12:20 – What was some of the early decisions you made on your investment journey that had an impact?

14:46 – How do you respond to others saying ‘he must be lucky’?

17:49 – Is ‘making money is easy’ or ‘making money is hard’?

21:45 – Where do the opportunities lay over the next decade?

26:52 – What does financial success mean to you?

28:50 – Thank you

Q: How does being good at chess help with becoming a world class investor?

• Chess is one of the best and most logical games out there
• Three characteristics – it’s a sport, a game and played as in a competition
• He learned analytical skills, logical thinking and creative problem solving – all things that chess teaches you
• Always good at and loved mathematics
• How this worked with finance? He studied mathematics in college in the USA and it was all natural progression by being involved in what he liked
• Money is a simple trade if you understand the basics. If you stick with the basics and think logically, it isn’t difficult to invest and make decisions
• Logical thinking is how he’s been progressing
• Follows some great thought leaders in the space such as Warren Buffett
• Started investing in real estate in 2000 – when he saw the power of real estate, the benefits such as leverage and appreciation, you don’t need to make it too complicated to get the benefits
• Time builds wealth
• Mike makes a key point that you need to differentiate between investing and trading, and real estate is all about investing by not timing the market and buying in stable options

Q: You say there’s no room for emotion in investment decision making. How do you leave emotions at the door yet cultivate enough awareness of how deals work to make decisions?

• Mike acknowledges he’s a very unemotional person with very little sensitivity to emotions
• His emotions don’t count towards any of his investment decision making
• When he looks at deals, he simply thinks about the most fundamental elements of investing
• Who you’re investing with
• What does the deal look like?
• Does it look like a deal he wants to invest in?
• Decisions are purely mathematics, logic and finance

Q: Where does gut feel fit into your thinking when investing?

• Mike calls it intuition
• It’s something he learnt from chess and it’s become second nature
• The first observation he makes is about the person he’s making the deal with:
• Does he like the person?
• Does he trust them?
• Does he click with them?
• Do they know what they’re doing?
• Do they communicate well?
• He evaluates his relationship fairly quickly
• He mentions that particular important is whether someone is too good at communicating (signally potential fraudulence) or if they’re willing to admit and learn from their errors
• He takes strong referrals to shorten the time to build cold relationships by working with a trusted source
• He’s also methodical by working with a calculated checklist to evaluate whether someone’s genuine or a slick salesman

Q: What were some of the earlier investing decisions that had a big impact on you?

• He mentions that you’ve heard of “ready, aim, fire” but he talks about an alternative strategy called “ready, fire, aim”
• What this means is that you need to take action instead of over-preparing
• This is how Mike’s invested in New York – he took action by buying and then holding for a long period of time
• If you made a mistake and you bought something poor, you get rid of it as soon as you can. You lick your wounds and you move on
• But he emphasises that if you don’t take action, you don’t learn
• While you want to learn about mistakes from others, you learn the most from your own
• To get a PHD in investing, you have to make a lot of investments, make mistakes and correct where necessary. Hence, ready, fire, aim
• He’s constantly correctly

Q: People often look at people like yourself and say “he’s got it easy” or “he got lucky” after years of cultivating a reputation. What do you say to that?

• Luck is a logical outcome from preparation. If you’re not prepared, you can get lucky but most times, if you prepare, luck follows
• Book recommendation: Jack Welch – Straight from the Gut
• One of the simplest practices that Jack Welch did at GE was to look at the top 20% and internally elevated/promoted them
• The vital 70% were kept and the bottom 10% were eliminated every year – he likens this to Darwin’s law
• Focusing on the best relationships is what his fund does
• It’s not just about return on investment, it’s return on time – is the work you do with people pleasant and easy?
• He prefers to work with people he likes
• Life is too short to work with idiots

Q: Is making money easy or hard to you?

• It’s not so much about how easy or hard it is, it’s more about whether you enjoy it or not
• It’s more than just about money – it’s about lifestyle and designing your business around the life you want to live
• You need to do something that makes you money to support this, which he calls “the genius zone”
• Money’s just a score or a number to pay the bills and support his livelihood
• What’s most important is that Mike enjoys real estate investing, generating a return, ensuring his team is happy, and working with people who he likes
• Real estate with proper underwriting, in general, is a stable investment that can generate double digit returns without a lot of volatility when compared to other investment classes
• Real estate is quite predictable and by maintaining predictability, you can generate the returns you want

Q: Where are the greatest opportunities for those who want to create wealth in the next decade?

• He acknowledges that he doesn’t have a global view and can only speak from a US view (where he’s based)
• Real estate is one of the best asset classes with great tax advantages
• His fund does a lot of value-add investing – where value is created
• They currently look at sites where they forecast some projects on stressed conditions to see what the downside is and then ultimately look at the upside
• He only invests where his relationships are – he starts with people
• If he finds a good operator he knows, likes and trusts them, he’ll commit to investing
• Don’t invest in what you don’t understand

Q: Where are the greatest opportunities for those who want to create wealth in the next decade?

• He acknowledges that he doesn’t have a global view and can only speak from a US view (where he’s based)
• Real estate is one of the best asset classes with great tax advantages
• His fund does a lot of value-add investing – where value is created
• They currently look at sites where they forecast some projects on stressed conditions to see what the downside is and then ultimately look at the upside
• He only invests where his relationships are – he starts with people
• If he finds a good operator he knows, likes and trusts them, he’ll commit to investing
• Don’t invest in what you don’t understand

Q: What does financial freedom means to you?

• Book recommendation: Rich Dad, Poor Dad by Robert Kiyosaki
• Once you’re out of the rate race of meeting your financial obligations, it’s about enjoying your work
• People talk about retirement – there’s no such thing. You have to do something else
• You’ve just got to be happy
• Money can make you very unhappy