Podcast 216. Lessons Learned from Tech to Buying Real Estate with John Foong

Average Joe Finances:
0:01

Hey, welcome back to the Average Joe Finances podcast. I'm your host Mike Cavaggioni, and today's guest is John Foong. So John, super excited. It is actually tomorrow where we're talking to you from, right? We got this.

John Foong:
0:14

Welcome, welcome from the future.

Average Joe Finances:
0:16

Yeah. Yeah. So back, yeah, back to the future over here. Hey, welcome to the show.

John Foong:
0:21

Thanks, Mike. It's a great honoree here. You do a wonderful service for the global community on a very important topic. Thank you for involving me.

Average Joe Finances:
0:27

Yeah, no I appreciate it, and I appreciate you taking the time. I know it's pretty early in the morning the next day over there. That's right. That's right. Even though it's only about a four hour time difference it's realistically about a 20 hour time difference if you go the right direction. But no this is exciting. Always excited. Talk to somebody on that side of the hemisphere. And, so John, I wanna start this off by asking you, did the toilet bowls really flush in the opposite direction there?

John Foong:
0:52

It is true. It's true. I actually only learned that from the simpsons episode. That was about that.

Average Joe Finances:
0:57

Really?

John Foong:
0:57

About, yeah. This is oh my goodness, 30 years ago. But yes the actually water does flow in a different direction in the southern hemisphere. So good day. And that's today's fun fact.

Average Joe Finances:
1:06

Yeah. Awesome. Thank you for that. And you know what's funny is that's, I think this is like the first time that the first question I asked a guest wasn't the question that I always ask a guest that comes on. So let's make that the second question and that's gonna be we'd like to know more about you John. So could you share a little bit about yourself and share your story? Tell us who is John Foong?

John Foong:
1:28

Oh, Mike. That is the question I think we all grappled with for our lives. But not to get too philosophical my, professionally I lead sales at Domain, which is one of Australasia's largest real estate portals. So we help, buyers and sellers, moms and dads investors and renters find, sell their dream property. And we do a lot of work with real estate agents. That's my day job. I've done it for about two years and I love it. It's an amazing journey. Even though the market's been tough all around the world, it's so important to inspire confidence in people's property journey. That's my day job, and that comes to the back of about 15 years in the tech industry. So I was 13 years at Google, two years at Uber, most of that time in the us, half that time in Europe. Even though I'm from Australia, so I've had the chance to really understand technology portals and marketplaces across a range of amazing companies. That's my professional story. On, on a personal note I grew up here in Australia. My parents migrated from Malaysia and Hong Kong before I was born. And I had the chance to grow up here in Sydney. It's an amazing place. I grew up in Sydney actually, did my undergraduate studies here. Did my first job here, then spent the next 17 years overseas and I just came back two years ago to be with my family here and bring my wife and kids along with me. And that's paralleled my investing journey. I had the chance to purchase my first house when I was 18. And that has been out of a culture of. Property investing. My dad was a real estate agent, but even before he was a real estate agent, he was an auditor at a bank. It was just tradition as his father had done before him. As soon as you have income, you invest in property and you do shares on the side, stops on the side. I can talk a lot more about that journey. But I've been chief Revenue Officer. That's my current job, a technologist. That's been my career and throughout my life. A property investor with a lot of interest in stocks as well.

Average Joe Finances:
3:07

John, all interesting aspects of your life especially, when it comes to what this podcast is about. I'm curious now with learning about some of those things in your background what are some of the things and this might be this can be a little bit different, but what are some of the things you learned at Google and maybe Uber, at least on the tech side, that you think helped you on your investing side?

John Foong:
3:33

That's a great question, Mike. I think what Google and Uber and those Silicon Valley tech companies to make a broad generalization, I lived in Silicon Valley for over 10 years, so it was my life I was at Stanford for a while. And that I think what those companies have is deep paranoia. There is this nurses paranoid.

Average Joe Finances:
3:53

That's not something I was expecting to hear. Please tell me more.

John Foong:
3:56

I actually think it's one of those things that makes, again, I'll generalize American technology companies so great and often so dominant is there is this belief of, okay, number one, in a positive way, how do we change the world? How do we change the world? What's it gonna look like to make something at Google, they called it the toothbrush test. Something so useful that everyone in the world uses it multiple times a day. That's great. That's positive. That's wonderful. And on the, I guess the more cynical or negative or skeptical side, there is belief that somebody is gonna come and disrupt us. Someone's gonna come and disrupt us, right? There's some person in the garage, mark Zuckerberg, Harvard Dropout, he's gonna build the next and that's gonna disrupt whatever it's. And those mindsets are very powerful and very useful. They can be a bit much if you get carried away with it. And so I think for me, what that's brought into my own investing is to play out both the best case of the use of Wolf's case. The best case is what does it look like to have a finance journey that super proud of? That you know that my kids can benefit from my grandkids, my great-grandkids. What would that look like? How do you plan for the future? How do you plan for world domination? That's the mindset that you get, again, coming out of America, coming outta Silicon Valley, but at the same time, you play out the worst case, like in this case, it's not, what? Will someone displace me as an investor? We're all investors here, but what does the worst case look like? And so for me, we used a lot of financial modeling, obviously in, in technology companies about best case or worst case, and that's something over the last 10 years I've done a lot of, what is the best case scenario and what could the Networth of the family be and what's the worst case scenario? And how might we mitigate that if those things were would occur?

Average Joe Finances:
5:27

So that's interesting that's one of the things that you took away from that, and I never really thought about that kind of mindset that these big tech companies would have. The, and that is a good way to think about it too.'cause when you become that big and you're creating something that is so useful to so many people, then that is the next question. Okay, who's gonna be the person that comes in here and disrupts this? Who's gonna be the person, who's gonna be that company, Amazon, who's gonna be, the Facebook, the college dropout that started this program? You know that?'cause Google was always like the number one, right? But before that, when I look at things too I look back at the past, especially on, in, on the tech side. And I think about my childhood, right? And I think about when the, AOL first came out, Uhhuh dial up internet and all that stuff. And it was so exciting to get that you've got mail thing right now. It's that's right. Stop sending me emails, please.

John Foong:
6:16

Oh, totally.

Average Joe Finances:
6:16

But I look at that then I remember back to then I'm just like, Yahoo was the thing that was the place.

John Foong:
6:23

That's right.

Average Joe Finances:
6:23

But then Google came. Disruptive. Not only disruptive, but completely took over.

John Foong:
6:28

Yeah.

Average Joe Finances:
6:28

So it's pretty amazing to see that. Now, did you see the same type of mentality when you were at Uber as well?

John Foong:
6:36

Yeah, definitely. There is a quote by a guy called Andy Grove, who's the founder and CEO of Intel, which is only the paranoid survive, and I definitely see it right at Google and Uber at Uber when I was there. I was there a few years ago for two years, it was the thick of competition. There was Lyft, that was coming, and they had a cool brand. And we're always looking at, Hey how's Lyft doing? What are they innovating? How, what can we learn from that? How can we, one up them? And then of course there's a battle in each country, right? There's, we're trying to expand into Asia, into India, and they had very strong domestic competitors. And then don't forget, at Uber, it's not just the rides, it's Uber Eats and you have, DoorDash delivery service. Wherever you look at it, even you might go Google's no one's search engine, but. Let's look at the lens of digital marketing. They're not number one there. Let's look at cloud computing. They're not number one there. You've got all these different spheres. You can always compete. You can always get better. And I think that's a very positive mindset. Again, if you take it too far, you'll never be at peace. But I think, it's a wonderful thing to, counter what Clayton Christensen calls the innovators deliver the whole notion of why all successful companies become unsuccessful. It's hard not to be complacent.

Average Joe Finances:
7:36

No, I love that, John, because if you do take it too far, like you said, You're not gonna be able to sleep at night 'cause you're just gonna constantly get worried around going, oh my goodness. Yeah. Constantly just worried about who's that next competitor that's gonna show up and be knocking on our door? No, that's great. So now learning that kind of mindset from the tech side. Yeah. You said that you've been investing, you know your whole life, right? Yes. Ever since you were very young and. By learning this, do you find yourself to be a little bit more paranoid about when it comes to your investments? Or like how does that translate into your personal financial journey?

John Foong:
8:12

Yeah I think let's talk about mindset.'cause I think, yeah, if I think about my own investing journey, it is the confluence of two mindsets that I try and find a balance between. And one of those mindsets is how do we get better? How do we optimize with the debt, the hand the cards that we've been dealt? How do we do the best possible things now based on what we know? So that's very much an optimizer, Silicon Valley, slightly paranoid learning growth mindset. But at the same time, I try to have a mindset of It's gonna be okay. It's gonna be okay. It may not be what you want, but it's gonna be okay. And that's not just about finances, that's family, that's career, things like that. It may not be what you want, but it's gonna be okay. And I think my investing journey is those two things. I'm always trying to understand what do I need to change? Because the market's always changing. My personal circumstance are changing. What success looks like is changing what got me to this stage, what would get me to the next stage. So what am I gonna do? And I want to have that mindset always be learning, but at the same time, I wanna be at peace because it is gonna be fine. I'm here in Australia. It's an amazing place. America's an amazing place. We're very fortunate that even if things are bad, they probably won't be that bad. And even if they're that bad, we're gonna learn from it. We're gonna learn from it. I guess I have if you ask me about what's my, how do I feel about my message journey, I actually feel pretty at peace. I don't feel maybe as paranoid as I do at work. I feel like it's gonna be okay. And I think part of that has been the own financial modeling to say, okay. What does okay look like? How much money do we survive? How much money do we need to put our kids through private schools or whatever our family goals are, okay, do we have that? What's the buffer on top of that? And what adverse events might eat at that buffer? How likely is that and what we defend against it? So in some ways, the mindset helps, but also see the raw numbers of okay, here's the actual true situation. Here are some bad scenarios. It's unlikely to happen. I guess that does help as well.

Average Joe Finances:
10:41

Sure. To always have that, like at least in the back of your mind, knowing what the possibilities are of things that, that may or may not. And I think to have a little bit, and I won't really call it paranoia, but maybe just, to have some concern about the things going around you, I think is super important, especially, with what we just experienced over the last couple years with this pandemic. Oh my goodness. Nobody saw that coming and, for people on the real estate side, like they had no, we didn't know. Where anything was going, we had no idea how this was gonna affect us, how it was gonna affect home prices. You would think that something like that, you would think all the home prices were gonna drop. But no, everyone had a scarcity mindset. So the home prices here in the States just skyrocketed over the next couple years. It was insane. It was bonkers. It did the opposite of what a lot of people were calling for, right? So that, that goes to show that you never know what's gonna happen. So you should always try to be prepared. For whatever might come up. So again, not being paranoid, but being prepared.

John Foong:
11:43

Being prepared. That's good. Different p word. P word?

Average Joe Finances:
11:45

Yeah.

John Foong:
11:45

Different P word. It actually, I referred to the last five years, so our eldest daughter, we have, we're lucky. We're lucky have three girls which is beautiful and crazy.

Average Joe Finances:
11:53

I got two.

John Foong:
11:53

Oh my goodness.

Average Joe Finances:
11:54

Yeah.

John Foong:
11:54

No it's an amazing gift. And obviously they're quite young. One is, five months, one has just turned three. The other one's four and. When my first one was born, four and a half years ago, I think when you become a father, everyone has a different experience. Mine was like this wonderful sense of awe and heightened sense of responsibility, right? And it's oh wow, okay. What are we gonna do? What happens if the bad happens? cause before it's me and my wife and we're both working and we're gonna be okay. And now you have this, helpless, dependent, on you, whatcha gonna do. And I did find it very helpful at that point in time to do a family balance sheet. It's actually just go, okay, let's put all on one Google sheet. Let's add it all together. What's our borrowings? What's our assets? And that was very helpful. And then number two, what I did was actually start to build on top of that a profit and loss statement, which is, okay, based on what we're earning now, based off, my wife goes back to work part-time, or whatever the arrangement is, how much would our net wealth grow or decline? So you get a balance sheet and then you time series that five years in advance is what we'll do next. And then I found it very helpful to run a bunch of, I guess in the core, what we call like penetration tests. Hey, what happens if you know there's a stock market decline of 50%? What happens if there's a housing decline of 30%? What happens if I lose my job? What happens if she lose her job? What happens if we have a medical problem with the family? Either ourselves, our parents, our child that costs, a few hundred thousand dollars and you run those tests against it? And I found that very helpful. Number one because it it almost brought a set of numbers to a unfathomable situation. So it brought data, it brought assumptions to something which is scary black box, but it also gave us some assurance that actually we'd be okay. We, if this happened, we would sell this investment property. If this happened, we sell the stocks. If this happened, then if I didn't have to work for two years, here's how it'd handle it, would cut these expenses, would do that. So it just helped us. Be prepared and, we're grateful. None of those things actually happened. But it helped us make, helped us feel more assured about our situation and also make some investment changes so that we were ready.

Average Joe Finances:
13:50

Yeah. John I love that, that is phenomenal because that goes along with the theme, like I said before about being prepared. You built this family balance sheet and you're able to use this to make sure. Especially after having your first daughter that you wanna make sure that no matter what, you're gonna be okay. Yeah. And that's one of the things I wrote down too, right? That, part of your mindset is it's going to be okay, and why is it going to be okay? Because I've prepared for this, right? I've prepared for these different scenarios that might come up, right? And then, the other thing you said too that I really love was the always be learning, right? Because I love that.'cause for me, myself, I'm a content sponge. I am constantly listening, see that to podcasts or watching YouTube videos that are, helpful for me and my family helpful to me when it comes to building my net worth and trying to just make sure that no matter what, when I look at the situations that could possibly come up, that it's going to be okay. So I love. I love that theme that you went with here. Now I wanna talk about that too, about some of your assurances that you've put in place to make sure that it's going to be okay. Four and a half years ago, had your first daughter yep. Then three years, LA three year or no, another year and a half after that, had your second, and then another two and a half years after that had another one. Having three daughters and myself, I have two daughters. There's a lot of things, as a father that you, that go through your head that you wanna make sure, especially for a daughter when it comes to a father-daughter relationship, that you wanna make sure that you're taking care of them and giving them what they need to grow and thrive in life. That's right. And when you look at these different scenarios that you put in place and the different things that can come up and you have these assurances, what are some of these assurances that you put together? To battle these what ifs?

John Foong:
15:39

Yeah. I think the best way to figure out insurance to me was actually a series of wealth and cash flow. The balance sheet was very helpful to say, okay, how much are we worth? And then of that, how much are we worth? How much is in assets, which are liquidable which are liquid and ones which aren't. Right? Because yes, we have these houses it's painful to sell a house. Part of my job is to make it less painful for customers in a Australasia, it's a lot, right? And in a house it takes a, there's no, I think one of your other guests said there's no such thing as passive property investing. You know.

Average Joe Finances:
16:08

Right.

John Foong:
16:08

It's work. You pour your heart and soul into it. You really get the value. When you hold it for a while, you get the tenant there, you get the house working, you, the cashflow working. So you've got a bunch of things which are not real liquid. You got things which are quite illiquid your 401K, like yes, in theory you could touch that, but that's painful. You're gonna pay a lot of tax. If you do that and you've got stuff which is actually very liquid, you might have stocks, you might have bonds, you might have a liquidity access line. And so a lot of it was actually compiling here is our net wealth, and then here's how we break it down to categories. Then the next thing was looking at our cashflow and going, okay, and actually at one child our cashflow was pretty good, right? Because actually, particularly before they're at school or things like that, that they don't spend that much more money. You spend a bunch of time, a bunch of money buying things. Though actually, particularly the Bay Area where we lived, a lot of people were really happy to share stuff and give things away. So we were very fortunate that we had all the stuff that there weren't that many expenses and it was just one kid. Who didn't eat very much at the very beginning. And so we were able to go back at that season.

Average Joe Finances:
17:04

Wait till she becomes a teenager, trust me.

John Foong:
17:06

And a teenager bringing friends over. Oh God, I can only imagine. We were able to go, okay, here's our Netwealth, here's the liquid amount, which is the buffer. Okay, how much is that liquid about going up and down, which is our wages versus our increased expenses? And actually, we were still pretty cashflow positive at that point in time. So it's okay, great. If you play out the scenarios if nothing happens, that changes, right? We're pretty good. We're actually gonna grow wealth if something happens that we're, we have to spend a lot of money, we've got this much buffer. Okay. And if I lose my job or we wanna move or something like that, then here's how many months we have before we need to correct the situation. We looked at that and go, okay, that feels actually pretty good. Let's continue to invest and be leveraged and be aggressive. Our investing now, three kids, two kids later, the three kids we're now in Australia we have a lot more expenses. My wife has not yet returned to work, after our third child. It's a very different cash flow situation. We're actually now we're spending a lot more and we're earning less, and our expense profile is different. And so we just go through the same analysis, right? And we kind of figure, okay, what's happening? And now we've gone from probably a net accrual rate to a net burn rate, which is fine. Different seasons, different things. We wanna make sure we spend as much as we need to on childcare, particularly supporting my wife that kind of stuff. That's a different posture, which is okay, we've got this much of liquid assets. We're happy to spend this much. Our net deficit is this much every month. At this stage, and maybe that'll change, how many months before we need to have an event where we're running outta liquid assets, so we're getting below a certain percentage. That's where you start to think, okay, do we need to change our spending profile? Do we need to actually convert some of those illiquid assets to liquid assets? So these are the conversations we're having with three young kids under five and one income.

Average Joe Finances:
18:44

No that's great to know because there, there are a lot of different scenarios that can happen, right? You guys relocated, from Silicon Valley back to Australia.

John Foong:
18:52

That's right.

Average Joe Finances:
18:53

Had two more kids. So it just changes the entire dynamic. Job shifted. Income change, there's so many different factors that come into play, but the thing is, what do you do? You go back to that balance sheet, you reassess and you reevaluate. And from there you. Build onto that plan to what, okay, what's gonna work for the family going forward from here? Before we had this excess, here's what's left over that we have left sure to, to invest in whatever we want to now, okay, this is how much we could burn comfortably and keep this engine running while we're, in transition or figuring out what the next move's gonna be.

John Foong:
19:28

That's right.

Average Joe Finances:
19:29

So I think that's, having some type of buffer is huge.'cause I know I recently experienced this myself when I transitioned outta the Navy. And, into the civilian world and being an entrepreneur and stuff. And I had this buffer, and I'm going on a year now of being home and I'm actually getting ready to go back into a W-2 job because I got a really great offer. Something that I don't wanna say no to. And it's gonna be phenomenal. But this year home that I had, I got to reflect on a lot of things. One thing that I noticed is that my wife and kids are not used to me being home. Or not. Two.

John Foong:
20:03

Quite a change. Quite a change.

Average Joe Finances:
20:03

That being said, having a teenage daughter that really changes things, changes the dyna dynamic. And, she's always are you always here? And a lot of times one of the things that I've learned over this past year is, I gotta give a little bit more space now. Because it was always the, I was always at work, always gone. And so time was so precious and gotta cherish it. And now that I was home all the time, it's kinda okay, you got the time just ease up on it a bit. So it's just, there's always seasons. Like I like to use the word seasons. There's always these seasons in life, right? And as the seasons change, we have to change and adapt with it. I. Where I grew up in New York we experienced all four seasons, right? In the summer, we would wear t-shirts and shorts. In the fall, it started to get a little more chilly. You'd have a hoodie or a light jacket on and maybe some jeans in the winter. You had that, that large winter coat on right in the spring, back to maybe t-shirts, maybe a nice light long sleeve shirt maybe some pants, whatever. But the point of that is, With the seasons that change, you also have to change and adapt to them, right? So with the weather, you would change what you would wear, things like that. So same thing with your finances, right? As the seasons of your life change you, how you plan your finances, how you spend your money, how you have your relationship with money should also change. With those seasons. So I think that's a fantastic point, John, now.

John Foong:
21:26

Actually, Mike, can I just make one comment on that?

Average Joe Finances:
21:27

Sure. Yeah.

John Foong:
21:28

Yeah. I totally agree with that. Obviously I think, there is a book, that it's a management book, but the title sticks with me. What Got you here won't get you there, and it's a wonderful book and I think it really describes life, really, that, whether what got you to be a father won't get you to be a great father of young kids. And what you do as a father of young kids changes when you, when your kids are teenagers, and that's true of parenting, it's true of marriage, it's true of finances, it's true of your career. So for me, just having that growth mindset, that posture of okay, wow, it's been great up to now. What do I need to do? How do I need to be different in this season is very helpful. And I think the underlying thing of all that, if I think through, Has the extent been successful? Our finance journey, it really actually comes down to, are you on the same page with your wife on finances, right?

Average Joe Finances:
22:12

Yeah, absolutely.

John Foong:
22:12

Cause there's a book called the Speed of Trust. And the notion is that things move quickly when there is trust when you're on the same page, and did mistrust is like attacks. Everything moves more slowly if you don't trust the other party that you're collaborating with. I think one of the things I'm very grateful for is, my wife has actually very similar. Investing history. Her parents, invest in property when she was young and did the same thing as my parents. And taught us very similar values about long-term investing, about prudence. That's helpful to have similar values, but actually so much of it,'cause everything's changing, we're changing, are we on the same page? How do we resolve conflict? How do we look at opportunities? Is there trust? Is there clear roles? And I'm very grateful that my wife have had that we are gonna have to keep at it, not just with finances, but with parenting and with, other things do with marriage. But we're very grateful. And I think that's probably been the reason why these balance sheets and things have even worked. Just 'cause there's that trust there.

Average Joe Finances:
23:04

Trust. Trust is huge. Absolutely love that. And you gotta be on the same page with your partner, right? Because if you guys are doing two different things, when it comes time to say, okay, let's see where we're at. There's gonna be two different answers, two different stories, and it's not gonna match up. And that's just. Leading into something far worse than, okay. Totally. Our balances might be messed up, so no definitely appreciate that. Now John, what I wanted to ask you was about your real estate, right? So yeah, I know you've owned properties both in the States and in Australia, so I was curious to some of the differences you've experienced with owning property in Australia and owning property in the States and what the differences are between how you purchase property in the United States, like with a mortgage and everything, versus how you purchase property in Australia. Because I do something myself called Velocity Banking, and it's very commonly referred to as the Australian mortgage on a home. So if you could describe that a little bit, like what the differences between buying a property in the states versus buying a property in Australia.

John Foong:
24:12

Yeah. So it's been.

Average Joe Finances:
24:13

At least from the financing side.

John Foong:
24:15

Yeah, the financing side. I think there's a few differences and I have had the privilege of investing in both, and I'm still, investing in both things that I'm grateful for in America. Maybe I'll start with that. That's different. I'm grateful for 30 year mortgages. We don't have that in Australia. 30 mortgages are amazing. They're a gift I think they allow you to lock in, they allow the de-risk of the course long period of time in Australia, most I'd say probably half of loans taken out have a fixed component and half don't. But the fixed component is only up to five years, and most people do two years. You are on variable pretty quickly, and that really means that from a bank valuation point of view, they actually end up being to loan you less money because they have to consider the worst case scenario of okay, what if interest rates go up and then, that affects your ability to pay. So I think the American system that has that allows mortgages to be traded, which ultimately allows 30 year loans, is a great gift. Number one. Number two, taxation. Taxation is treated very differently in the States, and I was in, most of my investments are in California, which is, from a taxation point of view, a very challenging place to invest. So Tax Australia is also fairly high. There's a lot of great social services here. There is not a federal and a state tax, just a federal tax, but it's similar to what the Federal Plus state tax will be in most places. It's actually probably more than the most places except California and New York. Australia has a lot of very helpful taxation regimes for property investing, so we have something called Negative Gearing, which means that you can write off any expense related to property, against any income, including your W-2. So in America it's categorized, right? So if you have property expenses, depreciation, it can be offset against property gains. That makes property investing very aggressive and very commonplace in Australia. So that's one thing which I think Australia is better, Australia's more helpful. The other thing is Australia has very favorable tax treatment of your primary residence. So in America you do have a sub, you have up to 500,000 deduction on capital gains. If you are, for your primary residence in Australia, there's no capital gains tax for your primary residence. Right? So as long as you're living in that house and you've lived in the past six years, so you might live in there for 20 years, it might, quadruple in value and you pay no capital gains tax. So again, it's very it means that your incentive is to buy, not to sell and that we call that the great Australian dream. And it means that your incentive is to invest as much and to house hack your primary business as possible. Again, there's some advantages, the US for that no one knew as much in Australia. The third thing about Australia and America that's different is buyer's agents are not very common in Australia. It's less than 10% of all transactions. And that's because it's not built into the commission system. So you, the seller's commission is built in and the seller pays that. It's about two 3% depending on where it is. There's no buyer's agent commission that's built in. And I'm a huge fan of buyer agents. Buyer's agents were a huge gift to us. Both were investing and we were buying our primary residence. And I really like the fact that it's built into the commission structure in the us It's just the norm, and a small percentage of people don't do it. But pretty much everyone does. I think that basically results in a much more educated buying and selling community or buying community. There are still problems, there are still buyer's agents that don't do their job and there are people that trust them too much. And there are situations which I don't like, where the buyers and sellers agent are the same, and I think that results in conflict of interest. But as a result in America, you generally have a much more informed. Buying community much better about inspections, much better about things go wrong in Australia. It's variable buyer beware, which means you may not know a lot of the problems. And if you do all the research, a lot of those inspection reports are not made are not made available as a default. And so I think that's a real positive for America, in versus Australia.

Average Joe Finances:
27:38

Wow. That is a lot to digest, John, because some significant differences and really great takeaways about. What makes it better in Australia and what makes it better in the United States. There's, so there's, it's a mixed bag to where it feels like, yeah, it's pretty even. And neck, and actually I wanna share something with you too. So the buyer's agents out here that, actually it's this seller. Actually pays the commission for both.

John Foong:
28:00

Yes, that's right.

Average Joe Finances:
28:01

Yeah. Yeah. So yeah it's pretty which is, we have a higher commission rate out here, and then pretty much the buyer and seller's agent split it.

John Foong:
28:08

Yeah. And that's different. That to me is, I wish we had that in Australia because, obviously that's a historical legacy. If you tried to introduce, we've gotta pay six commission three plus three rather than just three. But it's always been done. That's the way it's accepted and the results are good. Australia, here the buyer, actually the buyer's agent. We use one for a recent.

Average Joe Finances:
28:25

Which is why you have buyer beware, right?

John Foong:
28:27

So yeah. Yeah. I wish that the seller paid it, that everyone was in that habit like it is in America, because everyone would have one and it'll be great, but here, because the buyer pays it, most buyers don't wanna pay extra one half percent. I wanna pay extra half percent. I'll just do it myself. And as a result, we really miss out, on those things. So that's one of those big differences, right?

Average Joe Finances:
28:43

Unless they've really gone out and studied real estate. Maybe go out and take all the classes that a real estate agent would have to take. But yeah it's interesting because you know that representation you get with a buyer's agent is significant. So it's all, it's funny to hear the difference though, between how that works in Australia versus in the States. So you've been able to experience both.

John Foong:
29:02

Yeah. Yeah. Yeah.

Average Joe Finances:
29:03

I wanna rewind back to what I was talking about with the Australian mortgage, right? So that's what we call velocity banking.'cause you had described it as, you'll get a set five years in an interest rate and then it becomes variable, right?

John Foong:
29:15

Yeah. Usually two years. Yeah.

Average Joe Finances:
29:16

Yeah. So that's, that's for us, when we take out a heloc, we do the same thing, right? Like I took out a HELOC on my home. I locked in for five years on a specific interest rate, then it goes variable. But what I did is I took the equity from that home the equity in that heloc, and I started paying down my mortgage with it. Fantastic, right? And then I pay that line down and then pay down the mortgage some more, and then I increased the line. And it's just a way to pay down the home faster. And I've also used it to purchase more real estate, so now I have this liquidity. I have this line of credit with, of liquidity that actually helps me get in and. Do what I need to do. It's also helped me with this transition outta the military to where I'm at now. Like I had a really big buffer to work with.

John Foong:
29:56

Fantastic.

Average Joe Finances:
29:57

So that's something else that's really great about that. But it's funny because like it's been described in the past as an Australian mortgage, so that's why I hear what it was like there.

John Foong:
30:05

Yeah, no I think America with regards to line of credit is I, there's definitely more financial products and there's more options and, you describe what you do. It's. If that stuff didn't exist, you would not be able to invest as much as you are now. So it's a great gift to have those things. I would love to have more of that sophistication in Australia. So it's interesting that the Australian mortgage is turned that way 'cause I would love more American mortgages here.

Average Joe Finances:
30:27

No, it's great. And for my listeners here, I just wanna point this out you guys are hearing the difference right now between. Australian real estate market and the US real estate market and just buying properties in general and what some of these differences are and how in the states there's so many more opportunities to get money for real estate to get credit or whatever it might be to purchase more real estate. We do have some really great programs and great ways of financing if you want to get creative to get into more real estate. And I just wanna point that out.

John Foong:
30:58

Just on that note we talked all about kind of this growth mindset before. Yeah. I, going back in the day, I never would've thought about lines of credit. Because to me it's almost like, why would you do that? I assert it with kind of margin loans, which is oh sure, it's high risk, high reward. You pay a higher interest rate, but if the mark goes down, you're in trouble. And so I had a mindset up to only a few years ago that I generally don't use lines of credit. I have mortgages. I try and leverage up with mortgages and that's it. And it's only through exposing myself to more products and podcasts was like, oh, actually, Here's another option. And I went from thinking like I would never touch that stuff to realizing, wow, that's actually very useful in certain circumstances. And for us, when we were moving from America to Australia, we were looking to, take out a loan here in Australia. We needed more liquidity and we didn't necessarily wanna sell all the assets we had in America. Those lines of credit were very useful liquidity access slide in this case. And so I'm grateful for those products existing, and my only wish is that I had educated myself more earlier. Because maybe I would've made different choices with the information I had.

Average Joe Finances:
31:57

No, I appreciate that. Liquidity is the name of the game. It's it can really make or break in the future and just really help you scale a lot faster. So John this has been awesome. I got a lot of great information and really awesome page of notes here. I wanna transition this into something that we call the final round. Yes, where I'm going to ask you the same four questions I ask everybody that comes on the show and it gives us a better idea of how you are under a little bit of pressure, ask, getting asked some some tough questions. They're not so bad though. They're really not there. But if you're ready to go we'll get that party started.

John Foong:
32:27

Alright, let's give it a shot.

Average Joe Finances:
32:29

Okay, John. Alright. So the first question of the final round is, what's the biggest mistake you've ever made when it comes to your own finances? Investing real estate or just business in general?

John Foong:
32:43

I think the phrase that I use a lot in my current like my current job is don't try to time the market, maximize your time in market, right? So I think it's, I would say foolish. It's very difficult to know what will happen. Covid, you talked about covid before. Who knows what the impact to Covid is? We thought Covid would be terrible for property and it was for a few weeks and then it was amazing for a year and a half, and now we have the opposite. Now it's going back. So don't attempt to time the market. I would attempt to spend as much time in the market as possible, because I know that historically stocks and properties go up five to 7% year on year If you can weigh that and you're buying good assets. So that's what I've done. I've stopped trying to time the market and I just say, look, here's the money I have. Here's much I can borrow. Let me maximize how much and how long I'm in the market. Ideally, buy and hold on for as long as I can.

Average Joe Finances:
33:32

Appreciate that. It is something that, that's said commonly on this podcast too, is, when we talk about real estate in general, we always say the best time to buy real estate was 20 years ago. The second best time is today. Exactly right. So just always thinking like that. You're gonna be, you're gonna be okay. As you said earlier, it's going to be okay. So I love that. All right, John, so the next question, again, these questions all tie into each other, but what is something that you've learned that you wish you knew when you first got started?

John Foong:
34:01

I started my life as a consultant. I worked at McKinsey here in Australia for a few years, and I think in my head, consulting was always something that you do if you have a lot of money, or if you're a corporation, but it wasn't something for Average Joe, right?

Average Joe Finances:
34:15

Sure.

John Foong:
34:16

But, and certainly using an expensive consultant is not for average shows, but on basically every area I have begun or continued to try and get help. For example, I would've never spoken to someone about tax consulting. We have over the last few years, particularly as we've made international moves, I wish I'd done 10 years ago.'cause all these tax laws, potential things you can do, problems to avoid that someone who is in the industry who's done a hundred times will tell you about and you have no idea 'cause you've never done it at this stage of your life. Similar with things such as property investing, right? There are experts there. We talked about buyers agents before, and the question which I'd always have for you is, who is the expert on something that's important to you? Is there a way you could speak to them? And it may be expensive. Whether it's finances or your health or your marriage or things like that. But certainly you can learn. And if anything I wish that I had understood my ignorance on any given topic earlier in my life, and I had reached out to experts, not just friends who are very helpful. It's a good start, but often paid experts where I might pay a few hundred dollars, but save a few hundred thousand.

Average Joe Finances:
35:15

I love that I've paid coaches in the past too, myself. I think coaches and mentorship are huge to success in any industry that you want to be in. Not just necessarily real estate, but anything that you're interested in if you wanna be successful in it. You see all these folks that are in sports, right? They have coaches. They're not doing it by themself. There's always somebody there that's giving them tips and tricks to get better. At that and actually, speaking of tips and tricks, that's actually the next question. John, do you have any tips or tricks that you would recommend to someone that is just getting started out today?

John Foong:
35:48

There's probably two that come to mind. I did talk about the balance sheet and profit loss statement. I only, I did my first one really when when our first child was born. I found that very helpful. I found it helpful because it not just forced me to understand the true state of my finances, but it also helped me question like, what's the purpose of my life? What are the goals that I have in this point in time? So I think that is very helpful. Just say okay, it's a mirror. It's a mirror. And when you look in the mirror, you make observations. You might wanna make changes. That's one thing. The other thing is just started, I talked about timing. Time in the market rather than time in the market. I'm very grateful that at Edge team, I started, by my own property. And going through that the process of all. Wow how do I choose a property? Who do I use? How much I gonna spend what do I do with this cashflow? What are this? You, it, it confronts you with a bunch of questions that you can only learn in practice and not theory. So no matter where you're at, if you are at the very start of your investing journey, if you're the very start of earning money, if you are in the new stage of your life, I would just say try and do something. After you do your analysis on your balance sheet, try an investment, whether it's stocks or an ETF or property. You'll learn and you'll, it won't even be the right thing you do the first time, but it'll make your second and third times much better.

Average Joe Finances:
37:02

Yeah I love that because, if you start early enough, you start off with your balance sheet right away, you track your net worth, you can see where you're trending, right? If you're trending up or down, and you just, you have a better way to figure out any changes you might need to make any change in trajectory as you're going on your journey. And I think that's huge, right? And get started. Just get started, take action, right? Those are phenomenal answers. I appreciate that. So John, the final question of the final round is different than the rest of them. It's opinion based, but it's, do you have a favorite business investing or real estate related book or podcast, or both?

John Foong:
37:40

Oh, so many. Like you, Mike I love absorbing information. My favorite thing to do is what I can settle the kids is go up for a run and I run very slowly and I listen to a bunch of podcasts. So.

Average Joe Finances:
37:50

Yeah.

John Foong:
37:51

I think some of the most helpful podcasts I've had is there's one called The 20 Minute vc. Two zero vc. It's primarily aimed at adventure capitalists and entrepreneurs. I've actually found it very helpful. They have a bunch of really interesting guests. They had Simon Sinek the other day. They had Larry Summers. They've had a whole lot of people who know a lot about different things. But talk out in ways that help you understand what's happened with the economy. And I think one of the things I've enjoyed at investing is, you know that you have a personal investing story, a house, a stock that you're doing, but it's part of a macro story, that's happening on the specific investing side. There's a podcast, mad Money, so Jim Kramer's show is just translated into a podcast. I find the first few minutes of that very helpful each day because basically. He describes what happened in the market and why, and sometimes you look, the market goes up what's going on there? So I found that very helpful. And there's a organization called The Motley Fool that do a lot of stock picks. You know?

Average Joe Finances:
38:46

Oh yeah. I get, I'm on their email list. I get those all the time.

John Foong:
38:49

Yeah. And they, they're really interesting. They had a interesting philosophy of investing, which, is worth considering critiquing. They have a bunch of different podcasts each day. And I found them very helpful because they, it's not even so much Hey, here are the stocks to buy. Go for it. I mean that, that's somewhat helpful. And sometimes right, sometimes wrong. Really important thing is they tell you about the philosophy, about how you might think about growth versus defense. They try and relate some of those macro economic factors into what you might buy and sell. Because really it is about making good decisions, but it's about teaching yourself how to make decisions. And that's why I really enjoyed those particular podcasts.

Average Joe Finances:
39:22

No, I love it. Thank you so much for the for those. I wrote 'em down. I'm gonna go check those out. And yeah, I also like to listen to podcasts. Anytime I'm commuting anywhere or if I'm working out my kids hate it'cause every time they get in the car they're like, dad put on music. We don't want to hear anybody talking anymore. But yeah. So John this was awesome. So.

John Foong:
39:42

Thanks Mike.

Average Joe Finances:
39:42

That is it for the final round, however, I have another question I'm gonna ask you because of the conversations that we've been having which were phenomenal. There's people in the audience that are gonna say, Hey, I wanna know where I could find out more information about John. And what you're doing and everything. Do you have a website you could share with us or any social media profiles people can follow and, and track you down?

John Foong:
40:02

Yeah I'm a big LinkedIn nerd. I love LinkedIn. There's a phrase that one of my colleagues said to me years ago, which is, your network is your net worth.

Average Joe Finances:
40:10

Oh, it's so cheesy, but it's so true.

John Foong:
40:12

So cheesy. So cheesy and network is a few things, right? It's people who you know directly. It's people who and you might just contact them in terms situations and there's people who don't even know, but you learn from them. I found LinkedIn a very efficient way to, to address all three. If those are lists out there, particularly if you are in the property industry you know where, that's my day job. I'm very interested in connecting on LinkedIn. If you are creative content, please let me know. I'd love to follow you and learn from you. But yeah, LinkedIn is great and I, that's actually my newsfeed. It used to be Facebook, used to be Instagram. Now my newsfeed is when I was time I just looked at LinkedIn and what are my friends and network doing and what can I learn from that? So please connect with me on there. It's John, JOHN Foong, FOONG and I work for a company called domain domain.com.au. We're a property portal in Australia, but that's how to find me on LinkedIn.

Average Joe Finances:
40:54

Awesome. Fantastic. So I'll make sure we have that in the show notes to make it easy for people to just copy and paste or click away and follow you. I'm just asking all my listeners, don't do it. If you're driving, please wait till you,

John Foong:
41:04

please don't do it. Not safe.

Average Joe Finances:
41:06

John, this has been phenomenal. I wanna thank you again so much for taking the time outta your day tomorrow to have this conversation with me. I really appreciate it.

John Foong:
41:15

That's right. The future is bright. I can say that coming from the future now, seriously, thank you Mike, and thank you for the great service that you have made. Number one service to, the world and America, through the decades you spent there. But, you play an equally important service now in helping people get through difficult stuff, which is the stuff of life and marriages and all those things. So it was wonderful to get to know you and your podcast and thanks for you're doing out there.

Average Joe Finances:
41:36

John, thank you so much for that. And the future is bright and I can't wait to get to tomorrow where you're at. Again, thank you. And I also wanna say thank you to all of my listeners. Thank you so much for joining me and our special guest, John Fong, on the Average Joe Finances Podcast. Go leave us a five star review and tell us what you liked about today's episode with John. Aloha from Hawaii and have a great rest of your day.