Episode 76: Creating Personal Wealth Outside Your Building Company With Todd Polke

Professional Builders Secrets brings you an exclusive episode with Todd Polke, a renowned wealth and investment strategist. In this episode, Todd shares his journey to success and explores how builders can create personal wealth outside of their building company.

 

Inside episode 76 you will discover

• Todd's journey to becoming a successful investment strategist 
• The importance of strategy when creating personal wealth outside of your business
• Insider tips on leveraging time to create wealth opportunities outside your business
• Common blind spots for new investors and popular investment strategies
• How equities can help in successful wealth building
• And much, much more.

 

Listen to the full episode to uncover helpful tips that will allow you to leverage your time and create personal wealth outside of your building company.

 

Todd Polke - Investment Strategist

There is a reason that investors turn to Todd when they are ready to grow their wealth faster to create more money, more time and more freedom. Todd is an international educator and trainer in wealth creation and building strategic investment portfolios. His wealth systems guide investors on a step-by-step pathway to grow portfolios that deliver real financial results.

Connect with Todd

 

Timeline

4:10 Todd’s journey discovering how this is his purpose in life

8:27 Creating wealth opportunities beyond your building company

11:59 Common blind spots of new investors

27:49 It’s in the downtimes where true wealth is made

30:17 Navigating rising interest rates as a builder

40:35 Diversifying yourself within the building industry

 

Links, Resources & More

Todd Polke

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APB on YouTube

Join the Professional Builders Secrets Facebook group for builders & connect with professional builders world-wide.

Todd Polke:

The strategy that most investors apply is what's called buy and hope. They go and buy a property or buy some shares and they hope like hell, it goes up. To me, that's not a strategy, that's not investing, that's gambling. And investors don't gamble. 

Todd Polke:

There's a lot of people sitting on the sidelines at this point in time, sitting in a space of fear because of the rising interest rates and the cost of money and the rising inflation and the talk of recession. 

Todd Polke:

This next 10 year period in the real estate marketplace, I think is critical for investors, absolutely critical to building your portfolio hugely. 

Todd Polke:

Wealth creation isn't about luck; those who build wealth and create success in any arena of life, I don't believe that they get there by luck. There are some elements of luck that might be involved, but for most, they've just got a different system.

Bosco Anthony:

We've got another exciting episode from the Professional Builders Secrets podcast. Joining us today is Todd Polke, a wealth strategist and international trainer in the wealth creating and building side of things. Todd, welcome.

Todd Polke:

Thank you so much. It’s really good to be here.

Bosco Anthony:

Well, Todd, let's start off with something very simple. Tell us a little bit about yourself. How did you get about doing what you do today?

Todd Polke:

Great question. I've been a wealth strategist and a professional investor for about 20 years now. My background before I got involved in this world was as a burnout personal trainer. I was running a personal training business, getting up at 4am each morning. A lot of builders would be sitting here thinking, “Yep, that's me too. I get up at four or five in the morning with the early starts going through to about 10 or 11 o'clock in the morning, then with clients starting in about four o'clock in the afternoon, getting more clients till about seven or eight o'clock at night.” 

Todd Polke:

But then of course, if you’re running a small business or any business, your day doesn’t stop when the number of clients you have in the today stops, or whatever it is. My day would finish up by about midnight after I finished all the admin and all the bookwork and all the paperwork and the marketing and all the different things you've got to think about when you're running a business.

Todd Polke:

I would do that six days a week and I'd do that 50 weeks of the year, because my whole rule of creating success at that time of my life was just simply, “The harder I work, then the more successful I'll become.” I know a lot of people listening in have probably tried that strategy before. I basically broke myself. I broke my relationship at the time. I broke my health and wound up in hospital. My bank account was still broke, no matter how many hours I was trying to put in at the same time. 

Todd Polke:

I started to realise, “Wow, there's got to be a better way than this, this whole default life system that I feel that we're taught, which is just to change time for money and that type of stuff and work until you're 65. There's got to be a better way.”

Todd Polke:

Through a series of learning some new stuff and attending some events and getting some mentors, I wound up buying my first property about six months after this experience of breaking and winding up in hospital. I made more profit from that one property deal than my entire year's income, working 17 hours a day, 50 weeks of the year and doing that for a few odd years. All of a sudden the light bulb went on and I realised I was done. I was out of personal training. I was in the army at the time as well. I was just out of everything in a short period of time and I just fell in love with investing, because of the freedom and the choices that it can give you in life. 

Todd Polke:

So come 20 years later, I've been teaching, speaking and training. I’ve had the privilege to travel around the world doing this big background in property, but also in crypto currency and metals and business investments and shares and trading and a whole range of different elements. I’ve had the privilege to be able to work with thousands of people over the years as well.

Bosco Anthony:

Well, I'm looking forward to getting deeper into this conversation because most investors I know are nuts. I'm going to gauge how crazy you are through this interview.

Todd Polke:

Yeah, pretty crazy. Yeah, yeah.

Bosco Anthony:

Yeah. But before we get into the investment side and the times and everything else, let's start off with something really simple. You told me a little bit about your background; you could have picked all kinds of different things. You talked about the army, you talked about fitness, you talked about having different areas. How did you discover that this was going to be your purpose in life? Was it the thrill of investing? Was it the return? When did you know that this was what you wanted to do when you grow up?

Todd Polke:

That’s such a good question. Look, I'm a teacher at heart. As much as I love health and wellbeing, and it’s still one of my biggest passions today, I'm a teacher at heart. That's who I am. So I love to educate, I love to teach. To me, apart from the health side of things, there was one thing that had the biggest impact on my journey. When I talk about the biggest impact, there was one thing that gave me my time back, that taught me so much, that taught me about the principles of leverage so all of a sudden I started to realise that I could help so many people doing it. I realised that the level of financial understanding and knowledge and intelligence that most people have, unfortunately, is really low, just because we're never taught anything about money or wealth or investing.

Todd Polke:

I really realised that, “Wow, goodness, a lot of people need to know this stuff. This can help a lot of people.” So, if I was here to serve my mission on the planet to be able to help free people, because that's really what it is about for me, then this is my pathway. So, as much as health and wellbeing are still an absolute passion of mine, this was just a place where I'd had the privilege to fall into, so to speak. I had some great results and realised that the impact I could have on people's world – because when I looked around, I started to realise that most people's experience of life is limited by how much money they earn. I just knew that life is about so much more than working to pay the bills, and I wanted to help other people do that as well.

Bosco Anthony:

It's so interesting you say this because they don't really teach life skills in school anymore. In fact, they never did.

Todd Polke:

“They never did” is the right answer.

Bosco Anthony:

Yeah. And that's why builders as well, a lot of the builders I've interviewed, end up learning so much about the business through podcasts and through other builders as well. So, I was really excited to have you on for this podcast. 

Bosco Anthony:

Now I've got a question for you. I did a lot of research on you and you talk a lot about the importance of strategy when it comes to investments. I moved from Canada to Australia a few years ago, and when I started looking at real estate, it was like I had a plan. This was my plan: buy low and then sell high. But why is the strategy so important? I'm a strategist, so I'm curious to know what your answer is. Why is the strategy so important when it comes to investments and why do you preach about it so much in everything you do? You always say, “Start with a strategy.”

Todd Polke:

It really is. Any of my clients will get sick of me saying this, and I hope they do though, because I'll ingrain it as far as I possibly can with them. Here's my experience with most investors. The strategy that most investors apply is what's called buy and hope. They go and buy a property or buy some shares or buy some crypto or something like that. Then they hope like hell, it goes up. To me, that's not a strategy, that's not investing, that's gambling. And investors don't gamble. Investors move in a tactical way with intention and with purpose. So when I think about strategy, when it comes to investing, people invest, it hasn't got anything to do with the money. That's not why people invest. Money is just a unit of choice and that's all it is. It's just a tool for us in life.

Todd Polke:

Most people invest not because they just want to make more money, they want to make more money so they can have more freedom, they can have more time with their families, they can give back to the planet a little bit more in a greater level than they're doing now. They want the opportunity to be able to experience life at a more holistic style and level. So, when we talk about strategy, we start with strategy. It's always about beginning with the end in mind. What's the experience of life that I want to have? How much is that experience of life going to cost me? Well, reverse engineer: where am I right now? And strategy is what bridges that gap.

Todd Polke:

So when we are moving, operating in terms of strategy, every element that we buy and everything that we put our money into has a plan and a purpose. We're being very intentional with our money to get our money out there working hard for us because frankly, everyone deserves it. I believe that freedom is our birthright. Because of the education systems and various taxation systems and economy and a whole lot of rabbit holes I could dive into right now, I believe that freedom has been taken away from us and we have to take it back because, again, life's about so much more.

Bosco Anthony:

The sceptic builders who are listening to this will be thinking, “Okay, so you're telling me that I need to have a strategy. You're telling me that I need to look at other ways to diversify my investments.” Most builders that you and I know are time poor. So how do they get to spend their time wisely when they're already working those crazy hours and sometimes on the weekends as well for some builders out there? How do you get them to spend their time wisely, because it sounds like time is also a big currency when we're dealing with this? So how do they leverage their time if you want them to create other avenues of wealth outside of their building business?

Todd Polke:

Yeah, there's a big myth when it comes to wealth creation and investing, that in order to invest and create wealth in your life, you have to put a lot of time into it. And it's not true. It's not actually accurate, when it comes to creating success in any arena in life, including in business. A lot of what your team will talk about, and I'm sure you talk about a lot when it comes to the people that you interview and you speak about, is the power of leverage. Now, it may not be in those terms, but it might be the importance of having a team around you or the importance of learning from people who have come before you. 

Todd Polke:

So to me, there's a multiple of different styles of leverage. If all of our lives and our results are based on just how much time we have and how much money we have and how much experience we have and how much energy we have in a day, then our results are always going to be limited.

Todd Polke:

You interview with many builders, and I work with a lot of them as my clients. They work long hours and they’re working with their hands all the time, and for a lot of them, they’re working on the business aspects that have to be done after hours. So, if everything’s just based on you as an individual, then you become the bottleneck in your own results. You become the bottleneck because you only have so much time in a day. So to me, it's never about needing a lot of time, it's all about using your time effectively. This is why we need to tap into systems. 

Todd Polke:

Wealth creation isn't about luck; those who build wealth and create success in any arena of life don't get there by luck. There are some elements of luck that might be involved, but for most, they've just got a different system. Whether that's a business system, whether that's a construction system, whether that's a system to build a house or build a duplex or build a block of units for example, or any of those different types of things, wealth is the same.

Todd Polke:

When you can follow an investment system and have the right team around you, it's not about you having to put up a lot of time. It's all about having a strategy and a plan, then leveraging off the team and the system that can actually go and execute on that plan with you. So you can focus on your business, you can focus on your family, you can focus on enjoying your life more, rather than thinking that you need to spend 10 hours a week trying to build a portfolio at the same time; it's absolutely not necessary. For the vast majority of my clients, probably 95%, they don't want to be hands-on in their investing journey. They want to be able to focus on what they need to focus on, but be able to build their wealth in their spare time.

Bosco Anthony:

So what you're really saying is success leaves clues, follow the success templates and systems in place, and don't try to reinvent the wheel, just go where success already exists.

Todd Polke:

Yeah, and I'm sure you've probably experienced that, as you've been running this for seven seasons now. I imagine that you've been hearing some of the same stories, the same habitual ways of thinking, the same patterns or behaviour that the successful people actually apply in the building game, in the construction game. That's been leaving clues for a lot of your listeners as well. That'd be true, I would imagine, wouldn't it?

Bosco Anthony:

Yeah. Look, most builders have a common struggle or story behind them. My role, the role of any podcast host or something like, that should really be about uncovering their story and telling their story. Because at the end of the day, that's what our listeners love: hearing people's stories and backgrounds and then what brings them to where they are today. So you bring a good point. You've really squashed a myth here about time, and I really resonate with the word leverage there. But let's look at the flip side of this question. What are some of the common blind spots when it comes to new investors? What are some of the things that they might not be aware of that they should be aware of, especially builders?

Todd Polke:

Yeah. When we say builders, we may even say craftsmen or craftswomen, all in love with their craft.

Bosco Anthony:

All builders who own companies and are trying to figure out the business side of things, but their passion is their craft.

Todd Polke:

Yeah, a hundred percent. One big thing I see often is that they wind up investing based on emotion, and it's one of the biggest blind spots I see on a regular basis. My key rule is that investing plus emotions means you're going to lose money. That’s because what a lot of investors make the mistake of doing is that they're buying based on emotions, they're not buying based on facts and figures and effective due diligence. When we can remove our emotions from decisions, all of a sudden we can look at it from a very black and white standpoint and we can run each deal through a system like a due diligence system to say, “Yes, this serves the purpose that I needed to for my portfolio,” or “No, it does not.” Again, successful investing is about being a successful decision maker.

Todd Polke:

The same goes with business. Being a great business person is about being able to become a better quality decision maker, and the better quality decisions that we can make in all these different arenas in our life. It just means that we can actually move step by step by step towards the outcome that we want to wind up creating. I think that what I've found with a lot of the builders, because they're so intricate in their craft and they potentially love what they do, they can fall in love with the build as opposed to fall in love with the outcome of it and wind up over capitalising or not making the effective decision that's needed for their portfolio. That's definitely been one of the common things that I've seen on a very regular basis. I would say there's one more mistake: that a lot of people think that investing has to be big, crazy and outrageous. And it doesn't.

Todd Polke:

No matter what situation someone is starting in, everybody can start investing. People come up with these programs and these ideas in their minds that it's got to be the perfect time, that they've got to wait for the perfect moment, the perfect economy, the perfect lending environment. They're waiting for this perfect time to get started. “When my partner becomes more supportive, when the government does this, or when I have more time, when I have more money, then I'll start investing.” But investing should be as normal to every person as paying a bill. 

Todd Polke:

When we can normalise investing and financial freedom and realise that it's about the small, consistent strategic steps that are really going to stack up and stack up until the avalanche thing called success, all of a sudden it becomes more doable. It's just about small baby steps done consistently. When people can apply that and get on that road to financial freedom, the compound effect of that kicks into gear in a big, big way.

Bosco Anthony:

Yeah, that makes a lot of sense. So what are some of these popular investment strategies or tactics that you're seeing right now? You said they don't have to be large investments, they can even be small ones, but more leveraged for the building market out there, for a builder who might be a bit sceptical or might just say, “I don't really want to go crazy right now.” What are some of the investments that you're seeing in the market today?

Todd Polke:

Right now, there's a lot of fear in the market. There's a lot of this conversation in the media around a recession. The interest rates have gone up, inflation has gone up, and we're in this marketplace and the media is hyping it up like crazy, which is what they tend to do very, very well, of course. So, there's a lot of fear in the market right now. Now, Warren Buffet has this great quote and he says, “When others show fear, I show courage; when others show courage, I show fear.” What he's really talking about is the idea of being counter-cyclical.

Bosco Anthony:

Yeah.

Todd Polke:

Now, no matter what is going on in the economy or what is going on in the marketplace, there's always opportunity, but the opportunity just changes depending on the environment that we're in at that point in time. So to me, when I think about investing, as I said before, I always think about strategy first. What is the purpose for where I’m placing this money? The asset class that I’m placing my money in is there to serve in the portfolio that's going to help me go from one deal to the next deal to the next and move through the five different phases of the wealth creation journey. 

Todd Polke:

If I'm looking at investing right now, I’d think, “Based on the strategy that I might have in my situation, there are a few key things that are really interesting to me right now. Number one is I think property has become a little bit further on sale. The media has been talking about massive drops in the Australian property market, which have not occurred. We've seen some drops, but the media is, of course, talking about huge, huge drops.

Todd Polke:

But what's underpinning the Australian property market is this massive onslaught. What we're seeing now is an opportunity where interest rates have gone up substantially, which has pulled the heat out of the marketplace. People have stopped doing stupid things like paying hundreds of thousand dollars more for a piece of real estate than what it's fundamentally worth, and because the media has been sprouting so much fear around interest rates and because the cost of money has gone up, a lot of people have pulled out of the marketplace. This is representing some incredible opportunity now. 

Todd Polke:

When you've got a long-term perspective in mind, property isn't a six month strategy, so you can't treat it like that. So if you're sitting there looking at the property market right now and thinking, “Okay, well can I find some good opportunities in this marketplace right now while everyone else is running for the hills and hiding under the proverbial doona, just hoping everything's going to work out? I'm willing to ride this, hold this property for a long period of time.”

Todd Polke:

There are some incredible opportunities in there right now. I've bought a property just recently, and I’m literally about to settle it for about $800,000 under valuation, because of certain aspects in the market. What I think's going to kick in after a couple of years is that as interest rates start to drop back down again and the cost of money evens back out and the fear falls out of the market and inflation settles back down, we're going to have this environment where the undersupply is going to kick on at a huge, huge level. All the builders out there know the supply chain issues that have been occurring during the COVID situation we've just been in.

Bosco Anthony:

Yeah.

Todd Polke:

We've got this massive undersupply sitting in the marketplace and with a government that is promoting huge immigration and a population growing at a rate of knots. So, I think in the next few years, buying some strategic real estate for holding for the long term is an incredible opportunity. I also think in 10 years’ time, most people won't be able to get into property as an investment because I think it's going to be too expensive, and some other trends around that. So to me, property is absolutely a good thing to put your money into. I'm also a big fan of the cryptocurrency marketplace, but with the decentralisation world, of course it's a rollercoaster, so you have to be ready to roll to ride that pathway.

Bosco Anthony:

Now with the crypto though, is there regulation coming in?

Todd Polke:

Yeah, there will be. Yeah, no doubt about it. It was always coming. There's the central bank digital currency on the way, which is going to be popping in much sooner than we think in the next year or two, that will be coming into the marketplace. Regulation is going to be popping in. And I think we're going to see two markets: we're going to see the decentralised version of blockchain and cryptocurrency, and we're going to see the centralised version, which is going to be run by governments. A lot of people are talking about how, in the next few years, we're going to see that $100,000 bitcoin price point. But everyone's got an opinion and my crystal ball is broken. So if anyone's got a working one, I'm happy to buy it from them. That'd be great.

Bosco Anthony:

All right. So you said crypto; I'm assuming you're going to say minerals as well at some point because they're usually regarded as a different type of currency. Would you go as far as validating silver and gold as well in today’s market?

Todd Polke:

Yeah, I’m definitely investing in silver. Silver’s probably my pick, especially because its use cases with the renewable energy sector as well. I think there’s a lot of use cases that it’s there for. So, when I look in this marketplace, I’m looking at property, I'm looking at dollar cost averaging in the strategic crypto portfolio and I'm looking at hedging into silver as my primary metal. I'm not in the share market again yet, but give me six months and I'll probably be looking at it again. Then I'm doing other business investments and things like that as well. So that's my mix of my portfolio at this stage.

Bosco Anthony:

I guess the advantage for a builder is if they have land, building would more cost-effective if they used their own company to build those houses. That then leads me to ask what are some of the spec builds for flipping and build to rent strategies that you're seeing right now for builders?

Todd Polke:

Yeah, that’s really interesting. The build to rent stuff is something we should definitely talk about because it's going to change the whole real estate market in a big way in this next decade. So I'm keen to have a conversation around that. But when we're talking about flip strategies, to be honest, it all just comes down to the numbers to me. 

Todd Polke:

To me, it's not one particular pathway and one particular strategy, to me it's all about the numbers, because the flip is not a long-term hold. It's getting in and out of the market, which is all about asking, “Well, do the numbers stack up?” That's going to generate the outcome that I want to move into the property and move out of the property within a reasonable timeframe and make a reasonable return on investment based on the effort and the risk and the opportunity cost of not just selling it to the local market.

Todd Polke:

I've got a bunch of builders who have a rhythm that every year they might do two clips themselves from their own backyard, so to speak, while they're building their strategic investment portfolio in different locations as well. They don't want to have everything tied up in their own backyard because then they're hedging all their bets on this one marketplace, and that's very risky. 

Todd Polke:

Diversification is a key element in any investing and how you do that is by using different locations in and around Australia to take advantage of different growth cycles. You’ve always got your money out there moving harder for you in the market. I'm not going to talk about one particular flip that is working better than another, because the reality is, a lot of them work. It's just: do the numbers stack up and in what location with what demographic are we actually referring to at this point?

Bosco Anthony:

Yeah, that makes sense. So around the flipping, I guess the traditional sense of cost low and then flip high still exist in today's market, regardless of what you're looking at. I would say that the concept and the principle are still the same.

Todd Polke:

Correct. Yeah, exactly. Yeah. It's an arbitrage.

Bosco Anthony:

Yeah. So how do equities play a role in successful wealth building as well? Because, obviously, even though we have this speculation and even me living where I am now, the housing market seems to be still increasing in value. I'd been visiting Australia for about seven years before I moved here and every year the property pricing goes up. So, obviously there's equity.

Todd Polke:

Yeah. When you're talking about equities, just so I'm clear, are you referring to equity in the property market now? Are you talking about equities in shares and funds and management?

Bosco Anthony:

Throw it at me, I'm interested. You're set on either side. You can throw it at me in any direction.

Todd Polke:

All right, cool. Let's talk about both. We'll touch on the equity side of things like the shares and the funds and things like that just because it may be a little bit of an easier conversation. Then we talk about equity when it comes to property. What I want to touch on with the equity when it comes to property is the serviceability issues that are going to come. Some of this may link us back into the next 10 years in the property market with the build to rent side of things and property investors of the future and first home buyers of the future, because it could be a curious conversation, and one that a lot of people in the building game may be thinking about or maybe questioning or may be interested to hear about as well. Equities to me, when we talk about now the foundation of my wealth portfolio and a lot of my investment strategies, comes down to property.

Todd Polke:

The builders listening will understand why. It's something real. We can feel it, we can touch it, we can look at it, we can construct it, we can add value to it. Everybody needs it. Everyone needs a roof over their head. But in the share market, no one needs that. It's just a store of value attached to a company; that's really what it is all about. 

Todd Polke:

When you're investing in equities and shares and things like that, what you're really attaching yourself to is: “Is this company or fund that I'm investing in going to perform well into the future?” Over time, a lot of them have been. And over time the returns on shares are per annum without the leverage component that we get when it comes to property, have done just as well as property investing. However, it can be a lot more volatile type of market and it can be manipulated a lot more in various different ways. 

Todd Polke:

When I think about investing in shares and investing in equities, again, I'm thinking: “What purpose is it there to serve in my portfolio? Is it a long-term buy and hold purpose where I'm primarily about creating capital growth to create a sustainable income stream over time? Or am I flipping, am I getting in and out for a short-term game, or am I targeting yield place?” So again, when I come back to what am I investing in the equities market, I sit there. I'm out of it right now just because it was way too heavy. I knew it was going to be dropping and so I’ve pulled out of it right now. I'm going to be shopping for some value buying in the next three to six odd months. But when I'm looking for that, what I'm going to invest in is: “What do I need in my portfolio? Am I looking for the long-term play? Am I looking for the yields? Am I looking for the flips?”

Todd Polke:

Well, based on what purpose it's there to serve in the portfolio, it's going to depend on what type of equities and what I look for. For most people, however, you're better off just buying a good fund like  Vanguard or something like that and just doing a dollar cost average strategy into that because it's been for most traders or share market investors, they have never been able to outperform just the standard managed fund, the index of the fund. If you talk about hands-off investing, well that's a really easy way to do it and anyone can get involved in. You can even do it on $5 a week if you want to. The barriers of entry are really, really low, so I think that's a great way to do it for most people, unless you are in the game all the time.

Bosco Anthony:

Now, what are some of the trends that you're seeing right now? Obviously, the interest hike rates have been the trend that's in the news a lot more, but are you seeing investors right now being conservative? Are you seeing more people getting into the market because of the speculation? What are some of the trends that you're seeing in the market right now?

Todd Polke:

Most investors I would say are probably more out of the market. They're all waiting. There's a lot of people sitting on the sidelines at this point in time and very much a lot sitting in a space of fear because of the rising interest rates and the cost of money and the rising inflation and the talk of recession. So that's a really common thing that is happening right now. So, a lot of smart investors right now are looking for opportunities. They're looking for opportunities in this marketplace where they can do some value buying. They've got some long-term pathways, they've got some capital set aside waiting for some really cool deals to pop up along the way. But while, as I said, while a lot of people have moved out of the marketplace, it's bringing up opportunities.

Bosco Anthony:

Yeah.

Todd Polke:

It's in the downtimes where true wealth is made.

Bosco Anthony:

If you think about the 2008 recession, Airbnb came out; a lot of these innovation companies came out. I built my agency in that year too. Here's a question for you though. I was in Canada when the last recession hit in 2008 and the Canadian banking system was a lot more conservative than the American banking system, so it was a different kind of recession for us, and I'm sure it was different for Australia and New Zealand.

Todd Polke:

Correct.

Bosco Anthony:

If we were to get a recession in the next few years, is that going to have a global ripple effect? Is it going to be an almost identical type of recession or will it be different in different countries?

Todd Polke:

It's definitely going to be different in different countries. Now there will be some flow on effect from different countries into how we operate, just because of our reliance on trade and globalisation and things like that. But it is definitely going to be different in different countries. As you just pointed out, the banking system in the US is radically different to that in Australia and in Canada and other countries. Their global debt is insane. I can't remember off the top of my head, but their interest repayment is something like $8 trillion a year or something stupid. Is that what it is?

Bosco Anthony:

Yeah. They're probably larger now. Yeah.

Todd Polke:

It might be larger now. I can't remember off the top of my head. Maybe it's $8 billion, it could be $8 trillion. It's a lot of money anyway.

Bosco Anthony:

Yeah, I think it was in the trillions the last time I checked. Yes.

Todd Polke:

Yeah, it’s madness, isn't it? In Australia, we've got a lot more stable and stronger and regulated banking system, which is very, very different. So even if we were to fall into this recession, and Australians are very anti-recession so to speak, we don't tend to have recessions supposedly. But because we don't tend to have recessions, we make a big deal out of it at the same time. Where on a global level, different countries have been through recessions at different times and it's a natural part of an economic cycle. So, we need to be mindful not to get fearful about it. We just have to look at what's in front of us and think, “What are the potential risks? What impact might that have on me, my family and my business, and how can I start setting myself up now to be able to weather any storms that come up?”

Todd Polke:

That's all about being proactive rather than reactive in your wealth and in your business and what you're setting yourself up for, because there are going to be lumps and bumps along the way. There always are; it’s just part of life.

Bosco Anthony:

Yeah.

Todd Polke:

We're not skipping down the rainbow path with unicorns flying around.

Bosco Anthony:

Yeah.

Todd Polke:

We've got to prepare for what comes up.

Bosco Anthony:

So, what are your thoughts on these rising interest rates now? Will that impact builder investments? Will it change the builder landscape when it comes to creating wealth building or do you think because of these high interest rates, builders will probably have the competitive edge to take advantage and leverage what they have?

Todd Polke:

There's so much wrapped up in that question, with a lot of the trends and things that are happening right now. I might go a little bit out of scope what you asked on if that's okay.

Bosco Anthony:

Yeah, that's fine.

Todd Polke:

We just saw some more interest rate rises happen and they're saying that in 2023, maybe we're going to see another couple of bumps, but I think we are nearing the peak of the interest rate cycle. The Reserve Bank is saying we're nearing the peak of the inflation cycle. In the final quarter of 2022, we hit 7.8% and they're saying that we're nearing the peak with that. Now what I expect to happen is that we may see steady interest rates for a while, until, obviously, inflation figures have settled themselves down a little bit. Then we may see some drops back off in the marketplace.

Todd Polke:

Now we're not going down to 2% again. A lot of people have really short-term memories. We may pop down to 5% or 6%, but we have to understand that that's normal. Five years ago, before COVID, interest rates were 5% and that's normal. We're in a normal interest rate cycle right now. We're not in a high interest rate cycle. It's a little bit higher than usual, but it's a normal interest rate cycle. So, we've got to get over it a little bit, to be quite frank. But it's just spooked a lot of people and they've moved out of the market. 

Todd Polke:

Now what I think's going to happen is that as we start to come back down a little bit and the talk of recession may have dissipate a little bit, talk of inflation dissipate a little bit, people are going to settle down a bit or they're going to settle into a space of normalcy as opposed to a space of fear where they're sitting at right now. When we see that, we're going to see the activity in the marketplace start to pop back into the mix again.

Todd Polke:

That's why I see that right now there's this window of opportunity, but that's when we talk of where a lot of people are out of the marketplace. I'm sure you've heard this a lot, but builders have had difficulty with the supply chain. I'm super curious to hear what you've got to say about this and what your builders have said about this. But the supply chain has been massively disrupted over the last few years and isn't getting any better anytime soon.

Bosco Anthony:

Builders have had to play a smart game, maybe bulk order or store or order in advance. We've had so many different builders that have had different answers to supply chain, but a lot of it is just trying to think and play smarter because of the unknown timelines.

Todd Polke:

They’ve had huge delays, so we've seen a lot of builders who have had to delay projects by six months, 12 months, 18 months, just because quite frankly they couldn't get the materials and the cost of materials went up substantially. We saw building prices have to go up and up and up over this period of time as well. I hate using the term ‘the Australian property market’ because that doesn't exist. There's no such thing as the Australian property market. It's made up of submarkets within submarkets within submarkets, but it's left a lot of arenas in Australia with a huge undersupply of real estate.

Bosco Anthony:

It's not just Australia. We've got builders from New Zealand, US and Canada; our listeners are all over and they're all saying the same thing about supply, just different things as far as items.

Todd Polke:

Yeah, and so the question then is how long is that going to stay for and is it a forever thing, or are we going to see that the building, the ability to be able to put more supply on the marketplace is going to be able to increase at some point? I can't see that happening in Australia very easily with the owner supply, the supply issues, the population growth, which is moving. I think what's going to happen is that the type of product is going to change and the type of end-user is going to change.

Todd Polke:

This is why we're seeing this build to rent system come into being, massively supported by the government in a huge way and by big corporations, big funds. This build to rent is a huge push because the governments realise that people are becoming conditioned to a lifetime of renting. A lot of countries are already doing this, and that's coming in Australia too. In this next 10 years, I think first home buyers are going to be something you see in a museum; they're not going to exist. They can't afford it. My daughter's 11 years old and I sit there and wonder, “Wow, when she's 20, what's property going to be like?”

Bosco Anthony:

I went to Vancouver for holiday after three years, and if you didn't have $200,000 to get in when you’re in your thirties, you wouldn't be able to buy a property. A basic house in North America starts off at $1 million, $2 million, and a lot of people in their thirties and forties don't have the 20% deposit.

Todd Polke:

Absolutely not. That’s especially in countries where the taxes are high, almost 50% of our money goes towards that. And there are other the taxes we’re subjected to just going through day-to-day life. The system isn't set up for us to be financially free. It's set up so we become functioning cogs in the economic wheel of society and good boys and girls who do what we’re told and pay our taxes. But that's my conspiracy theory. I won't dive into that too much deeper.

Bosco Anthony:

That will be another podcast.

Todd Polke:

Yeah, that's another podcast. But this next 10 years; I want to touch on this. In the next 10 years, the landscape of real estate is changing drastically and property investing in 10 years is going to be very different to what it is right now.

Bosco Anthony:

Yeah.

Todd Polke:

There is a huge wealth divide that is happening in the marketplace right now. I think it's going to get worse, and property is going to be part of the crux of that. The government is leaving clues around where they expect things to go: the build to rent, the longer leases, more rights in terms of leaning towards tenants to have a home. We're moving towards a lifetime of renting. This next 10 year period in the real estate marketplace, I think it's critical for investors, absolutely critical to be building your portfolio hugely.

Bosco Anthony:

So we talked about properties. I'm going to tackle this one question on both the crypto and the precious metals. In precious metals, silver has been constantly high; gold has gone. I've never seen a time when silver and gold have dipped for a very long time. I’ve got a lot of friends who are in the silver space who are holding onto silver because they expect that to be the next boom.

Todd Polke:

Yeah.

Bosco Anthony:

So my question for you is, for the builders out there who may want to sit on properties and not jump into it, are cryptos and metals the safe bets for the future?

Todd Polke:

Yeah, look, as I said, I'm a massive fan of the silver market. I think it's a very safe bet and gold as well and different rare earth metals and things. I think it is a safe bet for the future, especially with where we're seeing the digital currencies come into play and some of the global disruptions in terms of the currency markets and a few different things. I think having a hedge in silver and gold is a great thing. I know some builders get some cash in hand, which doesn't quite go through the system the right way, so they’re able to walk down to the local silver shop or the gold shop. To be able to buy some, to be able to invest in that is a great thing to be able to do. I'm a massive fan of it.

Bosco Anthony:

Todd, I have no idea what you're talking about.

Todd Polke:

No, no, no. This doesn't happen. I know it.

Bosco Anthony:

It doesn't happen. Yeah. All right. So you talk about leverage, and building companies have access to so many different things if they decide to go to the property side off the investment side. What's the first thing that comes to your mind for a building company owner when it comes to the building company? How do they leverage it if they play the property game?

Todd Polke:

Good question. So here's the thing: for most business owners, the primary source of attention should be on your business because that's your greatest source of leverage. You taking your time and your energy and resources away to go and redirect it somewhere else with an extensive amount of time and things like that is not your greatest source of leverage. If your business is doing well, that's where you should be directing a lot of your attention because it's the highest return on investment in terms of your time, your capital, your brain space and your energy. 

Todd Polke:

The challenge I see though, is a lot of business owners put everything into their business and that's where all their wealth is. But it can be a black hole: it can take all your time, it can take all your money, it can take all your energy, it can take everything.

Todd Polke:

One of the things that scares me and makes them sad quite frankly, is that so many business owners have put all the risks they've taken – the blood, sweat and tears that they've put into their business – and all their money is tied up in this business and yet they have no personal wealth. Business is a gladiator sport, and so much could go wrong. It's subject to so many things that can be outside of your control. A lot of business owners have this dream that they're going to be able to sell this business for the big sell-out and it's all going to be magical and unicorns. Some do, but a lot don't, unfortunately.

Todd Polke:

Yet, if you were to use the business as an ATM where you can actually transfer your business profits into personal wealth in a systematic, strategic way, you can create an exit strategy from your business in your personal situation. Quite frankly, you deserve it, pure and simple, with what you put in. So to me, for most business owners, you don't want to be moving a lot of your attention away from there because that's your greatest source of leverage. But you then want to leverage off a team and assistant to be able to systematically transfer some of your business profits and use it as an ATM to build your personal wealth.

Todd Polke:

Now if as part of what you do, you want to go and start turning over some real estate because you've got some teams and some skillsets and some time and some business capacity to be able to do that, to start flipping some houses or start to build your portfolio that way, then that's incredible, that's great. You can build some leverage very nicely in there. But I would say that it has everything to do with what stage your business is at and where the highest investments of your primary resources are: time, energy and capital.

Bosco Anthony:

So with the building companies, do you recommend they also look at other businesses perhaps within that same business? Obviously because builders are time poor might it be a little bit difficult to say, “Hey, let's build a fruit truck or another business out there.” But we do have builders sometimes who will say, “Hey, we do different types of building, but now we also do renos and we do design and home design and we offer different services within that building business.”

Bosco Anthony:

I've got a mate of mine who built a global famous junk removal company and then he ended up with a moving company, a painting company, a house service company and a gutter cleaning company. They used the same call centre for all of the systems. So for a builder who is looking to diversify, do you recommend they look at other services within that building facet?

Todd Polke:

If it makes sense. Just because you can doesn't mean you should. So in the end, the business, if you're going to fan out, then that's what we call it. We start with our construction, then we might fan out. A good example in the property market is a real estate agent might start out by selling real estate, but then the property management might be fanning out, then the lending might be fanning out. 

Todd Polke:

If we look at industry and services in the same niche, we can then say, “What's one degree that I can add onto this, utilising my existing business systems and where I don't have to load up a whole new infrastructure and whole new things, and I can go and increase my profit nicely?” Absolutely, you are creating a diversified business system, which now isn't just relying upon one leg of this stool, you are creating a stronger base and a stronger structure and you can actually build a better, saleable and more stable asset for the future. So I think it's an incredible thing, but don't just do it for the sake of doing it.

Bosco Anthony:

Do it if you can do it and you have the ability to do it, but also not take any hits while you're doing it at the same time.

Todd Polke:

Yeah, yeah. Absolutely. But again, just because you can, doesn't mean you should or you have to. Again, it comes down to the numbers. I've said this a few times, but to me it just becomes very black and white. When it comes to business or investing, I get emotional about it because this is a purpose and this is a legacy thing and I know it is for a lot of people. The idea of providing homes and housing and that legacy for the future is something that's important to a lot of people and it is for me as well. 

Todd Polke:

But when I'm making decisions around how I operate within that business environment or that investment environment, I'm looking at the numbers, that's what I'm interested in. I've got a lot of business owners in construction and things like that as well who are investing in different types of businesses because they love the business world. They're not building another business, they're just investing in other smart, intelligent business owners who are driven and have their own systems. They get to ride the coattails of other smart entrepreneurs.

Bosco Anthony:

You talk about legacy, and legacy comes in a lot of the interviews that I do when I talk to builders. They talk about what they want to get out of this business or what their exit play is, and there's succession, there's sales, there's acquisitions, all of that stuff. I would assume that even investment strategies need a legacy as well. Who are you becoming? Where are you going? And that determines some of that investment strategy.

Todd Polke:

Yeah.

Bosco Anthony:

I've been paying attention, I've been doing my research on some of the things you talk about, but I'm going to flip the question. You do this for a living. You help people and, clearly, the system's broken and a lot of people just like builders learn a lot from the Association of Professional Builders (APB). The WIPAA (Work in Progress Accounting Adjustment) calculator was one of the first things I learnt interviewing the different guests out there, and there's so much knowledge that comes from APB. Why do you do what you do and what's that legacy that you want to leave behind?

Todd Polke:

I've mentioned legacy in this conversation a few times now as you've been listening, and it doesn't surprise me that it pops up in a lot of the interviews that you do. It doesn't surprise me at all. I believe legacy comes down to two different things. I believe in intergenerational wealth as a type of legacy. I sit there and I think about my daughter and her kids and their kids and I sit there and wonder, “What's life going to be like in a hundred years’ time?” I want what I do now to matter and to actually benefit them in multiple generations. I want to be that big guy who’s still controlling the wealth from the grave that's helping people to be able to live a better quality of life. My family will live a better quality of life in multi-generations.

Todd Polke:

So one is intergenerational wealth, but the other type of legacy is all about impact. I'm a big believer in building wealth that outlives you. So, I think about the impact I want to have on the planet. I've retired twice before and I got bored out of my mind after a couple of weeks. A lot of business owners and entrepreneurs will have the same experience. It may sound beautiful, but if you sit on a beach for a few weeks, you're going to get bored. There's no doubt about it. You’ve got to be doing something. You’ve got to be thinking about ways that you can make a better umbrella or to build something over here or do something. We just can't help ourselves. It's a disease and it's an illness and I'm very happy about it. So when I think about legacy, most people I meet want to leave the world in a better place in one way, shape, or form.

Todd Polke:

To me, what I found in legacy comes down to two things for me personally. One has everything to do with the system of control that I see. This is the education system that indoctrinates people into a lifetime of financial slavery, because we're in a system of modern financial slavery. I fundamentally believe that freedom is our birthright and I believe it has been taken away and that everyone has a right to take it back. I'm here to help millions of people do that, no doubt about it. That's the reason I do what I do: to help people create that freedom in their lives. But I also believe in giving back to the planet and leaving the world in a better place in different ways. As human beings, unfortunately, we've done a good job of st***ing up the planet in certain ways and polluting the planet.

Todd Polke:

I've had the privilege to do a lot of travel and see a lot of gorgeous places and I've also seen a lot of the destruction as well, and I'm just not okay with it. I'm just not. So I want to be able to actually use my resources and use my wealth and use some of my knowledge to actually do land conservation and be able to do ocean conservation. I'm a mad scuba diver, and going diving in Bali and seeing all the plastic bags just flying past my face and all the stuff like that, and turtles with things wrapped around them and sharks with fishing lines and plastic bags wrapped around them, just makes me cry. It just purely does. I just can't stand it.

Todd Polke:

Most people I meet want to be able to give back to the world in a bigger way than what they're doing right now, but they don't have the time. They don't have the freedom, they don't have the resources or the brain space to be able to do that. When I can help people free themselves financially so that they can lift their head above the financial borderline, so to speak, and see beyond that, there's so many people who have so much to give back to the planet, and if I can help them start them on that path to be able to have the energy and time and freedom to be able to do that, then yeah, I've done my job.

Bosco Anthony:

Todd, it's been really inspiration talking to you, my man. We have lots of commonalities in our way of thinking. My final question to you would be how can builders learn from you outside of this podcast interview? What are some of the resources? Do you do any events? How can they find you online?

Todd Polke:

Yeah. Look, I run a lot of free events and things like that that people come and be a part of. Probably the number one place for people to start is that I run a Facebook group called The Wealth Dojo. If anyone wants to finds me on any type of social media, I run a free Facebook group. It's full of investors who are just learning how to grow their wealth, and some are just starting out. Some are very experienced with tens of millions dollars in assets, but it's just those people learning how to grow their wealth and start to invest strategically. Finding me on social media is the place to do it. Todd Polke is the name. The Wealth Dojo is a free Facebook group that I run where I'm just sharing different trainings and resources and tools that people can come to be a part of.

Bosco Anthony:

Thanks so much for joining us today. We'd love having you here, and I'm sure we'll see you again in the future, my man.

Todd Polke:

I’d love to. Thank you so much. I appreciate you.

Bosco Anthony:

Thank you for listening. Remember to subscribe to Professional Builders Secrets on your favourite podcast platform and leave a review. To learn more about how the systems at APB can help you grow your building company, visit associationofprofessionalbuilders.com. See you next time.