2 Properties To Financial Freedom: Quickly Explained
The 2 Properties to Financial Freedom strategy is a property investment strategy that is fairly low risk and can allow you to set yourself up for financial freedom in as little as 2-5 years for most people. Here is the strategy quickly explained.
0:00 – Introduction
0:30 – The 4 Stages of Property Investing
1:13 – Stage 1: Buy and Build Properties
3:42 – Rough figures of the foundational properties
6:14 – Granny flats…that sounds weird?!
8:11 – Stage 2: Pay Off Debt
9:55 – Pursuing happiness without financial freedom
11:33 – Stage 3: Freedom
12:46 – Stage 4: Build Wealth
14:00 – Quick summary
the two properties to financial freedom strategy is a property investment strategy that is fairly low risk and can allow you to set yourself up for financial freedom and as little as 2 to 5 years for most people now this doesn’t mean you’ll financially free after 2 to 5 years but you set yourself up so that you will be financially free in the future so in this video we’re going to look at exactly how this strategy works hi i’m ryan from on-property helping you achieve financial freedom and this strategy is broken into the four stages of property investing so there’s four main stages of this strategy the first stage is the buy and build properties stage so this is where you’re purchasing properties and building granny flats acquiring what we’re gonna call foundational properties the second phase is the pay off debt phase where you pay off debt the third phase is once your debt is all paid off then you have freedom and you can live off the rental income of your properties now a lot of people will want to stop here at phase 3 and go on to live a life that they love with freedom of choices but some people may want to go on to phase 4 which is wealth and building wealth in your life and becoming much richer so let’s have a look at phase number one which is the buy and build stage so in the buying build stage this is where we’re going to be acquiring our key properties that will deliver us financial freedom in the future we call this the work hard phase because this is where you’re working hard to save your deposits to research markets to purchase properties to build granny flats this is where you’re working hard and this stage you’re looking at around two to five years for most people it can be shorter if you’re in a really good position it can be longer as well if it takes you longer to acquire these properties so 2 to 5 years is a guideline for what a lot of people can achieve and as you can see that’s a pretty short period of time compared to our lifespan so to work hard for just 2 to 5 years to set yourself up for financial freedom is definitely worth it in my mind but as I said it can be shorter or can be longer so the idea here is that we purchased two properties and we go ahead and build two granny flats this won’t work with just any so we’ll be looking at high quality metro markets because this is gonna be a long-term investment at the moment that’s kind of Brisbane southeast Queensland to get the rental returns and the figures that we’re talking about but that can be other places in Australia that allow you to build granny flats we’re looking for places that have long-term demands so we don’t want things like mining towns that’ll boom and then busts within the next 10 years we want long-term demand for our properties we want to get capital growth if we can this strategy doesn’t rely on capital growth but obviously capital growth can accelerate the purchase of new properties and it means that those properties are in demand and are likely to get rental growth as well we want to invest at the right time of the market cycle so we want to invest somewhere towards the bottom of the market so ideally we can then get some growth we want suburbs that are set for growth so we’re looking at high-quality metro markets but we want the best suburbs within those markets that have the best chance for growth but that are also the lowest risk as well so we want to invest in the best potential suburbs and the best properties within those suburbs so avoiding properties on things like Main streets or right next to train lines or right underneath powerlines and things like that so you can’t just do this with any property in Australia it needs to be a very high quality property and taking the time to choose the exact right property is extremely important with that said let’s have a look at some of the figures for what these sorts of properties look like this is what clients have pumped on property are doing today is that they’ll go ahead and purchase property number one for around about $400,000 that then rents for around about 420 per week they’ll go ahead and then build a granny flat on that property for 120,000 which will rent for about 280 per week so the summary there is the total cost is five hundred and twenty thousand which rents for seven hundred per week so you’re looking at about a seven percent rental yield and given current interest rates this property would be positive cash flow or cash flow neutral meaning that the rental income not only pays for the expenses on the property but it also pays for the interest repayments on the property as well as the principal on the property so these properties will be paying for themselves and paying themselves off we then go on to property number two and Chikara it’s exactly the same okay purchase price four hundred granny flat build 120 renting for a total of seven hundred per week so once you go through this process you now own two properties but you’re getting four incomes from these properties this is what we call our foundational properties because these are their foundation for our financial freedom so once we purchase these properties we don’t have financial freedom these properties are just paying themselves and they’re paying for the mortgage so they’re not putting money into your pocket but they’re paying themselves off and eventually will completely pay themselves off the key idea here is that once you’ve acquired your foundational properties in the work hard’ phase you’ve now effectively set yourself up for financial freedom so you’re not financially free now the properties are just paying for themselves they’re just covering their mortgage but they are paying themselves off so over the next 15 20 25 years these properties will eventually completely pay off the mortgage and when the mortgage is paid off you can then live off the rental income so these properties are positive cash flow and they will go on to pay themselves off for you so the tenants are actually paying the mortgage and eventually you’ll earn the property outright at which point you can live off the rental income if you want more help on getting clear on how this strategy can work for you then we are offering free property strategy sessions this is a one-on-one session over the phone where we talk to you about your current situation what your goals are and how to bridge that gap and what steps you need to take to achieve your property investment goals so if you’re interested in that go to onproperty.com.au/session and you can book a time over there that suits you now a lot of people may be saying or granny flats that sounds a bit weird but it’s actually not weird people absolutely love granny flats in the markets we’re investing in high-quality metro markets granny flats offer a very affordable solution to people we’re talking about a two-bedroom granny flat that is really nice so you’re going to have two incomes on your property they’ll be rented separately the tenants will have private access private garden so they won’t share a garden or anything like that now you can have granny flats where people do have common areas and common yards and even that is fairly easy to rent as well so you’ve got separate rents they have private access think of like a brand-new two-bedroom unit would it be difficult to rent a two-bedroom unit in a high quality area in a metro market like Brisbane would that be difficult no this is a two-bedroom unit with a beautiful deck and a small yard as well so it’s like a two-bedroom unit but a better version of a two-bedroom unit and the front house still rents fine as well it just has a smaller yard so the front house people are obviously aware that you’re building a granny flat you put up a fence so they have their own private space as well so granny flats while they may sound a bit different and you can’t do them in some areas like in Melbourne I think you’re not able to do them at the moment they are actually quite common and people love living in them and they’re very easy to rent so again if you want more clarity on this strategy and how it can apply to you and how you can set yourself up for financial freedom go to onproperty.com.au/session to book a one-on-one session over there at a time that suits you there’s a calendar over there you can pick the hour that best suits you on the day that best suits you get on the phone get clear on your goals so you can start moving towards financial freedom so once we’ve passed through stage number 1 which is buying and building property we move on to stage number two which is paying off debt this is what we call the pay off debt phase or the pay off debt stage so pretty simple here what we’re gonna do is focus on paying off debt over maybe a 10 to 20 year period now this sounds like a really long time to not have financial freedom but we’re going to talk about how this can actually create choices in your life but first we’re going to talk about paying off that debt as quickly as possible and getting that 20 years down to 10 years or even earlier and basically what we’re going to do is at this stage we’ve acquired our foundational properties our focus now shifts to paying off debt in whatever means possible so to start with we’re going the rental income from the property remember it’s positive cash flow to pay off the debt and the principal on the loan as rents go up over time we use the increases in the rental income to pay off the debt faster so extra money that comes in that’s effectively positive cash flow we could spend that on our lives but we’re going to put that back onto the loan or into an offset account you can also focus on growing your income and the extra money using that to pay off debt you can work extra jobs you could budget and save you can do side hustles and businesses in order to grow your income and use that to pay off debt faster or you could invest in what we call acceleration properties which are properties that grow in value of a shorter time period maybe ten years or fifteen years which you then sell to pay off lump sums of money so paying off debt you focus on how to pay off debt as quickly as possible and your task is basically how can I make more money so I can pay off debt faster is this also the pursue happiness phase so rather than looking at all these options and trying to pay off debt as quickly as possible and waiting until we’re financially free what you can do is actually push you happiness in this phase and so this is where you just let the properties pay themselves off remember they’re positive cash flow so they’re going to pay themselves off anyway you now quit the job that you hate because you’re not worried about your financial future and you now pursue a career that you love you still need to pay your bills you still need to pay rent you still need to pay for food and for schooling and your kids and things like that but you don’t have to worry about your financial future because these properties will pay themselves off so you can now focus on maybe taking a pay cut and pursuing a career that you love and you’re gaining back 10 to 20 years of your life not working in a job that you hate because you’re worried about your financial future you know that in ten to twenty years you’re going to be financially free so let’s spend that twenty ten to twenty years absolutely loving life loving our career spending time with our family all of that good stuff so you can focus in this stage the pay off debt stage to either work hard pay off your debt as quickly as possible or you can focus on pursuing happiness living a good life and the debt may take longer to pay off but you gain back that 10 to 20 years of your life so the key idea here is that you don’t need financial freedom to gain choices in your life knowing that you’re set up for the financial future knowing that your financial freedom your financial security is there allows you to focus on the now and allows you to focus on work and career and family and doing things that you love and loving your life now and not worrying about the future stage number 3 is freedom and this is the live off rental income of face so this is when our properties are completely paid off rather than focusing on paying off those properties we now divert that rental income and put it into our own pocket so we have some expenses still with the property like council rates insurances property manager fees that generally accounts for about 20 to 30 percent of rental income but the rest of that rental income can go into our pocket and we’re effectively financially free so the key idea here is that once the properties are paid off you now use that rental income to live off and a lot of people are going to stop there at stage number 3 and just be financially free gain their choices do what they want with their time they might enjoy their life you might go to the beach new sites highly recommended absolutely loved living up there you can live wherever you want because you no longer tied to a location for a job spend time with friends and family find what makes you happy at this point in your life I had pseudo financial freedom through my businesses at 28 I spent about two to three years really finding out what makes me happy and it took that time to get there but now that I got there I’m so grateful that I did that so once you pass through the freedom phase then it’s up to you you can’t go into phase number four which is where you focus on building wealth this is the get rich phase so this is where you can actually really start to build up a solid foundation of wealth in your life so you might go ahead and acquire more foundational properties or other high-quality properties that aren’t necessarily a property with a granny flat but they just have good capital growth or good bones or they’re in a good area you could invest in shares in businesses other investments like cryptocurrency or more speculative investments as well this is where you can go ahead and do that because you’ve got that foundation of financial you’ve now got the time as well that you can spend it focusing on building your wealth so the key idea here is that you don’t start once you achieve financial freedom now you have all the time possible in the world plus you have a foundation of financial freedom that you can fall back on you can really build a real lasting legacy of wealth so you could continue to work at this stage and imagine going to the banks and saying look I have a great income from a job I’ve got a side hustle and I’ve got these properties that I’ve completely paid off and I’ve got rental income coming in can you get me a loan and that’s such a great position to be in to go ahead and borrow and invest again so that is the two properties to financial freedom strategy quickly explained just to summarize the four stages of property investing you buy and you build your properties so you purchase a property build a granny flat rinse and repeat you don’t have to stop it to either you can do three you can do four we then move on to the pay off debt phase where we focus on paying off debt as quickly as possible or finding our happiness and pursuing a career that we love we then enter into freedom where we are financially free and we can do what we want with our time and then we can choose to pursue wealth if we want if you’re listening to this and you’re thinking this sounds great I want to pursue financial freedom I want to set myself up for financial freedom then go ahead and jump on a free property strategy session call where you can get really clear on your goals personally and how you can go about achieving your property investment goals get tips get tricks know what your next steps are so you can start moving forward towards investing in property and building a property portfolio that can help you achieve your financial dreams so go to onproperty.com.au/session in order to check that out and book in a time that suits you I wish you the absolute best in your property investment journey and until next time stay positive