Join Jason Hartman and co-founder and director of Neuro Leadership Institute, Dr. David Rock, as they explore conceptual issues of the brain as it pertains to work, such as focus, managing distractions, why our brains feel taxed, and how to maximize mental resources. Listen at: www.JasonHartman.com. Dr. Rock explains how being able to get a mental picture makes it easier to process and hold information, but when you can’t come up with a mental picture, you’re more likely to lose your train of thought or have more difficulty retaining connections, causing the brain more stress. Dr. Rock also discusses optimal times for scheduling work, meetings, and undisturbed workspace. He stresses that creative work needs a lot of space in the brain, as well as a lot of quiet. “Creative work first, urgent/important second, and everything else after,” says Dr. Rock. Dr. Rock also shares the many types of quirks of the brain, such as a blue room with high ceilings increases creativity, or changing rooms actually makes it difficult to access memories formed in the previous room. His suggestion is that people need to create their own workspace. Additionally, he talks about the unconscious and conscious brain and how breakthrough moments tend to happen when trying to solve a difficult problem. The quiet brain is most important for solving problems. Dr. Rock delves into the five domains that the brain is always tracking. It is very important that we don’t get a “threat” response in any of these domains because they activate the brain’s pain network, leading to defensiveness.
David is the founder and CEO of Results Coaching Systems (RCS), which has operations in 15 countries across the globe. In his capacity as CEO, David works with Fortune 500 clients specializing in embedding internal coaching capacity within organizations to develop leaders, retain talent, improve performance, and change culture. David Rock is one of the thought leaders in the global coaching profession. The integrated coaching system he developed in the mid-90’s has been taught to over 10,000 professionals in more than fifteen countries. He is the author of ‘Personal Best’, (Simon & Schuster, 2001), ‘Quiet Leadership’ (Harper Collins, 2006) and ‘Coaching with the Brain in Mind’ (Wiley & Sons, 2009), and ‘Your Brain at Work’ (Harper Collins), which is due for release in October 2009. In 2004, David founded the brain-based approach to coaching, which has gathered momentum as a theory base for coaching ever since. In collaboration with several leading neuroscientists, David is working to explain the neural basis of issues like self-awareness, reflection, insight and accountability. In 2006, he co-authored a feature article in strategy business magazine with neuroscientist Dr Jeffrey Schwartz, called ‘The Neuroscience of Leadership’, the most downloaded article of the year at the magazine. In September 2006, CIO magazine ran a cover story featuring David and Jeff’s work called ‘The New Science of Change’. In late 2006, David founded the NeuroLeadership Institute and Summit, a global initiative bringing neuroscientists and leadership experts together to build a new science of leadership development. David also co-created a complete coaching curriculum at New York University (SCPS) and is a guest lecturer at universities in 5 countries.
Introduction: Welcome to Creating Wealth with Jason Hartman. During this program, Jason is going to tell you some really exciting things that you probably haven’t thought of before and a new slant on investing. Fresh new approaches to America’s best investment that will enable you to create more wealth and happiness than you ever thought possible.
Jason is a genuine self-made multimillionaire who not only talks the talk, but walks the walk. He has been a successful investor for 20 years and currently owns properties in 11 States and 17 cities. This program will help you follow in Jason’s footsteps on the road to financial freedom. You really can do it and now here is your host Jason Hartman with the complete solutions for real-estate investors.
Jason: Welcome to the Creating Wealth Show. This is Episode #250, and this is your host Jason Hartman. Thank you so much for joining me today. Well, we just concluded our Meet the Masters event a couple of days ago in Southern California, and it was fantastic.
We will have a little debrief for you about that in a moment, but before we get to that, I just wanted to share a couple of things we are not going to have much time to talk today because I’ve got our guest and this is the 10th show of course so what does that mean when it’s the 10th show.
Well, we are going to talk about a non-financial, non-economic, non-real estate topic. And we have David Rock today, and David Rock talks about your brain at work and how to focus, avoid distractions and use that magical thing within all of us that you may or may not have heard of by her that many years ago from [Dennis Swadely 0:01:40] I believe was the original person that told me about this, and it is called to get this your reticular activating system.
What is that? Well, that’s the filter that we all have built in so that it filters out sensory stimulations so we don’t have sensory overload and we can focus on what we need to focus on, so that’s the reticular activating system and we will talk about that a little bit, and many other things with our guest David Rock and before we get to that you know its interesting now that I live in Arizona I have little interest in Orange County business.
However, I do so get the Orange County business for now, and as I was about to put it in the round file that’s where I got it out of my mailbox the other day, I noticed an article because I was kind of skin it real quick before I toss it, and I noticed an article that I thought I would share with you, and you know how am I always talking about the three dimensions of real estate and how income property is a multidimensional asset class.
Well, this actually almost talks about a whole another dimension and there were really more than three dimensions of course that’s just my catchy name for the basic or the most significant three dimensions of real estate and that’s why I call that module that name. But what’s interesting here is on the front page of the Orange County business journal March 19th issue, an article says apartment rent still hot, sales cool, trend has reason buyers building okay so this is kind of another dimension.
I just want to touch on here, and I won’t read the whole article to you, and bore you with my reading and voice over skills here, but just to touch out a few things here. It says Orange County’s once red hot market for apartment sales appears to have lost some steam over the past year and signs are emerging that the rest of the country could soon follow suit.
The 10 largest apartment sales here last year combined to sell were a little less than $370 million according to data compiled by this week’s top real estate deals special report see list on page 40 that’s a decline of about 60% from the year earlier when the 10 largest apartment deals in OC traded for a combined $878 million. OC’s declining apartment sales comes as the general outlook for the rental market continues strong.
Apartment lease rates are expected to notch a healthy increase again this year on top of the game of 10% or more in 2011 according to recent market data. Folks my comment can you believe it, apartment rents going up more than 10% in 2011, and they are expected to perform very, very well this year in 2012.
Wow, wow was I right? Did I tell you that as people were displaced from their homes, and as people couldn’t take advantage, the people who couldn’t take advantage of this phenomenally low interest rates because what their FICO scores are beat up because lenders just not loaning out the money because the banks are arbitraging their money. The money they took from the TARP and all the various bailouts Omibus etcetera.
They are arbitraging and that with treasury bills basically no risk for them, right so of course it’s a total scam for us, the taxpayers as our government gave them their money, and they are not lending it, but how do we exploit the trend.
We exploit it by owning income property in so many ways. Not just the inflation trade that I talk about frequently on the show, but of course inflation and induce debt destruction my phrase for that, but in so many other ways continuing the article, and I’m going to have a good comment for you on this in a moment.
The local trend on sales runs counter to the national trend as the economic recovery and large numbers of home foreclosures have overlapped to lift apartment prices around the U.S., so what they are talking about there is prices for buyers of apartment buildings mostly in the large institutional deal sector in that segment of the market.
And we talked about rents in a second ago, right? There are some 54 billion of apartment sales nationwide in 2011; a 50% increase from the prior year according to data by New York based Real Capital Analytics, a commercial property data firm. Sales of apartments were reported to be running 53% higher than a year ago levels on a national level as recently as January according to Real Capital’s data.
One reason for the slowdown on apartment sales in OC okay now remember they are saying Orange County is been contoured to the national trend. Now we are going to see why in a moment. One reason for the slowdown on apartment sales in OC, the market has gotten strong enough to encourage new development, aah, that’s what I am talking about. That’s another dimension.
Can you imagine this? You listening can now to jasonhartman.com, and you can purchase properties in numerous markets, in diverse markets, in healthy growing, business-friendly, landlord-friendly markets all over the United States, and you can buy them for one-third to about 60% of construction cost.
When in Orange County the rents have gotten so strong that the deals are actually penciling for people not to buy existing apartment buildings or apartment complexes, but to actually build them new from scratch even in places like Southern California where environment laws and regulations rule the day, the cost of construction is so, so high there, so its actually penciling for people to build them now.
Folks this is a major sign. This is a turning point. This is you see rents increasing, and rents are going to increase a lot more. We talked about this a lot, at our Meet the Masters event last weekend. Remember every 1% drop in the home ownership rate equals more than 1 million new renter’s phenomenal, phenomenal opportunity for us. The article goes on to say apartment development is on the upswing here with thousands of units on the works particularly in Irvine or several projects underway.
Folks if that isn’t the sign of what is coming I don’t know what is. one more thing before we get to our debrief on Meet the Masters, we will just talk about that for a few minutes then we will have our guest and we will talk about your brain at work, how to use that amazing asset between our ears for a more successful life, so I will get to that in a moment.
But firstly, I just want to share a note, a sad note and the folks please learn the lessons I have learned the hard way. You don’t have to do this yourself, and learn the lesson hard way. I learned a lot of these lessons over the years as an investor, and many of you have unfortunately and that’s why I say that the cheapest education you will ever get is at our live events, our home study courses at jasonhartman.com, listening to this podcast just learn the lessons by other peoples experience rather than in the real world because the real world is just an expensive teacher, and this is another example of that.
The note says, ‘Dear Jason, I wish I knew about your podcast before my mother invested a $150,000 in a TIC’. A TIC is of course a Tenant In Common deal that’s an acronym of Tenant in Common deal. In other words, that’s a pooled money investment. Okay I have talked about TICs before on the show. Before my mother invested $150,000 in a TIC a few years ago, well the first year she was doing well with it receiving monthly payments.
Eventually the money stopped coming in, and the excuses started pouring in. They said they lost a major tent ant, and usually these TICs are large commercial properties of my commentary back to the note. They said they lost a major tenant therefore; they could not pay their investors. It was hard to get in touch with someone high up in the organization to find out what was going on, and when the investors were going to get paid.
After several months of not receiving any payouts from the TIC, the investors wanted to start a class action lawsuit, however it could not be filed because the two managers of the TIC could not be found. This is a case of not having control over an investment which I know is one of your rules for investing.
I have been trying to help her, but I cannot find resources to help her get out of this bad investment. Have you heard of anything like this happening to anyone? I would appreciate any advice you can give us. Thank you. Well, that is a sad story. And I’m very sorry to hear it. There have been many, many stories like that.
And it is certainly not uncommon by any means, so if you can take any comfort in the fact that you are not the only one that’s happened to. It’s happened to many, many people. Commandment number three, thou shalt maintaining control be a direct investor, yes you will feel some bumps in the road, you will have some problems, nothing is foolproof.
Income property, direct ownership of it has a few problems here in the air, but they are far, far or less significant than the problem that can occur when you invest with somebody else in non-director traded investments. So the first advice I would give you is number one get in touch with all of the other investors.
There can be strength in numbers, so it sounds like you are communicating with those other investors because you’ve considered filing a class action lawsuit. The thing you need to do is you said in your note that the two managers of the TIC could not be found.
Well, that may be worth hiring a private investigator, but before really even doing that I would just go to the government, I would go to the regulators, and I would try to see if you can get someone, and again the government usually doesn’t pay attention to stuff unless its big, okay or some politician or district attorney or attorney general whatever the appropriate jurisdiction may be for this particular issue and less they are trying to get reelected and they want to make an example out of this case or something like that, but look the government is free.
You pay taxes for a reason. So the first thing I would do is try and contact the appropriate governmental agency. Now, how do you know who to contact? The first thing to do is look at the prospectus you got with this investment, and it will reference things in there like may be the SEC, the Securities Exchange Commission may be FINRA, may be it will reference what state the entity was formed in.
You can go to that state’s attorney general. You can just call the FBI. Okay there are many resources and things out there. It’s probably not sold as a real estate. And also I wouldn’t necessarily although it might have been. These TICs have been sold two different ways that I am familiar with. One is real estate deals, and the other as securities, so securities fall under the province of the SEC and FINRA, and may be other organizations too, but real estate falls under like department of real estate okay and the various state where it was formed.
So, I would look at the perspectives, obtain some clues from that, contact the governmental agencies because look you don’t want to spend any money to write a letter to the regulators, and see if they will follow up on it to make a phone call, or a few phone calls. And even the FBI, the FBI takes a lot of this stuff when it goes across state lines when its inner state commerce, it becomes federal, so that would be another resource for you. Again and I am sorry to hear this kind of stuff. The TIC may have if they were — you don’t know exactly what happened here. Its usually a combination of three things, or combination of at least may be two of the three things. Number one, I will say it, why be a direct investor, why follow my commandment number three is the 10 commandments of successful investing. Number one you might be investing with a crook. Number two you might be investing with an idiot. Number three, you might be investing with someone assuming they are honest, assuming they are confident. They take a huge management fee off the top and you know this might just be due to market changes. It might be a legitimate problem that they just encountered, but I will bet you — I will bet you dollars to donuts that before they encountered this problem, the fund managers, the people who set up the TIC skimmed a heck of a lot of money off the top for themselves, and that money might be recoverable. If they committed a criminal act, there might be some sort of insurance involved. They might have [Ari’s no missions 0:14:45] insurance. They might have fidelity insurance, a fidelity bond of some sort. You never know. The first step I would do, get the government involved. See if you can get the government to investigate for free and take advantage of the things we all paid the taxes for that would be my first step. After that prior to investigator, talking to lawyers etcetera, and again I wish you well, I’m really sorry to hear stories like this. It just breaks my heart. And you know really, look when I sold my company six years ago, I could have just pretty much retired, but I am so passionate about saving the middle class from this pooled assets, scams out there, and even if they are not scams just these bad deals that’s what I am here for. And that’s really my big mission in life is to save investors from that kind of stuff, so good luck with that, and please follow up with us, and let us know what happens. We would love to hear, I would love to hear happy ending out of that. but I can, you know announce on the show may be in several months or next year, so please follow up and let us know about that, and I wish you luck. Okay lets get to our Meet the Masters debrief. We will talk about that for just a few minutes here. I’ve got couple of our investment [counselors 0:15:56] I couldn’t get all of them at the same time, but I got a couple of them on the line with me here, and then we would go to David Rock, and we will talk about your brain at work, and folks I have a stack of content.
We have recorded so many great shows, but also just for my part of the show is my introduction, my monologue portion, I’m looking here on my desk at a stack of papers about two and just may be a little over two inches tall of things that I need to talk you about. On show number 251, 252, 253 and on, so a lot of stuff coming up on the Creating Wealth show. Stay tuned, and we got a lot of stuff to cover in the upcoming shows, so we will go to our debrief on Meet the Masters, and our guest today here in just a moment.
Introduction: What’s great about the show is you will find on jasonhartman.com is that if you want to learn about investing in and managing income properties for college students there is a show for that. If you want to learn how to get noticed online, and in social media there is a show for that.
If you want to know how to save on life’s largest expense, there is a show for that. And if you like to know about America’s crime of the century there is even a show for that. Yeah there is a show for just about anything only from jasonhartman.com or type in Jason Hartman in the iTune store.
Jason: Hey just wanted to share some thoughts with you about our most recent Meet the Masters event. I got Molly and Sarah on the line with me. And first of all what an honor it is to do these events. We just so much appreciate all of you coming and especially those of you who come every time, repeat visitors are great.
And all of those of you who flew from such far distances to come as well, so thank you for doing that and also its now Tuesday after the event, and I’ve been catching up on my email, and thank you for all of the very kind emails, all of the nice words out of the event so forth. I just wanted to share a few little debrief on that, and Sarah what were your thoughts on the event?
Sarah: Well, it was a great event as usual lot of new content, a quick special thanks to Robert coming all the way from Denver, Colorado, and also Brent and Brandon from Colorado came out and joined us again. And we had some guest from Pennsylvania and New York so pretty, pretty big group of people traveling in from far away, and we had a lot from Northern California as well, so thank you for everybody for coming out to our event.
And Jason another thing I noticed is that we have a lot of our clients who purchased with us two, three years ago, come back and we are at the event because they are seeing that now is definitely the time to be buying the interest rates are low, the price points are low, and there is some great opportunity out there.
Jason: There certainly are great opportunities out there. You know one of the things I said at the event is you certainly don’t have to convince anyone to buy good income property anymore. It sells itself no question about, so fantastic event there. Molly what were your thoughts?
Molly: I agree whole heartedly with Sarah I think that we have a lot of repeat visors come in investors, and there is always something new to learn. I think it was an awesome weekend.
Jason: Yeah and we learn new stuff, and we take all your evaluations into account. We read them all, and always take that feedback to make the next event even better, so the next time we do a Meet the Masters event, and we do them twice a year. We will be taking all the evaluations into account in terms of the speakers, the subjects, the things that represented the time schedule, the format, the number of speakers, you know one of the things that on this event I don’t know if people could really handle it, but we hosted a nice dinner on Friday evening, and one of the things I just got up and talked for just a quick minute at the dinner, but one of the things I said to everybody is I said tomorrow be ready because we go for 12 hours, we go from 9:00 a.m. to 9:00 p.m. all day Saturday, and if you don’t drink coffee or Red Bull or energy drinks may be you should start now, and because we want to have your mind sharp and be tuned in for the event, and we had 12 speakers on Saturday as well as two game shows, and we will talk may be about the game shows in a minute.
That was the first time that we did that, but I’m kind of thinking may be 12 speakers was a little much for one day for Saturday just too much information, but we will continue to get your feedback. I mean you are all telling me you like it.
We got some great tips on formatting and so forth, and evenly sequence of the speakers in the way the topics are presented. We loved getting your feedback on that too, but Molly and Sarah do you think 12 speakers was that too many or could people handle it, was it too much to take in?
Sarah: I thought people handle it well. Sorry Molly, I thought people handled it well. I think you know at the end of the event the one piece of feedback that I got from everybody is you know the information was great that there were so many great areas to choose from is in terms of you know where to start purchasing.
How do I choose which one to start with, and so you know I thought I would just encourage everybody. We attended the weekend. You know don’t hesitate to call your investment counselor either Molly, Ari, or myself. Give us a call, and we will help you kind of narrow it down at a good starting point, and everybody has a different time horizon, different investment goals, and that’s kind of what we are here for. We want to serve as an extra set of eyes and ears for you may be we can point out some things that shouldn’t think of, and we are here to help.
Jason: Yeah one thing I want to mention is again on one of the evaluations, one of our attendees asked about the process like, I’d like to know more about the process of investing. And of course there is more to it than this, but just a quick overview of how it works.
Contact us through the websites at jasonhartman.com. there are several different web forms and inlets there, or you can call us at the phone number on the website as well, and work with your investment counselor, and the process just becomes totally easy and apparent as you start talking and engaging with an investment counselor at our company, and they will usually talk to you about your as may be so I alluded to your time horizon, your risk tolerance, your investment goals, and all of those things just using basic financial planning techniques that applied in the most historically proven asset class. Income property rather then from a stock bonds, and mutual funds, and even precious metals, so we’ve got the right asset class, and we’ve got the process that is really proving a financial planning type of the process that’s our style where we really look at the investor and what their goals are, and what their needs are, and what they are willing, what risks they are willing to take because that helps us decide what markets to refer you to. And then usually our investment counselor will schedule a three-way conference call if you are on the phone. The investment counselor from our company on the phone, and the local market specialist, and the local market specialist is what we call the ground troops. They are the person on the ground, you’ve heard them on the show before, and they can talk to you about specific inventory that they have at the time. They can even talk to you about private lending opportunities and the hard money lending opportunities in some of the markets. We can help you use your 401K to invest. We can help you use your IRA to invest. We can help you use home equity to invest, or just money in your savings accounts or stock accounts, so there is a lot of ways you can approach this. There is a lot of strategy to it. and there is even strategy is to when you are buying many, many properties we’ve got clients that plan to buy 20, 30, 40, 50 properties from us, and how you sequenced the mortgages and how you do that right and there is a lot to it, and you don’t need to know it all.
I would hear it all at the Meet the Masters event or even on the show here. We will guide you through that process as it unfolds. And the reason may be we can share it all from the stage or on the show because its different for everybody that’s one of the things to consider. And you know Sarah, you get a lot of questions about that, you may have something to add what I just said.
Sarah: No I mean you summarized that pretty well. You know its just some people they leave the event so excited, and ready to start, but they kind of getting their own way in the sense that you know they don’t pick up the phone, and make that first call or that initial contact because they are not sure who to call, so just know that we are here to help you.
We are here to work with you on your time horizon whether its one to three months, three to six months, next year. We will continue to work with you, and help you get your ducts in the rows that you are ready to go, and getting over that first property is usually a challenging thing, and then after that it sort of becomes this addiction as many of our investors agree with [in account 0:24:57] to get your hands on the next one, so let us help you get over that hurdle, you know that’s what we are here for.
Jason: Well, and they work so well. I mean this just, this just works. This asset class, it’s not perfect. But one of the things I said at the weekend is I said it’s not perfect. It has its problems; it has its pitfalls, but the question every investor needs to ask them self is this compare to what? In other words compare to what, what else are you going to do with your money.
You have got to put your money to work for you so that it is earning, its highest possible return. Don’t have lazy money; don’t have sleepy equity, sitting in your house doing nothing for you. I cannot tell you the number of people who have come to us, who have been investing with us sometimes for many years. And they say gosh, I’m so glad I followed this plan. I’m so glad I put my money to work. I’m so glad I put the equity in my house to work. I’m so glad I put my IRA to work.
I’m so glad I’m a direct investor, so that I have control, so I’m not leaving my financial future in somebody else’s hands. And folks that’s just really important. Get in control of your future into your financial life because some people out there feel like this is the recovery we are in, and I don’t think it’s a recovery.
Really it’s a recovery for some, it’s certainly a recovery for the elite class, the banksters, the Wall Street elite, the political eliter, but for the rest of us it’s not a recovery. Okay and its amazing though how quickly within just a couple of short years you can turn your whole financial life around just by making a few good decisions. A few good decisions multiplied out into the future, a few 100 days even 3-4-500 days in the future.
It can really change things for you. its unbelievable how quickly that time goes by and what you can do with it. I want to wrap here, but other thoughts on the even either of you. Molly maybe?
Molly: Yeah I just wanted to read to you guys in the email that I received from one of my investors [unintelligible 0:27:03] shot out two platinum properties, and he stated I just wanted to let you know that I know one of your local market specialist through you and another investor network.
I actually heard of the local market specialist on my own, but wasn’t able to contact them. However, I am definitely planning to buy it for you guys moving forward, I like you guys much better than the other investor network, so I think that just speaks volumes for our weekend, for our team, and for everything that we have to offer all of our investors.
Jason: It’s really reaffirming, and great to hear stuff like that. And you know I got to tell you I hear stuff like that all the time, so thank you for sharing that Molly. One of the things I think we really have a different business philosophy in so many ways. Remember our slogan is the complete solution for real estate investors, the complete solution for real estate investors.
And with that slogan we really live by it. One of the things I actually mentioned in my closing at the Masters at the Mick Masters even is that we love problems. Bring us a problem and we love it because we know it’s a chance to win you as a client, to win you over, and so bring on the problems. I remember reading back when I read a book many years ago called The IBM Way.
And they talked about the way IBM did business when it was in a [unintelligible 0:28:24] of course IBM is not the same company it was back then, but back in the State it was like America’s flagship company. And in the IBM way they talked about how when a customer had a problem IBM staff would just ascend on that customer and just take care of their problem. And they knew that was the time when the sale was really made.
It wasn’t at the time the customer bought the computer system or the mainframe because that’s the olden days we are talking about. It was at the time IBM solved the problem for the customer, so bring on your problems. We love them because we know it is a chance to help make you a real customer for life, and to get a lot of referral so we are obviously in this to have a good business, and to create good incomes for ourselves, and to be successful, but we know we can only do that by making you successful.
You know Zig Ziglar said you can have everything in life you want if you just help enough other people get what they want.
Molly: Well, I was just going to add it that helping your clients to their challenges point. [unintelligible 0:29:32] the story on Sunday I sat down at a table for lunch with Rainbusters, and as soon as I sat down I realized that this conversation may not go well because there were two of them that you know they had a couple of challenges because they — you know they are long time investors.
They bought many properties, and they had challenges, and each had challenges on one of their properties. You know that we helped them through, but in getting through and by the way there was one new investor that had you know never purchased through our network so I was just really kind of embracing myself for this lunch. But it actually, it was great because the new investor got to hear some of the challenges that occurred.
They got to hear how we helped them through it. you know and actually made us look kind of, made us look good because we were there to support them, and it was just a great networking opportunity for these investors, and a great learning experience, so that’s the other aspect of Meet the Masters is just the networking alone is just so powerful.
Jason: One of the things that I always hear from our local market specialist and from people who attend our live events they say I went to another club, I want to another real estate group, I went to other meetings, and what strikes me about your group, or not your group like us the way we present ourselves, but the people in the audience and attendees say that, but then local market specialist we refer business to are providers in different parts of the country that provide the property for us.
They say this to me, and this is a recurring theme. I’ve heard it for a long time. They say your clients are the most sophisticated clients that I have ever worked with of any group. And I think one of the reasons we are attracting a more sophisticated clientele is because we are transparent. We don’t sugarcoat this stuff. We know that it is not problem free. It is just the question is compared to what?
It’s just better than everything else. There is a funny saying capitalism isn’t perfect, it’s just better than everything else, and that’s what we say about income property. It isn’t perfect. It’s just better than everything else. And we educate people, we are transparent in our assumptions on our performance are conservative and real world realistic, so I think those factors are what really bring a more sophisticated clientele because if you have a really dumb clientele you know you can be used car salesmen.
You can be cheesy and you can be unprofessional and you can pull the wheel over someone’s eyes, and you can slam deals together throw the [Mulligan’s] Wall, and see what sticks. These are low price properties folks. We don’t make a lot of money on every transaction. We depend on repeat business just like a restaurant, and so that’s really the key.
You know we are in this for the long haul. I love this business. My goal is really just to save the middle class so that’s where we are here for help investors really create wealth and have a secure retirement through income property. Any other thoughts before we wrap up?
Sarah: No not, for me. I think we summed it out pretty well. I thank you so much for putting on the event. I personally learn something new each time I attend. And I really enjoy the company as well, so thank you for that.
Jason: Yeah it’s a great networking opportunity, and Sarah it’s amazing. You sit in the room, and you listen attentively to every single event. I mean you must be so sick of hearing me talk. I can’t even believe it after all this time, but I really commend you for that, and its great networking with all of our clients, and just having these live events. Live events are a lot of work for us.
It’s a lot easier to do the show, the podcast, but we really want to touch base, eye-to-eye, and shake hands with all of our investors couple of times a year, so that’s why we do it. You know what we are planning now. We are working planning a tour in one of our markets where we will do the Creating Wealth boot camp may be on a Saturday and then a tour on a Sunday so stay tune for that. We’ve been thinking about it.
A few people even suggested it last weekend at Meet the Masters that’s we are working on, and we will talk about that on the future show, so thanks so much again for attending and let’s get back to the show.
My pleasure to welcome Dr. David Rock to the show. He is the author of Your Brain At Work: Strategies for Overcoming Distraction, Regaining Focus and Working Smarter All Day Long. I know this is a topic we can all benefit from especially yours truly. So I think this will be an interesting interview.
David is cofounder and director of the Neuroleadership institute, and they are all about breaking new ground in our capacity to improve thinking and performance and he is also founder and COO of Results Coaching Systems. David, welcome how are you?
David: Very good, thanks very much for your interest in my work.
Jason: Good and you are coming to us from New York city, right?
David: I am. I’m in lovely downtown Manhattan where I live, and I’m originally Australian, but I live in New York city. It’s a great city.
Jason: We would have never guessed that from your accent. Just kidding, fantastic accent. So David tell us a little about how we can be more effective. I mean everybody especially in today’s world is constantly played by distractions, complexities, and its tough to focus nowadays with looking at multiple computer screens, and then you’ve got your digital handheld device near you probably and plus people in the room so there is a lot going on.
David: Absolutely. I mean our brain is really very, very different to how the kind of the people who organize companies would like it to be. Our brain is not the brain that sort of interior designers think it is. We cannot focus. We’ve just a few people looking at us never mind dancing screens. We can’t focus very well at all if this; if it were the way people are watching this.
We can’t focus very well if it’s just a printer icon flashing on that screen. Its very, very easy to distract people from especially from a trained thought that is kind of conceptual when you — when something is run in front of you, you can think about it, you can talk about it. When something is conceptual like to the future, or you haven’t seen it before it’s a concept like a interest rate, or a new product, or a new hire, or concepts don’t fit very well in the brain. It take a lot of effort to hold and its very easily displaced because it takes so much effort, so its very, very difficult to focus on the kind of conceptual work we are all doing with any kind of distraction.
The truth is companies are making some shocking mistakes with that they just you know physically layout and organized kind of spaces in other things, yeah.
Jason: Very interesting. So you are saying I just wanted to touch on the concept point that you made because I’m not sure people understand what do you mean by concept, so you mean as opposed to task oriented thinking that’s much simpler where as conceptual thinking our brains need to put multiple perks together and reject them into the future, and that’s much more taxing on the brain. Is that what you are saying?
David: Well, it’s more like this. If I had you picture your mother, she is going to come to mind pretty easily and if I asked you questions about the relationship of your mother, you know you can think about that easily. First I picture your car, you can picture that pretty easily, or picturing an elephant, you know you can picture that pretty easily. But if I say picture where you will be in three months time —
Jason: That’s much harder to picture right.
David: It’s much harder. It’s a concept. It’s not a physical object in the world. And when we process anytime information we have to hold it in mind. And holding something in mind, it has essentially two parts. It’s called the working memory. It has two parts. There is an audio and a visual part basically.
The visual working memory is dramatically more robust, a lot more circuitry involved. And you could hold a lot more information in the picture than you can in a sound, and so our visual circuitry is really strong. But when you can’t picture something easily you are going to have a robust circuit, and it takes a lot of effort to hold that circuit in mind.
And so your picture will be in three months. And then you know and a phone rings next to you and you certainly lost your chain of thought. You are much more likely to lose that chain of thought than if I say a picture of your car, you would be able to hold that chain of thought for the distraction, and it’s the level of effort involved in holding the circuit together, so essentially we are dealing in concepts these days. Very few people sell physical sell or pickup and move, or deal with physical objects in the world so much. We are dealing with concepts.
Jason: Right so this is any things like that. That’s a good point, good point.
David: Exactly things we don’t see, so its much how to process all that.
Jason: So it’s interesting you know well first may be you can tell us about when you talk about how workspace is laid out for all people, what mistakes do you see individuals and companies making as in terms of how they lay out their workspace, what keeps them from being focused?
David: Yeah I mean it’s an excellent question. We did a survey recently with an organization we got 6000 employees to respond to a set of questions about physical space, but the biggest insight came from the sort of overarching questions, and we ask people how many of you do your best thinking at work, and just to they remind this is in the company that I work there who it is. but its in the company with people are really paid to think, so they go to work, they are supposed to be thinking, so literally in the place where they are supposed to be doing their work, I have asked them the question how many of you actually can do quality work at that place? And the answer was 10%. So, one in 10 people we actually find going to work with a good place to get work done. That’s crazy, right.
Jason: Terrible, bad odds.
David: It’s insane. I mean so just close the office. Its like people coming one in every ten days perhaps or one in every ten people should come in. I don’t know what, but its crazy when you think about it, so we — I wrote a blog called, a post called How Companies Spend Big Dollars Making People Less Effective, and there is a lot of organizations really don’t understand the basic nature of human functioning and do some crazy things. Now, Steve Jobs is been on the media a lot lately.
And he is an amazing man for many, many reasons. But one of the reasons that he has not talked about much is he was an observer of human nature. He was a meditator, and into all sorts of spiritual things. But what he was ultimately about what was observing human nature, and he was very successful at noticing quirks that other people didn’t notice such as people like things really simple. People don’t want to have to think. We like stuff to be intuitive and natural.
Now, certainly there are [puffins 0:40:20] around. You know he observed human functioning. Now, if you have to go into an office and observe human behavior what you will see is in any kind of office its even vaguely have been planned. You will see around with their headsets in trying to shut up well, so they can focus.
And if you ask people sort of, and you observe across a day, you will notice that people are doing a couple of hours of sort of really good work in the morning, and then that’s pretty much it for the day, so there are pretty obvious patterns that we need to be shot the world out.
And we can only really do quality work for few hours a day in the mornings, so it sort of starts to have you question well, how should we design company physically? If that’s the way that human brain functions and the answer is we should not schedule meetings, and not be answering emails in the morning.
In the morning, we should be leaving at times for creative work, and actually producing things. And we should do the afternoon meetings to help each other to stay awake, and we should also allow people, the physical people to be absolutely totally undisturbed by anything, and be able to sort of move through, and had that option to be totally undisturbed so those are the big things.
Jason: That’s interesting because people I mean most people I don’t know if it’s just me. I think most people the first thing they sort of do when they start the day is they manage all their email, and that’s pretty talks oriented though. I guess it requires sometimes the emails; you need to respond in a creative fashion or think about what someone send you of course, but may be that’s not the highest and best use for that prime time of our brain power.
David: Absolutely I mean that the golden rule to creative work first is urgent important second and email everything else third, and the reason is a bit complex. But essentially creative work is required a lot of space in your brain. It requires a lot of quiet in your brain.
You know we have insights when our brain is quiet when we can notice that all connections between things, weak connections between things, and so we are doing emails as sort of like doing 50 push ups and you have only in terms of mentally and you are actually exhausted afterwards, and then you got to do some other exercise, and you haven’t got much left in you. Creative work first, urgent important second, and everything else after.
Jason: So most people need to flip their day around I’d assume listening to this. What about the physical space? You know I assume you are going to say keep it a sort of simple Zen like environment and not a lot of things to look at maybe or you know, I mean I say a lot of work spaces of companies that seem to be pretty effective, and they seem like they have whiteboards all over, some of them paint them on the walls.
They are writing all over them. Everything is kind of like, you know there is that sort of wall room type concept of the environment where its like a wall room and you just got bulletin boards out things stuck up on the walls, lot of stuff to look at, story boarding whatever. And then there is the decorated type of officer where its may be clean and simple and nicely decorated. There is one more right than the other like what you are saying it seem like the wall room is a really bad idea.
David: Well, it depends the kind of work you are trying to do, and little things actually matter more than we realize so that comes to the physical space, and just the brain overall. You know little things really do matter as it turns out, so for example if you paint a room blue, I think it will be much more creative, high feeling makes people much more creative.
There is a lot of little things like that actually help they prime the brain. You know that sort of study today that showed that just changing rooms, you know when you move rooms, its much harder to access memories that you would form in the previous room, so its also kind of quirky things that go on, but essentially if you are looking for ones that fits totally the best ones I can give you is let people design their own space.
And there is a great study showing you get about the third increase in productivity where you let people design their own workplace which is crazy, and the companies say well, let’s design it for them that’s fine, you don’t want to approach. But a third increase in productivity that’s quite a lot 30%, 33% literally just you know how do you want your space you know just personalizing.
Some people like really need it clean and absolutely then some people want their family everywhere on the walls. Some people want five desks in the wall room seeing and you know every brain is really different. And given to build the autonomy to make these choices and actually it’s a reward onto itself, but people have different needs when it comes to that physical space as well, so the best rule is don’t have one is let people create this space of them self.
Jason: But that’s interesting what you said about blue. I mean there have been a lot of studies that I have heard about that showed it like pink is the color of calmness and they are painting prisons where there is a bunch of hardened criminals, you know they are painting the insides of the pink in many cases to calm everybody down so they are not violent and you know what is blue the color or green?
David: You know what they are not violent. They are — I’m trying to imagine the criminals. They are not violent. But they are deeply embarrassed probably.
Jason: Very well maybe.
David: Imagine going to jail and know that there is a pink cell you would be too embarrassed to be violent. That’s funny.
Jason: There you go. But is blue the color of creativity though?
David: It is yeah. It’s partly to do with the proximity effects. You know when you feel like you can see at a distance, and you feel like you can see a long way, and you actually, its weird, but it primes your brain to think literally big thoughts. When you are looking at the sky rather than your roof, your brain is able to sort of think further out, to think bigger thoughts, to think more systematically. It primes your brain [unintelligible 0:46:13].
Jason: I think a lot of people listening may be want to paint, get some blue paint so just before we leave the small little subject here that seems really important. Is there certain shade of blue, its sky blue is that the right color or navy or?
David: I don’t want to be too prescriptive. I think people did the right research on that.
David: But that something that is pleasing to the eye is of course really important, and that may vary.
Jason: Sure. What are some of the things people can do to find insights and solve seemingly insurmountable problems? The problems that just, threat there is no seemingly right solution. How does one get their mind in the place where they can solve these types of problems?
David: The answer to that is really fascination, and confounding. There is really two brains. We’ve really got two brains. We’ve got a conscious brain, and a non-conscious brain, and its been talked about by a lot of people, lots of different frameworks, you know the elephants and the rider, and the high road, and the low all sorts of things. But essentially been a conscious brain and a non-conscious brain. And you know where we can’t solve the problem; the conscious brain goes round and round in circles on the same small set of solutions.
We kind of get stuck in the same small set of solutions and not go anywhere, and what’s really interesting is those breakthrough moments when we suddenly have this kind of ah-ah something that I have studied a lot for about five years. We know a lot about now about this breakthrough moments that actually happen when the brain is quiet, and when we are not consciously trying to solve the problem.
We got to have sort of thought about the question, but trying to consciously solve the problem once we failed actually is going to reduce the likelihood of insight interestingly so what we know is quieting the brain, going a little bit internal been slightly happy, but not working directly on the problem working around it. This is the kind of state we need to be and to solve this type of problems. I wrote a paper about this. But if you look up online just had to have more insights.
You will see my post on psychology today on that have to have more insights, and its — we really know a lot now about the neural state of the brain that has these breakthroughs, and there is no substitute for quiet in the brain and quiet that literally means not a lot of electrical activity going on, so its that state you have in the shower in the morning when you first wake up, but won’t have that if you do your emails before the shower.
You know your brain will be ticking over, so it’s that quiet brain that’s when we have those breakthrough moments, and kind of respecting those quiet spaces in the day, and allowing the insights to come from the non-conscious brain into the conscious brain that’s how we are trying to solve those type of problems.
Jason: Yeah very good point. How can we be more effective in collaborative situations where we really need to collaborate and harvest ideas from others and being engaged in that exchange?
David: There is a big body of work in this area. There is a whole field called Social cognitive neuroscience and a whole bunch of neuroscientists probably about 500 of them now that are studying how people interact, and what happens when we try to collaborate and I built them all of that summarizes what goes on in this, in the collaborative system that its been really, really helpful for understanding what goes wrong lot of the time.
Basically there are five domains that the brain is tracking all the time. And with these five domains we are really, it’s really important that we don’t get a threat response in any of these domains. For example status is the first one. When we feel like our status is going down, when we feel it’s like getting worse, we react very, very intensely. And what the neuroscientist are finding is that something like a status threat or an autonomy threat, or a threat to a sense of relatedness to someone or a fairness threat.
And these threats actually A) very, very strong, and B) they activate the brain’s pain network, so feeling like someone is attacking the status actually feels in the brain is like someone is attacking with a knife, and you defend yourself accordingly. You defend yourself very, very vigorously, and this most just goes on non-consciously. So, the five domains are status, certainty, autonomy, relatedness, and fairness, and those five spell out the [unintelligible 0:50:32] scarf, on American its SCARF. SCARF is this five domains that either can be illustrated or be in a reward state, so you can have a increase in status that feels really motivating and its very remotivating to feel better than other people.
It’s very, very motivating to increase your sense of certainty. It’s very motivating to increase your sense of relatedness etcetera, so these five domains being played out in social situations and when things go wrong it’s usually one of these five that’s come, kind of come and stuck with that people being aware of it.
Jason: So certainly then what you are saying is you are leading a team the simple old concepts of positives strokes of complementing and rewarding and all that kind of stuff I mean that’s neurologically important is what you are saying.
David: It’s critical. And the reason its critical is that our conscious mind is really, really limited and not, but not that effective on many levels, and anything we can do to increase that conscious, capacity a conscious process and capacity is helpful.
Bear in mind that few people can even add up four single digits in their head you know that’s not much information. If I say to you what’s 56+79 you know you could probably do it, but you rather not, and just adding up four digits is the threshold that which most people sort of can’t do things, or some can. Certainly most people don’t want to, and so making things easy for people turns out to be more important because we’ve got so little processing power particularly for new ideas.
We can process existing thoughts, existing habits very easily, but new ideas take a lot of processing power and they get kind of come to decide a lot which is why you changes had as well.
Jason: But you are saying make it easy, but is the brain like muscle where it needs exercise, and atrophies if it doesn’t exercise, I mean do you want to challenge, don’t you want to challenge the brain, play chess, do crossword puzzles or whatever music?
David: I mean there is a use it all lose the thing. There is no question there is a use it or lose it in the brain. It’s not a muscle, but it’s definitely something that most functions improve with use.
Jason: Let me take a brief pause. We will be back in just a minute.
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Jason: You kind of alluded to it earlier, but in terms of when one feels their status is threatened they become less effective does that lead into any more thoughts on keeping one’s cool under pressure, under any situation?
David: I mean the big takeaway from the brain research is that emotions do really matter. And even low levels of stress have a surprisingly large effect on that cognitive [unintelligible0:53:33] and you know learning how to regulate your own emotions, but by recognizing them and being able to intervene quickly where that’s distracting your attention or changing your interpretation of situations, and doing these things quickly is really, really key, and what we know is from neuroscience is even really small threat responses something primed to people don’t even know they feel, really small fair responses actually reduced cognitive capacity in a big way especially on creativity, didn’t get a 50% reduction in creativity with the threat response people don’t even know the feeling, and so small things really matter when it comes to effectiveness.
I mentioned this earlier this is one of the kind of big findings from, big overall findings, its — I guess it’s the generalization, but we have less control over ourselves than others, than we probably realize that more influence, far more influenced in little ways over ourselves than others than far, far less control.
Jason: Your approach is from the angle of may be a manager or a leader in leading a group, and its important not to threaten ones status, and things like that, but if someone needs to say get over or something or forgive and forget or process emotions I mean can one do that more quickly I mean is it true that one can a lot of people say I need to just process these emotions and then I will be over it. I mean how does one do that? Is that really a thing that people truly do at the neuroscientific level or is it just something they talk about?
David: Now there is a price that’s called reappraisal which is very well studied in the neuroscience lab, and the appraisal is where you change your whole meaning about the situation, and we do it all the time mostly we are not aware of it. It’s a very, very important skill for dealing with strong stresses. It’s really the only skill you can use for something that’s quite stressful like you lose your job.
You know you might start spiraling down into a stretch response that really, really affects your life. Depression all sorts of things, but if you can reappraise, if you are able to reappraise the situation you might get a chance then. You can reappraise it as an opportunity to decide what’s really important for your career next or an opportunity to get really healthy and connect to your family for a while, or an opportunity to downsize and simplify your life, or you know something and its going to make sense to you.
But neuroscientist have been looking at what happens when we change our interpretation of the situation and the whole emotional response follows how the biological response follows when we change an interpretation so its pretty important stuff.
Jason: Yeah that’s a very good feedback. You talked at the beginning about how difficult and how much brain power it takes to comprehend conceptual things, and I wanted to tie this into a discussion about something that has been repackaged and rewrapped as recently as four years ago or so and that is the law of attraction concept the secret that’s been around forever basically, but it regained a lot of fame recently, and what one has to do when they make it goal for themselves.
They have to visualize something that they don’t yet have. It has to be projected into the future, but they need to make it seem like its real today, so that its sort of a subconscious mind can grasp it may be, I mean I’m kind of saying a lot of things here so interrupt me when I’m wrong or correct me. But is this quite so hard to set and achieve goals because one has to get their head around a concept that is, isn’t there yet like you said it’s grasping a concept. It takes a lot more power than a physical thing.
David: Yeah that’s partly it, and there is been some good studies on the fact that more a goal is proximal, or more the goal feels close to you know both physically and in time, the more motivated you are, and its just being some people researching that, so yeah definitely you know goals that are really in the future intangible its hard to picture them. We can’t picture something.
We don’t have an emotional response to it as strong as what we can picture it. Its not very well if I said I was a lion you are not going to get much of a response, but if you actually picture a lion about to jump at out, or we showed you a picture of that physically a picture you will get a biological response, so hearing something doesn’t get a strong response seeing it, really does back to that first point so.
Jason: So visual so when they saw the concept of visualization of course, you want to may be “visualize” a goal with as many senses a possible and as much sensory input as possible, but really vision that is without a doubt our richest sense right that we are beyond our hearing and our touch and everything else. Visual is the biggie right?
David: And people will say I’m a visual person. I’m an auditory person. I’ve got this learning style. Learning styles has been debunked. There is no such thing as learning styles. There are definitely tendencies and people have preferences, use in iPhone for a month, and you got a definite tendency to prefer using iPhones, just half of those got, that doesn’t mean you’ve got a iPhone style brain. It’s something you do over and over will become a bit of tendency, but in the brain there are two ways of processing data.
You know audio and visual that’s what we had and the visual just hold so much more information and in the brain it’s a huge amount of more real estate. It’s like an enormous shopping mall versus a single store in terms of kind of the square footage, so visual is the huge shopping mall, and auditory is the single store. So, there is a lot more connections you can make. There is a lot more neurons involved. There is a lot more circuits created when you hold visuals than when you hold the sound.
Jason: That’s interesting and I want to believe in every way that that’s absolutely correct. The only area that I sort of question is the power of music. Being so powerful and you know that’s auditory and so it’s kind of interesting.
David: [unintelligible 0:59:39].
Jason: I guess the best songs though make people visualize stuff.
David: That’s true as well. I mean it’s not to say that [vision 0:59:47] sounds aren’t effective. I mean I could play all sorts of sounds in the lab that would make you an echo. I mean you know the sound of [singing 0:59:54] out from a chalkboard will definitely have an emotional impact on people, so their visuals that are impactful and their sounds are impactful can’t so much compare them, but when it comes to — when it comes to the strength of the circuit it just the physical real estate is much more stronger, so I think the — you know we’ve got — we’ve goals.
There is a number of challenges with goals. One is often we can’t see them, and we don’t sort of the two often the distance. And other challenge is we often say goals in a negative way. We said avoidance goal instead of approached goals. And we need to really learn to fit. Approach goals that we go towards, rather than away from.
Jason: Yeah very good point. Couple of last things here before we wrap up. Providing feedback to people that can be difficult and trying and may be its not possible at all. I don’t know what you are going to say, but is it possible or can we be more effective at changing other peoples behavior, so feedback in changing other peoples behavior especially I think bosses and parents never going to want to break up with those two.
David: Yeah absolutely. I mean we all wanted to tell people how to fix themselves, and it’s a great way of creating the status rate, and having people shutdown. You know my framework for feedback is actually don’t give feedback until its positive. Give self directed feet forward which is, is to help people give themselves feedback about the way forward.
And it’s just a much more effective way of creating behavior change than telling people what they have done wrong.
Jason: Can you give an example of that? That was a really interesting statement.
David: Yeah sure. Yeah, absolutely. I mean you go to a sales meeting with someone. You are managing a salesperson. You go to the sales meeting, and they haven’t done so great, and come out afterwards, then you start telling them all the things that will do wrong and they will argue with you, and will feel really bad or whatever.
But instead of that you can give self direction feet forward which is you can say the person if you were doing that again you know you are a smart person, you probably learn a lot all the time. If you are going to do that again what would you do differently next time what learning did you take out of that? And I will give you people a chance to kind of tell on themselves around this.
You get a whole different set of circuits created, and it’s a reward response instead of a threat response, so it’s a different you know it’s a qualitatively different experience to do self directed feet forward than feedback. One creates a threat and shuts people down. One creates a reward and hopefully creates new connections. It doesn’t mean it works every time, but we found about three quarters of the time. This approach works which means you know you got a lot less. It means you got 25% as many arguments. It happens now.
Jason: Very good point. So the book is entitled Your Brain At Work: Strategies for Overcoming Distraction Regaining Focus and Working Smarter All Day Long. David tell people where they can learn more?
David: Neuroleadership.com has the programs that I offer on the brain and coaching programs, letting to be a certified coach, and work we do at organizations and neuroleadership.org has a whole range of programs for individuals to discover the brain as a change agent, so there is a post graduate certificate masters degree and things like that.
And there is an annual summer that we run, at neuroleadership.org, so a couple of different sites, the academic and research site neuroleadership.org, neuroleadership.com more of a commercial side and organizational work, and then my own site davidrock.net for the papers that I have written, and books I published etcetera so those are few resources for you there to enjoy.
Jason: Fantastic Doctor David Rock, thank you so much for joining us today, appreciate having you on the show.
David: Thanks so much for your interest in this work. All the best.
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