Insights from Studying the Rich: The connection between wealth and property. (Part 2)

To my question about, you know, insights you’ve learned about studying the rich people, is what you’re saying, basically mindset, like mindset is a significant part of why the rich are rich.

Absolutely. It’s not just that you need a slightly different mindset to get rich, it’s that when you observe the rich, they operate from a slightly different mindset.

Can you describe that? Can you, can you kind of describe it a little bit for people who are not familiar with, like what is the mindset that they have that I should be in?

Yeah. So they’re willing to forego current pleasure in order to have long-term gains. So, you know, don’t just when you’ve got enough money together, go on that trip or buy that car or, or have that you, whatever it is you want fancy stuff. You know, getting an 85 inch LCD tv, I know they’re getting cheaper and cheaper, so it’s harder for me to say you shouldn’t get a tv. But I do often tell people, if you want to do really one in life, take your TV and toss it out the window. If you wanna save some money, I’m all for saving money. Open the window first, but get rid of the tv. And full disclosure, Michael, I do have a tv, but look, weeks go by that I don’t turn it on because I think that TV at some level does rot the brain.

It is a script, writer’s fantasy, all these programs to lure us in to watch long enough so that we stay there for the ads, because that’s how they make their money. If they show that enough people have watched the ads and they can get revenue. So a a way of looking at it is when you get on a plane, it’s not universally true, but in general it’s true. In the back of the plane and the economy class people are watching movies and they’re, you know, they’re, they’re playing games and all that sort of thing. And then in the middle of the plane, in the business class, they’re reading magazines. And in the front of the plane in first class there’s a large for element of people reading books. And I don’t think there’s a one-to-one correlation between watching movies and being poor and reading books and being rich.

Not at all. There are, you know, we can give examples of, of where this isn’t true, but in general, people who have done very well are avid readers. And that’s why I’ll say one of the attitudes that the rich have is their, they’re willing to read. And it comes back to what you said way at the beginning, mark. It’s just another way of saying we’ve gotta educate ourselves. You educate yourself by reading a book in general, whereas by watching a movie, you entertain yourself and there’s so much shock and horror and murder and mayhem on movies these days that often they don’t enlighten you. They don’t give you United Man, I could adapt that to get an extra bit of passive income. Whereas by reading a book, you can, again, you spend that same $30 in three hours reading a biography by reading a biography, whether it’s an autobiography or written by someone else.

You can condense the essence of someone’s entire life into three hours and pick out all the good bits. Why would you not read biographies? And yet most people don’t. Book readership has gone down in the last 15 years. We’ve gone from 46,000 bookstores down to just over 6,000 and the numbers are still dropping. We aren’t reading anymore. We’re obsessed with social media and just scrolling. And again, a lot of that is useful. There’s some good to that, but there’s also a lot of misinformation, disinformation, or sheer nonsense. So I think the, the rich have developed this knack of learning more to better themselves and others. And it’s that old thing. It’s a Zig Ziglar’s. You can get whatever you want in this world as long as you help enough other people get what they want. And so what you are doing with podcast, what I’ve done, you know, with during events around the world and and writing books, is you help other people.

And the more you have this propensity to help and show other people how it’s done, the more you learn. They say that if you really want to understand a subject, you’ve got to teach it. Because in teaching it, you’ll expand your mind even more and absorb more. Mm-Hmm <affirmative>. And when I have an event and I’ve got a thousand people there, it’s true. I’m the one doing most of the talking. I’m the nominal teacher, but I learn a little bit from the audience even when they don’t speak. But I can tell from their reaction whether an idea goes down well or not. Or they come up with examples. You know, I put on an event recently and someone talked about getting a piece of land and he parked his own RV on it just to park it somewhere. It was I think a third of an acre.

And then he started getting phone calls from people saying, can I park my RV there as well? And at first he said, okay, $30 a month. And then he thought, that’s a cheap, so he made it 50 a month and before long he’d filled this third of an acre with RVs and he turned it into an RV park, highly profitable. And he now buys odd bits of land that no one else can see or use for, or they don’t have the money to develop it by building it. And he rents it out as RV space and he’s doing extra. I’d never thought of that. I don’t own an RV, I’ve no particular desire. I probably would never have thought of it. But had I not put on that event, I wouldn’t have come across this idea. So the more you are willing to share, and I think the rich have figured this out too, if you’re willing to share things, the more that comes back to you, it embodies what Zig Ziglar said and the philosophy that you talk about.

All of it is interrelated. That’s the other thing. Successful people, you’ve probably heard this, but it’s so true. Successful people don’t do one thing 100% differently. They do a hundred things 1% differently. And the rich tend to do the same thing slightly differently. They’re not as showy as you might expect them to be. They’re willing to share you know, information. They read a lot. They’ve always got two or three books on the boil. They tend not to watch much TV if you ask them about the latest soap or hit series or something. I I, I haven’t watched any of them. I mean, I’m ostracized by some friends ’cause I never knew. I can’t even think of the names. The gold something. Oh no. Game of Thrones. I haven’t watched a single episode. Sometimes I wish I had that. I could at least participate in the conversation. <Laugh>. I find excessive consumption of alcohol is not that great amongst the rich. They might have a wine with a meal, but they, they, they tend not to get schloss or like, there’ll be exceptions I’m sure. But they’re too focused on having fun and other things. They don’t need alcohol as an escape from anything. ’cause They’re focused on their mission, which is generating more passive income.

You answered a question I want to ask you and I’m gonna ask it anyway. You know, I was gonna ask you you know, what are the biggest things, or maybe even one, what is the biggest thing the rich do and don’t do? I mean, it could be one thing, it could be two, three things you’ve partially answered that maybe completely answered that, you know, ’cause you’ve rattled off a list here of things like TV books and whatever else. But is it fair to ask you the question still, like, what are the biggest things the rich do and don’t do?

Well, it is. But I think you’re right. My answer is not that it’s one thing. I mean, if I said that rich people wore blue and if only everyone would wear blue, then you’d all be rich. Yeah. If that were the truthful answer, the reality, then I’d share it. I don’t think it is that, as I said, they don’t do one thing completely differently. They do a hundred things slightly differently. Yeah. They speak respectfully and they have integrity. You know, and to highlight that is if you and I decided after this podcast to go out and rob a bank, then we could be rich instantly assuming we didn’t get caught. No, I’m serious. And we, maybe we should consider it. But the challenge for you and I with robbing a bank is that we need a few helpers. We need a couple of lookouts, and we need a getaway driver.

And where do we recruit those people from? Do we recruit them from the ranks of those with integrity or from the ranks of those without integrity? Well, the answer is without integrity. So when you and I come out of the bank hauling bags of loot and we throw it in the trunk of our getaway vehicle, our newly acquired friend, the getaway driver, he hits that accelerator before you and I have a chance to get in the car because he figures he can split the proceeds with fewer people. So my point is, if you lack integrity and use that to get rich, then you hang with people and you won’t stair rich. So the wreck have integrity. And as I said way at the beginning, you know, you can change your attitude to that in a heartbeat. And to the extent that you keep your word more and, and you turn up on time and you do what you say, you’re going to attract kinds of people that, that also do that. And successful people, believe it or not, they do turn up on time and they do say what they’re going to do. That’s how they became successful. Yeah. So a lot of it is an attitude more than an action or what you wear or what kind of a car you drive or what house you live in. They’re secondary. It’s having an attitude of excellence. If you want to do well, if you, you don’t compare yourself with others. Compare yourself with how you were yesterday and can you do a bit better? That’s where it comes.

Very, very well said. Yeah. I love that. Compare yourself to how you were yesterday, not to other people. Right.

You will always find people smarter than you, dumber than you, quicker than you, slower than you, taller than you, shorter than you fatter than you skin. That’s not important. It’s if you are not happy with any of those, that you can do things to change them. You can change how you appear in terms of intelligence by, by doing things that raise your awareness in your general knowledge. Read more books, in other words, is one way hang with people of high intelligence. There’s that saying that, you know, you are the average of the five people you hang with most. So if you are not happy with your level of income, maybe you’re hanging with people who just don’t care about income. They just wanna get drunk on the weekend and be sober enough to turn up for work on Monday. Yeah. Whereas you have a aim of not having a work to go to.

Yeah. Yeah. Sadly. I know some of those people <laugh>. So to tie it back to real estate, what have you found is the connection between wealth and property? I mean, clearly everybody intuitively knows there’s a connection there because the more property you own, theoretically you should have greater wealth. But but is there, is it more than that? Is there Yes. A different type of connection?

Yeah. The the biggest thing that I can think of is creativity. And the truly wealthy in real estate have been very creative because if owning real estate was the only thing you need to, to do, then any for with a certain lump of cash in their pocket, could go out and buy something and then sit on the beach reading books or watching people go buy and become wealthy. But those who are creative can do so much better. And one of the things I love about real estate, one of the four things, we probably don’t have time to go into all of ’em, but one of them is that when you buy a piece of real estate, there are so many things you can do to massively increase its value without spending much money. You can’t do when you buy a stock, when you buy a hundred thousand dollars worth of IBM stock or Hewlett Packard or whatever you can’t do anything to increase the value other than hope and pray and write letters of encouragement to the directors of the company. Some

Some do.

Anything right. But when you buy a piece of real estate, oh my gosh, you can remodel the bathroom, you can, you know, paint the house, spending $2,000 painting house can increase its value by 20,000. And if you don’t believe that and you’ve never made 20,000 and a week and then change what you’re doing this coming weekend you know, and, and I’m always one to put my, my money where my mouth is market. So I so believe that there are 101 ways of massively increasing the value of your real estate without spending money that I wrote a book about it. I’ve got one here. It’s called 101 Ways to massively increase the value of your real estate Without spending much money. It’s the longest title on Amazon. And you know, again, you’re limited only by your imagination and you, you can have the really cheap things like changing a $3 40 watt light bulb into 150 watt bulb or whatever the equivalent is in LED these days. The room can seem bigger, brighter, fresher, and cleaner. And it will rent more readily. It will sell more readily. That’s the cheapest idea I can come with. And if you’re really cheap, that 40 watt bulb that you took out, it still works. You can use it somewhere else. Right. That’s an aside. But we’ve, we have other ideas where we’ve turned $20 into 2 million overnight. And if you think that’s impossible, then you’re limiting your beliefs. And I don’t know if we’ve got time, we’re probably rapidly running out of sharing Go ahead.

Well, no, go ahead.

You know, so full disclosure, the 20 bucks was spent on a bucket of paint and a brush, and how do we turn that into 2 million overnight? It sounds too good to be true. Right? Well, I have to set the scene. It was in Jakarta, which is the capital of Indonesia, and it’s known as being the most congested city on this planet. You measure how far it is to your destination, not in terms of kilometers or miles, but in terms of how many hours it’s going to take you to get there. So the CBD, the central business district of Jakarta, to get to the airport, Sohar International, it should be a 45 minute drive with no traffic. But because of traffic it might take three hours, it might take six hours. So the CEO of a company in this commercial building we had, if he had a [spp-timestamp time=”9:00″] AM board meeting, he could not book a [spp-timestamp time=”2:00″] PM flight.

So what did we do? We took this bucket of paint in the brush and went onto the roof of the building. It was a flat concrete roof, and I painted a big white circle, and in the middle I painted the letter H and I turned it into a helipad. And I know full disclosure, we had to get civil aviation authority approval. It’s like the FAA to run helicopters out of there and all kinds of other regulatory requirements. But we got that. So now the ride to the airport was 15 minutes. And the rental, when you convert it from Indonesian rupi per square meter to US dollars per foot, it was about $14 a foot. But by having the helipad there, we could raise it to $16 a foot. Many of the tenants thought they’d probably never use it, but they had bragging rights and others thought, yeah, we could use it.

So the value went up by $2 a foot. There was about a hundred thousand square feet of space. So the rental, the annual rent went up by 200,000 a year. And at a cap rate of 10%, the value of the building went up by 2 million. Bingo. Wow. So it’s been creative. And to answer your question, I find that the wealthy tend to be very creative. They come up with ideas that other people haven’t thought of and it, yeah. How do you come up with ideas? You travel and you observe. I’ve brought back so many ideas from other parts of the world that I’ve deployed here in the US and similarly I’ve brought ideas that I see here in the US and take them overseas. And so we have to travel more. America has this dubious distinction of being the western nation with the lowest uptake of passports in the world. Now I understand there’s no need to travel here. It’s so big. There’s so much variety here. But travel overseas, save other things, other foods, other languages and you know, you never learn less.

That’s incredible. That’s a crazy story. But it makes so much sense. I mean, really when you think about it, you just increase the value of the property. And if you can charge more rent, you know, on a commercial property and you’ve got a 10% cap rate, you know, you just can leverage. It’s massively increasing the value of that real estate. Right. That’s incredible. Right. I love it. So as we kind of wind things down here, you know, like we can go on for hours, it seems about all of this stuff. I’m just curious, how do you balance risk and reward when you’re making your investing decisions? Is it, do you have a methodology or, or a philosophy or anything when it comes to balancing the risk and reward of what you look at?

Well I don’t have strict criteria, like the return has to be less at least 7.3 and the occupancy rate has to be at less 89%. And the remaining lease length has to be on average, at least that. I think that’s too rigid because finding one property that meets all those criteria is pretty rare. But because I think differently, which I encourage everyone to do and I encourage everyone to be more creative. I can find deals that other people can’t make work. So in the case of the building in Jakarta, we lifted its value by 2 million. But there are many instances where other people can’t make a deal work. And you have to be creative. I’ll give you a morbid example. I came across a funeral parlor. It had been vacant for three years. No one could figure out what to do with it.

And my philosophy is not to buy it and hope that I can find a tenant, because remember, a commercial property without a tenant is worth a negative amount. ’cause You still have to pay property tax and insurance on it. Right? So what I did is I employed someone at the then going hourly rate of $8 an hour to phone every funeral director going further and further away from this, this location until she found someone who said, oh yes, I’ve always wanted to operate there. And that’s when I got on the phone. And so I said, listen, the building’s for sale, I hadn’t bought yet full, I I was honest with him. I didn’t try to hood work it. I said, if you wanna buy it, go ahead, but if not, then I’m an investor and I need a tenant before I can buy. He said, no, I don’t wanna buy real estate.

I don’t know that I don’t have the money. He looked at it, he said, I love it. I said, well, if you sign this LOIA letter of intent, we are subject to me buying it. You will become the tenant then I’m willing to have a crack at buying it. And he said, well, not so fast, Sonny, Jim, I’ll only do it if you gimme a long term lease. Well, that’s music for me is <laugh> and Marco, I would’ve been happy with a five year lease, but one of my eight golden rules and one of my books is never be the first to name a figure. So I said, well, how long would you want? And he said, well, I’d want 10 years with a right of renewal for another 10 years. And so I said, we’ve got a deal. But again, I I thought differently for three years, the owner and the agents in that city couldn’t find a buyer. And all it took is someone I’d spent two days, that’s 16 hours at $8 an hour, that’s $128, which is tax deductible. And yet the 20 year lease that he signed up for was indexed for inflation. I mean, so that’s crazy. It took $128 of tax deductible money to find a 20 year tenant. It’s just thinking differently.

Yeah, that’s it. It’s thinking differently. I mean, it’s, it’s, you know, it’s what Steve Jobs said, and it’s also, there’s a book written with I think the exact same title. You know, one of the things I learned a long time ago, many, many years ago from one of my early mentors in the marketing space was one of the biggest things that make you money is innovation. Right? So if you can think creatively and innovate, you know that, that not always, but that’s what leads to significant returns, increased cash flow, increased wealth, you name it. Right? So pretty powerful. Right. So let’s, let’s wrap up with one question here. A lot of my listeners are either new like newbie haven’t bought a first property, or they’re getting started. They have one, two, maybe three properties, but you know, certainly less than five, of course, there’s many listeners that listen to the show that have 10, 20, 50 properties. What advice would you give someone who’s either just starting out no properties or just a few properties, they’re just starting out with their real estate investing journey or career today?

Well, one of the things I would say, Marco, is that if we can imbue in these people this notion that, oh my gosh, I’m onto something good, then that’s, that’s great. And I always like to give things away. So I talked about this book 101 Ways, and you cannot, one, I mean no one including you, but your, your listeners cannot read this book without coming across 10 or 12 or 15 ideas that they can apply right now to the properties they may have already. Or if they’re looking at buying their first property, they say, yeah, that wasn’t so good in this area, but now I’ve got ideas as to what I can do. So I’m willing to give a free copy of this book to anyone who wants it. I’ve got a URL where they can go, it’s called Dolfgift, D-O-L-F-G-I-F-T.com, dolfgift.com.

You go there and we’ll get you a free copy of this book. I guarantee you, you will not be able to not find an idea that you can deploy straight away. And as I say, the cheapest ones are about $3 to deploy. The greatest lift we had have got the helicopter idea in here is a $2 million lift. But even that only costs $20. I mean, these things are so simple and often people, when they hear these things, they say, dog, but that’s too easy. Is it really that easy? And the answer is yes, it is. You know, the reason why today’s people do things that their parents never dreamt of doing is that their parents didn’t dream of doing them. You’ve just got to, you know, and that’s why I think listening to your podcast is so valuable for people because every time you get an idea of, Hey, I never thought of that.

And that’s why we interact with other people. If you are born somewhere in abandoned, in a jungle, and somehow you manage to survive, survive, and it’s actually happened with people that they grow up in an environment of you know, orangutans or something like that, it, you don’t learn anything. You don’t learn about passive income. You don’t learn the meaning of passive, you don’t learn the income of, of meaning of income. So what we know already is from our surroundings and all that people like you and I do, is we teach people how to make that even better.

Yep. Very true. Well, that’s a great gift. I appreciate you offering that. We’ll make sure that we put that link in the show notes and let people know about it. So I guess in wrapping up, tell our listeners how they can find you, follow you, get more information, learn more about what you’re doing in your world these days.

It’s pretty easy. I’m very easy to find. I’ve got a unique name. My first name is Dolf, DOLF, the last name is De Roos, D-E-R-O-O-S. So I’m on social media, usually under Dolf De Roos, REI, Real Estate Investors. So Dolf De Roos, REI I’m on TikTok, I’m on Instagram Facebook. I’ve got a website, dolfderoos.com. And one way to get started, if you wanna get a free copy of this book, you can read it later on today, if, if you act in time, is simply to go to dolfgift.com. And we will get you a, a copy of that book. I think we’ve got the audio and a written version that you can have. So whatever your preferred style of listening is, we cater to that. And yeah, just know that you can do this. It’s not beyond difficulty again compared with a PhD in electric engineering.

It’s trivial, but it’s far more lucrative and it’s a lot of fun. You’ve gotta have the attitude of fun too. I always say, Marco, if you can’t put your head down on your pillow at night and say, wow, what a blast today and I’m looking forward to tomorrow, then do something differently. It comes back to, you know, yeah, do do things differently. Because life is here, you know, we dunno what comes afterwards. It’s very short. Enjoy it every moment and generate some passive income so that you can do things with people and do things for people.

I agree. I agree. Well, Dolf, this has been a real pleasure. You’re you have very interesting and entertaining stories. You’re a wealth of knowledge. You’ve got all kinds of great, great books. You’re one of the OGs in the industry. I appreciate you coming on. So thank you for taking the time and hopefully you’ll come back on the show anytime you’d like.

Absolutely. It’d be my pleasure. Thank you so much for having me. Thank you for what you do for the community of, of investors and, and would be investors out there. I think at, at some level, we are making a difference and making this a better place for everyone. So I appreciate you as well. Thank you for your gracious words and I look forward to our next interaction.

Yeah, definitely. Thank you. Yeah, you’re welcome back anytime. So thanks for your time. Well just hang tight there. Dolf just in wrapping up here, this has been an incredible interview. I, I wish I can go for another hour, but I have to respect everybody’s time.

But that is it for today. Remember, we have a team of investment counselors if you have questions or want to just explore the opportunities. And with real estate investing, we’re here to help. Just contact my team, remember to subscribe if you haven’t done so already. And that is it for today. Thank you for listening. We will see you all on our next episode.

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