Ask Steve McKnight

What motivated you to risk leaving a comfortable job to become a property investor? Was there a key moment where you knew you were committed to becoming "financially free"?

Many people are deeply unhappy with their employment situations and ‘dream’ about doing something better with their lives. I was no different, right up until I had a stress related medical crisis where my GP told me to take a holiday and change my life or else prepare for an early grave.

Up until that moment I would grumble about my job, but I was addicted to the ‘prestige’ and ‘pay cheque’, despite the ‘pay pain’ that came with it.

Yet, as I reflected on what was most important to me, I realised that being paid a lot of money to be unhappy simply didn’t make sense. There had to be a better way to approach life.

Aside from the medical urgency to change my lifestyle, I also rationalised my decision to move away from my career on the basis that if worst came to worst, I could always go back and get a job in accounting.

Truth be told, I was already living my worst case scenario (doing a job simply for the pay), so any improvement was a step in the right direction.

The moment I knew I was financially free was when the net income from my property investments exceeded the salary I was earning as an accountant. That was a great day!

How did you stay focused and motivated to keep moving forward with your investment goals, and avoid falling prey to "moments of weakness"?

Make no mistake – the path to financial freedom has many twists and turns, and it is easy to stumble off course and become lost. This is natural, but the sooner you find your way back, the better.

Strangely, experiencing success is a significant danger to your larger wealth goals, because as your wealth grows, the pain that was present when you started gradually fades resulting in potential stalled progress.

Perhaps business guru Brendan Nichols, a man I tremendously respect and admire, said it best when he commented that “the enemy of a great life is a good life”.

So, how do you stay motivated? There’s a plethora of books and courses you can read or study, but to me the key to pushing on is to remain connected to the reason why achieving your big picture goal is an important priority.

Two pieces of advice I can offer are:

  1. If you don’t know ‘why’ you’re trying to do something, it’s almost impossible to decipher the best ‘how’ for achieving it; and

  2. People give up when the pain of going forward becomes greater than the pain of going back. Pain (or at least significant dissatisfaction) is probably what propelled you into action in the first place, so in order to keep making the effort required for progress, maintain that ‘pain’ perspective as a reference point.

These two points are among the most important realisations I have ever had.

How has your outlook and focus changed over time as your investing income grew to the point you no longer needed your job? And what keeps you motivated now that you're no longer "chasing a paycheque"?

I believe that there are two quests in life: control and significance.

In the first quest, we seek to master and control our destiny. That is, rather than having to do something, we want choice. This might be something primal, like getting food, water and shelter. Or it could be freedom from financial pressures.

Once we have ourselves sorted out, we start to think about the impact or legacy we have on others. This is the quest for significance or life meaning.

These two quests are not necessarily mutually exclusive, but undoubtedly one will demand more of your attention than the other depending on your circumstances.

Applying this theory to my situation, my first quest was all about controlling my finances as a way of controlling my work environment.

At the same time I was experimenting with my faith and wondering what the ‘big picture’ of life may look like. Once I had achieved my financial goal, I had more time to work on my quest for life meaning.

With the benefit of hindsight, I think there’s a stronger connection between the two journeys than I first realised because the second journey can give meaning and context to the first journey. That is, it’s hard to succeed in Journey #1 without some grasp of Journey #2.

So, what keeps me motivated today? I still have financial needs and goals, but they are no longer primarily about me and my comfort, but rather how I can use my skills to help the needs and comforts of others.

Every investor will face setbacks and challenges in their investing journey. What advice can you give someone who is struggling to move forward after experiencing a big investing mistake?

Provided it’s not fatal, I take the view that something is only a mistake if it happens more than once. The first time is a learning opportunity and a chance to improve.

The truth is that, as I’ve said, the road to financial freedom has many twists and turns. Sometimes, bad and unexpected things happen. For example, I once owned a property that was demolished by the local council without any prior notice… or so I thought.

They had actually sent two registered letters that had been received by my office but misfiled. Obviously that was a problem, but it was also the chance to review and improve the internal office communication.

Investing is about risk management, not risk avoidance. Things can and will go wrong, and when they do, you may find that how you respond actually makes you a better person... once the shock wears off.

What are the most common mistakes you see people making when starting in property investment?

Here are four:

  1. Thinking that having more money will make them happier.

To borrow another phrase from Brendan Nichols: ‘money doesn’t buy happiness, but everyone has the right to figure that out for themselves.’

Money can help you look happier, but it will never meet the deepest needs of your soul. Happiness relates to being content; filling your life with things that deliver temporal rather than eternal significance will only deliver temporary relief.

  1. Concentrating on ‘how’ rather than ‘why’

Because the goal is ‘how’ to have more money, rather than ‘why’ is more money a priority, it’s easy to waste time looking for quick fixes rather than permanent solutions.

The strategy is the mechanism for making money, but it is not the reason for making money.

For instance, renovating can work for some but not for others. The strategy is not the problem, but rather the application of the strategy.

It’s much smarter to let your ‘why’ dictate the best ‘how’, rather than having your ‘how’ dictate your ‘why’.

  1. Failing to start

It’s been said that ‘you don’t have to be great to start, but you have to start to be great.’

Again, the lack of certainty about how to start is because there is a lack of certainty about why starting is a priority.

  1. Money follows management

I could go on all day, but let’s finish up here with a forth and final comment: money follows management.

All too often property investors are overly focused on what they’re buying, when the real money is made by maximising the value proposition of how the asset is owned and managed (and ultimately sold), as opposed to how it was acquired.

Any idiot can sign their name, but it takes skill to make the most money, in the quickest time, for the least risk.

When you started as an investor, you had never bought a property, and only had modest savings in the bank - but you came up with some clever strategies to fund your property purchases. What are some of the best ways to fund deposits for properties without living off 2-minute noodles?

Leverage is powerful because it allows you to overcome the reality of your constraints and achieve more with less.

Our two biggest constraints are our time and money, so if we can leverage off other people’s time and money, then the glass ceiling of our own limited resources can be overcome.

So, the question to ask is: how can I access more time, and how can I access more money?

In regards to time, you can rearrange your own schedule, but you still only have 24 hours a day. So the better approach is to outsource and delegate but retain management and control.

For example, rather than spending hours looking searching the internet for deals, create a deal profile that explains exactly what you are looking for and email it to all the agents in the area where you think those properties might exist. That way you will have multiple people looking in multiple areas without costing you a cent!

In regards to money, either join forces with a money partner (someone who has the money but not the time or skill you have to invest it), or else use a leveraged investment technique such as vendor finance, lease options or vendor carry back.

If these terms are new to you, do a google search or even better, grab a hold of the revised edition of my first book and read Chapters 12 to 18.

Now that you've achieved your goal, if you could go back in time, and give yourself one piece of advice that would help you as a property investor, what would it be?

Carpe diem (latin for: seize the day)!

You might not get a tomorrow, so make the most of today.

Seriously, if you don’t like what’s happening, do something about it.

Rarely do things sort themselves out, and all too often we become passive instead of confronting the root issue and resolving it there and then.

Procrastination is like ‘progress cancer’. Luckily there’s an instant cure, if you have the courage to apply it: reassessing, learning, and taking action.

If someone is interested in following in your footsteps to become a property investor - or wants to take their property investing to the next level - what would you recommend they do?

There are three ways I can help.

The least costly is by becoming a member of (it’s free!)

Doing that will help you stay up to date with what I have to say about various investing matters as the property market ebbs and flows.

Books & Seminars

The next level of help I can offer is via reading the books I’ve written and attending my bi-annual live market updates (held in the major capital cities).

Property Apprenticeship

If you’d like to work more closely with me and my education team, we offer a fantastic course we call our “Property Apprenticeship” which, once completed, results in a formal qualification (a Certificate IV in business).

Becoming a Property Apprentice is definitely a worthwhile investment if you’re looking to fast track your investing progress. More information is available here.

Wishing you with all the best of success, and that your investing delivers the life-changing results that I’ve been able to achieve.

- Steve McKnight

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