What can you do if you love the 2 Properties to Financial Freedom Strategy but you’ve already started investing in property?
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A lot of people are really resonating with this two properties to financial freedom strategy that may and Ben Everingham from pumped on property had been talking about, but we’ve also been getting a lot of feedback in youtube comments in emails. Ben and Simon have been talking to people as well saying, we love this strategy, but unfortunately I’ve already gone ahead and invested so I’ve already bought my own home. I’ve already bought an investment property or build up a sizeable portfolio. If I could have my time again, I would do it this way, but unfortunately I’ve already invested and so we wanted to make an episode to talk about if you’ve already invested, how can this work for you and how can it fit into your current
investment portfolio? It’s a really good point because as an investor in the last eight years, I’ve personally bought 11 properties myself, which is crazy when I say it like that. I don’t own all 11 now because as you guys know, I don’t love debt and risk luck. I used to, but at the end of the day I’ve only just found out about this to property strategy now it would’ve been nice to know about it. 11 properties you go, where were you brought into life at that time and it would’ve been a lot easier with a lot less headaches, but I’m, I still had a really good property portfolio and I’m still looking at this to property strategy for my next steps moving forward so that again, I can future proof more income, um, and, and continue to hold the high quality great assets that are bought in the meantime as well as well as my own home, which is a big thing for me and my family.
Yeah. And then I’m in the opposite situation where I achieve financial freedom through my businesses, don’t currently own any property. And so for me, I don’t need this strategy to achieve financial freedom, but I would like to do it in order to achieve more longterm financial security for myself and my family. And then obviously when me and my wife pass away from my kids as well, like they’ll have that. Whereas a business that is mostly passive can change over time and so for me it’s like a longterm thing. I don’t need to get out of my job, but I’m starting from fresh.
Starting from fresh is cool, but starting with the portfolios completely fine as well.
Yes, I think we need to reword it because people are calling saying, you know, if I had my time over I would do it, but unfortunately I’ve already invested. No, no, there’s no unfortunately here. If you’ve already invested, if you’ve already invested, chances are unless you’ve had some dodgy investments that haven’t gone well, chances are your chances are you’re going to be in a better position than someone starting from scratch to implement this strategy and to make it work for you and achieve financial freedom. And so let’s have a talk about that. Let’s have a look at that. And so basically I think the core thing that I want to get across to people before we start going a bit more analytical into different types of situations is that the two properties to financial freedom strategy isn’t necessarily about buying two properties and building to granny flats.
Like that’s the strategy that we think is really easy and really achievable for people. But it’s about the idea of acquiring properties that generate you enough rental income that if those properties are all paid off, you will be financially free living off that rental income. Like that’s it. Like the most simple investment strategy that is out there, like the simplicity of it is not in, you know, it’s just two houses. The simplicity is it locks in income for life forever income, whether we’re in a boom or a bust and it guarantees cashflow for life. If you own the two properties in granny flats outright in the future. And that’s all it’s about. We’re just using property as a way to get passive income. There’s a thousand other ways to do it. Unfortunately, most people are saying you need 10 properties to get the same sort of income that we’re saying you can get from two owned outright, and so I think yeah, so the goal there is, well, we’re talking about the three phases of investing, so the first phase is your foundation, and so that’s where you build up the foundation that’s going to deliver your passive income, so these are the properties that when they’re paid off, they will deliver you the passive income, so that’s phase one, so you acquire those properties.
Phase Two is acceleration where you’re focusing on paying off those properties faster and acceleration could be you just taking extra cashflow from those properties to pay them off. If they’re positive cashflow, it could be any extra money in your job or budgeting so you’ve got extra money to pay it off or it could be investing in high growth properties that you could then sell down the line. Two page chunks off debt. Even high growth, just properties grow in value over 10 year period, you know, four percent compounded over 10 years is a big chunk of money. That’s tough to say. What year owning or manufactured growth or buying under value like so it can involve property investing as well, and then the third phase is when you paid everything off and that’s the freedom phase and that’s where you can just go on Olympia life. And so if you have an existing portfolio, I think the first step is to really assess your existing portfolio from a couple of standpoints.
The first one being how much rental income do you have coming in from those properties? So if we pretended that you had paid off all your properties, so everything’s paid off, do you have enough rental income coming in that you will be financially free and always think you need to take at least 20 percent of the rental income into account for expenses 20 to 30 maybe. And so take that into account. So take away 20 percent or 30 percent if you want to be more conservative and then say how much money would I have leftover if everything was paid off after paying those expenses? And then would you be financially free? And then because if you are like maybe you’ve got enough properties already, you can just move into acceleration phase, that could be true. The other flip side of that is let’s say that you’ve got a million dollar home not having that property it outright, that’s currently giving you $500 a week of cashflow. Could you repurpose that money? Again, this is not advice. This is just an ID. What I’ve done personally for myself, I sold a million dollar property, go and split that into two houses to granny flats and for that same million dollars I get $1,400 a week, which is a seven percent return. All of a sudden I am financially free immediately without having to go through all the pain. I’ve done good
hard work in the past as well.
Yeah. So your existing portfolio, just because it’s not a property with a granny flat, but your existing portfolio, if it’s delivering enough cash flow, you could consider that your foundational properties that you’ll pay off and then your own them for ages and they’ll deliver financial freedom or your existing portfolio could be your acceleration properties. So maybe you’ve, you’ve skipped the foundational step, gone straight to acceleration and these are going to be properties that will go up in value but maybe not deliver the level of cashflow that you want. And so maybe if that’s you, you might want to go out and purchase some foundational properties like we’ve talked about to get the cashflow and then your existing portfolio down the line. You could look at selling that to pay off debt on the foundational properties. So then you can achieve financial freedom that way and it put this in there
like real world terms. That’s what Ryan just explained is exactly what’s happened to me. So I bought these 11 properties. I’ve sold a bunch of them, sometimes it good time, sometimes it completely the wrong times. I’ve learned a lot from those experiences, which is great if you’re an existing investor or you’ve got your own home, you’ve learned lessons which are going to set the future up in a better way. So what I did is I think at the start of lush or end of last year, I had mid last year, sorry I had eight properties in my portfolio, still are reviewed those properties from my new context, which is cash flow is absolutely king plus longterm wealth creation is important for me in my family and what that is, is I systematically went through and I’ve sold three of those properties. Now I’ve taken the money from those three properties to invest in these types of opportunities that we’re talking about now to set myself up for one way better cashflow longterm because my yields are so much higher to reduce debt position. Um, and, and just, you know, makes me feel a little bit better as well that are moving in alignment with what I truly want, which is forever passive income and choices for life as well as, you know, keeping those properties that are already bought that I knew were good. Um, you know, for long term wealth creation as well because that’s an important part of the mix as well.
Well then that’s the other thing, because we were talking about in the car today that maybe there’s a phase four to this which is after you achieve freedom than wealth and you can go after wealth creation and you know, moving from middleclass up to like being real wealthy and maybe there’s some properties in your existing portfolio that may be phase four, which is like wealth, like they’re so good that you don’t want to sell them to pay your foundational properties. You want to hold them and they’re going to provide longterm wealth for you and so maybe you can just hold those and then go and buy your foundational properties anyway and do it that way. Like
and Nice foundational properties obviously help really offset those wealth. Creating properties with the lower income strains. You just got to remember if you bought high quality property in Sydney, Melbourne, Brisbane, 10, 15, 20 years ago, even five years ago, then your entry cost is probably never going to be that low again. And if you know at some point in the future, you’re going to want to require those high quality assets. Sometimes it’s better to hold them than it is to, you know, get rid of them and, and ride the short term pain while the cashflow is slightly negative until they neutralized because you pay down some debt, the rental increases increased or you go out and do these two property strategy where you’re making surplus income from day one if you put down a half decent deposit and then that income helps offset some of the stuff you’ve already done. Which of those properties that you know are probably going to outperform the slightly cheaper ones a little bit further away from the city, if you know what I mean.
So something that I wanted to talk about at the start of the video but forgot to talk about is this idea of goals and really a lot of what you decide to do will depend on what your goals are and whether. Because for some people their goal is just that baseline financial freedom that they want to get to. So then they have the choices and that’s really cool. Like that’s me in a nutshell. And for some people that’s not what they want. They want larger wealth and stuff like that, so look at your existing portfolio and think, what are my goals, what’s my timeframe sort of thing, and if you think that your goal is financial freedom or a baseline level of financial freedom in the shortest time period possible, then you can assess them and decide what to do based off that. If your goals are something different than like this strategy might not be for you or you might want to invest in a different way,
so many different ways to get the same result. This is just our concept of how the average person like Ryan and I can infinitely speed up their journey to having more choices in their life. Now, when I first started investing, I did it for short term cash flow and wealth so that I could stop working. Then I transitioned into longterm wealth building and now I’ve transitioned back into cash flow being the focus for lifestyle and choices again. Now at different stages as your journey as a person, as a family member, as a mom, as a dad. Days, things change and we’re not saying that the two property strategies, right, for everyone, you wouldn’t be continuing to watch this video if it wasn’t for you. It’s just a way of creating certainty in your life and to create longterm financial freedom for you, your family, your kids in the future, as Ryan said, passing it on.
It’s not the only way to do it and I certainly have more costs in my life. Then a couple of properties and outright again to support in terms of one child in private school, soon to be another two kids like it’s an expensive time in my life that I’m coming into. I want to travel still like I want to say the word. I choose to live in a nice home. I choose to have a second car. I choose to have someone. I’m cleaning my home once a week because my wife and I just kept fighting about it for years until we could outsource it. It’s like I made these choices which increases my living costs, but worst, worst, worst case scenario. The whole world falls on its head and my businesses fail or I have to sell some assets for some reason. Then my baseline is still enough to survive and I think once you’re out of survival baseline, it enables you to think more clearly about other things now to property strategies to financial freedoms.
Not Enough. I’ve already got more properties in that, but I’m coming back to that. Strategy’s a lighter term investor because that cash flow that that chaterjee creates is important and because I wasn’t smart enough to think about it 10 years ago, I just don’t think about it as two properties to financial freedom. It can be one property, two properties, four properties, 10 properties, you know, you can take it from there, sweat lodge, whatever. That’s the thing for me because I’ve already got that freedom through my businesses and I want to continue working. For me, it’s not about getting that cash flow into my life so I can quit straight away. It’s about that long term security that yeah, if everything falls on its head, then I’ve got that tobacco
me up and I mean if that means I need to cut back on my lifestyle but
I can get by and then if I want extra money at that time, then I could go back to work or confidence. Yeah. Confidence and bravery and options and you know, it’s like having a partner. It’s like having children. It just gives you that hopefully if you like. Is this going to be one of those analogies? Properties like having children. It’s just that confidence that you get from having like a baseline. If you’re dropped in the ocean, you can see the grades. But like I, I get confidence from having my wife in my life and my kids in my life and it’s just another way to get confidence. It’s like having a good business or a good job. It’s just little stepping stones that add different security chunks. And once you’re past security, you can get into higher levels of, uh, you know, things that you want to be doing, choices that you want to be making. And that’s why it’s so important to me and that’s why we want to get this message out there that you don’t have to be like all the others going for broke or nothing. It can be like a smooth transition of high quality stuff over time. Remembering your property, investing fundamentals as well.
Yeah, and I think the core concept here is that the two properties to financial freedom doesn’t have to be done. You buy your first property and build a granny flat, and then your second property build a granny flat. It doesn’t have to be done in that order. The core concept is, is that we want that security and financial freedom, and so to everyone out there who’s already invested, that’s great. You’ve got more experience than people who haven’t. Hopefully you’re in a better position as well. You might be able to leverage in equity or in cash flow in order to help you acquire those foundational properties. There’s so many options out there for you. If you’re an existing investor, so assess your current portfolio, see where you’re at. Maybe you’re in that acceleration phase now and you just want to switch your focus to paying off debt, or maybe you want to go out and acquire some of those foundational properties and get the extra cashflow from them.
It’s really up to you and really up to your situation if you need help with that, like if you need help assessing a situation and saying, what can I do from here? Or you want to go again and you want to buy some more properties and you want to do the two property to financial freedom strategy, but needs some help. Then that’s where Ben and his team over at pumped on property. They specialize in that and they’re offering free strategy sessions to listeners of today’s episode. So if you go to on-property dot com, forward slash session, then you can learn about that over their book, a Free Strategy Session that will help you assess your situation and what your next steps are. And then you can either go and do it yourself or you can hire them to do it for you. If you want to do it the easy way and the fastest way, and so again, that’s on property.com dot EU Ford’s our session and we had. This has been helpful. If you haven’t already checked it out, then go ahead and check out the two properties to financial freedom video, which I will link down below to check that out and see if you’ve gotten this far. You don’t know what we’re talking about that a very story, but go ahead and check that video out and until next time, stay positive.