July 12, 2022

First of all, there are economic vs perceived definitions of what constitutes a recession. After many searches, it’s become weirdly clear to me that everyone agrees on what a recession is:

• “During a recession, the economy struggles, people lose work, companies make fewer sales and the country’s overall economic output declines (Forbes.com).”
• “A recession is a period of declining economic performance across an entire economy that lasts for several months (Investopedia.com).”
• “In economics, a recession is a business cycle contraction when there is a general decline in economic activity (Wikipedia.org).”

Of course, an economic recession can be of any scale — even on a personal level — and it doesn’t necessarily need to be impacting a whole country or even the rest of the world (like the one we seem to be facing at the moment). However, city-wide recessions (such as the City of Detroit in the US) to worldwide recessions (such as the one induced by COVID-19 lockdowns back in the year 2020) still occur once every few decades or even centuries. Remember: everything’s cyclical.

One of the key reasons why I also call it a ‘perceived definition’ is because none of the (what I would call) experts seem to agree with each other on the length of time it takes to clearly define a period of ‘overall economic output decline’ as recession. I don’t know about you, but I personally prefer to look at things this way since I fundamentally believe in not only the possibility of surviving through an economic recession but thriving through one regardless of how long a recession is.

As usual, this article is written largely based on my personal definition and experience, and I’m officially calling what’s happening in the general economic environment a recession (at least, in Canada).

2008

In2008, when global financial crisis was at its peak, I was still only about 18 months into the work force as an economist would call it. Proud of my 6-figure job as a 26 year-old, I thought I was invincible as long as I worked hard and work even harder when I needed to.

Of course, my strategy to trade more hours for dollars didn’t work. More hours, yes. More dollars, no. The shrinking results from my elevated efforts to maintain a pay check and lifestyle forced me to learn some of the “what not to do’s”:

• Cut spending on everything (which I later on learned is actually quite stupid in the grand scheme of things),
• Pay down my mortgage and car loan faster (which I again learned was a financially illiterate move), and
• Put more money into savings and company stock options where they would match 25% on every dollars I put in (which literally makes me angry right now even just writing about it).

What I learned from living through the 2007–2009 global financial crisis set the foundation for how I’ve built everything today.

The real lesson is this:

Spend and invest — but only on necessities and assets especially during an economic downturn. Cost and values have a very direct correlation. Like a bad cell connection on a long-distance call, they are connected but often have lags.

If you don’t know what to invest in, invest in yourself in anyway possible. We are our biggest income generating asset. Many people think investing means that you have to pick a stock, a type of crypto currency these days, some sort of real estate, or (god forbid) savings. That cannot be further from the truth. Nothing will yield good returns if you don’t first decide for yourself if it’s a good investment tool for you. Like all tools, if you don’t know how to use it, it might end up hurting you. I’m pro any type of personal development and financial education (as long as you’re not simply learning how to ‘buy’).

People ask me if real estate is a good investment. I would say: It depends. Are you educated enough to make it a good investment?

People ask me if stocks are a good investment. I would say: It depends. Are you educated enough to make it a good investment?

People ask me if precious metals are a good investment. I would say: It depends. Are you educated enough to make it a good investment?

I think you get the idea. I know for a fact that a newly licensed but trained carpenter can use a hammer more effectively than me.

If you asked me in the beginning of 2010, I would say investing in real estate is horrible!

I became an ‘accidental/traditional’ landlord in 2009 when I moved from my first property. Like many, I rented out the first property because I could afford to carry the ‘expense’ (aka negative cashflow) and the carrying costs of the new one. I also got into a commercial syndication through the referral of a coworker who ‘parked’ her money in real estate in 2009 thinking it would at least do better than my shrinking portfolio in mutual funds, savings and company stock options. Little did I know, I was the last batch of people they took the money from before they gave up on the project. I never saw my hard earned money again.

However, it gave me the kick in the butt that I needed to learn to grow my money and protect my own financial destiny.

Today, I can share with you why I love real estate for days on end as you know. The biggest lesson I took away was this (and still is everyday):

2016

The perfect storm that almost took everything I built.

From 2010–2016…

• Lost all my savings in a commercial real estate syndication
• Began my financial education leveraging real estate investing
• Had my 3rd heart attack and a major depression
• Diagnosed with the 1st of my 5 auto-immune disorders
• Started applying my financial education
• Declared financial freedom (#1) on July 25, 2012 (same day I was laid off from my soul sucking corporate job)
• Declared financial freedom (#2) in December 2015
• In September 2016 — lost $1 million dollars (in cash value) overnight that “almost” lead to a bankruptcy (corporate & personal)

While I thought I was on top of the world at the beginning of 2016, my portfolio was not strong enough to take on the regional recession (in Alberta) that started in 2014. This is why when I teach and mentor these days, it’s not just about cashflow anymore. It’s about cashflow, cashflow management and cashflow mindset. 3 big topics that I plan to write about later.

I’ve learned to indulge and enjoy life the way I want over the years. It can be very unsettling at times when it’s not something you grew up with. For example, I have a 3-hour rule when it comes to flying these days. That means: any flight that is longer than 3 hours, I will pay to fly business or first class. This wasn’t always the case. On smaller planes, I used to walk by the nicer seats and dream that — one day, I would be in it all the time and not have to walk the long way down into “cattle class” (as a British friend of mine puts it). On the bigger planes, I wanted to take the other bridge to board or turn ‘left’ instead of right when entering the aircraft. In the early days, I would upgrade myself with points or ‘get lucky’ and get upgraded because I had some loyalty status with the airlines when some flights were overbooked.

Then, with better financial resources (and mindset), I started with a 6-hour rule. It’s now evolved to the 3-hour rule as I’ve shared. This is not a brag nor a status symbol. Rather, it’s the lesson of taking care of what’s important: health. One of my conditions is called Ankylosing Spondylitis. Feel free to look it up. While I took a huge loss in 2016, I learned to manage and balance my cashflow to maintain a certain lifestyle to honour my top value: Health. More importantly, I learned to be a value-based spender.

People who know me these days know that I have no problem pulling the trigger on a multi-million dollar real estate investment deal when the numbers are good, and yet have a hard time buying a new piece of furniture for the house for a few thousand dollars. Admittedly, a part of me is already ready for the ‘worst’ to happen again and I want to stay alert and be ready.

I once learned that a best and highest-paid boxer would move to a shack 3 months before a major match because he wanted to sharpen his skills and instincts rather than staying in the lap of luxury he’s created for himself from his financial successes. That has spoken to me — deeply.

Everything is cyclical. This recession taught me to be ready for the worst at any time. To capture the moment, to seize the opportunity and to be disciplined and patient daily. My lesson can be summed by with this quote:

2020

AKA the COVID-19 recession.

Recalling what it was like in March 2020 without looking at charts and analysis of what was happening economically, I was both scared and excited. And this little quote came into my head:

Since the beginning of COVID lockdowns…

• Started Trust Your Talent Academy with many of my trusted and educated investors
• Acquired more cashflowing properties in 1 year than the last 5 combined
• Experienced the 2 financially best years in 2020 and 2021 in my life
• Travelled 9 out of the last 18 months (and counting…) when people felt restricted and fearful to do so

Forgive me if you feel that I’m overly excited about the ‘recession’ that we are in or going into. Because I really am. Of course, it sucks to see some people get hurt and it is not about that. It’s about seeing the human spirit during any sort of ‘downturn’ and how we learn and grow from it for the better each time.

Here’s what I realized what I did back in 2008 was utterly and incredibly stupid:

• Cut spending on everything — to get the economy going, spending needs to happen. Money is a currency. Like a current, it needs to flow. When it flows, it connects and revitalizes parts of the economy needed to function and grow. Think of spending like pumping blood into our veins. What happens when that slows down or even stops?
• Pay down my mortgage and car loan faster — “throwing good money after bad” is a good way of looking at this. As inflation rises, your debt obligation shrinks. Read that again. While our money devalues, so does our debt. The point is NOT to pay down debt faster, but to leverage debt even more to acquire income generating assets during times like these.
• Put more money into savings and company stock options where they would match 25% on every dollars I put in — unless you’re the CEO or have insider trading information, I have no other comments other than maybe cash out and tape your money to the back of your toilet at this point. No joke.

Technically, the pattern is simple and can once again be summed up with: everything is cyclical (3rd time’s a charm!).

The financially educated know that there’s another great opportunity coming. I have never personally witnessed 2 economic recessions happen so close to each other. I personally believe that we were headed for a recession right before lockdowns started due to COVID. The global initiative from governments creating aids (aka printing money) coupled with the resulting supply chain issues are making this one seem scarier than it really is.

Not only me, but friends in my circle also experienced some of their best financial results in 2020 from investing in other vehicles — stocks and businesses. The lesson carry through: nothing you choose will create the financial results if you do not first choose to master your own knowledge in it. Moreover, how you DECIDE to come out of this recession will largely determine how you ACTUALLY come out of it.

So, here you have it: my 3 lessons:

1. Invest in myself — my financial education, my personal development, my physical health and my mindset
2. Honour my values through the good and bad times so I never have to ask “what am I doing it all for?”
3. Stay alert and stay humble. Expand my means responsibly.

Gratefully, each ‘recession’ has further helped me define who I am as a person in addition to creating better financial results. I hope it will start to do the same for you.

Tomy dedicated readers, I thank you for your support and feedback. If this is the first time you’re reading one of my publications, I hope you’ve enjoyed it and learned a thing or two.

If you’re wanting to be a part of a community of real estate investors from around the globe, here is the T.A.L.E.N.T.ed Investors Facebook Group. It’s a place where people come together to share experiences, knowledge, successes and challenges, and money making opportunities!

For those of you who prefer watching videos, here is the YouTube channel where some of my work (very raw) has been shared.

If you prefer the live interaction and delivery to help you build some foundation, our next Bootcamp is on July 23 and July 24. Go ahead and register for a session for either day to help you further your financial education.

Lastly, I just want to say thank you for your continuing support.

I aim to be authentic and adding value to your life.

I invest to build a life. I build business to create better life experiences.

It’s ultimately about LIFE and I appreciate you coming on this journey with me!

(Written at the Fairmont Royal York in Downtown Toronto, ON)

July 19, 2022

(WARNING: COLOURFUL LANGUAGE)

Cashflow — another highly used marketing buzz word by real estate buyers who masquerade as investors and coaches to make their ‘deals’ sound better than they are these days. My attempt as usual with this article is this: help as many people understand the difference between cashflow, cashflow management and, MOST IMPORTANTLY, cashflow mindset.

With so many people reaching out these days asking for perspectives, opinions and experiences during a time like this — looming recession and high interest rate (cost of borrowing), I always like to go back to the basics to stay grounded.

According to Investopedia, cashflow is defined as “the movement of money in and out of a company. Cash received signifies inflows, and cash spent signifies outflows. The cash flow statement is a financial statement that reports on a company’s sources and usage of cash over some time.”

First thing first, let’s quickly break this definition down:

• It’s the ‘movement of money’ in and out of a company. If you’ve had the chance to check out some of the My Daily Dose with Tim videos, you’ll know that I treat EACH and EVERY property like an independent business. And like a business, we want to be making a profit at the end of every month (unless it’s meant to be non-profit from the start).
• Cashflow is sometimes synonymous as profit. If you’ve gone to any sort of business school, you’ll learn this very definition in your 101 class: Revenue — Expenses = Profit. As a result, cashflow is also an indicator of how well the business is run — kind of makes sense. At any given point, the goal is to maximize revenue and minimize expenses. That brings me to a very important point here: the emphasis should be on creating POSITIVE CASHFLOW.
• In most real estate investing strategies (refer to the Wheel of Wealth articles), the high level formula actually looks more like this picture (yes, that’s my handwriting on a flip chart — don’t judge 😉):

Well, well, well…it looks like we are missing a crucial component here with the simplified version before: debt service (aka cost of borrowing). Unless you are purchasing your properties with cash (and why would you?!), chances are you need to maintain the debt servicing on a regular basis. And the terms and rates of the debt service will ultimately determine the cashflow/profit.

As I’m writing this, I know many buyers (who have been posing as investors and coaches) have stopped buying while I’m in the process of acquiring/closing on 12 properties (16 doors) from 2 tired landlords — in both Canada and the US. I’m also making the biggest daily gains from trading futures since I started learning last September.

I’m definitely NOT braggin’ since I was not always able to capture every economic downturn to the best of my ability (as mentioned in the previous article). However, I did learn from a mentor at the beginning of my financial education career that Financial education will allow anyone to make money and grow wealth when the market is going up, down and sideways. That was the ‘sales pitch’ that got me. Today, it remains the main reason why I’m pro financial education and NOT just real estate investing.

When you are financially educated, you will learn be excited about economic downturns for these 2 main reasons:

1. Your money will go further when value drops. People see higher interest rate/inflation and decreasing value as a double whammy. When, in fact, it’s the most amazing thing when you are able to leverage debt to build wealth. As mentioned in the previous article, regardless of rate, the devaluation of money is also the devaluation of debt. Plus, most investors are still able to borrow money for a mortgage (depending on types of property) anywhere between 4.5% — 8% in North America when inflation just clocked in at 7.7% in Canada and 9.1% in the US (at time of writing this article). That literally means that your debt is FREE MONEY still. While on paper, the rates are ‘going up’, let’s not forget that it’s based on comparison of what people have gotten used to in the last decade or so largely due to global financial crisis. Mind you, I’m not denying the fact that the higher cost of borrowing can eat into your cashflow as a result initially (see calculation formula above again). This is precisely the reason why time and time again I emphasize on buying for positive cashflow. It’s the survival tool in a recession. However, when values are dropping, it also makes certain asset classes more “affordable” to get into.
2. You can increase your overall net worth dramatically coming out of it if you learn to acquire assets properly during this period of time. The value will bounce back up —it’s cyclical. It’s the good old saying of “buy low, sell high”. And also, what I’ve learned from trading is this — unrealized losses and gains don’t matter as long as you are making a positive cashflow. Think about this example: whenever Elon Musk says something dumb (according to the majority’s opinion or media’s scrutiny), his company value drops. But was he or his company hurting? No! Because they are protected by positive cashflow/performance. The same goes for all big and major companies that we’ve come to know: Coca-Cola, Nike, Microsoft, Google, Facebook/Meta, etc. The values of these companies go up and down on a daily basis — sometimes in the millions and billions — and they continue to grow and thrive over time. This is also when trained stock investors buy more shares — when the values are lower (in comparison). We are simply going through the initial contraction of a recession. So, understand these 3 stages (important!): as money (as currency) devalues with inflation, the value of things (especially assets) also goes down while the price goes up (initially — I know, makes little to no sense sometimes). Then the price will go down due to supply and demand and the loss of buying power. Over time, as inflation gets under control, the value of money stabilizes, value and price will inevitably go up in the long run.

I sincerely hope that you have fully absorbed what was shared here as this article will serve as the foundation for what’s more to come. If you enjoyed it, please give me a clap and a follow so I know how I can continue to create relevant content on this platform.

Tomy dedicated readers, I thank you for your support and feedback. If this is the first time you’re reading one of my publications, I hope you’ve enjoyed it and learned a thing or two.

If you’re wanting to be a part of a community of real estate investors from around the globe, here is the T.A.L.E.N.T.ed Investors Facebook Group. It’s a place where people come together to share experiences, knowledge, successes and challenges, and money making opportunities!

For those of you who prefer watching videos, here is the YouTube channel where some of my work (very raw) has been shared.

If you prefer the live interaction and delivery to help you build some foundation, our next Bootcamp is on July 23 and July 24 (this weekend!). Go ahead and register for a session for either day to help you further your financial education.

Lastly, I just want to say thank you for your continuing support.

I aim to be authentic and adding value to your life.

I invest to build a life. I build business to create better life experiences.

It’s ultimately about LIFE and I appreciate you coming on this journey with me!

(Written at home in Edmonton, AB)