We all know that property investment suffers no fools, and anyone that makes the leap to become a full-time investor has to have a good head on their shoulders. What if we told you about one man who not only became a great success in property investment in Australia, but who did it with no business contacts, no starting capital, and no English.
Meet the entrepreneur who did exactly that: Julio De Laffitte.
All the original rules hold true, as Julio did indeed have a very good business head, and his success exemplifies that obstacles can be overcome with the right wealth mindset and an enthusiasm for hard work. Any person can have both those things, and it’s inspiring to see what can happen when they’re applied properly.
A Good Financial Education
Julio had a solid start in life at the knee of a prominent Brazilian family with a rich business heritage. His father was an enthusiastic property investor. Laffite learned a lot about strategy through observing him. He soon began to understand the numbers behind the process. He appreciated the potential of using leveraging and positive cash flow from current properties to buy other properties. The ability to increase leverage from existing properties through applying aggressive debt-reduction strategies appealed to him. It was like a property ‘chain reaction’.
With his wealth mindset forged from a young age, he went on to found several successful enterprises in his hometown of Rio de Janeiro.
At this point, you might be wondering why this successful young man would, at this point, leave an environment where his success was practically guaranteed. Two stories can be found that explain this leap into the unknown.
Goodbye Rio, Hello Cairns
One explanation is quite simple. Julio had earned success early in life and craved fresh challenges. It would be understandable that he might have even wanted to prove himself outside of his family’s reputation.
Another explanation doing the rounds is a lot more dramatic. It tells of a chance meeting in Rio between a young Laffitte and a lovely Australian girl. A relationship bloomed, but her impending return to Cairns was set to separate the young couple by cruel distance. Rather than let this happen, Julio booked himself a flight to Cairns and was in fact there to greet her when she arrived. No shortage of courage or creativity there!
Julio De Laffitte vs the Australian property market
Personal life sorted, Julio set about making his mark professionally. Just some minor issues to overcome – no knowledge of Australian business culture, no capital, no contacts, and no English! His personal relationship accelerated his uptake of the language, and his hardwired business and wealth mind helped him attain a commerce degree and diploma in financial planning. Within seven years, he had built substantial business interests and considerable net worth.
How did he do it?
Julio arrived in Australia just before the recession in the early 1990s. He was impressed by Australia’s low inflation rate compared to Brazil’s (12% vs 300%) and its banking system, which made it easy for him to secure a loan. He worked two jobs and borrowed to purchase his first house.
When the recession hit, rent prices went up which inspired Julio to rent out part of his house to a tenant. The income from this rent allowed him to purchase an investment property within a year, and he was on his way to creating his first property “chain reaction” – buying one property and using the rental income to fund the next property purchase.
This system allowed him to build a portfolio quickly. Laffitte then borrowed against his portfolio to move into the financial industry, and the rest is history. He went on to found his own company and enjoy the fruits of his labour – while his large portfolio of over 70 properties estimated at over $40 million pays for itself.
How can I learn from this?
Laffitte has predominantly made his money by investing in property. Here are four tips he has shared on property investing based on his own experience.
- Don’t Chase A Pay Rise
Aim to build on an asset base so that you can go to work to “do what you want to do, not what you have to do”.
Set up a “chain-reaction” of assets where houses buy houses and then they buy everything else.
- Never Sell Property
Capital gains tax only applies if you choose to sell a property. With a well-structured financial facility, you can use your property portfolio as an “enormous credit card” to fund your lifestyle and future purchases.
- Don’t Look At Your Tax Refund As Income
Put tax return cheques towards driving down mortgage debts instead.
- Location Matters
Big upgrades in infrastructure suggest a suburb is going to expand. Also, you need to consider where the everyday person wants to live.
From my perspective, it’s important to learn from Julio De Laffitte’s advice as well as from his example. The biggest takeaway is that being financially literate and having a good financial education is crucial. Julio’s knowledge of finances enabled him to overcome obstacles that would stop even native-English speakers from launching into property investment and dictate his future.
Look at it this way: if you can read this, you’re already at a great starting point to benefit from property investment. Call us if you have any questions about property investment or if you would like to find out how we can work together to grow your knowledge of this space.
