How To Make Property Investing Simple


Often property investing can seem extremely
complicated and extremely overwhelming and the biggest problem that I see people having
is that they don’t actually stop. And so in this episode I want to talk about how you
can make property investing simple, not easy, not quick. This is not going to get rich quick
and a really easy way to do it, but it’s just going to simplify it. Property investing for
you. So you’ll have a really simple strategy and then you can go out and expand from there
if you want to. But this simple strategy can allow you to actually achieve financial freedom.
So what is this? Um, hi, I’m Ryan from on-property dot com dot EU. I help people invest in property
and achieve financial freedom. And I do see people getting extremely overwhelmed with
how they need to invest in property. They might think they need to buy 10 properties
in 10 years. They might think they need to do development
or subdivision or strata titling or commercial properties and mixing all of these different
strategies in order to make money in property and in order to achieve financial freedom.
And so today I want to share a really simple strategy, not going to be the fastest strategy
to make money in property, but it’s a really simple way to look at achieving financial
freedom through property so you can start with this and then as your skills improve,
then you can add in the more fancier stuff if you want to. And the strategy is this super,
super simple guys, it’s by property, pay off debt, and then live off the rental income
for that property. That’s it. Okay. You might already know about this. You may have heard
of this before, that you can buy and hold property and that you can pay off the debt
over time. And once the debt’s paid off your largest
expense, which is generally your mortgage, you no longer have to pay, which means the
bulk of the rental income is going to go into your pocket and with enough properties and
enough rental income, then you can live off that money. So me and Ben talked about this
in our two properties to financial freedom video. So if you haven’t checked that out,
do go ahead and check that out. I’ll leave the links in the description down below or
go to on-property dot com dot a u four slash five, oh eight, and you can check out that
strategy over there, but basically the idea of that strategy was to purchase to high quality
properties, will to granny flats on those properties. Then you’ll have a over seven
percent rental yield and your properties will be positive cashflow. You then focus on paying
those properties off over the next 25 years or ideally speeding that up and paying them
off quicker and then once they’re paid off, the money that was going from those properties
to pay off the mortgage now goes into your pocket. So let’s jump into a little bit of maths just
to make this more straightforward for you guys or just so you can see some more concrete
examples. A lot of people use the amount of 80 percent of rental income as a standard,
so you’ve got 100 percent of rental income coming in. Twenty percent of that is going
to go to expenses. So you’ve got your rental manager fees, you’ve got council rates, you’ve
got insurance, you’ve got maintenance. You’ve got water, you might have strata or body corporate
fees if you have a unit, and there’s some other expenses as well, so a good kind of
mark is about 80 percent of the rental income. After you pay your expenses will go into your
pocket. So that’s what we’re going to work out today. Obviously every property is different,
so sometimes more goes into your pocket, sometimes less, but let’s say you want to earn $100,000
per year after you’ve paid your expenses on these properties. So you want 100 grand a year coming into your
pocket. How do we go about making that happen? Well, assuming that 100 grand is going to
be the 80 percent, so after expenses we actually need to be earning $125,000 a year roughly
in rental income in order to have the financial freedom of that level. Now obviously you can
drop this down to $50,000 per year, 40,000, 30,000. I tend to think that once you achieve
financial freedom, most people don’t want to completely stop work, but they want to
work in something that they’re really passionate about, but once people achieve financial freedom,
they tend to not stop there, tend to go again, so that might be working in a job you love
or it might be investing in more property and growing your portfolio because once you
get to this point, if it’s easier to do and it’s really simple and straightforward, why
would you stop? So you can adjust these numbers for yourself.
You could aim for 100,000, you could aim for 50,000. It’s really up to you. So $125,000
a year works out to about $2,400 per week that you need to be earning in rental income.
Now let’s say you follow the strategy, mean Ben talked about two properties to financial
freedom. So we’re purchasing a property for around $400,000. Building a granny flat for
around 110,000. So total cost of 510,000. And we’re renting out the house. And we’re
renting out the granny flat and getting a rental income to start with around $710 per
week. Now we need $2,400 divided by $710 per week. That means we need about three point
four of those properties in order to achieve financial freedom. You might be saying, Ryan,
I thought you said this was two properties to financial freedom. That’s what the strategy
is and this is why you invest in high growth areas. This is why you don’t just want cash flow,
but you want capital growth as well. You want to be investing into areas that are going
up in value because if the properties are going up in value, generally what’s happening
as well is the rental income from those properties are going up in value. And so over time we
might be starting with $710 per week, but over time those rents will go up even more
than the inflation rate. And so overtime we’re earning more and more rental income from the
same property because we invested well, we invested into a good area and the rents are
going up also, you probably want to invest in something that you can add value to as
well that will also help you increase the rent down the line. And so with the two properties
to financial freedom strategy, it does require that time, I think we looked at about a four
percent growth per year in terms of the rental income. We looked at some averages for different cities
and got that figure. I can’t actually remember if it’s four percent or what it was, but I
do remember researching rent increases in areas and going off that. So let’s say we’re
getting that rent increased over time, we’re going to get more and more rent and that’s
going to allow us to get to the equivalent of $100,000 a year today. So you might see
this and you might think, okay, that’s great, but paying off debt on those properties is
really hard. And that’s true. But that’s why I love investing in cashflow as well. So I
like their growth because you get the growth in rental income as well. Getting the growth
in capital growth allows you to leverage and purchase more properties, but also investing
in cashflow means that these properties are paying themselves off. So when you work in
a job, the money that you earned in your job, you can just live off that and these properties
will pay themselves off or you can take the extra money and you can pay down the debt
on those properties faster. Also, if you’ve invested into a good area
and the rents are going up and you’re earning more money each year, then you’ve got more
money to pay off your mortgage faster. So this is a pretty simple strategy. I hope that
this has made property investing at least seem more simple for you. There are a lot
of things that you need to learn. It’s not easy. It’s not going to be a get rich quick
scheme, but seriously just let’s get back to basics guys and look at that simple idea
of you can purchase property, high quality property in good areas, get that cashflow
and then pay that property off over time and then once that property is paid off, then
you can start to live off the cash flow. So you might do two properties to financial freedom.
You might do one and have less income you might do for properties. Also talking to ben the other day, he’s been
talking and doing strategy sessions with you guys around this concept and this can work
for so many different people. For people who can only afford one property. This can work
for them because they can get that positive cash flow. They can start paying that property
off over the course of 25 years, but also they can save and then go again in a few years’
time and they’ve got one property that they’re already working on paying off and so they’ll
achieve financial freedom at a lower rate through that first property faster. And then
as they accumulate the second property years down the line, then that’s going to be great
for them and he’s also been talking to people in more affluent positions who can just go
out there and purchase three properties, build three granny flats straight away, and now
start working towards financial freedom income level. That’s going to be over $100,000 per year
once they’re all paid off. And so this can work for people who are only buying smaller
properties if you can’t afford as much or it can work for more affluent people as well.
You also don’t necessarily need to do the buyer property. Build a granny flat. Let’s
say you can only afford a cheaper property of $300,000, but you can get a seven percent
rental yield where you could start with that and start paying that off. It’s not going
to give you the level of financial freedom that you want, but it could give you partial
financial freedom and that property could help you leverage into more properties in
the future. So really simple strategy. I want to make property investing simple for you
guys. If you have any questions, head over to on-property dot com you session ask and
you can type in your questions there and I’ll get around to making a video about a lot of
those questions to help you guys out. So again, that links on property.com, forward
slash ask. And if you want to learn more about the two properties to financial freedom strategy,
go ahead and check out this video that I did with Ben Everingham where we talk in detail
about the strategy. This isn’t something that you guys need coaching with. This is something
that you guys can check out. You can do yourselves. It’s really simple. So go ahead and check
out that video. We’ll leave the links in the description down below and don’t forget to
subscribe to the channel as well. That’s it for me today and until next time, stay positive.

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