Is 64 too old to be starting a property portfolio?
Must your investment property be fully funded by the time one retires?
And why does investing with intention matter – even after you’ve acquired 5 properties?
In today’s Q&A we’re answering these fantastic questions that explore the many layers folks should consider BEFORE they choose to enter or exit the property game.
This episode highlights the importance of planning and intention, from calculating how much you really need (and gaining clarity around your next step) to why you shouldn’t invest in property like stepping stones.
Plus, we have a Listener Tale (or horror story) highlighting why property management matters. Listen now!
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FREE MASTERCLASS:
- How to Build a Property Portfolio and Retire on $2,000 a week >>
FREE BEST-SELLING BOOKS:
- The Armchair Guide to Property Investing
- Make Money Simple Again
FIND US HERE:
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Is 64 too old to be starting a property portfolio?
Must your investment property be fully funded by the time one retires?
And why does investing with intention matter – even after you’ve acquired 5 properties?
In today’s Q&A we’re answering these fantastic questions that explore the many layers folks should consider BEFORE they choose to enter or exit the property game.
This episode highlights the importance of planning and intention, from calculating how much you really need (and gaining clarity around your next step) to why you shouldn’t invest in property like stepping stones.
Plus, we have a Listener Tale (or horror story) highlighting why property management matters. Listen now!
FREE STUFF MENTIONED
LISTEN TO THE FIRST 20 EPISODES HERE >>
MOORR MONEY MANAGEMENT APP:
👉 Apple: https://apple.co/3ioICGW
👉 Google Play: https://bit.ly/3OT86bW
👉 Web platform: https://www.moorr.com.au/
FREE MASTERCLASS:
- How to Build a Property Portfolio and Retire on $2,000 a week >>
FREE BEST-SELLING BOOKS:
- The Armchair Guide to Property Investing
- Make Money Simple Again
FIND US HERE:
- Website
- Instagram
- Facebook
- Youtube
Alright, folks, welcome back to the Property Gouch podcast, and we're excited today because we are continuing the questions that you've asked us to answer right here on the podcast. So, first of all, we're going to cover the rich mindset versus the poor mindset and what's the difference, and also we're going to cover investing later in life. How late is too late, ben? What else do we cover?
Speaker 2:Well, Bryce, if you're building up a multimillion-dollar property, how do you land the plane? So we're going to be talking about exit planning and retiring debt down. We get lots of great questions about that. And finally, in what's making property news, we're going to delve into Eliza Owens' report around winning property and we see an opportunity for some of those younger women to think about and get into the property market. So we're going to talk about that in what's making property news.
Speaker 1:Season opportunity. Ladies. Let's check what that is. Let's rip into the show.
Speaker 3:Welcome to the Property Couch where each week, you get to listen to two of Australia's leading property and money experts Bryce Holdaway, co-host of Location Location, location Australia on Foxtel's Lifestyle Channel and co-host of Escape from the City on the ABC. And Ben Kingsley, chair of Property Investors' Council of Australia and a back-to-back winner of the Property Investment Advisor of the Year Award. And both the partners of the multi-award winning Empower Wealth, co-creators of more, the free lifestyle design app, as well as best-selling authors of the Armchair Guide to Property Investing and make money simple again. Stay tuned as they bring you the Insiders Guide to Property Finance and Money Management. All right folks.
Speaker 1:Welcome back to the Property Couch podcast, and welcome back to you too, mate. How are you?
Speaker 2:Oh look, you know what can I say? First round, opening round, wasn't where we wanted to be. We got a little bit pans pulled down by a GWS. They played terrific, so hopefully we can reverse it around. Other than that, mate, I'm pretty good.
Speaker 1:Yeah, mate, I just thought it was a wonderful way for the season to open. I thought you were going to say, when you said that, mate, just the lengths that we will go to to actually get a recording of the podcast. I thought you might have mentioned that, ben, because here we are, episode 485. And just to give peel back the curtain a little bit, we went to record this morning and I checked in with you and you went, mate, I'm actually just on a plane taxiing out ready to go and I'm like well, according to my diary, we're due to record in about 20 minutes. So how are you tracking? And you've just gone, okay, I'm going.
Speaker 1:Whoops, folks, after 485 episodes we're happy to give you a leave. Pass on that, ben. So now for those folks. It's seamless, who's listening to this? But we've forward projected it. You landed, you're now where you are, and then we're now recording. So just nothing.
Speaker 2:Yes, the sound quality is a little bit different Because I'm sitting in a hotel room where I'm meant to be at a conference downstairs.
Speaker 1:So there you go, folks. Special appearance from Ben. When he should be at a conference, he's talking to us here, which is good. Hey, mate, you've got an upcoming webinar. We talked about it last week, but for those who haven't had a chance to listen to last week's episode, ben, it's on the 19th of March at 730. And it's the best tools for the job what to use when. So you're looking forward to that.
Speaker 2:Yeah, it's going to be really important, right? I mean, ultimately, we're focusing on the jobs that we need to do, right? So we're talking about money management, we're talking about cash flow management, we're talking about managing our investment properties, so they're the jobs that need to be done, and so we're going to show you the tools that we've built inside the free more platform to allow you to get the best use out of that, because one of the things that can be frustrating when you're running spreadsheets or running different things in different places is you really should only need to put your data in one location and then the magic should all happen, right? You should be able to see insights and you should be able to track that information, and then, ultimately, that's what we're going to do. So, yeah, I'm really looking forward to the product team getting together next week and giving everyone a showcase in terms of what that looks like 19th of March, 7.30, australian Eastern Daylight Time.
Speaker 1:And all you need to do is go to thepropertycouchcomau. Forward slash more webinar, one word or lower case. And if you don't know how to spell more, the way we spell more, ben, it is M double O, double R. So check that out, folks. We'd love for you to go and see how that works. We get quite a lot of questions, ben, from folks who write in. I see all the questions and it's like how do I do this? The little nuance around here, what about? How would you apply this? So this is that perfect opportunity for those folks to go and check that out Now.
Speaker 1:Folks, we have got a big day today. We're Q&A day. We're getting through a lot of the questions that you've been leaving us today. There's a really cool theme that we're looking forward to chatting to Before we get there. Ben, I just got this little message on Instagram, I put it up on my socials and I put it as day made. But have a listen to this. Hi, bryce, I really need to thank yourself and Ben for all the wisdom you have passed on. I can't wait for every Thursday. That aside, your empathy and genuine care for the guests on the recent summer series is my reason for reaching out to great blokes with massive hearts helping and inspiring people. The platitudes could go on, so simply thanks, mate Cheers, hey, ben, that was so fulfilling and I just wanted to share that with you because it's obviously on my socials.
Speaker 1:We do actually take a lot of time and energy and effort to make sure that our summer series guests do feel welcome and they do feel like we curate a space and hold the space so that they can be real and showcase the transformation.
Speaker 1:So that was particularly significant. I want to say thanks again to Paul Campbell for that, because it really did resonate with me, because we do genuinely put a lot of effort in making sure that is a really wonderful space for folks. And I just want to remind folks if you want to go to thepropertycouchcomau forward, slash my story. I do a shout out at the end of the year for summer series, ben, and you can wait till then, but if you feel the pang and you want to be a part of it, go and put your details there. I see them all and then, when the time comes, we will definitely reach out to you. But, ben, that's a nice little bit of feedback for something that you and I take really seriously when we get to shepherd and steward the people who come onto our podcast, who are being vulnerable and show up and try and help others.
Speaker 2:Yeah, I mean, it's just such an important part of our community where by us helping others and shining a light on others' story, that ultimately helps the community as a whole. So, yeah, I mean to make them feel comfortable. I mean, everyone's got a story to tell and a lot of people who think about telling the story oh, my story is not really that interesting. It's always interesting, whether it's simple or whether it's complex. The story always resonates with our community because it's life, it's people moving through life and then basically telling us the wins, the losses, the challenges, the rewards. All of those things play true. So we're super grateful and we'll continue to play our role as the guides in terms of helping people on their journey.
Speaker 1:The propertycouchcomau forward, slash my story, go there, leave your details so that we can reach out to you. But that is really, really important and thank you for sharing once again, paul hey, my Mindset Minute theme today, ben, is from a, I'd have to say, a, virtual mentor OG Hero of mine. It's Jim Rohn ROHN. If you haven't listened to any of Jim Rohn's stuff, it is iconic and unbelievable and incredible. He had a CD set, ben.
Speaker 1:This is showing you how far back I was listening to his stuff called Five Days to your Best Year Ever, and I recently came across a little clip. He's no longer with us, which is a shame, but a clip of one of his talks regarding the rich versus the poor mindset and I must admit, it really his voice the way he does things. He's such a student of the game. So let's have a little listen to Jim Rohn on his concept around the rich versus poor mindset.
Speaker 5:Poor people usually spend their money and invest what's left. That's the philosophy of the poor. Now here's the philosophy of the rich. Rich people invest their money and spend what's left. And here's the startling answer. It really doesn't matter what the amount is. What's most important is not the amount. What's really important is the philosophy. So I would ask you to adopt this philosophy of spending after you have invested Invest first, then spend.
Speaker 1:So, ben, I'm always trying to find inspiration and third-party edification for the messages that you and I want as the core foundation of this podcast. I spend a lot of time going oh, warren says it, and Uncle Charlie says it, and now cousin Jim. I'm trying to find ways so that I don't get sick of hearing yours and my voice bang on about the same concepts. But, ben, it is very, very simple when you have someone who's iconic and been around for a long time and shown that many, many, many decades ago when he first started investing, it was invest first, then spend second. So I'll pass to you in a second. But just his voice is hypnotizing to me. I've got to say I've listened to ours and he's teaching. It's amazing, engaging, simple, practical, wise and empowering. But he's been a pioneering figure in the personal development space and he's asking if you haven't prioritized investing before spending, then it would make sense that you're not getting close to achieving any of the financial piece that we're talking about, ben. So what's your views on that? Invest first, then spend?
Speaker 2:I'd say we would sort of give that a little sub note saying choose your heart, yeah part of it is part of some of the stuff of our teachings, which is every dollar has a job to do, and so when I think about what he's trying to talk about here is that's committed money, and what he's asking you to do is basically work out habits whereby, similar to the way in which you might treat bills or even loan repayments, treat putting aside money for investing as part of that habit, that ritual, and even if you have to trick your mind into thinking that that is a loan, that it's a bill or a debt or something, I don't care how you get to build that habit and behavior, but ultimately that's what we're talking about.
Speaker 2:So we know that through looking at the results, across everyone who borrows money for a mortgage, there's only a very, very, very small percentage of people who struggle to repay that debt, and that the mindset is well, I've got an obligation, I've got a commitment to actually pay that back, and people do everything they possibly can.
Speaker 2:So if they use that same mindset to effectively say all right, it doesn't matter the amount what you're saying before, bryce but if you allocate an amount of funds and you keep building on that and let time do the magic, it's just a timeless piece of advice that, basically, separated out, may get part of the commitments that you're doing and I think about how my dad used to do that in terms of no, that money's committed. You know, I always used to say that money's committed, so you know now whether it's committed to future self. That's what we're talking about here for investing. But that money's committed, so every dollar's got a job to do. So, as you're doing your annual budgets and you're running your MoneySmart system, just make sure you're setting aside that savings amount or a portion that savings amount is money to be invested.
Speaker 1:The important line and what he just said, Ben, what's most important is not the amount. What's really important is the philosophy.
Speaker 2:Oh.
Speaker 1:I really like that. So thank you, jim, for all the wonderful wisdom that you shared in my life and I'm certainly trying to be a role model for that. So today's Q&A day, ben, this is where we ask people to leave their questions on SpeakPipe on our homepage. Press the yellow button up, it comes, leave your message and here it is. People want to. We want to hear from you. We prioritize the people and, just out of interest, ben, anyone who has their question read out on our podcast gets a free copy of our start and build course, which normally is $497. So if you want to get $500 with the value, just go and leave a message.
Speaker 1:Make sure the message works for the entire community. It's not so specific that it just answers your own question and we will make that available. The first question here is from Richard. Richard's question is how important is it that an investment property is funded by the time you retire? So listen to the question Richard asks now.
Speaker 6:Hi, I'm Ben and Bryce Richard here Just want to start by thanking me at Batesburg for everything you do for the community. It's a real eye opener and helped me to get my head in the right spaces. I look towards having my house fully paid off and looking to start my investment property first investment property. But my question is I'm 52, I'm just about paid my own property out. How important is it that an investment property is fully funded by the time you retire, or is it okay if it's just looking after itself and can continue on for another few years whilst you're in your time and find itself in the background? If you can give us any help on that, that would be great. Thank you.
Speaker 1:Ben. Common question Do I need to have the debt plane landed by the time I enjoy lifestyle by design fully, or can I have a little bit of residual debt in the background? Now our planners go through this time and time again, week by week, answering this question, ben.
Speaker 2:All the time. I'm going to take some liberties here to Bryce in terms of because we've got lots of themes on this question. I'm going to try and put a little bit of a different slant, because we've got some other questions there. Now I'm going to say to Richard and to anyone in our community who's listening, the idea that you fully pay off your home before you potentially invest in your first property I'm not necessarily a big advocate of that, because there is ultimately a challenge with the time that you have left. That's where Richard finds himself in now a situation where he's got a fully paid off home and that gives him lots of security. I get that part of what we're trying to teach people about investing is trapping surplus and paying some of that into your mortgage, but also putting that other money to use. So you don't necessarily find yourself in this position, richard. That's why I love your question, because it does allow us to say no judgment here in terms of you can't change the past, but my first piece of advice to anyone is if you are thinking about I'll start investing once I've got the home paid off, you're actually robbing yourself of the power of compound over time. That's my first point there In terms of the reference to how we look at basically when or what time, or is it okay in terms of paying out their loan. There's a bit of work that we need to do here, and that is we need to understand someone's working income, and when does that working income stop? Because that's going to give us an indication in terms of, well, by the time you retire being sort of 65 or whatever it is what do we project in terms of how that current situation looks? And then it's about sort of converting the cost. So when we're sort of saying, okay, do I need to have it fully funded by retirement, well, we then start to look at a couple of other interesting things is is the property paying its own way? In other words, is it covering all of the costs associated with that? Our preference, then, is ultimately to try and get it to that situation, but even if it's not at that situation, we also have got another basket of liquidity and opportunities for us to think about, and that basket could be things like the ability to how we might fund a further reduction of that mortgage as a lump sum, so we might decide to downsize from our principal place of residence because it's no longer fit for purpose in terms of our needs. So we might get a lump sum and then pay that down. We might also then have a look at access to our super and as part of getting access to that super, it may be sensible and again case by case situation where you might pay a portion of that onto the debt which is then allowing that rental income to start flowing through as part of that passive income story.
Speaker 2:So you know it from from where I sit. This is a story of if I'm 52 and I want to invest in property, how can I eventually pay it off? We want to see at least a minimum of 10 years of being able to comfortably support and hold that property. So anyone who's potentially thinking about investing it doesn't guarantee success by holding it for a decade, but it does mitigate and reduce a lot of the risks in terms of if there's any short term challenges in the market.
Speaker 2:So for mine it's a really you know powerful question about what does it need to look like in retirement? Preferably it needs to be paying its own way, but it certainly doesn't have to be fully paid out and I think a lot of people make that mistake, thinking that it's got to be debt free by the time they retire their working income, and that's not necessarily the case. But it's got to be effectively analysed in terms of how are we going to hold or get out of that property and some of our clients who are later in life who have a preference for residential property as their investment vehicle. We might have whole periods of 10, 15 years before we do potentially forecast a sale of that property. Now, whether we actually sell it in 15 years time is not the case. It's the scenarios that we might be building to give the confidence around what that looks like.
Speaker 1:Yeah, it's important stuff. You've covered a lot of ground there, folks. So I reckon, if you want to rewind and re-listen to that, there was some gold right, because it's whether or not the properties or your property portfolio is self-funding once there's no more working income. That's the critical part, because you want the portfolio to be able to provide you with an income. If you're no longer got any working income, the portfolio is going to give you enough money in substitute for the working income so that you can fund the last. All that you want, that's one and two. You need to be able to fund if there's any debt residual left. So that's really what it comes down to.
Speaker 1:But I think I think the important message that you said in that part, ben, was at the very top of your answer, which is around the fact that don't think that these are stepping stones. You need to pay off the home, then you can invest in property, because that ignores the fundamental premise of what makes property investing so great and what makes it as a passive investment so great is the fact that the longer you've had your name on the title before you get to retirement, the better, and the more the magic that kicks in here. So the amount of times you have the conversations with people saying, now I've paid off the home, what's next? I think is synonymous with this question. And again, richard, the fact that you've paid off your home is to just double click on Ben's point is phenomenal. Right, but now you're 52. And when was the reasonable amount of time that you actually wanted to retire? Did you have 60 as the benchmark? Did you see yourself working till 70? These are really really important questions.
Speaker 1:But I think I think to Ben's point, the longer that you can be in the game. Now you're 52. So, and you haven't invested in property and it's not too late. So I think it's the reinforcing point here for you. And but you would really want to be having a really good eye on risk profile what the end, what the what the end line is, so that we know how many years that we're working for, so that you could get a better understanding of what type of properties you would actually be investing in. What is the priority in the properties that you're getting? Because clearly, if our timeline is a little earlier, we are well and truly having conversations that capital growth is the one and only master that we want to serve wherever we can, but as we move closer to a transition to retirement, that really needs to be taken into account, because if we don't have the lever of time that we can play with here, that will definitely impact whether it's a growth property, a balanced property, a year property. Ben.
Speaker 2:Yeah, it does, I think. I think that's one of the other things that you mentioned nicely there, Bryce is the strategy has got to be informed by the cash flow and also the time to retirement and the working time and all those other things. So usually if we are starting later in life, having more yield as part of that particular conversation, if we're taking on some debt, is going to be part of our considerations in terms of how we might advise at a one-to-one level, on a case-by-case basis. But generally speaking, you don't want to be taking on a huge amount of debt and leverage the lady who are in life. It should be more balanced in terms of that. That's why the other basket of funds in terms of assets downsizing, access to lump sum of cash or those things are going to influence the decision that you should make, and that's also assuming, Ben, that everyone wants to do what we do, get multiple properties that give you a passive income, richard.
Speaker 1:you could possibly buy one investment property at 52 and go to sell it at 62. And if you've bought the right property in the right location, the right area in the right part of the cycle, chances are that that property is doubled in value and once you net off your selling costs, you might have a big lump sum of money that you would be quite happy. So instead of receiving an annuity-style income which is what we're advocating for so it goes on forever you might just be happy with a lump sum that you can draw on. That you can actually help you fund maybe five or 10 years' worth of your retirement. But for us, the Nirvana is the constant passive nature that, year after year, the portfolio is going to continue to spit off cashflow. That allows you and if you do it well and it's part of your goal you can have generational impact. So that's the Nirvana.
Speaker 1:But, Ben, I think it's important to highlight here that if someone does have an investment property and it's only for 10 years and they do have to sell, chances are they're going to be better off than a lot of people who don't do anything in the same situation. So again, it's been clear on what the exit game is. Our exit game is an infinite game. We want to stay in the game for as long as we can, but some people might just see it as a short term.
Speaker 1:let's get in it for a decade and liquidate after that. Horiband. The next question is from Ralph. He has a question in the same family here, ben, so I thought it was a nice little grouping for us here, and this is a question around investing a bit later than 52. But how late. Let's have a little listen, hi, I just want to know if I can build a property portfolio at the age of 64. Thank you. So, ben, far be it from us to give any parameters around whether people can start or stop, right, so 64, okay, good question. But I guess if someone was wanting to contemplate investing at 64, there's a few things that they need to consider that we want to spell out here, ben, because not only are we at the latter part of the life cycle, ben, but it's all about how much time before we want to see the fruits of our labors. So there's a whole range of things. So let's riff off some stuff here.
Speaker 2:There is, and in terms of sitting on the plane and going through some of those notes, I do want to say that starting at the age of 64 would be unusual, generally speaking, if we were going to take on some debt. So we don't know the full story here, but starting at 64, I would certainly want to know what all my options are available to me, not only directly with property, but also through some other investments. So it's not impossible, but is it the right strategy is very much a question mark. So here's some of the things that I sort of made notes of before we get into some of the sort of nice list you we've got going on here, bryce as well. So step number one is just always work backwards from what your needs are. Okay. So you know from retirement what are your needs, what are the essential things that you need to cover, and that is your baseline, all right. So ultimately, if you're 64 and you're thinking here's the, here's the minimum requirements of what my life needs to look like for the next 20, 30 or so years, that's your baseline. Then you can add to that what your wants are Okay. Well, if my needs are taken care of, that's my baseline. What extra do I want on top of that in terms of that?
Speaker 2:Now, once you then starting to document those types of things, you then want to start to say, okay, well, now that I've put those things together, how feasible is what I'm talking about?
Speaker 2:How realistic is it in terms of my current net position?
Speaker 2:And I'm thinking about income, I'm thinking about cash flow and I'm thinking about current asset position, and that's going to be different for every 64 year old or thereabouts in terms of what their story is.
Speaker 2:So that's why it's always a case by case basis and we'll never give specific personal advice. And then it's about, you know, the realization of that feasibility and that plausibility of whether it can happen, and that's all part of what you need to be putting into the mix in terms of so, because if you're working back from those points of view, then you then start saying so well, how can I achieve that? And I achieved that just through getting someone to help me land my plan with my super and doing a transition to retirement super plan. You know, getting some annuities as part of my ship, or some bonds. Some regular yielding comes from some shit. All of those could be real, but also direct private rental properties could also be part of that mix as well, but that's why I think it's got to be all cards on the table, working from that sort of personal position backwards in terms of what's available to you, because what are some of the things, bryce, that you've got to think about?
Speaker 1:Yeah, because I think you've set the same beautifully there. But it's like well, what are my liquidity needs during this time, from 64 going forward? So you have to have a real sense of what. How would I rate my health and wellness at this point of time and how long am I actually going to be earning a working income for? Do I plan on getting towards the end of that working income or am I planning on digging in for another 10, 15 years, right? So that's important. What is you know, the amount of super that you have and your cash flow needs? What is your risk tolerance?
Speaker 1:Because definitely one of the things, one of the things that we love about property Ben is and we've showcased it in webinars, we've showcased it in trying to do it via audio on this podcast is we love the 30 year journey. Because what it does is at the beginning of the 30 year journey, you've got a price that you pay for a property or share or whatever. You're analyzing over the 30 years and then, at the end of that 30 years, there's been significant growth. We can apply a compounding growth to it. We can go wow, aren't we, aren't we delighted? We stayed in the game for 30 years. But what is irrefutable and undeniable is, during that 30 years there are periods of volatility, right. So at age of 64, your tolerance for volatility is limited.
Speaker 1:Market cycle timing imagine if you were 64 and started investing in Perth a decade ago. You would have been 74 before you started to see the run that you're just experiencing now over in Perth. So market cycle timing is really really important. So, again, it's at the far bit for us to say whether you can or can't build a property portfolio, but you didn't ask the question, ralph, should I buy an investment property? You asked can I build a property portfolio? Which, to our assumptions that we're projecting onto this question, is that means multiple properties, and so that therefore comes down to how long you're in the game, how much you come working income, what is your risk tolerance?
Speaker 1:What do you feel about market cycle timing? How do you self assess your health and wellness right now? What cash flow needs do you need in the short little while? Because that's going to very much determine what your liquidity needs are. And, if you circle back to Ben's opening, probably not the default suggestion for someone at 64. Has someone done it? Yes, is it possible for someone who's 64 to do it. Absolutely right. No ceilings here. But is it typical? No, it's not.
Speaker 2:Yeah, and I think it's also important that we talk about access to funding and lending. We definitely know that from a responsible lending obligation through your investment savvy broker, there will be some lenders who will not have comfort in potentially lending over a 25 or a 30 year period, especially. You know they're going to know how are you going to service this mortgage. So there are definitely some funders out there who have an appetite for being able to borrow to older people. But again, there would need to be, you know, a really strong mitigation or evidence based part of the application process where you'd be sort of saying how do I, how am I going to ultimately repay this loan? And talking through that particular process with your lender and they can also get comfort that it's appropriate if you're going to do some leverage, and I would.
Speaker 2:As I said for the early example for Richard, we don't want to see people getting into very, very high leverage positions later in life. We would like to see that loan to value ratio story moving south, not north. So that's why it's not impossible and it would probably be more unique than the norm in terms of whether we would eventually say that there's justification to be able to build this. But if you turn up to me and say I've just sold a business and I've just sold it for $5 million and I want to put four of that in the end into a property portfolio which is a recent story that we had in the business, you know, last week actually and so, yeah, so people do sell businesses different age groups and so forth in that particular example.
Speaker 2:But that's the type of example where we could say, okay, well, yeah could you get 20, 25 percent borrowings against the rental income and the other monies that are going to be stored in long-term passive income vehicles to be able to justify a 25 percent loan to value ratio? Our consensus on that when I spoke to the the broking team was yeah, we think that's plausible and we don't think that that's unreasonable, especially because there was a little bit more than $5 million in their scenario as well. But that just gives you some example of the different stories where everyone just naturally assumes do I go into a leverage property position at 64?
Speaker 1:Well, no, that was just yeah, that's the point, isn't it? You and I, yeah, yeah, no, someone might have a fist full of cash. Ralph might have a fist full of cash and happy to have him buy it, and big differences are coming through at that age.
Speaker 2:Remember we're also talking about $2 to $3 trillion. Well, I think it's $2.5 to $3 trillion worth of generational wealth that's also going to be passed down. So those family members are in their 90s passing away. There's going to be this enormous amount and that next generation aren't passing it on to the Gen Ys, so the baby boomers potentially want to allocate that. So building a property portfolio based off that inheritance allocation, that's not a dumb thing, and in that particular case you'd be sort of saying, well, without any debt or a very, very low amount of debt, that's actually quite a smart passive income strategy.
Speaker 1:And I think back to Tom in our summer series, ben, who started late and built a significant property portfolio. So it's kind of a shout out let's crowd source. And if you're listening to this and you are either someone who started at 50 or later or you know someone who has started at 50 or later and is willing to come and share their story, can you please definitely let us know? We get a lot of questions from a lot of folks asking about what they perceive as a late or starting time. So if we can showcase other people who have done it, ben, so that these people can draw inspiration if they're starting the investing game a little bit later in the life cycle, we'd certainly love to do that. So I'd like to crowd source it. Folks, if you know someone, if you are someone who has actually started 50 plus, definitely please reach out to us at the property couch. Just go to the property couchcomau, leave us a little note. We'll definitely reach out and showcase them on our podcast, because we'd love to do it. We'd love to be inspired by these people who are outliers, ben, so people can see how they can also be an outlier as well. So great question. Thank you, ralph. Hopefully that's helped the folks here, but there's just a few things that you need to think about when you're starting a bit later and hopefully that's helped All right.
Speaker 1:Third question for today. Ben is from Matt. Matt's in a good position Got a business, got multiple investment properties. Let's have a little listen to his question now.
Speaker 4:Hey guys, it's Matt here. I live down in Torquee, Victoria. We have a number of investment properties too in Queensland through Victoria and we own our own home. We own most of our investment properties. There is still a little bit of debt there. Basically just looking for a financial plan or some advice as to what to do to move forward. I plan to step away from our business within the next five years and just see whether we can somehow live off the equity. Yeah, basically just a plan and just maybe get you guys to have a look at our overview of our financial situation and offer some advice. Look forward to hearing back from you. Bye.
Speaker 1:Alright, ben, isn't that a wonderful. What I love about this question for our audience, and what you and I can riff it now, is here you have someone who's diligently gone and accumulated five investment properties plus their own home, paid it off a little bit of debt, but still not super clear on what the end game is. Should I be living off the equity? Should we be talking about what you and I have talked about for the last couple of questions around the annuity income, rather than living off the equity? So there's lots here, but what I hope this question serves as a timely reminder for our audience who are thinking about investing or just in that early stage of accumulation. Just because you have a number of properties doesn't necessarily mean all the answers suddenly appear. You've got to have some intention and some strategy and a very, very clear North Star that you're heading towards, or you might end up like Matt, who's, on paper, in a reasonably great position here but still got unanswered questions that form the basis of where they end up.
Speaker 2:Yeah, so ultimately, what we're talking about here is a question of living off equity. Well, I'm not sure that. Well, I don't know what Matt and his family's cash flow analysis story is here, but this is a little bit of rinse and repeat in terms of what we heard from Ralph before. And that is so, Matt, and if you've got a significant other and a family member sit down and I want you to go through this exercise, I want you to write down a list of essential spending going forward. Okay, so get all of the things that you know are a lock for you in terms of essential spending that make you happy. Then I want you to overlay that with other things that are discretionary spending, and now you might do what we do inside more and what we took.
Speaker 2:What we teach in MoneySmartz is that some of those expense items are going to have essential and discretionary elements, like holidays as a classic one. So we want to be committed to at least 10,000 a year as the essential, but our discretionary might be another 10 or whatever that looks like Now. That's when we're going to start with, so we literally then need to know exactly how much we need to cover the lifestyle by design that we want to live. Then we're going to start to work through. The next phase of the question is where is this money going to come from? So, looking at the cash flows we've got coming off those properties, looking at our holding costs and commitments, looking at how they've performed and the maintenance and all of those other things, when is that going to come from? And then it's a calculation of how much more do I need now. So you go through the exercise. Do we have enough of that passive income coming in to be able to accommodate that, or do we need a little more? And how much more time do I need to work on? You said you'd be able to work for a couple more years.
Speaker 2:So this is a classic case on me saying to someone like Matt this is impossible. Or now I shouldn't say it's not impossible. You could probably do rough calculations on the back of an envelope, but they would be pretty. I wouldn't want to be deciding my future on rough calculations. For me, this is possible to answer in significant detail when you actually do cash flow analysis and when you make the invisible visible and the power of running models where you're able to sort of say every different type every month over the next 20 or 30 years. You can allocate either one off costs or ongoing costs associated with that. And then what you do is you've got your what if models and then you're able to run through a couple of those scenarios and then really you've got line of sight on planning become what you plan to become, and that is the master. That's mastery of lifestyle by design. And so if you're not able to do that, it's worth paying several grand to get someone to be that accountability partner to be able to do that modeling for you.
Speaker 2:And then you will then know, in terms of, can I hold on to all these properties and do I need to liquidate any of them? Do I have any goodwill in my business that I can also transfer into the sale of that over time? Because what a lot of people don't realize, Bryce, is when they talk about living off the equity there is. You know, if rents keep going up and costs keep coming down over time, those properties pay for themselves. But let's say there's a situation where they don't. Let's say, interest rates keep going up higher and costs keep going up high and you can't do that.
Speaker 2:Well, as funds start to evaporate out of your retirement fund, how we do our models and we talk about this in the book and we also you know, verbatim talk about this in terms of how we're doing models for clients. We have a rough default that when cash balances and cash reserves get down to $100,000, we might liquidate one of those properties and that just then builds up another several hundred thousand of buffer and rather than sort of thinking that you got to sell all the properties, all of a sudden let's say hypothetically that I only just needed one property to be sold out of the five that they built up, and all of a sudden now the others are accumulating and they're actually going forward, so you can't spend as much money as you earn, which is obviously the beautiful models that we like to show and demonstrate to our clients. So if we're putting our gloves on and being an advisor to you, that's the type of advisor that you want to be seeing, because you want to be able to do those modeling. You want to be doing those what if?
Speaker 2:Situations, and then you have huge amounts of power in that piece of mind, knowing what your next five years, 10 years, 15 years look like. That is the greatest feeling of all, and I can tell you that from personal experience. When you actually do a model and you have line of sight on your situation, it's so peaceful and empowering. It changes your mindset. It does all of these wonderful things that help you become happier and better at living rather than worrying about the money story. So there really is a lot to be on offer here for someone like Matt to actually get some professional advice and get that line of sight on what that future looks like for him and potentially he's significant other and potentially the kids as well.
Speaker 1:Now that's important because people can project okay, five investment properties already, for that's great. You know, the 73% of all property investors stop at one. And here's Matt and his family got five right. But what we don't know is wants to step away from the business in the next five years, right? We don't know how successful that business is, and if you have got to become an outlier and bought five investment properties, we could maybe make a reasonable assumption that it's spitting off some good cash flow to enable them to be able to do that and retire at that debt. We've got no idea what the age profile is here, but is the business still going to? When he says step away from the business, didn't say sell, it just said step away. So what's not known here is based on their lifestyle goals and what they actually want, despite the fact that they are an outlier. You don't know where the one or two more investment properties, based on the resources that they have, still allow them to go to another level. Because who knows this? This, this particular family, might be someone who just wants to make as much money as they can so they can give it away to as many people as they can. We do not know the motivations and energies and we can all project assumptions onto them. So, to your point around what the planning process can do, we've got someone who's, on paper, presents as very, very successful in this game that we're talking about and yet is not super clear on what the end game is, and so, therefore, I said at the top of the message I'll say it again it serves as a wonderfully powerful illustrative question for everyone in this community to know that, just because, so, not investing is one category, but being an investor but not super clear on the North Star, still means that there's further refining to the strategy that can go along here. So, matt, I think you've got yourself into a wonderful position, but I think the next step for you is to be able to perform those powerful what if? Analysis for you, so that you can actually stand in the fork in the road and go.
Speaker 1:If I go down that path, here's my options. If I go down this path, here's my options, because there's four categories of expenses, been that we have talked to and taught in our Money Smart System. It's bills and spending is category one. Discretionary spend is category two, investment costs is category three and loan payments is category four. Well, let's break that down. Number four loan payments. We own our own home. So unless there's cars and boats and caravans, there's a reasonable assumption that that's close to nil.
Speaker 1:We don't know about any other alternative investments they have, but their cost to service the investment properties from an interest perspective is getting quite minimal. So it's kind of leaving those two top categories of bills and spending and discretionary spend. Now they might go to Whistler every winter. Then we don't know, or they might be campers who love to go down the road to Anglesey for camping. So there's a bit to know here. But the beautiful part about this is there's so much potential to refine based on getting super clear line of sight around what is possible for you and that can generally be done on paper for a lot of people in terms of paper trading their way from this point forward. So they make the right moves, because stepping away from the business sounds like it's a big goal here for Matt and, assuming, his family. So it's important that they know what's the right step to do, because they've done the hard yards to get themselves in this position.
Speaker 2:Yeah, they have. I mean, ultimately, Matt and family. If that's the case, they've got to be excited about the free time, the time that they're going to free up because they've done the hard yards early, and I think that should give him some confidence to know that if he does get a proper piece of advice, then he should be able to know exactly what he needs to do next and put that in the right sequential order and then all, as I said, that's a pretty empowering position to be in when you know, sort of, what the future holds for you.
Speaker 1:And folks. For those of you playing along at home, living off the equity, there's really only two options to do that. You harvest the equity, which means you borrow against your equity and live off the borrowings, or you just sell the properties down and harvest the equity that comes from that over time. And in our Nirvana you wouldn't do either of those two. You would be in a position where the cash flow from the rents is what you are able to fund your lifestyle. So very good, matt. Thank you for your question. Hopefully our audience has. It's a big theme. Ben, we always get the exit strategy question. We always get the what if we start late questions, so it's always nice to revisit some of these questions. So we thank those folks and remember to reach out. We'll give you a copy of Starland Build. Hey, ben, we've got this. Trevor has sent us in a little note and it's a listener tale. I'm going to read it out and I think it's really powerful again for the benefit of our community. Hey, ben and Bryce just wanted to reach out and say episode 480 was Fert. No, manu, right, that's how we spelled it out. And for those of you who haven't listened to episode 480, it was how to fail to retire on 2000 a week, ben. So we did the inverted thinking, the Charlie Munger inspired inverted thinking. On that I can relate to some, if not all, of the how to fail to build points you raised here.
Speaker 1:My true story goes a little something like this I bought my first house and land package as a principal place of residence just before the GFC hit and, after living in it for a year, rented it out because I went off traveling the world in my mid twenties for the next eight to nine years. That sounds good, ben. After the real estate agency secured what I thought was a good tenant, I gave them the flick and managed the property privately. Oh, cautionary tale here, ben. I thought it was a great idea to save a few dollars on fees, right? The same tenants moved out five years later and I had to replace all the carpets, repaint the walls and replace some fans the kids had swung off of. Needless to say, the bond certainly didn't cover this. I kept the bond and offered the tenants to pay the rest of the bill. Obviously, I heard crickets from them, so I had to pay the rest out of my own pocket. I had landlords insurance, but this is a worst case insurance for me. We'll need to circle back to that, ben, and I never use it to claim small things. It's just for the what if the house burns down. You think I'd learn right Wrong. I went and got another tenant. Funny enough, it was the family next door and they were moving out of that house because it was up for sale. I saw an opportunity to save off management fees again and to rank to rent the real estate ward of charge for finding a new tenant. The new family moved in under a private agreement. Sweet as right, with the big question mark Nope.
Speaker 1:After trying to manage this house from a yacht somewhere in the Bahamas which I worked on, by the way, not owned I found out while doing my own tax return one year later that they had underpaid me and rent. I had to send them emails and show them spreadsheets from afar of how much they were behind, and it was more than five grand. I thought enough is enough and got a property manager to help sort them out. And they did pay me what was owed and it was all fine. But do you know what the kicker is? Well, it's not keeping up with the rental, with what the rental market is doing. I rents around my house had gone up considerably, but because I was managing this house myself from afar, I didn't have my finger on the pulse.
Speaker 1:After learning all of this, let me tell you, fellas, I have now learned. I maintained a property manager for this house from then on. This lesson had taught me about property management and its importance. What it didn't teach me was having the right strategy in place, and so I sold that house at roughly the 10 year mark. Insert calm in the face emoji. I can wholeheartedly say that the net of the money I saved in management fees over the years was surely a net negative and, as you can see, to top it off, I sold the property and paid commission to do so. I can't bring myself to check the growth of that suburb and what the house would be worth now, or even to check what its rental yield would be. For context, I sold it in 2022.
Speaker 1:Final point I'll make on this and for people who may read this I wish I got accredited professional help, because my future self would have thanked me for it. My wife and I have now got that help and we're on a path of retribution. I am a dedicated listener to your podcast. Keep up the great work. You guys are my Joe Rogan cheers Trev. Oh, joe Rogan man, I'm happy with that, but it looks like it was a path of salvation that eventually landed in the right area where they've now got professional, qualified property investment and device help. But quite a journey there, man.
Speaker 2:Oh yeah, I mean, trev, you're not alone. There's plenty of people who've done dumb things. I've done a dumb thing by selling one of my properties the first property I ever bought I keep. The worst part about that is it's across the road from where my brother lives, so I actually have to see it every time I go and visit. But it just gives you an idea that yep, sometimes paying for professional advice, what do you always say, bryce? You're always paying some way right, and in this particular case it's. You know he's paid for experience and that's been obviously a heavy cost financially and you know to try and save a buck. So I think I think, like anything in life, you've got to work out the is the juice worth a squeeze? And I think Trev's worked out in a lot of respects that he's made some errors and unfortunately you can't undo those. But he's now moving forward by, you know, getting some professional advice and hopefully, as he said, as he's on, he's a retribution or redemption pathway.
Speaker 1:You either pay with your time or you pay with your money, ben, and you get to choose. So thank you to everyone, everyone who contributed today. They're gonna start and build course, as I said, for normally 497. So that's Trev, ben, we've got Matt, we've got Ralph and we've got Richard. So if you reach out to us, we'll make sure you get a copy of that, which will be hopefully a contribution to you, making sure that you pay. You don't pay with your time, ben. You can fast track that. All right my Life.
Speaker 1:Hact today is a podcast I was listening to. The person who was being interviewed was Daniel Priestley and he had this concept of with or without you energy and I really loved it. So I'll explain what it is and then I'll put it into a real life example and I'm gonna encourage our community to work around with or without you energy. But he explained that people like to get involved with something they feel is happening. It sort of demonstrates that you're a key person of influence. So humans don't wanna miss out on something that is going to happen, and very rarely exciting things happen. Most of the time, for most people it can be sort of Groundhog Day or Humdrum. So when occasionally something is exciting and happening, you don't wanna miss out. So he also points out no one likes neediness and people like things that are happening and people like to flock around people who are key persons of influence. So by demonstrating that you're putting something together, people just naturally gravitate around that. So, with or without you energy, right? So how does this apply in real life?
Speaker 1:Recently my wife was she's keen to do this two-day seminar in the city here in Victoria, so she's heading off to Melbourne and she wanted to go with someone that she'd recently connected with and wanted to build a relationship with this person but hadn't got yet the clicks in the legs on the relationship. She was in that early stage and so she was also a bit nervous about going solo to this event and was in key to invite her. So I am and this person that she's building right. She's previously flagged interesting going right, but nothing overly committal. So I said to Andrea are you gonna go with or without her, and or is it only a case of if you've got a plus one, you're gonna go? And she said no, I'm going with or without. I said well, play the with or without your game here, right, we use this with or without your energy. So basically I said send her a text and say I've just booked this ticket. I'm really pumped to go and learn more. Let me know if you'd like to join me. The alternative is I'd like to go. Would you like to go with me? Let me know if you wanna go with me. That's not with or without your energy, ben. She said I'm going, I've booked a ticket. I'm excited. Let me know if you wanna join.
Speaker 1:This person came back and said she'd love to go and she got a ticket as well. So she modeled the with or without your energy. So here's the takeaway for the people that are listening to this. I've tried it a couple of times. I'm still clunking through it, but I'm constantly thinking about this idea of the with or without your energy. So if you can frame up your interactions with the people that you're in dialogue with using that with or without you energy, watch how quickly you become a key person of influence, whether it's trying to go to the footy, go to the theater, engage in a project, go overseas, whatever it is, let the person know that you're trying to negotiate and influence that it's with or without your energy, and see what happens. So there you go, ben. What's?
Speaker 2:making property. No, I think that's really helpful. I mean, at the end of the day it's showing to your point the human nature is we don't necessarily wanna miss out. So people do that and we tend to flock to them. So I think there's some validity in that statement.
Speaker 1:Very good mate. Give us some with or without your energy around. What's making property news?
Speaker 2:All right, bryce. So what's making property news? So we did see, with International Women's Day, a lot of focus on that and we did talk about. Allies are releasing a paper through CoreLogic and they've done some really terrific analysis and we'll see. We'll get a link in the show notes so you can see more about that particular story.
Speaker 2:But some of the summary is quite interesting, right? So overall, 68.2% of women females have a higher ownership of dwellings compared to men, who only have 67.4%. Now, this is where it does get interesting, because when you think about that and you read through the paper that Eliza's put together, which is a terrific paper, it talks about the fact that, yes, obviously, as couples get together and marry and all of those things happen, women retain high ownership and that makes a lot of sense because what it means is basically that's the security, and women have really high levels of security and, based on all of the research we do and we know about investing, but they're very cautious and conservative investors. Now it also shows up in terms of more than half. So this is what GenZ I'm talking about here, right, this is where it becomes more challenging. So, with the GenZ population, we're seeing males are owning 51.6% of dwellings, compared to just one quarter of females. So just over one quarter 27.3%. So there's a big gap in the next generation of women coming through, and so what we want to inform you of is that there is an opportunity here for those young professional women.
Speaker 2:All right, and we have a look at the overall percentage of young men investing in property, and there's 14.1% versus young women investing in properties 12.5%. So we're putting the challenge out there for those individual professional young women to think and focus on what you can do, and this is about allocating that money. This is about building mindset change around investing for yourself, right, in that classic sense that a man's not a plan. This is you basically being self-fulfilling in terms of what that story looks like. So it's an opportunity for those women to continue to keep working on that sort of skeptical concern that you have and take on a little bit more calculated risk based on building knowledge. And I think that's the message that I wanted to pass on in terms of what's making property news, because there is an opportunity for those women who are earning good money to be able to ensure that they get on the property ladder as early as they possibly can, and that's my big takeaway from that particular story that there isn't too much men, younger men, are happy to take a risk of property ownership, more so than women, and certainly the same applies for investment. So try and move the dial on those women and get out there and have a go.
Speaker 2:And in a lot of cases, bryce, they do seek professional help and I think that that's okay If that's what you need to do, instead of taking just general risks like men do. And I'm generalizing here, I know I'm generalizing. If you need that supporting person or that professional to guide you through that process, they are out there. And I think that if that's the final thing that you need to get some guidance and advice, go out there and get that guidance and advice, because it will serve you well over the longer term. And of course, I'm speaking from a male style and pale male's perspective in his 50s who's done that? But I'm telling you this message is coming from the heart around the control, the controllables be able to do what you're able to do. And if you need a little bit of a nudge, if you need a little bit of help, then go out and seek some professional help to get you over the line.
Speaker 1:Ben Welleson.
Speaker 1:We're an equal opportunity podcast here, so we want everyone to thrive. But what we have been very fortunate you and I is we are surrounded by incredibly talented women in our business and those women are advocating in the conversations they're having with us, privately and, in Amanda's case, publicly on the podcast, that that disparity is something that needs to be highlighted, right? So we are still gonna be advocating for the fellas to keep investing, but I guess the takeaway from that is, ladies, there's an opportunity here that the investing landscape is one opportunity where we can start to peg back, not withstanding some of the handbrakes that do exist. So we acknowledge that. But there is an opportunity where you can peg back some of those stats and lead the way and look after your own financial future. But we want everyone to thrive, ben. We want the fellas to invest, we want the ladies to invest, we want to highlight how hard it is historically been for the ladies and I guess to your point we want to say, well, going forward, if you are willing, enable, don't let any of the narratives stop you from pegging back some of that margin that actually exists. So we'll analyze.
Speaker 1:It was a great paper. It's been updated. They've been putting out for the last couple of years. We've obviously we're privileged to have her on our podcast a couple of weeks ago, which was wonderful. So good on you for highlighting that mate and letting us know what's making property news there. But we've covered a bit of ground today, ben.
Speaker 2:Huge amount of ground.
Speaker 1:There's a fair bit we covered, brought all the way back from the feedback that we got around curating our summer series guests. Then we had Jim Rowne. We had three really great questions talked about, with or without you and, of course, you spotlighting a really wonderful cause in the shadows of International Women's Day, mate. So I appreciate that you navigated your day to include me in it, mate, so that we could have this conversation today, but enjoy the conference that you find yourself at and until next week.
Speaker 2:Knowledge is empowering Bryce, but only if you act on it Well said see you next week, folks.
Speaker 1:Hey folks, bryce, here again. I just wanted to catch you real quick before you go. If you're new to our community, I want to encourage you to listen to our very first 20 episodes, as the concepts we share in EPS One through 20 are foundational principles, pillars and frameworks that you need to know for you to get the best value from our content week to week on our show, my little tip is to listen to it at one and a half speed. Now, for those of you that are time poor and don't have the option to go back to the beginning, don't worry, because we've got you covered as well.
Speaker 1:We've created a binge guide that summarized these foundational episodes into one easy to digest booklet so that you can get up to speed super fast. So go to the show description on whatever device you're listening to now and simply click on the first 20 episodes link to download it straight away. Oh and, by the way, whilst you're there, you'll find a few extra goodies for you, including a link to download our lifestyle by design app more, the home of Wealth Speed and Wealth Clock, and our hugely popular MoneySmart's Money Management System, as well as how to get free copies of our bestselling books. Now, just a reminder that anything we cover on this podcast is not considered to be financial advice, and we certainly recommend that you seek out expert advice tailored to your unique circumstances, and everything we talk about is general in nature. Folks, I wanna encourage you again to click on the show description, wherever you are listening, to access all the free goodies we have for you Until next week.