About twelve years ago we stumbled upon a certain understanding of life that really cleared up things for us.

This was during a time that we were reading every single real estate, sales, motivational and “self-help” book that we could get our hands on.

We were both pretty frustrated with the idea of working for someone else for the rest of our lives.  Things like dental benefits and “matching RRSP contributions” just didn’t excite us – AT ALL.

So we began reading every single money making and motivational book under the sun.  We still have a ton of them lying around.  One of us even “invested” $5,000 in a set of tapes (yes, not CDs or MP3s but old-fashioned cassette tapes) from a big real estate guru so that we could learn the art of buying property with “no-money down”.  

And we’ve both spent tens of thousands on various boot camps and seminars.

Although some of the material we were studying was a waste of time the process wasn’t.

The frustration that we were was feeling propelled both of us to take action.  We actually now like it when we get extremely frustrated because we realize it’s a leading indicator for making some new and big changes in our lives.

Our goal now is to harness frustration, not prevent it.

One book that we stumbled into, that we can’t find any longer or we’d share it with you, outlined a very simple but profound way to look at your life.

The author explained that to deal with anyone … your spouse, you kids, your friends, your boss, anyone … all you have to do is figure out what their values are and then speak to them with those values in mind.

The key is to figure out the priority of their values so that you can speak to them in their language.

For example, if your spouse’s values fall into this order:

1. Family
2. Health & Exercise
3. Friends
4. Stress Free Relaxation (TV, Social Media)
5. Career & Wealth (Making Money)
6. Leisure Time
7. Self Development

And your values are in this order:

1. Career & Wealth Creation (Making Money)
2. Family
3. Self Development
4. Friends
5. Health & Exercise
6. Leisure Time
7. Stress Free Relaxation (TV, Social Media)

Then you’re likely always talking about your career, investing and making money and your spouse is always talking about taking care of the kids, the house and the family.

In order to really understand and relate to your spouse you’ll have to focus on their values, not yours.

In the book the author was an extremely successful Chiropractor who traveled around the world giving lectures.

This often upset his spouse because he was constantly away from the family  -  which was her top priority on the value list.  So he would always break the news about his next business trip by including some sort of family trip immediately afterwards so that he was taking care of her values as well as his own.

And he would always highlight how that, although not initially obvious, his trip had very specific benefits for the family and weren’t just about progressing his career.

She would always respond to this because he was talking to her with her values in mind.

To really relate to people you need to talk to understand what they value and what they don’t.

But this wasn’t the biggest eye opener for us, it was this next concept…

The author explained that there was no such thing as time management.  There was only “priority or value management”.

If your values are in this order…

1. Family
2. Friends
3. Health & Exercise
4. Career & Wealth Creation (Making Money)
5. Self Development
6. Leisure Time
7. Stress Free Relaxation (TV, Social Media)

Then you may *think* that you’re focused on “building your own business” or “investing in real estate” or “advancing your career” but we’ll let you in on a little secret.

It will take you a very long time to accomplish your “Career & Wealth Creation” goals.

Because when there’s an opportunity to advance your Career and/or Wealth Creation you’ll very often be interrupted by something higher on your value list.

A family event interrupts your agenda or, a long lost friend calls and wants to grab a drink or the gym has a new Pilates class … something higher on your value list will always take priority.

Because all of those things are higher on your value list you’ll throw your day timer out the window and juggle your schedule to accommodate the values that are more important to you.

So if you find yourself questioning why “time management” doesn’t work and questioning why you’re not getting the results you want in a specific area of your life it’s likely because that particular area is too low on your priority list.

Other things are more important to you … end of story.

The best online calendar or iPhone App won’t help you achieve more.  Only moving that area of your life higher up your priority list will.

It may take a major life event to do it.

Maybe a boss upsets you long enough and you get so frustrated that “Career & Wealth Creation” jump to the top of your value list.  You’re going to focus on building your own business like never before.

And when that happens, all of sudden you find all sorts of time to focus on this area of your life.

And it may not be “Career & Wealth Creation” that moves up your list.  Maybe you’ve been focusing on that particular area too much and a family event happens that really makes you rethink your priorities … and then “Family” moves up the value ladder.

Recently we’ve been working with a couple of real estate investors that can’t understand why they’re not achieving as much as many of the other investors we work with.

Upon discussing their lives with them it’s obvious that although real estate investing is high on their value list … leisure time and relaxation are actually a notch or two higher.

So every time there’s an investing activity that needs to be done they drag their feet a little, move a bit more slowly than they need to, and as a result their results suffer.

If you can’t figure out why you’re not achieving as much as you want to be.

Or if you’re struggling with time management.

Examine your values.  What are your priorities?

Career & Wealth Creation may be very high on your list.  Maybe #2 even.

But perhaps #1 on your list is Stress Free Relaxation.

Guess which one will get more attention and more time?

Until next time … Your Life.  Your Terms!

Brad his a fantastic guy and we’re always excited when we get a chance to chat with him.

Earlier this week we took this brief video asking Brad to reflect back on when he just began investing and to analyze his fears.  Which fear about real estate investing came true?  And which fear didn’t?

Enjoy…

(UPDATE: If the video doesn’t work for you, then click here and play it on YouTube and it should be fine…fingers crossed!)

Last week we were chatting with someone who was pretty frustrated with their accomplishments.

More specifically, their recent lack of any.

They had read “The Secret” when it first came out and had believed they were practicing the art of affirmations and positive thinking aggressively but weren’t seeing any change in their circumstances.

They had studied the classic, “Think & Grow Rich”, by Napoleon Hill.

They had read, The Power of Positive Thinking.

They had scoured the bookstores for hours trying to find something that would answer the question, the one question, that was haunting them, “Why weren’t they were they wanted to be financially, mentally and even spiritually?”

We’ve been fascinated by personal growth for years and are students of it.

And a few years ago we realized something.

Personal growth wasn’t enough.  We need systems that produced consistent results in the real world.

We could “think positive” as long as we wanted but we didn’t actually achieve very much.

Ultimately you need to play ball and enter the marketplace.

You need to pick a niche to serve.

Then come up with something to offer that niche.

And then, figure out how to get your message in front of them.

That’s where real estate came in for us.

When you buy a property you’re forced into action.  You have advertising to get going.  You have leases to sign and money to collect.  And the interesting part of this?

You can be the grumpiest person in the world and the results will still come.  The mortgage will be paid down, equity will build, cash will flow.

You didn’t even need to think positively.

It was almost a disappointing realization for us.

But it was an important observation.

We were in shock when we met so many grumpy, frustrated, even angry, landlords but they were all making money.

And many of the happy, “positive thinking”, people we knew were broke.

Didn’t seem fair.

At that point we became convinced that hard work and systems were more important than “The Secret” and positive affirmations.

Business was done in the real world after all, not some fantasy land.  

After spending a few years fixing up properties, managing them, and profiting we began to notice something.  

The landlords and property owners who survived the longest and profited the most had two things:

Financial Capital and Emotional Capital.

The most successful investors had more than just money.

They were able to deal with almost any foundation problem, roof leak, eviction or contractor much better than the others.

They were very resilient.  Nothing got them off track.

When we started our real estate brokerage we found that it was important to have systems for our business but also important to build up our emotional capital.

To make deposits to our emotional bank accounts regularly.  That’s why we travel, attend mastermind meetings and take the time to read good books.

Each of those are big deposits into our emotional bank accounts.

It’s this combination of financial and emotional capital that really makes you powerful.

A few years ago we learned about the Stockdale Paradox, in Jim Collins’ book, Good to Great.

In the book Jim talks about a Vietnam prisoner of war James Stockdale.  He was held for seven years and was beaten repeatedly but refused to succumb to the demands of his captors.

He was eventually removed from the other prisoners and placed into solitary confinement for his refusal to cooperate.

When he was released he could barely walk or even stand.  He went on to receive a Medal of Honour and eventually ran for Vice President next to presidential candidate Ross Perot.

Jim Collins recorded a conversation he had with Stockdale.

He said, “I never lost faith in the end of the story.  I never doubted not only that I would get out, but also that I would prevail in the end and turn the experience into the defining event of my life, which, in retrospect, I would not trade.”

And when Collins asked who didn’t make it out alive, Stockdale replied, “Oh that’s easy, the optimists.  Oh they were the ones who said, ‘We’re going to be out by Christmas.’ And Christmas would come, and Christmas would go.  Then they’d say, ‘We’re going to be out by Easter.’  And Easter would come, and Easter would go.  And then Thanksgiving, and then it would be Christmas again.  And they died of a broken heart.”

Stockdale then added, “This is a very important lesson.  You must never confuse faith that you will prevail in the end – which you can never afford to lose – with the discipline to confront the most brutal facts of your current reality, whatever they might be.”

The Stockdale Paradox: Faith you will prevail plus the discipline to confront the brutal facts.

How insightful.

Positive thinking is not enough.

Problems happen.  In business and especially in real estate.

But that’s OK.

It’s the way you deal with them that makes things more bearable.

A blindly optimistic real estate investor thinks that eventually they’ll collect their rent.

A disciplined investor says, “I don’t have the rent, I’m going to deal with this right now.”

We now believe that you need three things to carry you forward in real estate and in business:

1. An underlying positive belief system with regular emotional deposits to it.
2. You need to be accurately assessing the facts of a situation.
3. And you must take action and work hard – and you do it, not out of frustration, but because you want to, it’s part of your mission.

Although real estate on its own offers a very effective system for acquiring wealth in your life.

You can accelerate your growth and success with accurate thinking … the Stockdale Paradox.

Positive thinking alone is not enough.

We searched high and low for a quote that would summarize all of this, here’s the closest we’ve found so far:

- Mahatma Ghandi

The G20 Summit is just around the corner and we thought what better time than right now to take a peak behind the curtain to see what these guys and gals will be talking about.When we analyze what asset classes we like to invest into we always come back to real estate … for many reasons.

Although we’re fans of commodities as a valuable asset class, especially over the next decade, and do invest in them … they don’t produce cash flow.  We look at them as “wealth preservers” but not “income generators”.

And you need income to pay for your daily living costs.  

We used to like equities/stocks but the last fifteen years has proven to us that we don’t have control of them.

No matter how great a P/E ratio may look you’re ultimately at the mercy of what someone else will pay for your share.

And they can shoot up and shoot down on a whim.

Even if we only focus on stocks that produce cash flow via dividends … we’re still not in control.

Dividends can be canceled or reduced without your input.  Just look at what’s happened over the last few years and for a recent example you just have to look at how BP has halted its dividend payments for the reminder of the year.

We don’t like the idea of building our wealth on a basket of dividend stocks that we don’t have control of.

What has happened to all of those people who live on the fixed income of their dividends only to have them reduced or canceled unexpectedly?

Doesn’t sound like fun to us.

So although equities can play a role for us their never our primary asset class.

We always end up with real estate as an asset class to produce cash flow for us.  And, of course, even real estate takes work, requires research and discipline and can throw you curve balls.

But we haven’t found a better answer.

There’s actually only two ways to build cash flow into our lives that we can figure out.

Build businesses that produce cash flow.

Own real estate that produces cash flow.

That’s about it.  

So how does the G20 play into this?

Well, to master the art of investing and owning real estate its useful to understand what’s going on in the world economy.

It’s almost generally accepted across all financial analysts that the world’s financial system is now 100% interconnected.

This “new order” of financial markets is unlike anything the world has ever seen.

So how do we monitor these developments?

1. First, we look at the Bank of Canada and what its up to.  Its the central bank in Canada … the bank that backstops all other Canadian Banks.  It controls interest rates, which directly affects our real estate…so we watch it closely.  

2. We then look at the IMF.  The International Monetary Fund acts as the World’s central bank.  It’s the bank that backstops countries.  It controls the International Monetary System.  Together with the U.S. Federal Reserve, the IMF plays a big role in how the World economy works.  The decisions made here can change what the Bank of Canada does, so naturally we’re interested.

3. How does the IMF get its power and money to hand out?  The G20 gives it to them.  Canada is part of the G20, so in effect, you and I are giving money to the IMF.

So naturally we want to keep abreast of what’s going on in the corridors at the G20 meetings because ultimately their decisions can affect how much our mortgage payments will cost six months down the road.

The decisions they make have a direct impact “on the streets” in places like Vancouver, Edmonton, Halifax, Toronto, Cambridge, Brantford, Hamilton, Barrie etc.

And forget the formal meetings … those are great for pictures and press, but like any conferences I’ve been to, the real business is happening out in the hallways and corridors.

So what’s going to happen behind the scenes at the Toronto G20 meetings?

Here’s our best guesses….

1. First, China wants to play.  If this group of guys and gals is controlling how the world money system works then its natural that China wants a seat at the table.  For that to happen someone else has to give up some of their voting powers … sounds like great drama to us because its highly unlikely any other country wants to give up some control.

2. Second, they’ll definitely be chatting about how to get more control over the fragile state of the economy.  Although we all read and hear how great everything is, behind the scenes the discussions are very different.  No one actually believes anything has been solved in the credit markets … only postponed.  We’re still left with 1,000 point plunges in the stock market, countries that run out of money and fear of more of the same.

If you’re really interested in the details of the International Monetary System and the suggestions that the IMF is making to the G20 then you’ll want to check out this paper that is dated April 2010 and was released to the public on June 4, 2010.

It is the IMF’s very latest thinking on how to fix the fragile system … both short term and long term.  You’ll learn about U.S. Reserves and “SDRs” as a new possible currency between countries.  

Fascinating stuff, if that’s your cup of tea.

Here’s the actual paper…

Reserve Accumulation and International Monetary Stability

This will definitely be part of the closed door discussions at the G20 meetings in Toronto and will likely lay the framework for some big announcements at the next G20 meeting in South Korea this Fall.

If you hate this stuff and want to focus on buying properties and creating cash flow … we can’t blame you!

But if you want a peak at the inner workings of the discussions that will be going on then this paper will be very insightful.

And as we mentioned earlier, no matter what changes are coming down the road over the next decade we always find ourselves coming back to real estate because we can:

Own it.

Control it.

And Cash Flow it.

And even more importantly, no matter what happens over the next couple of decades we believe a hard asset like good real estate will always have value one way or another.   Whether that value is measured in Canadian Dollars, Gold Bullion or IMF “SDRs” really doesn’t matter to us.

Onward!

Until next time…..Your Life.  Your Terms

Mike Desormeaux tours the second storey for the first time and Ruben shares how he’s been solving problems on the fly!