Show Notes

• From civil engineer to full-time investor
• Simple house with a granny flat
• Achieving financial independence
• Commercial real estate opportunities in Australia
• Helping others create wealth
• The Rethink brand
• When the product sells itself
• Scott’s biggest problem right now
• A disciplined investment approach
• Maintaining organizational culture as the company grows
• The importance of setting boundaries
• Designing the life you want to live

Connect With Scott O’Neill

✩ Website – https://www.rethinkgroup.com.au/ 

✩ Instagram – https://www.instagram.com/scott.oneill1/

✩ LinkedIn – https://www.linkedin.com/in/scott-o-neill/

Summary

Scott O’Neill is one of Australia’s leading voices in property investment. A former civil engineer turned self-made investor, he achieved financial freedom by 28 and built the Rethink Group – a powerhouse spanning commercial and residential investing, finance, and renewables. A best-selling author and sought-after speaker, Scott simplifies wealth creation for everyday investors. Scott discusses his early path to financial independence, and the key ingredients that have fueled his success.

Full Transcript

Brian  

Welcome to another episode of LifeExcellence with Brian Bartes. Join me as I talk with amazing athletes, entrepreneurs, authors, entertainers and others who have achieved excellence in their chosen field, so you can learn their tools, techniques and strategies for improving performance and achieving greater success. Scott O’Neill is one of Australia’s most influential voices in property investment, and is transforming the way Australians think about building wealth. A former civil engineer turned self made investor, Scott achieved financial independence by the age of 28 by turning his passion for property into an expansive portfolio and a thriving business empire. Today, he is the founder and CEO of Rethink Group, a diversified multi-brand powerhouse that has guided over $5.8 billion in property transactions across Australia and New Zealand. Scott is a best selling author, sought after speaker and trusted media voice known for his sharp investment strategies and visionary leadership. He has a unique gift for simplifying complex financial pathways and showing everyday Australians how to create lasting prosperity. Scott’s hands on approach, deep market insight and relentless drive for excellence have positioned Rethink Group as one of Australia’s most trusted and progressive investment partners. I’m super excited for our conversation, and it’s an honor to have him on the show. He’s joining us today from Sydney, Australia. Welcome Scott, and thanks for joining us on LifeExcellence.

Scott  

Great to hear, Brian. Thanks for having me.

Brian  

Well, it’s great to see you, Scott. You and I met on Necker Island earlier this year, and I’ve been looking forward to the show ever since. What stood out for me immediately in our first conversation, even before we got to Necker, was the speed of your success:  first investing on your own and becoming financially independent, and then, of course, with the phenomenal growth of Rethink Group. You started your career though managing construction sites as a civil engineer. How did you get started in real estate, and what caused you to eventually leave civil engineering to become a full time investor?

Scott  

It surprised me as well, the speed of things that happened, because, by nature, I’m pretty conservative, my parents are accountants and drafts people by trade so we were really that middle class, work till you’re 65 notion, and that’s what I was gearing up towards. I did a civil engineering degree thinking I was going to be an engineer forever. Then a couple years into that, I realized you needed a bit of business there, so I started doing an MBA. I was really gearing towards the hopeful CEO trajectory with a large company. What I didn’t really anticipate is how little I liked working at these construction sites, because as an engineer, you’ve got to gear up and move every two years on average, maybe every three years, because you’ve got to chase projects around the country. Australia is a big country as well so that means you’re probably going to have to move thousands of kilometers, or, if you’re lucky, stay in the same city, but you might be driving two hours on top of 12 hour days as well. I was really disheartened by how hard the long term trajectory looked. The pay was good as an engineer, I can’t lie about that, but I didn’t think it was equal to the amount of hours and skills we had. The career progression was quite linear as well. You had to be a graduate engineer for a couple years, then you’re a site engineer for a couple years, and then a project engineer for another couple years. But the system is designed to keep you working long term under a company structure that progresses you moving faster than you should. It’s not so much skill based – at least my experience wasn’t – it was really timeline based, and as long as you ticked enough boxes, you’d progress to that next timeline. As soon as I worked that out, I was pretty adamant to do anything I could to bring retirement quicker and that was investing on the side. I started investing in shares from the age of 14. I was very young into that. I was only playing with a couple of hundred dollars here or there, whatever I could scrounge up through part time work. I worked at McDonald’s as soon as I was legally allowed to as well. I was always a worker, but where it really changed was getting into real estate, because in Australia we could leverage up, I put ten percent down on a property so that means you’re playing with 90% of other people’s money – which is the bank’s in my case – and it started fast tracking the returns. That’s how I got started. I was 23 at the time of the first purchase.

Brian  

What was your first investment property? Just out of curiosity.

Scott  

The really simple house with a granny flat on it in Sydney, not far from where I lived. I live in a place called the Sutherland Shire, which is 45 to an hour south of the CBD of Sydney. The property had good cash flow in Australia as well. There’s this trend towards taking a cash flow loss on your properties. The reason for that is there’s a tax deduction on it. There’s this culture of accepting negative cash flow, and that is the goal, with the hope of getting some of the tax return back. But the problem with that strategy is you’re not actually building an income that you can retire from. It’s just all for capital growth and nothing more, and hopefully the cash flow fixes itself in time. I grew up in a cash flow poor household that had assets, my parents did, but we really didn’t have free cash flow. I just thought that way of living is counter productive, especially if I wanted to get out of my job or work a different one, maybe a lower paid one that was more lifestyle focused. But my property, because of the granny flat, had extra income, and that allowed it to wash its face from a cash flow point of view. It was actually about ten grand clear per annum, so $10,000. I looked at it as a pay rise, thought if I could buy ten of those, that’s one hundred grand a year. It’s a pretty good start to retirement. That got me, that was the foundation to the initial investment strategy.

Brian  

Well, it sounds like a great start, especially from a cash flow standpoint, as it compares to what most other people were doing. Scott, I know one thing our listeners are wondering, is how you achieved financial independence by the age of 28. I think a lot of people – maybe 38 or 48 or even 58 – would like to figure out how to do that. How do you define, first of all, financial independence, and walk us through what you did to get from that first investment property to that status financially at such a young age, especially.

Scott  

Financial independence for me is simply having enough cash flow from your investments to live off so you don’t require a job. That’s what it was for me. I replaced my income at the age of 28 and it was a pretty good income. I was working in, as you said, a construction engineering business. I had 130 staff and contractors working for me at a young age, and you could imagine that the income was pretty good from that. But I used that income to deploy every cent of it, to be honest, back into property. I was living in a very cheap rental, basically just redeploying all the capital we could back into property. The thing I did differently was – there were a few things – chasing cash flow and capital growth. I was never neglecting one category over the other. Most people choose capital growth or cash flow. I wouldn’t touch the investment unless it had a strength in both columns. That’s more of a long term strategy that        underpin the success of each investment. What I did differently to others was I started buying unit blocks on one title, strata tiling them. Let’s say there’s a unit block, you might call it multifamily in the US, or something like that. But I would then buy them on one title, and then split them into five or six titles that would then create a revaluation uplift, because you can, it’s cutting a pizza up into six slices. They’re worth more per capita on slices than they would if you buy the whole thing yourself. I was buying it at a discount, and then going to councils, doing some renovations, fixing the places up. I was very hands on as well. I was doing everything from floors to kitchens to organizing new car parks to get done, to increase the lettable area of these properties. It was fairly manual and also a little bit technical because of the change of ownership structure, which really created nice equity chunks that I’d then redeploy into the next project. From the age of 24 to 28 I did a lot of that. Australia’s property market was just going up and up as well so naturally, things were very good, just because real estate in Australia is all a bit bulletproof because we’ve got this amazing lever called – well, it’s not amazing, depending who you are – but as an investor, immigration solves all our economic problems. Where I’ve actually been in a per capita recession for the last couple of years, but if you let enough people in with money, GDP increases, and that’s what happens. We’re not building enough houses in Australia. This is a real problem if you’re, say, one of the younger generation, or you’re trying to get into the market, because they’re effectively pricing them out, because we’re not building enough and there’s just more and more demand. There are a lot of people like me that are just playing with the system we’re given. We’re not causing the problem. We are literally just buying and we’re providing rentals to people. The natural market just keeps growing, and so it’s a great place to invest. It’s a safe haven. Same with New Zealand as well. It’s a little bit more volatile there, but they’ve got the immigration tap benefit as well. Then moving into commercial, and the numbers in that department were just next level, and that’s what        fast tracked the income side of things.

Brian  

I know you’ve been doing commercial for quite a while now, commercial and industrial properties. You wrote a book about it. Do you see yourself as a pioneer, or at least a contrarian from that standpoint? I know it sounds like maybe you’re still doing some multifamily residential, but I know a lot of what you’re working on, both for yourself and for your clients, is commercial. 

Scott  

I’m definitely one of the biggest voices in Australia, especially in the last say 20 years. After the GFC, people forgot about commercial and rightly so, because a lot of the commercial markets corrected 30-40%, the office market, particularly. That subprime crisis really affected commercial landlords with debt at the time. I always studied previous economic issues so I could avoid them in the future. And every economic issue is different as well, but you can learn from the patterns. I just saw all these properties around Australia well below replacement costs, anyone would have done the same thing in the US. In some markets you get in after the correction, a lot of these people make the mistake of buying at the peak, and that’s when the yields are at the lowest point. There’s obviously cash flow issues and valuation problems that happen from that. But I just saw it was a really cheap market, and no one was looking at it outside of maybe owner occupiers. The odds – I’m generalizing – the old guy in their 70s or 80s who got a big industrial complex that they’ve held for decades, like that was almost a demographic. What I’ve done in Australia is really started speaking about it just through my own personal experiences; I bought this shopping center, I bought this industrial property, here are the numbers on it. And just by talking about it on podcasts or in the books you mentioned, some people were just like, well, the numbers are good. It feels safe because the supermarket feels like a good investment because there’s a ten year lease. All of a sudden people realized that wasn’t the boogeyman everyone’s making it out to be. The numbers are good. It’s still a physical property. It’s freehold land. You could change its use if you needed to, it’s a valuable asset in a good market, and the numbers were just too good. The more we talked about it, the more awareness became. Australia, the residential market is about 12 times the size of the commercial market, plus everyone understands residential so that’s where everyone talks about it. In Australia we have this saying it’s the famous barbecue topic; everyone has an opinion on residential property because we live in it. Everyone feels they’re an expert on it. Soon as you start talking commercial, it’s crickets. No one knows what’s going on. It’s this gray zone in the economy, outside of major fund manager owners who own towers and stuff like that. Beneath that it’s forgotten. I feel the gap was starting to in Australia, and we’ve influenced thousands and thousands of investors to consider and buy in this asset class. 

Brian  

Do you feel that gives you a competitive advantage when nobody’s talking about it? I know you and I talked about this a little bit in the US, it’s the same way people who are talking about real estate, even real estate investing, tend to be talking about residential, single family homes, multifamily apartment complexes there. There just aren’t a lot of people talking about commercial property investing, and yet, there’s so much of it, whether it’s retail or medical or office buildings or child care centers, even parking lots. Does that help you from a business standpoint?

Scott  

Definitely. The people in the know it’s commercial. If you look at any good family office around the world, they’ve probably got a large portion of their net wealth in commercial property. Whether it’s shopping centers or medical centers. And humans are negative biased as well. People will go, oh, commercial, it’s crashing because they think the San Francisco vacancy rates are super high, so that reflects the entire industrial market or the medical field or what’s the pharmacy got to do with a high rise apartment in the city where there’s too much supply? The answer is, very little. In fact, COVID actually brought a lot of opportunities to different segments of the market. Industrial is one of the fastest growing sectors of the economy, because so much is that the e-commerce boom keeps marching on, and that directly means there’s more need for storage, logistics capabilities even. Everything that’s happening around the world with almost a decentralization of things, means more local manufacturing is coming back online. If you understand how to read the commercial markets, it’s almost, I think, a lot easier to make money than residential, because residential is almost like a blanket modernist product that goes up and down depending on what sentiment and interest rates are doing. But commercial, it’s like stocks; there are certain sectors that are going to go well and if you’re in the know, you will pick them easier, and there are certain sectors that are going to go very poorly. That’s exactly what’s happened in the case of the office market so you just have got to avoid those areas and pick the winners like anything else.

Brian  

You started your company, Scott, Rethink Investing – the first company – in 2015 and you’re already doing great as an individual investing for your own portfolio. What was it that caused you to want to expand beyond just personal investing, to help others create wealth through property investment?

Scott  

At the time, I was just helping a couple of friends and family, direct ones, I mentioned I was doing an MBA. When you tell people what you’re doing more than you normally would, eventually it came out. Like, I’d tell them I invest in property a lot and as soon as I mentioned how much I’ve done, or whatever, they’re instantly, Oh, can you help us find a deal? I started doing a few of those. Eventually, the word of mouth started to spread. Then I just started charging a small finder’s fee for deals. Then before I knew it, I was doing two to three of these a week, and it was becoming a serious thing. I then made an accidental business, there was really no long term vision at that point. It was just that I was trading my time for a service at that point. And then I was in one of those sold magazines and articles. There was a major article that went out about ten years ago, and that was the number one article on the day in Australia and New Zealand. It got translated into 20 different languages, and we had thousands of inquiries off the back of that one article. We had a lot of hate off the back of it too, because they were like, Oh, look at you, property investors, because it’s almost a very polarizing topic in Australia. I’m sure it is in most countries. But that just meant we either had to shut off completely, or scale up, and we chose the latter.

Brian  

Tell us more about exactly what you do for your clients. You mentioned the situations that you did early on where you were charging a fee, a finder’s fee, and you were actually doing a lot of those. A couple a week sounds like a lot of deals. But today, are you teaching people to invest on their own, or are they investing in deals that you find and you manage? Do you have a fund? What does that look like? What are the different ways that you help your clients?

Scott  

I’ll try go through the whole value of chain really quickly. Started off finding properties. Basically, we help secure properties. We do all the negotiations. We do all the due diligence. For an individual client, they’ll have their own budget. Our average purchase price might be somewhere two to three mil. For a client, we do deals all the way up to the 20, 30, 40 million, down to about 500,000, so there’s quite a large range there. Australia and New Zealand, at this point we’ll eventually go into other countries when we see the opportunities. But I can’t see any markets that are presenting better opportunities from a capital growth risk point of view and a cash flow point of view than Australia and New Zealand right now. Hopefully that changes, and we’ll move to those markets when it makes sense. But in terms of the value chain, we find properties and then we help them financing it. We’ve got Rethink Financing, which is one of Australia’s largest commercial financing arms. Basically it’s money for commercial properties and residential via the banks and private lenders, stuff like that. Got an insurance business because a lot of these big, big properties are very hard to insure. If it’s a cold storage facility in an area that has never had a cold storage facility, you can’t just go online and get this insured. You need someone to survey it, and you need to get proper quotes from specialists. So we’ve got that business as well. We do educate a lot. We’ve got an education platform. We’ve got the podcast, which is free information. The books and podcasts are almost indirect lead generators, but we never sell anything. If you’ve read the book, it’s pretty much, here’s what it is. Do you like it or not? People do what they want with that information. Some will buy by themselves. Our big value proposition is right now we’re purchasing 60 to 75 properties per month for clients. That purchasing power gives us really good networks. That’s the secret sauce. It’s almost like inside trading legally; we know who’s selling properties, we get them off market. There’s no competition for the majority of these deals, even the ones that are listed on portals and stuff like that. We probably know the agents and done ten deals with them, and that gives us a competitive edge, because they know we’re a verified genuine buyer. Sometimes they’ll accept offers from us below others, because a lot of these deals will crash due to finance, or maybe the buyer didn’t know what they’re doing with due diligence. We’re a sure thing, and that’s a good thing in this industry. More parts:  the newest business, there are a couple of new ones, there are eight in total. We are launching a fund management business, which is license back and that’s holding money for people, giving them a return; those are larger assets. Again, the renewable energy one is probably the most exciting one at the moment, which is essentially putting solar panel and battery storage on these large roofs of shopping centers and industrial properties and we sell direct to the tenants. The tenants benefit from this, because they might save 20-30% off the main grid, so it’s green energy and it’s cheaper for them. There’s a win there. The landlords themselves will win, because we’re paying a lease roof value. There’s a roof and they can’t monetize that normally, but if we come there and say we’re going to pay for the solar panel and battery storage, it might be a million dollar investment, but then they’re getting a rent for a 20 year lease on a roof. Then they could use that lease to increase the cash flow on the investment. When you increase the cash flow on a commercial investment, you create equity because you’ve increased the net income versus the capitalization rate of that market. You’re actually getting free money, not only in cash flow, but also from equity value. As a landlord and then as a company, we benefit, because there’s a margin on the power that we create, even after we’ve discounted the tenants on their their mains bill. The only loser in this case is the actual mains companies, those large fossil fuel or whatever companies out there could fill in the grid up. That’s a really capital intensive business. That’s its only problem, because every time there’s a new job, you’ve got to come up with the capital. But it’s an exciting one that’s basically, again, it’s helping investors. We met on Richard Branson’s Island, he inspired media a lot with the Virgin businesses. It’s very similar, but we’re obviously more in the financial division. The Rethink business, it’s all about having a model to helping a client financially.     We’re more in the finance game and our method is property, wealth, and obviously that can go up and down the vertically integrated business model quite easily.

Brian  

You’ve done a great job of that, and some of the businesses that you’ve created are natural growth – financing or legal or insurance – renewable energy is a little different, but certainly related, and I can see the connection. I wanted to ask you, you mentioned Virgin, and in our first conversation, you talked about this, your intentionality around uniting the entities under a single brand, as you just said Richard Branson has done with the Virgin brand of companies. Scott, why was it so important for you, for every company, to have the Rethink brand in its name, and what are the benefits from that type of naming convention?

Scott  

The two major ones are, one, to help manage them better. They were growing at different rates. Like   we might find financing grew 250% but then the Rethink investing business grew 130%. A lot of them are so directly connected that if one grows too quick, the customer experience will drop in the others, because the lead flow between them is significant. That’s probably the other benefit; clients trust the brand. We’ve been around for a decade. Trust is huge. If we have some random insurance broker company that no one’s ever heard of, they’re just going to start again and look for their own referral searched source. Trust is probably the main thing. We’ve taken, as you mentioned, 5.8-6 billion in transactions to get that trust. I found business got a lot easier, probably from year five or six. Business got really… I wouldn’t say easy, but compared to the early days when no one trusted what we did, life’s very easy now, and we’re doing much higher volumes, a lot more staff. But we’re just doing the right thing by people and the clients. They work with us, so much easier now.

Brian  

Are clients coming to you in different ways? Early on, it was all about real estate investing, and then again, you got into insurance and financing and and legal. Are clients coming to you for legal work and then getting into other areas, or coming to you to insure properties and and then becoming more involved with you that way? Or does the funnel still work the same way it did originally?

Scott  

Great question. It comes from all aspects. Legal, for example, they do all types of law, from family law to dispute resolution, construction. Conveyancing and just commercial transactions are only a very small part of what they do. If someone comes in to due to some pharmaceutical law type thing, and all of a sudden they might go, Oh, you’re part of Rethink group, I’m thinking about buying my next pharmacy, let’s talk on that. It can come through any angle like that. Some businesses are more lead captures, insurance is the last on the line once you bought the property and done everything, that’s the last step to finish the transaction. You’re probably not going to get many referrals back to the top of the funnel that way. But we get our leads from podcasts, through word of mouth. Word of mouth is probably the major one now, because of 5000 plus clients over the years, a lot of them are coming back to their second and third, or in some cases, up to 15th, property with us. It’s word of mouth, and then obviously all the usual stuff, social media, Google and stuff, that. But it’s a lot less influential than the previous methods I mentioned.

Brian  

I didn’t realize that your legal business branched outside of real estate. I was thinking that it was really supporting real estate transactions, obviously it does that as well. Talk about the newest company, financial planning, and is that another example of where financial planning will include, say, equities, or alternative investments, Bitcoin or something, in addition to real estate? Or did you create the company primarily as a support structure for your real estate clients?

Scott  

Good question. Again, it really is to help give holistic wealth advice. A big problem in Australia with the financial advice industry is they do not recommend property at all, it’s purely insurance and stocks. There’s maybe 1-5% of planners that actually look at property, let alone commercial property, that’s so far from their bucket of knowledge, you couldn’t get further from it. So we created that for proper advice. It’s a different business model. It means they’re not getting kickbacks from insurance or just giving equities advice, because you need a bit of everything. You know this better than anyone, Brian, you have to have a little bit of diversity. You don’t only buy commercial property. Even if I think it’s the best investment in the world, that’s not what you do. You need to have a residential, some stocks, chuck some Bitcoin and other alternative investments in there. That’s where the advice might actually contradict what we’re doing with commercial, because we don’t want someone to go into commercial if they’re not ready for it. It’s protecting the client at any cost. That’s the idea. It’s been a really popular service, we launched it only a couple months ago, and it’s been booked out four months in advance now. The trouble with that business is scaling it to maintain the same level advice. It’s very hard to find staff for that business because no one has that holistic knowledge. We’ve got a few people and we’re going to have to train from the ground up. That’s the way to fix that business. You can’t put it online and job ad it and say, we need someone who can advise you in stocks, Bitcoin, residential and commercial property. They do not exist in Australia, so we’re going to train them. That’ll take a bit of time.

Brian  

Then how do you market that company? That sounds like more of a retail product than, say, getting commercial real estate clients.

Scott  

Right now, there’s really very little marketing. We just did one podcast on it and that filled it up for four months. We are going to have to put it in the background until we fix the operation side. Otherwise it’s just going to create waiting times that are just going to disappoint customers.

Brian  

Essentially, the good news is, if you do one podcast and you have deal flow for four months, it’s a pretty good idea.

Scott  

That’s the foundation of every business I’ve run. Maybe that’s my engineering brain. We’ve got a good product in every department. The product works, it doesn’t need to sell itself. You still need to sing from the hills a bit and get the word out when there’s a business, but the products sell themselves. That’s very different from a lot of other entrepreneurs that I see out there, which, they’re more marketing first, and then they create the demand. Both methods work, but I believe in the product first and marketing second. That’s why maybe I haven’t had a failed business to date, just because these things. Even the first business, I was doing cash jobs without a website, no business card, the product works. All the other stuff, that’s 10% benefits here or there in terms of revenue. That’s how I look at it. Every business must stand on its own two feet without a website, without a business card, and if you can do that, then you’ve got a good business.

Brian  

Well, it sounds like it’s been very organic over the ten years.

Scott  

We’re achieving, on average, 30% year on year growth every year. At some point I was thinking of listing it on the stock exchange in five years. I’ve recently thought, what’s the point? Because then you lose control, and then you’ve got to report every quarter. Life’s in a really good spot where the business is growing, and it’s just that you don’t need to create… you don’t need to make your life more difficult. That’s maybe something that’s changed myself in the last couple of years, because we could have just gone for even more growth, but then your product gets diluted a bit, scaling. You can’t scale all the time in every business, there’s a limit to the amount of good properties out there, or the investments, so we need to keep that in the back of the mind. In case we get ten times the size, we’re going to be wary of how to create that growth. It’s probably going to be other countries and other businesses.

Brian  

I was thinking about that as you were talking about expanding outside of Australia and New Zealand earlier, wondering – and I have no idea, it didn’t seem to me that this would be the case – that at some point deal flow, not dries up, but slows down, especially with the way you’re scaling. Do you think that’s what’s going to… you mentioned, absence of opportunities on the level that you have in Australia and New Zealand as a barrier right now. Do you see that happening; where the rate of deal flow will cause you to look outside of Australia and New Zealand?

Scott  

It’s our biggest business problem right now, the amount of stock. In the entry level price points we have over six months of waiting periods just to get a property. It’s not as long if you’ve got a larger budget, because there are more deals out there. Obviously the more you spend, your head gets above the clouds in terms of competition as well. Commercial, and even residential, it’s a great place to be for a larger budget client or a family office or a fund, because you can pick and choose a lot better. You get better yield, better growth or lower risk; everything works. But the entry level price points, it’s very difficult, because we maintain a certain level of quality that others may accept lower than what we do. If I brought that barrier to entry down – let’s say we accept lower yields around the country – we could increase our business revenue significantly for the following few months after that, because we’ve got all this extra stock to choose from; we’ll pile them into the basket and they’ll get allocated to clients. But if we did that, that’s a short term strategy of ruining your reputation. Yes, you make more money because you’ve got all these deals, but then you’ve just overpaid on hundreds of deals. Those clients will eventually work it out that you haven’t invested well for them, maybe a year or two down the track, then you’re finished just from a reputational point of view. We did expand in New Zealand for that reason, because it was cheaper, identified that market of having much better opportunity than Australia, actually, because interest rates went a lot higher, their prices fell more, and we were buying at a 30-40% discount from peak prices in 2021, in 2024, and 2025. We’re buying at a discount rate. That’s been a really good pocket of investing. We’re always looking around the world at other opportunities. It’s harder than you think, because people want to lend, especially if you’re putting 30% cash down and the bank is lending you the other 30%. Your return on that 30%, return on equity, should we say, is very good in Australia. You’re looking at anywhere from 15-35% return on equity, and that’s without doing a value add. That’s just growth of 7% leverage. We can break the numbers down with the spreadsheet for your clients if needed. But it’s good returns, and they’re low risk returns for that amount of upside. The reason for that big number in return is just the leverage factor. It’s amplified because you’re putting less down. If an Australian goes to the US, we almost can’t get a loan in most cases. You’ve got to put 100% of the cash down. It’s not going to give you that return due to the amount of cash you’ve got to put in. You don’t have that amplifying benefit that you would otherwise. Lots of parts of Asia, the good markets, are terribly low yielding. Many parts of Asia you can’t own the land as well; there are problems there. Europe is struggling in many parts. Like, I bought a property in Greece, again, it’s a cash situation. Mostly, you can’t get bank loans as foreigners. The income side of things is extremely difficult to achieve there because tenant rights and also things like Airbnb. It is limited in terms of how much you can rent out per year. There are further restrictions coming as many local councils, local government areas, crack down on that. There’s a whole lot of risk everywhere. Then you see Australia and New Zealand, and it’s almost too good to be true. Maybe there are parts of the world I don’t know about, but we don’t want to go into the full third world country hoping for all that growth too, because it’s just a bit too scary for us as well. We’re always looking though.

Brian  

How do you stay disciplined in your investment approach, especially when deals start to dry up? You mentioned not wanting to overpay, not wanting to buy properties that end up in lower yields. How do you maintain that discipline?

Scott  

We’re upfront with clients to say the waiting list is now very long. Yes, you can sign up and wait for this, but could be three months, could be six months, could be nine months. We’ve got alternatives, here’s New Zealand. We’ve launched the fund Rethink Capital for this reason, so you could just put a smaller deposit in a larger asset. Just creating new products for them because we know that they’re going to go somewhere else. There’s always another advisor out there that [says] hey, we can get you a commercial property. They might think it is a good deal themselves, but in our eyes, it’s not because they’re paying too sharp of a yield on it, or maybe it’s too regional. I don’t know. There are many reasons why a deal may not be good, but I’d rather not have that on my books, because a bad deal… there’s this old saying, you’re only as good as your last deal. If we do a bad deal, everything we’ve done before, we’ve just ruined someone’s life potentially, or set them back financially many years for what? For a small fee? It’s just not worth it. I’d rather not go somewhere else. We’ve got the alternative products there, but it’s a battle because there are a lot of impatient people that want in. We just have to maintain that discipline, as you said.

Brian  

It sounds like you do a pretty good job of it. I want to switch gears a little bit, Scott, and it’s clear that you’re a brilliant real estate investment strategist and property manager, but leading the organization that exists today requires a very different skill set than buying real estate or managing properties. What shifts did you have to make in your leadership style to be able to manage people and teams effectively, especially that you’re trying to maintain such a strong organizational culture as you scale your companies?

Scott  

It’s a good question. It’s one I haven’t put a huge amount of thought into. In terms of leadership, my style is empowerment of others, so I trust a lot the other people under me to the point where… we just hired another senior manager. I said to him, I probably won’t come to you, you come to me when you need help. I’m always available, door is open. This is yours, you do what you need to do. We’re not sitting on thin margins or reporting to stock shareholders quarterly. If things go a little bit wrong through to someone not doing their job, I’ll live with it. It’s not a stress for me financially. You can recognize the patterns quickly – not quickly, rather – but then you can step in and go, right, you’re not doing good there. What do we do to turn that around? It’s quite long term reaction based, I guess. But we’ve got really good people working here, staff generally have the freedom, in most cases, to do what they want within reason. Then if they skirt outside of the culture of the company, we’ll come down pretty quick on that and try and remove them in any way we can. But it’s really just people. They know what to do. Hire the best people we can. We are lucky in this industry because a lot of the buyer’s agent world, it’s a new industry, a lot of people want to get into it. We do have multiple resumes coming in. Almost daily we get a resume sent to us. There’s always something you look over. You hire for culture rather than resume. I think, you just get a good feel with someone and you know they’re going to learn on the job here. This isn’t a business that’s been around for 50 years. We’re an industry for that matter, so everything they learn is going to be unique to this company. It’s about them, not what they’ve done in many cases.

Brian  

What are the biggest challenges that you bump into as either as an entrepreneur and/or as a leader in your companies?

Scott  

The biggest challenge would probably be just keeping the quality of the stock up. That’s more operational. In terms of staff, it’s been pretty good. There’s always that one staff member that just gets jaded, and one of the biggest mistakes I’ve made in my life is just putting up with it and letting them sit and sour within the company. Because one sour person can influence at least five people around them, and that’s what they do. That old saying that misery loves company, and they find who else is miserable and they all start talking in the background; a lot of the time, I just let that slide, because things are going good. Almost a little tiny bit of damage they’re doing in the background but the ship is sailing well, so let’s not muck around with it. But in recent times, when those people have left, we’ve actually grown a lot quicker. All the other people lift, the negativity goes, and it’s all always around that individual. I think not moving quick enough has been something, because I’m pretty relaxed as a guy in general, too. I can relax my way through problems too in that case, but just dealing with it quicker is something that has been very beneficial in the last couple of years.

Brian  

I don’t think people ever think that they let people like that go too fast and free them up to pursue their next opportunity, right? Typically, most of us tend to take a little bit too long, and everybody around us knows that it should have happened maybe before we know.

Scott  

It’s pretty much everyone’s least favorite part of running a business, the staff. The bad side of staffing – even when you don’t want to – letting someone go is horrible. There’s nothing good about that, especially in Australia and New Zealand. It’s very difficult to do that. You’ve got to be prepared, you can’t just sack someone. You’ve got to have pages and pages of legal backup, and you’ve got to understand the exit strategy. You don’t just go in – like what I would do with 95% of my meetings – unprepared. You actually have to prepare, which is a shock to the system, because it’s not assumed knowledge. It’s, this specific case, there are these specific rules, and you’ve got to then say it in that way. But once it’s happened, it’s the best thing ever. It’s done, the company benefits. Everyone’s happy around them.

Brian  

What I always come around to on that… you’re absolutely right about what we have to do in advance of taking the inevitable action, but what I come around to is that it’s the right decision for the organization, and everybody in the organization knows that, usually. It also frees that person to go pursue their right livelihood somewhere else, because if you’re not happy with them, chances are that they’re probably not very happy with either you or with what they’re doing or with your organization. The sooner we can free them up to go pursue something else, something that they will be happy doing, the better all the way around.

Scott  

It’s definitely for the greater good, you’re so right. Like one of my old bosses used to say – he was a very forward, old school type – sometimes it’s best just to let them know that you’re not happy, or they’re not happy with the company, and it’s best you go. This is almost something before you get lawyers involved. Like, just say, no one’s really happy with how things are going around you. Are you happy? Probably not. We can see it. Have a think about what’s best for you. It just gets them in that mindset to potentially walk on their own, because you’re right, they’ll find something better like that. People get jaded with a business for whatever reason, maybe the company’s growing quicker than they have, or maybe there’s internal competition they don’t like or personal issues with direct managers or whatnot. But these problems don’t exist in every business, so you’ve just got to find where the glove fits better somewhere else. Staff stay too long too, it goes both ways; companies sack too slow and staff linger around a little bit too long as well. That is not good for them.

Brian  

Sure. Well, that’s comfortable. One of your core values at Rethink Group – and this is one that really resonates with me – is excellence. Of course, our show is called LifeExcellence. I have to ask you, what does excellence mean to you?

Scott  

Just the freedom to do what you want when you want. I think, from a happiness point of view, I’ve never been happier in my life in terms of I just… there’s no weight. Where that all started, with the financial side, you sort that out, and then, it’s not just that. Because most entrepreneurs then bury themselves into 15 hour work days, seven days a week; that’s where I was for almost ten years. But take the step back and feel a bit more strategic from a decision making point of view, not just on allocating time, but also I think I grow this business more efficiently with less effort. That gives me a lot of… I just feel life’s gone really well for that reason – touch wood, it keeps going – because it’s not all about just ground digging as hard as you possibly can. That’s a lot of the mindset out there of entrepreneurs; just outwork people. I definitely don’t outwork my competition, but I think we do outsmart them in terms of building better business processes, scaling in certain areas, using people and processes to overpower the individual effort. I think that’s that’s probably what excellence is to me, just living as efficiently and as happy as possible.

Brian  

That’s great. Scott, I know work-life harmony, if I can use that term, is extremely important to you, and so really continuing on with the thought that you started, I know the demands of your business continue to increase as you scale your companies. You said that you’re not working as hard as some of your competitors, but I’m going to push back on that a little bit. You have eight companies. You’re growing, you’re scaling. There’s a lot of deal flow. There are definitely demands on your time, yet I know that your personal life is important to you. Your family’s important to you. How do you balance ambition and contentment growing a thriving business empire while also living a fulfilled life outside work?

Scott  

It’s just setting boundaries. In terms of the business set up, again, I really trusted. People that I can trust run those companies, and I don’t need to interfere too much for the day to day, so quite high level approach to that side of things. They’re all invested in as much as I am. Just setting boundaries. I’m not going to talk to people on weekends about work. Even if I get someone who wants to chat desperately,   on the weekend, I just try to keep business and property outside of those chats because it is all consuming. I get approached in the street every now and then [people] wanting free property advice. I’m happy to give that, that’s no problem, but I remember in the early days, you just bring work home, and you talk work non-stop. Then your mates want to know what’s happening with work. Then you take a client call at 9pm at night because they’re overseas. All of a sudden you’re doing nothing other than working, and you say, what was the benefit of all of that? What? I grew the business half a percent more that year because of that extra effort – that’s just ridiculous when you think about it. Instead, close that side of things. I feel I’ve got a lot more free time than you’d probably realize because boundaries are set. Then, even small things, like shorter meetings. Don’t have an hour long meeting, have a half an hour long meeting. What do we need to sit in there for an hour and just chat for if it’s to do with a simple business catch up? All those little decisions do make a big difference at the end of the week.

Brian  

I think our listeners and viewers hear you say that, and they they want to know more, because they want that. Maybe they want that even more than financial independence; creating boundaries around their work life and their personal life. You make it sounds so simple. You’ve actually done that through the show. You make commercial property investing sound – I know you don’t intend to – so much easier than I know it is, and probably the same with these boundaries that you talk about. It seems, generally speaking – I’m assuming – that in Australia, New Zealand, it’s the same as is in the US, we’re pulled. The boundaries between work and personal life are blurring, or maybe non existent, more than ever before. How are you so fastidious? Does that go back to your engineering background, that you’re able to just stay so disciplined in creating those boundaries, that those lines don’t get blurred? What’s your secret?

Scott  

Well, I don’t think discipline comes into it at all. Because when I was taking every single thing on board, it was because I wanted to and now I don’t want to, because I’ve reached a point where – I mentioned –       we don’t need to push ten out of ten effort because it’s not going to really change the outcome of my life, or even the life of whoever I’m talking to. The simple thing is, I’m just doing what I want to do in that department. It’s almost like I don’t need to put in rules, I’ve just got to be comfortable saying no. If you’re canceling a meeting or pushing one back a month, it’s not because you feel guilty doing that – that’s the early days. Or you might think I’m going to delay revenue because I can’t do that deal as quick. I’ve got three or four business proposals on the table right now that people want to start businesses with me, and I just can’t do it because it’s going to overlap with other ones, and it’s just going to start making the whole thing a mess. There’s a bit of strategic in there, but it’s for the greater good. But I think everyone’s at different stages of life, so it’s simple for me, because I’m at a stage now that I’m content and happy. No doubt the Gold Coast will change in time, and I’ll probably want to go harder at some point. But just listen to your body and your mind and do what feels right. This is what feels right at this stage. I’m still working very hard, but I’m just not taking on extra things that are going to make it less enjoyable, because the most unhappy I’ve been is when I’ve been overworked, and that’s where you start making mistakes. And you just treat people different around you as well.

Brian  

I mentioned discipline, and maybe I was wrong about that. Maybe it’s about clarity. It sounds like you’re crystal clear about the life that you want to live, and then you just do what it takes to build that life around you.

Scott  

Every year I might set 12 month goals, or think in five years where do I want to be, and it’s pretty much doing what I’m doing, just with the natural growth that comes out of it. Like, talking to someone else playing golf the other day, and it’s, oh, well, your business isn’t the biggest in the country. I thought, I said, Why would I want them to be? What would that change? That means I’m going to have to fly around the country ten times longer reporting to shareholders and for what? To get an extra zero on the end of the profit? Like, what am I going to do with that money? Or even a list, see it on the stock exchange. If I sell 50% of the equity in the businesses and I’ve got this giant chunk of cash, what would I do with that cash? I don’t want a yacht. I don’t want to buy another ten properties. It’s useless to me. At some point, the freedom is more important, a lot of people want that. If you want to buy a $500 million yacht, go for it, that’s what you’re going to have to do. You’ve got to keep taking it on and that’s the next level stuff. But that doesn’t interest me. Materialistic stuff is really so far from the vision that it’s not funny.

Brian  

That’s great. Scott, I really appreciate you sharing, not just the last part, but really the entire show. It’s all been great and I really appreciate you coming on the show. It’s wonderful to see you again, and thanks so much for taking time out to come on LifeExcellence. Appreciate it.

Scott  

Great to see you again, Brian. Good to see you, and catch up again on Necker Island, hopefully.

Brian  

Look forward to it. Thanks for tuning in to LifeExcellence. Please support the show by subscribing, sharing it with others, posting about today’s show with Scott O’Neill on social media and leaving a rating and review. You can also learn more about me at BrianBartes.com. Until next time, dream big dreams and make each day your masterpiece.