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The truth about Michael Yardney’s net worth

by xyonent
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Growing Time Value Of Money Investment Wealth Fina Guwvny7 1160x774.jpg

Key takeaways

What’s my net worth? While I don’t answer this question with a definitive number, I’m always happy to talk to people about how I achieved my financial success in the hope that they can learn some lessons they could use.

I usually explain to them that throughout my journey I’ve had more than my share of failures (both personal and financial and many of them self-induced) but I’ve been lucky to also have my share of successes.

Well, maybe it wasn’t luck, because the more I learned about success, in all areas of life, the more I realised that luck has very little to do with it.

I explain the rich quietly build their asset base, while the average Australian works hard trying to increase their cash flow. The problem is, you can’t get rich through cash flow, you have to build your asset base first through the capital growth of well-located properties.

Residential Real Estate is a high-growth, relatively low-yield investment. Over the years I have bought properties to enable me to buy more properties, and then slowly lowered the loan-to-value ratio of my property portfolio and started living off my “cash machine” of properties.

I know a reasonably common Google search is “what is Michael Yardney’s net worth ?”

In fact, a question I’m asked frequently is, “Michael, what’s your net worth?” Concept of money growing from coins

And while I can understand that this may be of interest to some people, I’m sorry to disappoint you…

I don’t answer this question with a definitive number, but I’m always happy to talk to people about how I achieved my financial success in the hope that they can learn some lessons they could use.

I usually explain to them that throughout my journey I’ve had more than my share of failures (both personal and financial, and many of them self-induced) but I’ve been lucky to also have my share of successes.

Well, maybe it wasn’t luck, because the more I learned about success, in all areas of life, the more I realised that luck has very little to do with it.

So what is net worth?

Net worth is the amount by which your assets exceed your liabilities.

Fact is: all wealthy people have built a substantial asset base – it could be in property or shares or businesses.

Wealth

However, while the rich quietly and steadily build their asset base, the average Australian works hard trying to increase their cash flow.

Either they try to earn more by working harder or longer (you’ll never get rich this way) or they look for properties that will give them positive cash flow.

The problem is you can’t get rich through cash flow.

Now don’t misunderstand me, cash flow is the ultimate aim — but that’s only once you’ve built your asset base (your net worth.)

This means your investment journey will comprise four stages:

  1. The Education Stage – you really must develop a level of financial fluency before you start investing
  2. The Accumulation Stage — is when you build your asset base (net worth) through capital growth of well-located properties.

    You can speed up your wealth accumulation through leverage, compounding time, and “manufacturing” capital growth through renovations or development.
  3. Transition Stage — once you have a sufficiently large asset base, you slowly lower your Loan to Value ratios so you can move on to the …
  4. Cash Flow Stage — now you can live off your property portfolio and enjoy the longest holiday of your life.

Growing your net worth with property

Personally, I’ve used property as my wealth-creation vehicle because it provides:

  1. High capital growth (if you own the right type of property), which grows your net worth, and;
  2. Secure income, which increases over time (helping you pay the mortgage).

And while it takes a few decades to grow a sufficient size asset base to become financially independent there is a way to speed this up.

You see the wealthy have learned to use…

The power of leverage

Have you ever wondered why it’s easier for people who have money to make more of it?

I mean, why is it that the second and the third million are so much easier to earn than the first?

Do you want to know what the biggest difference is between how wealthy people build wealth and how poor and middle-income people do it?

It’s how they use leverage and I’m not just talking about borrowing money.

In my experience, there are at least four ways successful investors use leverage.

These are:

1. Money

One of the biggest differences between how wealthy people and the average Australian go about building wealth isn’t how they invest the money that they have… it’s how they leverage and use the money they don’t have that makes them wealthy.

You see, the average Australian rarely uses leverage in any focused or strategic way, partly because they are afraid of taking on debt.

On the other hand, wealthy investor has mastered the art of using money that they don’t have – other people’s money – to build their wealth.

Insurance Money

They use borrowed money to magnify their investment activities and enjoy enhanced accelerated returns.

They take on more debt and borrow, gear, or leverage their assets to own even more assets.

Yet the average Australian is frightened of taking on more debt.

This is a huge difference in mindset.

When you have a more sophisticated understanding of the rules of using leverage, you are able to literally use it to take your wealth-building to the next level.

When I look at an investment, I don’t ask myself, “Can I afford this property?”

Instead, I ask myself, “How can I strategically use leverage to help pay for this investment in a way that enhances my overall return without taking on more risk?”

2. Relationships

You can also leverage your relationships or your network so successful investors build a great team around them – I know I have.

I also understand I don’t have to be an expert in every field if I develop a good network.

For investors, this network may include a good finance broker, a smart solicitor, a property-savvy accountant, and a knowledgeable property strategist.

Successful investors also have one or two mentors and they may belong to a mastermind group.

Relationship Team.jpeg

This is a group of like-minded people who encourage each other and act as “unreasonable friends” helping each other push forward towards their individual goals.

Having a great network around you enables you to leverage other people’s expertise.

I often say “if you are the smartest person in your team then you are in trouble.”

Your network of relationships is critical to growing your wealth, not just for what they themselves know, but often for the people, they know who could also help you.

3. Time

Successful investors have also learned how to leverage their time effectively.

Many first-time investors waste so much time trying to do everything themselves.

Successful investors value their time and have learned to leverage it by putting it to its highest and best use.

They do this by outsourcing minor tasks to their property manager and to other contractors.

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