Do you prioritize building long-term wealth?
I will be the first to say that this isn’t something that I have been focusing on much in my life yet, but it is something that I really want to learn more about. Someone who has been educating me a ton when it comes to this topic is my guest for this week’s episode, Salena Kulkarni.
Salena is a wealth strategist for entrepreneurs. She shows them how to replace lifestyle income and create the freedom to exit their businesses in 2-5 years through low-risk alternative investments.
With this episode, my goal is to educate you on what’s possible and the things you can do with your business if it is generating great revenue and profits. I want to show you how to leverage your existing business right now, whether you are already doing well or heading in that direction, in order to build more long-term wealth.
No one cares about your money as much as you do. By learning the 4 pillars of wealth and taking control of your financial wealth building, you can get yourself on track to retire in 2-5 years if you want to.
In this episode, you’ll learn:
- Why your net worth is a vanity metric
- What the 4 pillars of wealth are
- Why wealth building is an art, not a science
- How to get in the right mindset
- What alternative investments are
- What downside protection is and why it’s important
Links & Resources:
- The Art of Online Business website
- DM me on Instagram
- Visit my YouTube channel
- The Art of Online Business clips on YouTube
- Full episodes of The Art of Online Business Podcast on YouTube
- The Art of Online Business Podcast website
- Check out my Accelerator coaching program
*Disclosure: I only recommend products I use and love and all opinions expressed here are my own. This post may contain affiliate links that at no additional cost to you, I may earn a small commission.
Salena Kulkarni Links:
- Learn about Salena’s mastermind and calculator at her website
- Listen to The Alternative Investing Podcast
- The Alternative Investing Playbook
- Follow Salena on Instagram
- Connect with Salena on LinkedIn
- Check out Salena’s YouTube channel
- Follow Salena on Facebook
- Connect with Salena on Twitter
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My friends, if you are looking for a faster, a better way to grow and scale your online business, you very likely do not need another course or to be reading more books about how to grow your business. What you need instead is a personalized, cohesive growth strategy for your business, along with one on one coaching and group coaching, support and accountability to help you every step of the way. Well, that’s exactly what my accelerator coaching program delivers for you. Accelerator is an intimate 12 month rolling open enrollment, so it’s ongoing open enrollment, personalized coaching program and mastermind experience for established online course creators and coaches who want to take the guesswork out of optimizing and grow towards a profitable seven figure plus business without more anxiety, without more stress and hours spent in front of the computer, accelerator is about thinking differently and bigger about your business, about your team, your funnels, your ads, your vision, etc., so that you can create more profit, more impact with less hustle. So accelerators application only. And again, this is rolling ongoing open enrollment. So if you want to learn more and apply, just go to Rick Mul Radio.com forward slash accelerator. Hey, my friend, welcome to the Art of Online Business Podcast. My name is Rick Mulwray and I’m an online business coach. I’m an ads expert, and most importantly, I’m a dad. And this show is where we help established online course creators and coaches create more profit, more impact with less hustle.
All right, let’s get into it. What’s up, my friends? Welcome to the podcast. Rick Moretti here. Thank you, as always, for tuning in today. So let’s talk money, shall we? Specifically, I want to talk about wealth building as an entrepreneur. This is something that this episode basically is coming from as a result of my current journey. I have not done in full transparency. I have not done a very good job of educating myself on building long term wealth. And, you know, I say you know, I say having done a good job, I’m very hard on myself. Right. And that does a lot of good. Right. But timing is the timing is perfect. I’m learning everything as it’s supposed to. Things are unraveling as they’re supposed to. I firmly believe that. And I really want to share this conversation with you. And I’m going to be talking more about these topics here on the show, especially because these are the topics that are coming up more and more in our accelerator coaching program. In terms of, hey, wait a minute, I have a really successful business making a lot of money. What are the wealth building? Things that I can be looking at, right? I’m not a financial advisor. This conversation is not financial advice. This is for education only. And you’re going to learn a lot here today. So one person who’s been helping educate me a ton is my guest today.
And she was introduced to me by our mutual friend James Franco. He’s been a former guest here on the show and her name is Selena Kulkarni from Inkosi Wealth Qcom. And what has been fascinating for me is how much I didn’t know. Right. And so Selena is a wealth strategist for entrepreneurs and she shows all of us entrepreneurs how to replace lifestyle, income and create the freedom to exit your business if you so choose, in a shorter time period than most people think. Like 2 to 5 years. And she does that through low risk alternative investments. Again, this is not investing advice. We are not saying, hey, go do this. This is for educational purposes only. And what I really want you to get out of this episode here is just educating you on what’s possible and the types of things that really if you are doing well in your business and creating great revenue, great income, great profit, that there’s more to it than that in building long term wealth and how to leverage your existing business right now, whether you’re already doing well or you are heading toward heading in that direction to be thinking bigger in terms of wealth building. And we’re diving into all that here today. So without further ado, let’s do it. Let’s go hang out with Selena Lakhani. Selena, welcome to the podcast. How the heck are you today?
I’m doing really great, Rick. It’s really awesome to be here.
I love your koala in the background on the wall back there.
Put that up for the the US friends I had.
I’m like looking at you on the camera and it’s like just the koala, just like staring at me right there. So I’m going to be looking at that a lot. I love it. So we were introduced by our mutual friend James Franco, who I recently had here on the podcast, and he said, You know what? Got somebody that you definitely need to talk to. So you and I chatted. We’ve had several conversations and I am fascinated by what you specialize in and what you teach. And we’re going to dove into all this here today, especially with how it regards to with how it pertains, I should say, to online entrepreneurs and wealth building that most of us don’t think about until very late in the game, if you will. And I’m more than happy to share my personal experiences and sort of like what I’ve gone through and what my thoughts are and where I want to get to. And, you know, for be listening, share behind the scenes of some of our conversations that you and I have had. Selena So before we dove into all of that, what is your background? What is what is your specialty? What do you do and who do you specifically help and how so?
My. Background is actually as an accountant. I jokingly say I’m a reformed accountant, but it’s been a fantastic foundation to really kind of leapfrog into investing. And at the moment, my passion and what I what I do is I work with business owners who are looking to replace either a portion of or all of their lifestyle income so that they have the freedom to choose whether or not they continue to run their business or retire. But to try and do that within a time frame of 2 to 5 years and predominantly through alternative investments.
So. The do I do I need to preference. I should have asked you this before we hit record, but hey, I’m going to ask you this right now. Do I need to preface this with this is not financial advice or you are able to give financial advice, correct?
You know, it’s probably best to preface don’t run out and do anything wild after listening to this podcast. But this is this is not definitely not advice.
This is informational purposes and. Guys. The reason I want to have Celina on here is that this has been a I want to share kind of a personal journey for me and the types of conversations that I’m having on my end. And these are also the types of conversations that come up quite a bit in our accelerator coaching program. And I want to help more of you have these like. Educate you on these types of things earlier on than for me personally, because, you know, I’m eight years into a very successful business, but yet I’m just now unfortunately or fortunately or it is what it is, having these conversations and planning from a wealth perspective. And so what are some of the things, Selina, as an entrepreneur that we can be thinking about maybe earlier on in our business, or maybe we’ve been doing this for a while and but we haven’t been really thinking about wealth building because most of us think like, oh, we’re making money, we have a lot of money in the bank, maybe from our business, but is that truly wealth building? So what should we be thinking about in terms of, yeah, we’re making good money in our business.
But this is such a fabulous topic. Look, I would actually say that what you describing in terms of entrepreneurs who kind of love the idea of business and growth, that the trap that people often fall into is thinking that income is wealth and you know that, you know, the only KPI that matters is the measurement of income, revenue, profit. The challenge that I’ve witnessed over the last 20 years is
that as people’s businesses become more successful as profit grows, what tends to happen is there’s this kind of mental justification of I’ve earned this, you know, I need to enjoy the fruits of my labor. And so sometimes, you know, people will focus on trying to invest some of that in in assets that grow over time and even then, like end up in a situation where they’ve they’ve got a reasonably good net worth, but net worth even by itself is to some degree. And I use this, you know, very lightly. To some degree it’s a vanity metric because assets that just sit there and maybe underperform or don’t perform or don’t generate income, they’re fairly useless to you unless you’re kind of strategy is to sell those assets and eat the cow, I call it, to survive in the years when you don’t want to run your business or you want to take the foot off the gas. So I think the shift that entrepreneurs really need to make is that definitely building income is plan A and it’s, it’s, it’s the main game for sure, but it’s kind of like the short game, if you like. That’s the, that’s the game now today. And if you think about a sphere outside of that, which is the long game and the long game is where legacy lives, the long game is where you’re focusing on wealth building outside of the business. And it’s not that one game is better than the other. The short game of business building is is just as important as the long game, but you’ve got to play both games and that’s the transition that I think a lot of business owners don’t make till the runway becomes very short.
When you say runway like older in life, is that what you’re saying? Okay.
The timeline to kind of maybe wanting to exit or do something else or cut down their hours, you know, it isn’t as long as when you’re in your so your twenties and thirties when you’ve got the long runway ahead of you.
Yeah. And so you made a, you made a one before we hit record here. We were talking about that. A lot of teenagers reach out to you asking questions and stuff like that who aren’t at the level of being ready to invest, you know, a lot of money into these types of investments. However, what can we as online entrepreneurs who have successful businesses already or are on a path to a successful business, whatever success means for everybody listening right in their own individual businesses? What can we learn from the types of questions that, you know, teenagers are asking about this subject that we can incorporate into our businesses, our lives?
I think this is really interesting because I think if if everybody understood the mechanics of wealth building when they were a teenager, it would be game over from a financial perspective much sooner. I see so many entrepreneurs who are, you know, outwardly caning it like they’re really killing it in their businesses. But if you pull back the curtain, there’s there’s very little else but, you know, to support them outside of the business. So the thing with teenagers is they’re they’re almost to some degree, as close to a clean slate as possible. So giving them kind of some understanding of the mechanics of wealth. Loading is is absolutely life changing for them. And funnily enough, the principles that I share with teens and I’m really passionate about kind of education for teens around wealth building because I think schools do a pretty terrible job of it. But the principles have come from 20 plus years of observing habits that adults have. And so, you know, when I work with someone, especially for the first time and they show me their numbers and it’s really interesting and I think this is where the accountant in me comes to the forefront. Numbers really tell a story. You can kind of get a sense of the decisions that people have made, how effective they’ve been at converting income into wealth, how much it matters to them, what sorts of assets, things like that. But I’ve kind of identified that people often have like one Achilles heel, if you like, or one vulnerability. So I kind of say that there’s four pillars of wealth building, and that’s the same stuff I teach to teens.
It’s it’s mindset, how you relate to, well, investment, effectiveness, how good are you at selecting investments? Then there’s knowledge which is like education and wisdom combined. And then the final piece is really kind of, you know, like network and kind of like how do you grow your wealth and sustain your wealth? And so one of the things I’ve noticed is that you can be this amazing entrepreneur who kind of gets intellectually understands the thinking behind wealth building and choose a whole series of dud investments because your investment effectiveness is really, really poor. And so, you know, often in working with people, I started to talk about these, these pillars. Stewardship is really important. If you earn a lot of money, you waste a lot of money, but you still have money left over. It just means that you’re not firing on all cylinders like you. You’re kind of falling short of what’s what’s possible for you. So I just think, you know, when I’m kind of auditing and looking at someone’s perspective, it’s those are the, say, four pillars. And and so when I talk to teenagers, it’s really talking, saying these are the four pillars you’ve got to strengthen. You’ve got to really get your stewardship in order. You’ve got to be good at choosing investments. So you’ve got to have investing rules, you know, those sorts of concepts. They’re kind of universal. They’re not unique to adults and they’re certainly they can be applied by kids as well.
So when you said the mechanics of wealth building, are we are we referring to the same thing here when we talk about the pillars?
Yeah, it’s kind of like I definitely think there’s too many people out there talking about wealth building as if it’s formulaic. Yeah. And my view is it’s more of an art than anything else, because if you don’t have your head, head right, you know, your thoughts and your actions are what give you your results. And if so, if you don’t have your head right, if you don’t have the right knowledge, if you don’t look after the money stewardship in when it comes into your world, you know, if you’re not good at choosing investments, if you don’t get those four pieces right, you kind of it’s like running with one hand tied behind your back or whatever the metaphor is. It’s just it’s it’s not you’re not firing as well as you could be.
So one thing I just thought of when when you just said that and I want to circle back to some of those things that you just mentioned there is that. Like I come from a corporate background, so I left the corporate world. Not that I know exactly what day it was, but it was September 30th, 2012. It was a Friday. I know exactly what it was, but, you know, that’s when it was like, you know, contributing to a 401. K and, you know, whoever the the 401k. I don’t know what you call that person like at the moment. Yeah. The person who is taking care of the the 401. K plan for the company at the I don’t know. But they’re running it right? Like you’re putting it in their hand. You’re saying, okay, I’m, I’m choosing this, but then they’re managing everything. My point is, is that so many, like the traditional thinking, like you’re talking about, like what we see growing up from our parents, for example, not blaming them, but like we are giving control over the how our money is being managed or invested to other people. Where what you’re talking about here is taking that control back. Correct me if I’m wrong, taking that control back. Educating ourselves, getting the right mindset, etc., etc.. Do I have that right?
Absolutely. Like no one cares about your money as much as you do. And I think one of the I don’t know whether I’d say crippling, but one of the decisions or evolutions over the last 30 years is the evolution of a wealth industry that really spouts the idea that you should trust them, that you should give your money to them, and that they’ll know what to do with it. That wealth building is, in fact, incredibly complex, and it doesn’t have to be. And yeah, the reality is that abdicating is really, you know, everyone I know that follows the path of abdication always falls short of where they want to be.
So when we say, okay, so we’re going to, you know, we’re a big lesson here so far is we’re going to take back control or we want to take control of our financial wealth building. We so many of us have this amazing asset in our business where we’re creating good revenue. Hopefully, we’re we’re at a nice profit margin as well. But there’s way more to it. So where does one get started if light bulbs are going off for people listening right now and saying, okay, I get this and I want I want to get into the alternative investments and like, what does that mean? And sort of how I view what what you teach and what you and I have talked about. Differently. And we were talking about this before we hit record. Differently from example or differently like a traditional whatever mutual fund or what have you. Right. How most people think about investing. And that’s how I was thinking about it as well. Or real estate, that sort of thing. So. All right. We have a great business. We’re generating good revenue. Profit margin is healthy, but we’re not building wealth in terms of what we’re talking about here. What’s you talked about? Mindset. You talk about the knowledge, part, investment and effectiveness. Where do we go from? How do we get that mindset, if you will? How do we start this process?
I think that’s a really fantastic and quite a big question. But the thing that I would say is maybe a pre frame is part of the reason that many entrepreneurs don’t put as much effort into wealth building as maybe they should is there’s the perception. I mean, as entrepreneurs, you are stretched, you’re often stretched to the limit. And there’s a feeling of kind of overwhelm at the idea of taking on another kind of activity, if you like. So people put it on the back burner because there’s perception that it’s just it’s going to take a lot of bandwidth and a lot of energy. But I guess the pre frame I have for people is it’s really important to remember that the cadence around wealth creation is very different to the cadence and energy required to run a business. So the cadence around wealth building is much slower. So it means that it doesn’t necessarily have to be as time intensive as people think. You just need to. The big challenge, I think, is that the world is just awash with just information overload. And so the challenge is how do you discern which bits of information are important and which ones are, you know, marketing or media or news or sensationalism? And so that’s that’s the big challenge that prevents a lot of business owners from giving wealth building, you know, that little bit of attention that it needs.
It’s kind of like exactly what you said. Where do I start? Yeah, but but I honestly like I think the starting point has to be really an examination of it’s really basic. It’s, it’s, what do I want? Like really, what do you want? Like if you were from a wealth perspective, the definition of financial freedom, people, people do things like they say, oh, well, I’ll play golf on a Friday and then I’d be able to do this on a Wednesday and I wouldn’t get up till ten in the morning. And that’s maybe a description of how life would look. But the definition of financial freedom should be almost like a formula when A plus B plus C is in place. That is financial freedom for me. So like it could be something like when I have. X amount of passive income coming in when I’m mortgage free and when my kids are through university. That is the definition of financial freedom. And so like, everyone’s going to be different. But the problem that most people are very guilty of is moving the goalposts. It’s it’s when I do this, you know, and a lot of people, as I said earlier, hold net worth up as being the Holy Grail. You know, when I hit this net worth, but I tend to kind of say.
Net worth is one metric. But there’s so many others that are more useful and probably more meaningful from a life point of view. But I think the starting point is really that definition of, you know, what does financial freedom mean to you in a very concrete way? Then the next piece is really doing a stocktake of Where am I now? And really asking yourself the question, How good have I been to this point in time at converting my premium income into wealth? And there’s there’s so many different ways of kind of measuring success. And there’s a fabulous book, The Millionaire Next Door, which you may have read, Rick. Yeah. You know, it’s a 25 year old book now, but there’s a formula in that that they created after interviewing hundreds of high net worth individuals. That was very simple. It was the average household age. Multiplied by your gross household income before tax. And if, in the case of an entrepreneur, it’s your earnings, your profit divided by ten. And that number is theoretically meant to be what your net worth should be for the income that you’re on. And it takes into consideration that your income grows over time. So if the average household age is 50 and then you multiply that by, let’s say you make a million bucks in profit a year and then divide by ten.
That should be your net worth. Now, if you are above that number, you’re doing well. If you’re below that number, you’re not doing so well. And I would even say just because of the way that the world has gone over the last 25 years, instead of dividing by ten, I would divide by five. And that should be your network now. All that is, is an example of a barometer for how good have you been at converting income into wealth? That’s it. And so my point is that you just got to really be able to look at where are you now and hand on heart. Have I actually done a good job of being a steward of the money that I’ve had? Have I allocated money carefully to investments? Have I been playing the long game and the short game and just asking those sorts of questions to really evaluate Where am I at? And then you can start to engineer like, what do I need to get from where I am today to where I want to be in a particular time frame? And I highly recommend the five year time frame. I think it’s more meaningful than a ten, 20, 31. It’s hard to stay focused and motivated for that length of time.
So let’s talk about that five year time frame, because that’s something that you and I have been talking about, and that’s something I know that you talk a lot about for the reason that you just that you just mentioned. So. The the way that I see it and the the difference of what you teach versus. Because like when most people like when let’s just flesh this out a little bit, when most people think about, you know, investing, they’re thinking about like, I’m putting it into an IRA or a Roth IRA or 401 K or a mutual fund or what have you for retirement. And I’m like waving my arm way out in a, you know, like, way so many years down the road. But while we’re talking about I mean, and that there is certainly that element. Right. But what we’re talking about is what you mentioned earlier is what kind of income can I create that is coming in as a result of the investments that I’m making? Just I don’t want to use the word like passively, but that’s kind of what it is, right? Like we’re investing our capital so that we can create an automated. I don’t mean to sound a little scammy because it’s not, but it’s like we’re we’re investing our capital so that we can create revenue coming in. You know, say five years down the road, whether we’re working or not. Am I right?
And yeah, absolutely. And I would say to you, just to clarify, if you think of all investments as sitting on a spectrum where at one end of the spectrum you’ve got super active investments, meaning like let’s say you buy the house next door and then you’re the landlord and you’ve got to do the maintenance and you’ve got like that’s super active developments. And then down the other end of the spectrum, you have completely passive where you do not have to manage the investment, you don’t have to do look after that asset day to day. So, you know, most assets will sit anywhere on that spectrum. But typically, entrepreneurs are looking for more of a passive investment opportunity. They’re not interested in running another business.
Right. And so one of the first things that we talked about was just what you just mentioned, like because my thought is, oh, because everyone talks about it, oh, maybe I should buy a home to rent out. And while all that sounds great, I don’t want to get a call at two in the morning that like, oh my, the toilet’s overflowing or whatever it is, right? Like. The AC broke or something like that. I don’t I don’t want to do that. And so that’s where this type of alternative investment comes in and the opportunities that exist within this area of a portfolio. Right. And what’s especially appealing to me is this five year time frame is if we can invest the capital that the business is earning from profit and like just continue to invest it over this time period and create this revenue stream at the end of ish five years that’s coming in that allows us to make the decision of whether we want to work or not, like my family and I, and also takes care of Maya, my three year old daughter. Like, talk about legacy. Like that’s very appealing. So let’s start to define what is an alternative investment. I know there’s different areas of it. So let’s start to break. What break that down. What exactly that means?
Totally. Well, I think it might be useful for people to understand, like in terms of my back story, I when I started to really put my head into investing, you know, about 20 years ago, I tried everything like I was doing real estate, I was doing share trading, I was doing futures, I was doing options. I mean, I really put my head in everything and I fell in love with real estate very early on because I could see by applying leverage, you could just make these enormous gains. And it was in about 2009, just sort of in the midst of one of the worst recessions ever that I started to look at our numbers. And at that time we had quite a large property portfolio and we redlined our finances to get there like we had. We’ve always had relatively modest income and we just hustled and, you know, tried everything we could, you know, bent the rules as much as possible to get to that point. But, you know, from an accounting perspective, at that time, I started to future pace like, okay, we’re here now. We have an even at that time, an enviable property portfolio. When am I going to hit the the income goals that we have? And I realized at that time I was still at least 25 years away from generating the kind of income that I wanted. And that’s what led me to go, this is terrible that we’ve done all of this. We had, you know, even on paper, great net worth, but we weren’t where we want it to be. So when I started to look at, okay, what else, that’s when I came across alternative and it was totally like a light bulb moment. The thing to make mention of the word alternative investments conjures up all sorts of scary. Scary.
Wait, what is this like?
Yeah, yeah. So again, if I think of it on a spectrum, down one end of the spectrum, you’ve got things like venture capital, seed start up capital, you know, maybe even blockchain, you know, all those things, high risk, high return. And that’s the hair raising stuff that you hear people, you know, make and break their fortunes on down. The other end of the spectrum is alternative investments, which are investments which are backed by real property, so often backed by real estate. And that is the space that I like to play. I am a super conservative person. I am looking for investments which have amazing downside protection, which lack of volatility, where I can get predictable income, where it doesn’t matter which way the market moves. If the market moves up, I make money. If the market moves down, I make money, the market goes sideways, I make money. And the problem with all as my. Love real estate, but they bank on a rising market. The way that most traditional real estate deals are. And I cannot stand exactly what you’re talking about. I have I still have quite a large property portfolio, but I hate the tenants and toilets piece like this is irritating. So from my journey, you know, my husband and I still both run businesses. So that’s kind of the, you know, the fun a game. We’re both part time in the businesses and it’s more of a mission based thing now. Then underneath that is the alternative investments which generate really strong, predictable cash flow. And it also you don’t need much money per deal. So I love that you’ve got that true diversification. Different strategies, different geographies, different deal makers. And then underneath that is my property portfolio. And then underneath that is all my retirement funds, which a bit like you, we were, we were kind of yawning about the sort of returns that we get in those. But yeah, you know, it’s kind of like creating multiple safety nets because there’s no guarantees that there won’t be some catastrophic event. But I love the idea that you’re thinking in terms of layers of safety.
So you you kind of touched on it there. But within alternative investments, if I’m not mistaken, there’s four that you focus.
On this five buckets of.
But I, I kind of love things like syndications, which is where a group of investors work with a single deal maker and secure a single asset. So you know what the asset is? You have a direct ownership of the asset and the deal maker. It might be like an apartment complex, it might be self storage, it could be any number of different styles of assets. But the idea is that you are purchasing an asset that’s potentially already cash flowing, that’s maybe just underperforming and underutilized. And the skill set of the deal maker is to acquire it at a price which allows them to create some forced appreciation, potentially improve the cash flow. But the idea is it’s a single asset. That’s what the definition of a syndication is, a single asset. Then you have these small private funds where a bunch of individual investors work with a deal maker or a team of deal makers, and they acquire multiple assets and they can be very narrow in their focus. It could be like, you know, bridging finance on on high end real estate through to self storage multiple. It could be diversified into lots of different kinds of assets. But again, you’re participating at the highest level of control, but you don’t you’re not interested in any of the day to day. The third category is what I call Joint Ventures, and this is a really fun one where you partner with a deal maker who’s got boots on the ground that runs the deals for you.
So an example of that might be I might put $20,000 into a joint venture deal. My partner will run the deal. They’ll buy a single piece of real estate to do their rent. They already already control the asset they might renovate and cashflow the asset they’re going to pay me say 11% per annum for a couple of years and at the end of two years they’re going to sell or 12 months they’re going to sell that asset and give me 10% of the profit they’ve bought the asset under market. So my average return for those two years might be 15 to 19% like. So it’s a cash flow return and a capital return. The fourth category is lending opportunities where you get to be the bank and it’s not that you’ve got to go out there and do any due diligence on any potential borrower, but you participate with someone who’s a deal maker that has that experience and structures the deals for you. So you’re participating in someone who’s the the lender. And then the fifth category is what we call turnkey real estate. So that’s probably where it’s the closest to owning direct property. But the idea is that somebody else manages it. So if there’s a broken toilet, somebody else is handling it. And often you’re buying at under market value, but you’re predominantly buying for strong cash flow rather than appreciation. So there the five buckets. I don’t know if I’ve gotten too much into the weeds on that.
No, I really wanted that, actually. So and the like you said, alternative alternative investments conjures up all these things of like, you know, like, wait, what’s wrong? Like are these sketchy deals? This is a Ponzi scheme, all this other stuff and. It’s something that early on that came up in a conversation that you and I had about this exact when that’s where my brain went, I was like, wait a minute, what is what is all this stuff? Right. And it has to start with like one of the four pillars you talked about are just like educating yourself and that these are the types of investments that aren’t. Correct me if I’m wrong, aren’t available to. Most people because of the lack of knowledge, because of the lack of network. Is that my describing it correctly?
100%. Right. I mean, when I stumbled across alternative, I realized it was in itself a secret playground. And then I realized, you know, and I had I made all the mistakes, all the rookie mistakes, like, you know, investing with the wrong people, the wrong strategies, the wrong geographies, everything, you know, not really understanding the mechanics of the deals. So, you know, it’s really been a really from the grass roots baptism of fire, if you like, of really just like how does this work? And so I feel like well qualified to talk about it because I made a lot of mistakes, like a lot hundreds of thousands of dollars. But where where I feel I’ve got to is, you know, as you start to meet good people, they then introduce you to good people and you start to ratchet your way into better and better networks. And I realized that, you know, wherever there’s opportunity, you’ll find sharks for sure. Sure. So part of the journey is around, you know, bypassing all of that and finding the people who are they’re not famous. They’re not celebrities. They’re the terrible marketers. But they are really good at what they do and they love what they do. Most of the guys I deal with, they’re all financially independent, but there’s a real passion for the the play of these strategies. And if I can align with people who in my mind are some of the best investors in the world and who will share their exceptional skills and deals with me, that is serious.
You know, they they have their ear to the ground. They know what’s coming long before news hits the market. It’s like insider trading. It’s like legal insider trading. Mm hmm. So things that, you know, we talk about inflation and things happening in the economy. These guys invest heavily in their own masterminds. They understand the impact in what’s happening economically long before mainstream. So I think of it as a very conservative investment. And I know that sounds bizarre. So I think the really important thing is to understand there’s a huge difference between something being unfamiliar and something being risky, and knowledge and education is how you de-risk it. And then when you understand and then you can contrast some of these alternative investments with mainstream investments where you basically, in most cases, you’re hoping and praying the market goes up so that you make money. That’s when you start to go, hang on a sec. These alternative investments are actually much lower risk. They’ve got multiple exit strategies. They’re cash flowing and they’re predictable. Today, before I even do any work. I’ve bought at below market. I’m at the highest seat in terms of power and control, and I’m not abdicating my decision making to anyone. So it’s all those elements that we’ve already spoken about.
Yeah, you bet. You mentioned the multiple exit strategies, and I took a note here of you said downside protection. Can you talk a little bit more about that? Because this is another thing and I love how you just put it in. And you said when it’s risky or people think because they don’t know about something or don’t understand it, then they automatically like, well, that’s risky then, right? Or There’s got to be a catch or over here. I think that’s that’s how something like that’s what I was thinking right before I started to educate myself and talk to you a lot about this. So when you say multiple exit strategies, downside protection, what are we referring to here?
So what? What I like about the sorts of deals that I invest in now is. The dealmakers understand that they’ve got to manage risk. And so what that looks like is they have plan A, B, C and D often around how they’re going to dispose of or manage an asset if the market crashes. What do we do? And in most cases, like the worst case scenario is you often just have to keep the asset a little longer and just, you know, keep the cash flow coming in. You don’t necessarily recognize that liquidity event where you sell the asset to the market. But, you know, there could be a refinance, there could be an asset sale. There could be like there’s multiple levels. And downside protection just means simply if if everything turns to custard, if the market falls apart. Like what kind of protection do we have in this deal? Like, for example, if you own a share in a major bank on the share market and the market collapses, there’s no downside protection at all unless maybe you’ve, you know, shorted the market or something like that. But yeah, in, in these real estate based deals, there’s often good downside protection. And I started investing in the States back in oh nine.
And what was really fascinating to me, and you would remember this, you know, a lot of markets were just completely annihilated. People were selling property at cents in the dollar. But what happened to rents and income was absolutely nothing. And in some cases, the rental market really strengthened because people were more renters. So the market collapsed, but rents just flatlined like nothing happened. So that that to me is, you know, people need a place to live. You know, there’s no question. And if you can stay in that affordable housing sector of the markets, if you think of the bell curve, you neither want to be a slumlord, nor do you want to be only dealing with blue chip. You want to be in that kind of area of the bell curve or the market where that’s where most people want to live. That’s where most people want to buy. That’s where most people want to rent. And if you stay kind of near that midline and even lucky with property that I buy here in Australia, like I kind of that same rule of thumb applies. You’re much more likely to, you know, navigate economic challenges better than if you’re at the extreme of total high and blue chip or slumlord.
And you’re just. And just to clarify, I probably should have mentioned this early on where you just said that when you are teaching alternative investing, investing, it’s not just in Australia, but it is the majority of it, if I’m not mistaken, is is here in the States, is that correct?
Yes, I look, I do have alternative opportunities that I share with my mastermind here in Australia, but funnily enough, even my Australian clients lean more towards the US opportunities because again when they, when they’re educated on how the opportunities work, you know, who the dealmakers are and who the dealmakers are is probably the highest risk component of the whole thing. You really need to know like and trust the people that you operate with. And that’s where I made all of my mistakes early on is, you know, aligning with the wrong people. So I, I think there’s opportunities in alternative real estate all over the world, but it’s really about trying to work out, you know, do the numbers work? What kind of legal system do I have to protect me? What are the mechanics? Who are the people? Can I get access? And really, this is the question. What people often think about when they’re investing is how do I just find that next one deal? And what I’m trying to encourage people to do is think about building a pipeline of deals. If you can build the right network that can supply you with a pipeline of great deals when you need it, then money will never burn a hole in your pocket. You can be proactively thinking about, okay, well, I have this money that I know I’m going to earn next quarter.
I can be thinking this quarter about, well, where where’s that? Where’s that surplus going to go? You’re not chasing deals. You know what’s happening in the world right now. And, you know, you would probably have experienced this. Real estate prices, share market, everything’s gone crazy over the last two years because people have more disposable income and the market is super frothy. People are investing from a place of FOMO. You know, the fear of missing out. Yeah. Real estate prices are getting pushed up. People up paying over market prices just to get their foot in the door. And that is a that’s a really I’m going to say unhealthy place to start your investing journey from is just trying to like it’s almost like you’re just trying to get get in because you’re worried about missing out on future growth. And so there’s a whole cohort of investors that I think have come into the market maybe in the last two years who’ve maybe done very well over the last two year. Block But potentially, you know, with the uncertainty, volatility and rocky times that we might be facing could find themselves in hot water if they’ve overextended or overleveraged.
Yeah, and one thing that you mentioned earlier, too, as far as. I guess creating a more I don’t want to say safety, but the ability to diversify like because you said you can take, you know, let’s say give $100,000 to invest. I’m going to put 20,000 over here. I’m going to put 40,000 over here. I’m going to put 10,000 over here in the different types of deals. For me personally, that’s very appealing because I get to spread. I get to spread it out into different types of things. Is that what you see most people doing in terms of alternative investments?
Yeah. Look what I love about the way that this particular asset class works is you can take small bites of lots of cherries. So instead of having to go out and, you know, with or without leverage, purchase a an asset that’s worth hundreds of thousands of dollars. What you can do is put a little bit of money here, a little bit of money there, and participate in a way. And in in many deals, like if leverage is appropriate, the deal maker will organize the leverage. So you don’t have to deal with the banks as well, which is which can be very painful. And they will apply in some case. And these are all the questions you have to learn to ask. But sure, they’ll apply a fairly conservative level of leverage, if at all. It’s really important that crafting your your investing rules and understanding how to ask the right questions is really, really important. And that’s, again, as you said, part of the education piece.
Yeah. And that’s really where you come in, because I know that the question. That so many people listening right now are thinking like, okay, I get it. I’m interested in learning more. How do I like I know that one question I asked early on, I was like, All right, well, how do I get access to this type of network of people to be able to do these types of deals? And that’s really what you facilitate in your business in terms of your program, your education, etc.. So talk about talk about what you do in terms of your program and how that works. And you, like you said, you’ve done all the vetting. And you make it easy for people. So talk a little bit about that.
Yeah, look, I reflected long and hard over my last 12 year block in terms of all of the experiences I had. And and really there are very few kind of environments where people can share their wisdom and kind of create a GPS for you of how do I bypass the mistakes and just get to a very simple, elegant solution. So that was really the the thought that I had in starting the mastermind that I run. And really what I’m trying to do is I work privately with business owners who are entrepreneurs who are looking to set up a portfolio of high performance investments so they can hit their goals in anywhere from 2 to 5 years. And, you know, I like the idea of it’s curated deal flow. People will come in and they’ll say, Celine, are you going to tell me where to put my money? And my response to that is, you know, it’s going to take a little bit of time to get your head around this new environment. But by the time you get to the starting gate, you won’t even want my opinion. You just know which strategies feel like they’re in alignment for you. You’ll know whose particular methodology you like. You’ll just fall in love with, you know, who these dealmakers are. And it’s fascinating to me that no two investors pick the same subset of dealmakers to work with. Yes, I’ve done some, you know, the due diligence and the underwriting, but I actually genuinely have great affection for the guys that I call guys and girls that are part of my dealmaker network. They’re they’re really good human beings. They really care. They’re ethical. And so for me, it’s I’m ambivalent about which deals people do. My job is to be the guide to make sure you understand what you’re doing, that you stay safe, that you don’t get any cuts and bruises the way that I did, and that the solution is really simple. I think as a profession, accountants are definitely guilty of overcomplicating things and making things seem messy.
So job security. Selina It’s job security.
Yeah. So I think the ROI that I the that I’m able to show people is there’s a tangible one for sure, which is I’m going to invest this much money and I’m going to get this return. That’s the tangible return that they get. But there’s an incredible I like to think of an intangible return, which is to do with their leveling up. I mean, they’re really becoming professional investors. They’re thinking differently. There’s a lot of peace of mind around the wealth piece, which maybe they hadn’t had before. You know, I feel that the the wealth building has to be holistic. So even though, like our focus is predominantly on the alternative, it’s like, well, what else have you got in play that’s supporting your journey? You know, are you looking after your retirement? Are you thinking about financial legacy? Do you have a family investment charter? Do you have thoughts on how your kids are going to participate in the wealth building? But there’s a journey like the starting point in the journey is How do I get out of survival mode and into wealth building mode? Yeah. Then the next piece is like, okay, let’s start building that passive income. Then let’s start to turn those into annuities, which are you can be as active or as passive as you want. And then there’s the legacy piece. So there’s really a journey and it takes time.
And that’s what’s really been eye opening for me, and I tend to be very hard on myself. And so after our initial conversations, I was like, Man, why? Like, why did I wait so long to start thinking about this stuff? Because it’s always been the traditional mindset up until, you know, the past, honestly, like the past six months or so, unfortunately. So anyway. And by the way, so what’s the name of the mastermind? What’s the name of your podcast? And also, I want to share that amazing calculator that you shared with me because we put numbers into this, this calculator that you created, and it’s a five year calculator. And I was like, Wait a minute, if I invest this much money per year reinvesting the dividends over those each of the years until we get the five years, that’s what’s possible. As like kicking out every single year in perpetuity, like, yes, please, that sort of thing. So what is the mastermind and where can people learn more about that?
So the mastermind is actually my flagship program is called Freedom Warrior and you can find out on my website, which is in Cosi wealth in K OCI wealth. And just for reference of why Inkosi Inkosi is the Zulu word for tribal leader and the number one KPI that we all track inside of my program is actually what percentage of your passive? Wealth goal, passive income goal. Have you achieved? And it means that people can share that really freely without having to share all their private numbers. Yeah, you could be at 20%, 50%, 90%, whatever, but it’s just, you know, that’s so that’s where Inkosi comes from because we’re all trying to be leaders in in our tribe in case. Yeah. And the calculator’s just there on the website. You can just get it’s called the Freedom Mapper calculator.
But the podcast is called the Alternative Investing Podcast, and it’s really become a passion project in a way. And I’m really trying to be quite contrarian and interrupt people’s beliefs and thoughts about what they think they know about wealth. And just in reference to what you said a minute ago, I really want to address that. Being hard on yourself is, I think, human nature, sir. But my, my, my genuine thought is it’s never too late. You know, I talk to people who are as old as in their seventies, and they’re just starting to think about it now. Yeah, and they thought that it was too late, but it’s never too late. Never too late to change your trajectory.
Well, thank you for sharing all this. This is like I hope this is eye opening for everybody listening right now. That, number one, if you’re not thinking about wealth building in the fashion that we’re talking about here, whether it’s alternative investing or not, I really want to encourage you to start doing that in terms because for me, for so many years, I thought like, Oh, business is doing great, right? Like we got money in the bank, but it’s just sitting there. It’s not really it’s not working for me and my family. And you know, now, over the past six months, eight years, a little over eight years in the business now now I’m thinking about these things and now putting this into educating myself and putting these things into place to be able to build that that kind of wealth, that kind of recurring money coming in, whether like everything we’re talking about here today, whether I’m working or not, creating a legacy for my and my family and so on. And so thank you, Selena, for coming on and sharing all this. I’m going to link all those links up and the show notes you all for for everything we talked about here today over on the website. Thank you, Selina, for coming on and sharing your wisdom here today. I appreciate it.
Oh, it’s been super fun unpacking all of this. Thanks for having me, Rick.
All right. Hope you get a ton out of this conversation here today with Selena. After we stopped recording, we were talking and I said, you know, I got to have you back on the podcast here probably a few more times to talk about how, you know, in investing in alternative investments, for example, I should say, and how market conditions can or won’t affect this type of investing. So we’ll get a lot more specific on different situations and scenarios in future episodes while we all have Selena on the podcast here. So thank you again as always for listening if you’ve not already. A lot of people still don’t don’t ask for this on podcast, but I’m going to ask you here if you’d like to support the show. Still very much. Number one, make sure you hit the subscribe button on whatever wherever you’re listening to the podcast, whether it’s Apple Podcasts, by the way, I looked at my stats and we have a very, very, very Apple centric listening audience. So there’s like, like huge percentage of you are listening on your apple. You’re on your on your apple device, on your apple, on your iPhone. And so thank you, as always. If you’ve not already hit subscribe and if you wouldn’t mind leaving a quick rating and review for the show there on Apple Podcasts is super help here for the show helps us reach more people with our message of helping online entrepreneurs establish online course creators and coaches. So thank you in advance for doing that. Thank you, as always for tuning in today. Appreciate you, my friend. I’ll see you right back here for the next episode here. The Art of Online Business Podcast.