working 13 months a year, but I’m starting to take more holidays than I ever did. We just got back from South America which was fantastic. We had our own personal guides in each of the places and limousine in each of the places and really enjoyed the trip, it cost $50,000 and I wont pay a cent off that $50,000 dollars, because in the Club, we’ve got the properties millionaires Club and we tell people, start using the asset while your alive, run up a debt on it, because the assets going to keep on rising anyway, and never pay it off, rely on the tenants paying that off. So we went better than first class.
PodSpirations: For somebody who’s getting into the property now, and the prices are a lot higher and the rents are not moving as high and it was a completely different story there 10 years ago, so what do you say to people who are just getting on board now?
Kevin: The answer is that this has been happening since 1066, so its not like a recent flash in the pan and in The Investors Club, we give them a whole historical data going back post war and you see every 7 to 10 years, the properties double, rents keep going up, currently thanks to the reserve bank pushing up interest rates, they’ve strangle supply coming into the market and we have short supply and a rising population and you get the rising prices. I predict rents will go up 30% in the course of the next 12 months, they’ve probably gone up 20% in the last 12 months thanks to the reserve bank an of course that pushes up prices as well. So we’re going to see the biggest jump in prices in the next 3 years than we’ve ever seen in Australia’s History.
PodSpirations: Are you involved with any charities?
Kevin: We’re looking for ideas. We find the problem with the current lot of charities it sort of goes in and you don’t know where it goes, we want to go to a village somewhere and say look, we’ve got some ideas we can introduce, emulating someone else who’s done it, they went to China and introduced pigs and a grating system so the droppings went through, they collected the droppings and actually used them for fire and previously they were burning all the timber round the area and they were running out of timber and there was soils erosion and all the things that go with it, and then the went to the CSIRO and they came up with crops they could plant in their rather arid country that didn’t need a lot of water and would grow and it would give them nutrition so that they’ve got the meat from the pig, they’ve got the fire and the heat from the pig and they get their food from these different things their growing. So I’ve got it all on tape and that would be a great thing to do, then the members from the Club can go in and help from time to time or go over and see the result of what they are doing.
We’ve got Neil Munday in the Club who has got great delight out of helping 2 boys in Africa through the normal charity and so he said about setting our own charity in the Club where we can funnel money through that and get into a village somewhere or even in Australia and help people, and it’s all flowing out of the profits of property, so if anyone’s got a good cause we can get behind, I think it’s a great idea. We went to visit these 2 boys Neil was giving the money to, they had just grown past the years where they were getting the money, and they had no future source of income. He found out the eldest boy liked music, so he came back to Australia and bought him an electric organ and all the instructions and sent it over to him, and he’s making money out of playing at weddings and funerals and all those sort of things and has a real good lifestyle, and he sent Neil back a video tape of, Italy returned some big artifact they had stolen, so the president of the country had a big unveiling of this thing when it came back, and there’s a picture of this boy playing the organ for the music for this ceremony, which is a nice pat on the back for Neil. And then the other boy as he got a bit older equally had no source of income, so he bought him a mini bus, so he’s the local taxi, running people around. So really he can see that he has changed peoples life’s for the better.
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