How to Profit in the Falling UK Real Estate Market
Transcript
00:00It keeps losing money, drop of the price, drop of the price, drop of the price,
00:03there's a whole bunch of reasons why that will never work. And I think their thinking's wrong.
00:06It's what's the result you want from the price.
00:13Business and property, that's what we're all about. How cool is this?
00:17We get to connect two things that we're both really, really passionate about.
00:22I mean, you're the absolute guru when it comes to property, no questions asked.
00:27Thank you very little.
00:30You are the person that has got me into property. I remember being in the UK many years ago
00:37and seeing this crazy guy walk down this property seminar, this very, very structured,
00:43very official property seminar webinar. No, it was a live one. And this crazy man's walking down
00:50with all this get up and there's loud music blaring and Rick Otten struts his stuff down the
00:57middle of the audience and jumps up on stage and I was like, whoa, who is this guy?
01:02So that was a bit of a shock to the system, but mate, I've been a massive fan of yours over the
01:08years and we've just done so many cool things with the strategies that you've taught us.
01:13Where have you found yourself more recently?
01:15Yeah, well, look, since doing a truckload of property with you and your strategies in the UK,
01:21I love business, business related, I'm onto it. So over the last 30 odd years,
01:29I've started 15 different businesses and I've taken so much of what I've learnt from you,
01:35so much of that mindset of the body language, the communication patterns and the negotiation skills
01:42that I learnt in property, I just bring it across to all my businesses and it just is phenomenal
01:47for helping me grow my businesses. So, yeah, that's what I've been working on.
01:51Can I just say really funny, a little while ago you sent me an email, right?
01:54And there was a little picture of you and I was like, my God, he's dressed up as a cook,
01:58he's working in a restaurant. So let me ask you something, I guess that's one of the businesses
02:02that you've started over the years since we met, right?
02:05Sure, and if you know anything about me, you would not want me cooking,
02:08so you would not want to eat my food. So, look, that's a business that I love, I've grown it,
02:14it's quite big, it's a seven-figure business and that's called Tommy Sugo, that's what,
02:19I was on Shark Tank pitching the concept a few years back, which was just phenomenal for exposure
02:25and I've done heaps of different marketing strategies using a lot of your strategies,
02:30the ugly marketing and ways just to cut through the shaft of the over-cluttered
02:37marketing mindset, you know, minefields out there. So now I'm in food restaurants,
02:43I do loads of things around food, we have retail stores, we do home delivery, catering,
02:49loads of different things in that. I'm in the wellness space, I've set up a weight loss program,
02:56which is, we've just launched in Indonesia and we're going global with that and there's a whole
03:01bunch of marketing, love marketing, I've been learning so much about marketing over the past
03:06decade and ways of doing free stuff, love free, love being able to grow a business without too
03:12much cost. Well, mate, if it makes you feel good, you're looking like a very, very healthy man. So
03:16the food business and the health business must be working for you. So, and it's really great
03:21you've been able to use some of those techniques and strategies, right? Because I think one of
03:25the things is when people stop me in the street, although I've always been a real estate guy,
03:28they always go, mate, I'm now doing this other business and I've taken away all these techniques
03:32and methods and systems and processes and applied them to different businesses, which by the way,
03:37for the people who are watching us here on our intro podcast, one of the things we want to do
03:41is not just cover real estate, but it's like the business of property, the business of real estate,
03:45which is because people start doing transaction state and then they build a business, then they
03:50get stuck because they don't know how business works. So they've got to get the strategy,
03:54putting house deals together. Then they've got like 300 house deals. Now they need a business
03:59structure, but just don't know how to do it. And you've gone to that next level, right?
04:02Absolutely. Yeah. The amount of, I sort of consider myself as a business athlete. So what I do and
04:10what I'm going to be sharing with you guys over the next bunch of podcasts is all about
04:15doing everything we can possibly do to elevate our business and using all the tools at our
04:22disposal. There's so much information, knowledge, skills, and tools and techniques out there now
04:29that are so much fun to build your business with. I mean, AI has just revolutionized everything. So
04:35I use that a ton in my businesses. Every tool that we can use, let's bring it on board. And
04:42in this podcast, I'll be really focusing on business growth and the business of property.
04:48And Rick is just going to bring just so much value to everyone on the marketing within the property,
04:54the creative. Tell us more about what you do, Rick, and all your cool stuff that you can-
04:59You know, it's just really funny because I knew we're going to have this podcast today,
05:02right? And it was going to be the intro podcast where we're going to talk about our history. And
05:05one of the things that people always say to me is, have you ever lost money on a house?
05:09And I said to myself, I thought about it. I thought the only time I've ever lost money on
05:13a house was in 1977 when my dad sold me a house, right? And my dad sold me a house and he lost
05:19money on it. And then I bought the house off my dad, knowing nothing about houses, and I lost
05:22money on it. And I thought about that's the only time I've ever lost money on a house. But then I
05:27thought we're going to do this podcast. And I was thinking, no, that's not actually right.
05:30I've deliberately lost money on four other houses where I deliberately sold it for a loss. And
05:35people say, why did you do that? I say, it's the best marketing move I've ever done. It took my
05:40business into a multimillion dollar business by learning how to lose money on houses, right?
05:44And I thought, as soon as I say this on the podcast, people are going to go, holy shit,
05:48how does this guy make money and build a multimillion dollar business losing money
05:51on houses? Well, obviously, it's a system and a process. There's some thinking behind that.
05:56So it will probably be for another day. We'll do a podcast on marketing, right,
06:00and unique marketing that cuts through the clutter of the 1500 marketing messages a day
06:04that people get. But losing money on houses can be one of the most profitable ways to build a
06:09multimillion dollar property portfolio for another time. So mate, there I was, you know,
06:14I started back there, then I script over to Dallas, right? And I can't just tell, I don't
06:19know if I've ever told you this, I got into houses as a pure default. I never went there to do houses.
06:26I mean, I was doing TV. And then I got married. I got married and my wife said to me, you better
06:32find a way to make money with, you know, houses or something. And they had, because they had the
06:38savings and loans, and the house prices dropped 90%, houses had stickers on them that said,
06:44buy this house with your Visa card, buy this house with your MasterCard. And that was the
06:49thing that made me go, how do you buy a house with a Visa card? How do you buy a house with
06:54a MasterCard? And that's how I found about the property crisis, that all the banks had
06:59collapsed in Texas, right? And the prices were virtually give away. I mean, I was just buying
07:04houses with no, I had no money, right? It was either figure out how to buy money with a house
07:10with no money, or go and work like dolls at like $2.19 an hour and create big macs.
07:16But don't you get discounts for your burgers?
07:19I probably would. But I tell you the funniest thing was, when I did my first house,
07:25it was a place in Canada. We're just going to go about a house, right? I've never done a house
07:29before. I've never read a book about a house, know nothing about houses. The guy was $86,000
07:34for his house. Now, what I didn't know was, that was the debt he had on the house. It's like $86,000
07:39through a bedroom, two bath house. And I said, oh, I'll buy the house from you for $86,000.
07:45I was excited. No one was buying property at all. No one was buying real estate at all.
07:53And I said, look, I'm a little bit short on the $86,000. He said, how short are you? I said,
07:57$85,000. So he said, so you want to pay me $1,000 a month? And I said, well, only for 86 months,
08:04right? Well, there's virtually no other buyers in Texas at the time. So he goes, okay,
08:09I go back, tell Jane, who I've been married to for about 30 days, that I've just bought us a
08:15three-bedroom, two-bath house for $1,000 a month. And of course, she being smarter than me said,
08:20you're an idiot because I didn't have $1,000 a month. And mate, that's how I ended up putting
08:25up the little ad saying, who wants my house for $1,500 a month? All those people turned up on
08:30the front lawn to buy the house that I got for a grand for $1,500. And I made $500, had to find
08:3630 more houses for 30 more people who wanted one. Crazy way to start, right? And then I ended
08:41up staying there. I was only going to do one house, by the way, to get enough money for an
08:45airline ticket to come back to Australia. Ended up staying there 15 years. Fantastic. And you
08:49did a bunch of houses over that time. 313 or something. But I mean, I think I was the only
08:55guy buying, mate. It was just a crazy time. I remember I went to the auction and I got this
09:00for $3,000. Funny stuff you remember 30 years ago. I paid $3,400 for this van. We'd had no
09:08window. I cut windows in the side so the agents could sit in the van and we could drive around
09:13the streets and they could sell me the house because it was just no buys. I had an agent.
09:17He used to say, look, I'll tell you what, Rick. He used to charge me 500 bucks for every house
09:22he used to buy and sell for me. But I used to sell them before I'd buy them. So he'd say,
09:27have a house for me to buy and I had no money. I'd say, how much can you sell it for? He said,
09:30well, we can probably sell it for double the price. So I'd get him to find the buyer who's
09:34going to pay double the price and then I'd pay half the price. It was just a crazy, crazy time.
09:40But you made the rules up as you went. Fantastic. And that was something
09:43that you said just there. There was no buys around. You were the only buyer.
09:47And obviously you had to utilise different strategies because when you're in that,
09:53when those times are tough, banks aren't lending. So you're looking for different ways of skinning
10:00the cat, right? Right. Let me tell you, I remember there was a place on Walnut Hill
10:04Lane, Walnut Hill Lane, which is just up the 35th from where I live. He used to sell musical
10:08instruments. I couldn't get bank loans, but at the end of the day, let's face it, if the house
10:12is $5,000 each, how many are you going to buy? As many as you can, right? Because you're going
10:16to go back to 100 grand. So I'd go to the musical instrument shop and I'd say, mate,
10:21can I buy some musical instruments? He goes, well, what do you want? I'll say I'll give you
10:25some drums, guitars, give you this. I'd buy like 20 grand's worth of musical instruments and he'd
10:29finance me on a payment plan to get personal loan. I got a personal loan. I just couldn't
10:35get real estate loans. So I'd get the financing for musical instruments. I'd then go outside his
10:39shop on the street and sell them for half price, get 10 grand, knowing that I owed him 20. And
10:44then I'd use that to go and buy three or four or five houses at two grand each, right? Because
10:48at the time, it got down to I could buy a two-storey condominium with two bedrooms,
10:53two bathrooms for $500 each and rent it for like a thousand bucks a month. That's how crazy it got,
10:58because no one was buying, right? Yeah. I mean, and in retrospect, you'd go nuts,
11:02wouldn't you? Knowing that at that time, the opportunity was there. I mean, I remember when
11:08I came to the UK back in 2010, I think it was, 2009, 2010, and I'd come over there specifically
11:16to do property and you were around, your name started popping up. But because of the global
11:22financial crisis, we weren't able to get any money from the bank. We'd been doing standard
11:27buy-to-let properties. My sister and I had been doing it for a few years and they were going
11:31really well. And I had businesses in Australia and I thought, this is crazy. I need to be in the UK
11:36doing all this property because they're doing really, really well. So I sold up all these
11:40businesses and I went over to the UK and the freaking global financial crisis hits and we
11:47can't get any money. So that was when this crazy Rick Otten appeared on the scenes and-
11:53What an exciting time.
11:55It was so cool. And it was so much fun. And yeah, having that solution to not being able
12:01to borrow money, but still create and grow our portfolio was just like so fresh. It was-
12:08Let me tell you a funny story about that. A guy calls me, David Lee, right? An Aussie guy
12:13from Australia. He calls me in about 2002 from Britain. And I go, what are you doing, mate? He
12:18said, Rick, they're not doing how to buy a house for a pound in England. I said, what do you mean
12:22they're not doing how to buy a house for a pound? He said, others, they just don't get it. Well,
12:25by this time, Australia did and New Zealand, all the other Commonwealth countries like
12:29South Africa and Canada. And let's face it, we all came from the mothership from England.
12:33I go over there and I saw a market, which by the way, only the UK had it, where in order to borrow
12:40money from the bank, the rent had to be higher than the debt servicing, right? Which meant every
12:46property I bought for a pound or whatever it took over the loans, they always cashflowed. Always
12:51more money was coming than was going out. Anyway, it took me a few years to work out how it all
12:55works and work out strategies. And of course you can imagine every legal firm said, this is not
13:00possible. This is in the UK. We don't do it. And I said, well, that's why I came over to change it,
13:04right? But here's the funniest part. I remember I did the first big event in about 2009, I think it
13:11was, in Earl's Cork. It was like packed. There's like about 300 people there because there was no
13:16bank lending. And I said, look, I'll tell you what, I'm going to teach you guys how to issue
13:18loans. And no one had ever done this in England, right? And it was takeover loans. And I remember
13:22saying to Jane about a day before we ran the conference, it was sold out. I said, Jane,
13:27right now we can stop and we can just pick up every house in England for a pound,
13:32knowing that every single one of them will cashflow 500 pounds a month. Why don't we just
13:36cancel the whole conference and just go and buy 600 million houses, right? Some of you guys went
13:42out and did like 300, 200, 100, built massive portfolios with just taking over loans and doing
13:48these creative stuff, which really, and it wasn't hard for the people to get their head around it.
13:54I think it was more hard for the legal institutions to recognise that this stuff's
13:58been legal since 1677, but it just wasn't the way the average British man did real estate.
14:06Absolutely. Absolutely. It was breaking norms, but it was such an amazing solution to a problem.
14:12And that's what I focus on in all my businesses. The bigger the solution,
14:17the better the business, the bigger the business. So if we can create amazing solutions,
14:22then we're just going to be helping a truckload more people with what we do.
14:27So you had a solution and still do have solutions that can get sellers out of a problem and buyers
14:35out of their problem. So sellers, if they can't sell, we can move properties quickly and buyers
14:40who can't get on the property market have an amazing solution that they can get into
14:46home ownership. And what you've done is just put the two together with phenomenal
14:51win, win, win results. The buyer wins, the seller wins, and us as investors, as middlemen,
14:58we just make a lot of money out of it. A lot of people say, what's the process to do something?
15:03And I think their thinking's wrong. It's what's the result you want from the process?
15:08So people get locked up in the process and I'll say, well, what's the end game? And this guy
15:11says, well, I've been trying to buy a house for 50 years and I can't get into one. Okay,
15:15so the result you want is to get in your own home. Yes. Then the seller's trying to sell a property
15:20and he keeps losing money, drop of the price, drop of the price, drop of the price. There's
15:23a whole bunch of reasons why that will never work. So mate, what's the result you want?
15:27Well, I want to be able to walk away from this property without losing my ass, right?
15:31Okay, so just the process has to change based on we now know the result. And when you start
15:36changing the process, that's where people start thinking different. Yeah. And we all know the UK
15:40experiencing some interesting times ahead and that's why I think one of the big reasons is
15:46we've reconnected and we're refocusing on helping sellers, buyers, investors to move ahead in these
15:53more challenging times because it requires a different strategy because things are gone
15:58kind of pear-shaped out there. You can't get tomorrow's results using yesterday's thinking,
16:04right? And so what people are trying to do over the last 10 years, the market's been great.
16:09So you could use a set of skills and a set of processes. Now the market's turned. Well,
16:13the world's changed. Everything's changed. It's not the same market. You can't just keep employing
16:17the old to fix the new. Do you know what I mean? It just doesn't work. It's trying to stick a
16:21square into a circle. So you've just got to really think and redefine. Matter of fact,
16:26because we go back to global financial crisis and you knew some of the stuff we were doing there
16:30and people took them a while to get their head around it, but once they did, it's sort of hard
16:34to go back, right? It's just again, I've got to look at the market and saying, what is the tool
16:40set that people need now to solve a problem? Now, look, one of the things I spoke to you about,
16:45which we're going to do on another podcast is, you know, landlording, especially in the UK,
16:49landlords are getting absolutely hammered, but they're using the wrong process. You know,
16:54if I understand that, you know, landlords want to make money and I'm going, well, that's great,
16:58but why would you use an AST and a residential lease to be a landlord? It's just the wrong
17:02process. You get hammered by government, you get hammered by compliance and legislation.
17:07It's a whole different conversation, but it's just the wrong process to get the result they're
17:10trying to get to, but that's a podcast itself. Excellent. We'll be covering a lot of those
17:15different strategies that you have. Lots of stuff. Yeah. Yeah. So much fun ahead. So what
17:21we're going to be doing is putting together the business of property, guys. So it's all about
17:26growing your business in property and using every skill, every tool that we've got available,
17:32all of Rick's amazing, phenomenal body language and negotiation and skill set in property that
17:38he has just mastered. He's literally the grandmaster of these creative strategies.
17:43And we're going to bring that together with a whole lot of the rest of the tools that are out
17:49there. So, you know, the health, the mindset and the business scaling. I think we're pretty well
17:53covered. I can't think of anything else we want to cover on this intro podcast, except the fact
17:57that, welcome aboard everybody. And it's an intro podcast. Yeah. We're looking a lot. We're
18:03really looking forward to creating so much value for the property sector, bringing all these
18:08strategies together. So stay tuned for the next one. There's going to be some really cool stuff
18:12coming your way. Okay, buddy. Well, I'll speak to you soon and everybody else is on the podcast.
18:16Love you. Long time. See you soon.