Exploring The Financial Freedom Foundation Strategy
In this episode I sit down with Ben Everingham and we explore the Financial Freedom Foundation strategy (to be renamed) and what our thoughts are about it. This is really raw and fresh for us so it’s a very candid look into our thought process.
For those of you wanting the outline of this strategy without watching the video here are the basics:
- You purchase 2 properties valued at approximately $400,000 that rent for approximately $400-$420/week
- You build 1 granny flat on EACH of those properties. This will cost around $110,000 and should rent for around $280-$300/week
- Your properties are now cash flow neutral or positive
- You have a Principal and Interest loan over approximately 25 years
- The properties will now go on to pay themselves off. In 25 years when they are paid off you use the cash flow from the rental income to become financially free.
- By buying these 2 properties you have a financial freedom foundation. You know (bearing unfortunate circumstances) that you will be financially free in the future. You can now focus on living a great life and working in a career you absolutely love.
- You can also get aggressive and lower the time period from 25 years using multiple different methods. Invest in more properties to pay down debt faster, start a business, get a pay rise etc.
Hi Guys, Ryan here from on-property Dotcom Donohue and today I have with me none other than Ben Everingham. We are in the same room at the moment, which rarely happens. Usually we’re just talking over the phone, but we wanted to meet up to talk about this new financial freedom foundation or two property strategy or we haven’t quite worked out the name yet, but basically this is all fairly new for us, so because I just wanted to capture the conversation, we’ve had a quick convo about it but not a huge one and so we thought do something more casual today, kind of capture the essence of this idea because we really do think that this is quite revolutionary and could help a lot of people.
Yeah. So Ryan, run me the other day, be safe for some of you that have been following us for a while. We’ve got the four properties strategy that we’ve been talking about. Um, but I’m on my way home and Ryan’s like, I’ve got something amazing to talk to you about.
Yeah, I like texting him. I was like, had this feeling in the morning. I was like, I’m going to have a good idea today. Something bad’s gonna happen. So I’m like, I’m going to go for a surf because that helps my creativity in the surf. Like the idea hits me. I like run home from the setup. I like text Ben Unlike call me. I’m like, if you’ve got something on Kansas, can you call? And then like three hours later he texts me. He’s like, dude, just go. You message. Unfortunately, or fortunately I have clients that I have to talk to as well, but Brian is building up,
um, that. So Ryan’s texts me and then we’ve talked in the up on the way home and I’ve literally got goosebumps about this concept because it means that every single person that we get to work with that follows the strategy will end up financially independent. Cashflow was, it just will take a little bit longer for some people and a little bit shorter for others. But we’ve been thinking about these figures in, in years now, me personally, and I’ve always been looking for a way that the average person like me can achieve financial independence in a relatively reasonable period of time without taking on too much risk or debt. And uh, Ryan’s finally figured that out.
Yeah. Well, and I’m big on the idea of simplicity. Like so many people talk about the logical way to make the most money through property and capital growth and flipping properties and complex strategies and things like that. But I also know a lot about people and how people get very overwhelmed about how we don’t. Like, I am proof that people don’t live on logic alone. Like I’m a very emotional person and we’ll work off emotion and so something that you can line up with people’s circumstances and people’s emotions and changing lifestyles and stuff like that as well. Because even a lot of the strategies like capital growth where you negative gearing. Like what happens if you wake up tomorrow and you, you hate your job or you get made redundant or you get fired and now you’re negatively geared to the hill and you’ve got an income coming in. So I’m always like on the idea of flexibility, simplicity and actually like playing to our strengths as people who have the notion rather than like trying to be vulcans will live long and prosper rather than Trinity Volkans and just live with logic only and infested with logic only try and find something that works with our emotions rather than against it.
And I realized that someone who’s bought some property for myself and a lot of property for other people that I’ve talked to, a lot of different investors and gone through all the ebbs and flows personally, that, you know, logic and emotion to things. But then there’s also all the theater. It creeps up. There’s all of the different influences in our environment. And so what I liked most about this concept is if I hadn’t found out about it, um, you know, possibly 10 years ago or eight years ago when I was just getting started on my, I’ve done things very, very differently. I’m a mortgage broker that works out of our office and who’s a good friend of mine, Adam and I was faking you about this after I explained it to him the next day. And he said, well, I’ve actually got a friend who’s 25, he’s got a couple of kids.
And Him and his wife had been traveling around Australia for the last three years, nonstop because they realize this to property strategy. Three years ago he was working in the minds away when I bought these two properties. He know that longterm now that he’s going to be financially independent, he’s like, just happy to cruise while that independence comes to him without him doing too much. So it’s not an easy strategy. You’ve still got to take action. And obviously no one wants to wait forever for financial independence. But you know, once you’ve locked it in, you can reverse engineered and speed up the journey of, you know, that’s the second stage of it really.
So for those of you who like have like four minutes in and have no idea what we’re talking about, the strategy, which I call it the financial freedom foundation, but maybe renamed in the band name is similar to that. I don’t know, that’s not three words, but the idea is that you buy a few or a couple foundational properties that have good income. So two properties that we build granny flats on. So you get four incomes and basically they’re positive cashflow neutral, good, and they’ll go on to pay themselves off over 25 years. So you work hard and you buy them. And then the properties will basically take care of themselves and pay themselves off over 25 years. And at that 25 year point when they pay themselves off, rather than paying off the mortgage, that money now goes into your pocket and you’re financially free.
So the idea is that you accumulate a couple of properties in a shortish period of time. And then that will go on to give you financial freedom in the future by themselves. And so then where you’ve already set that up and now it’s just up to you to decide, well, do I try and accelerate that? Do I try and grow that or do I just leave it and do I go on and live my life? And so if you missed the video, go on property.com dot EU for session five. Oh three if you want to watch them or detailed summary over there. Um, but that’s the basic concept that we just didn’t have the framework for, like we had all these ideas like kicking around and elements of all of this sort of stuff, but it just never came together in a cohesive unit. And for those
of you that are a little bit more like me that likes the detail and the data to roll these out, it’s very simple. If you’re a first time and getting started in theK and have some cash in the bank or if you’re more established and you have a couple of investments already or your own home with some good equity in it and you’re earning 60 to 100 grand a year combined, this is a strategy that you can actually execute. It doesn’t take hundreds of thousands of dollars of savings or income, which is why I love it. So the detail is really buy the first property. Maybe it’s a $400,000 home that rents for 400 to 420 bucks a week and then go out and buy the second time. Again, 400 k that rents for 420 grand off 120 bucks a week. And then after you bought the two properties, go and add a granny flat on each of those.
That might cost you $110,000. Not all that of your own pocket. The bank will finance 80 percent of that and then that $110,000, granny flat get you another $280 a week in rent minimum. So you do that twice one on each of the properties. So now you’ve got 400 k home plus 110 grand granny flat, so $510,000 worth of investment and you’re getting, you know, what do we told them? $600 bucks a week, 700 bucks a week in rent. So you’re getting a seven percent yield. You’re also buying quality areas. We’re not talking about buying regional properties in the middle of nowhere. You can execute this strategy in Brisbane, which we all know over the last 50 years has performed as well or better than Sydney and Melbourne from a capital growth perspective. So we’re not trading growth for cash flow, but we are definitely looking for that cashflow elements so that you know, $700 a week in 15 to 25 years time turns into a pretty good amount of passive income if you don’t have any other debts.
Yeah, you want in a good area because if you’re talking 25 years down the track, who knows what’s going to happen in the next 25 years, right? And so you want that area to still be good in 25 years. You want. We want rental increases over that time as well. Capital growth, if we can get it. Sure. But I think what I love about this strategy as well is that a lot of people like it takes a lot of the complexity out of it. A lot of people also, when you’re looking at a multiple property strategy where you’re talking five, six, 10 properties, then you start to hear it all sort of lending limits and difficulties with lending that you don’t really hit when you have like a two property strategy and so it kind of removes that complexity as well. It also removes the complexity of this incessant focus that people have on capital growth and like every. Like I walked past, I was in woolies today and then walking past looking at the property mags and they’ve always got something on the front about like the hotspots and stuff like that. Like it’s all about capital growth. Everyone talks about capital growth and we’re all about capital direct. Like we want that for sure. We just kind of control roll
it. And that’s the problem with traditional property strategies is capital growth was fine when property is doubling every seven to 10 years. But what if they only double every 20 years moving forward? Or what if a certain times of the cycle you go through corrections, then cashflow is king and in America if you talk to 90 percent of investors, they invest for cashflow. It’s really an Australian centric thing to be capital growth focused and that’s because you’ve probably had almost 50 years of consistently outward growth or 100 years of consistent growth. So it’s in our psychology, but that is being driven by things that are outside of our control in some ways. And you know, when the population tap, you know, turns off or when we go to war, then capital growth can stop. But what is constantly is paypal and a place to learn place to live and they need a pace to play rent to and when money’s tight to get in hard times people, there’s more renters, so incomes rise and it’s one of those strategies that you never ever gonna regret getting passive income for the rest of your life. And that that’s why I like it so much and I’ve moved significantly towards this and it took me.
Well the funny thing is like you’re already doing this, like for yourself in the buyer’s agency as well, like we’re already like have been moving towards this strategy. Even the forefront for properties to financial freedom like is this strategy but just more complex as the set. So we’ve been moving towards this anyway. Even we had a combo, what it have been six months or a year ago. One of the conversations went, ben called me freaking out and acting as a psychologist happens more modern and the after a big weekend under beers. But yeah, just this idea of that you’re not at the point of financial freedom that you’d like to be, but if you just left your portfolio then it would get there anyway. Like that idea. We had that idea months ago, but it just hasn’t come through into a way that we can express it to other people out there. Can
you guaranteed future income or you have to do is pay principal and interest for 25 years on the line and it’s there. Anything you do in that period of time after you bought those two properties, then becomes your choice because you’ve guaranteed your financial future. Then you can speed it up or you can just cruise like some of us don’t want to work our asses off for the next 25 years. Some of us are working jobs. Like when I was working before I started this business, I really didn’t enjoy parts of my jobs or parts of the employees that I was working for and there’s hates of people that could lock these types of strategy down in one to four years and then take the pressure off themselves. Changed careers. Take a cheaper job, low paying job until they rebuild the skills, have a crack in a business or start a business on the side, cut down to four days a week or start taking some more holidays, you know, go away for awhile. Like my mates theater. It just gives you options without that constant thing hanging over your head of how am I actually going to be fine in the future, which unfortunately is Western as we’ve all been programmed to think outside that we obviously keep working and that’s how the system works
well. And even with all the other strategies about capital growth, I think really feed on. Agreed. And I agreed that well you can make $100,000 or you could make a million dollars and like the books or sell it, you know, a million dollars in property in x amount of years. Or like I’m no sleeping nine. Had a zero to a million dollars in property in 12 months. Like all those sort of numbers like feed on our grade. But I think when I achieved financial freedom through property, but through my online business, um, and I know you kind of went through a similar thing as well, you kind of get to the end and you’re like, okay, adding extra money doesn’t make you happier. Like in fact money doesn’t make you happy. Like you get to that point of financial freedom, like shorts, great. I don’t have to work in a job I don’t like anymore, but you don’t have automatic happiness.
And so I’ve really stepped away from the greed and from the money and from the fancy cars and stuff, which I never really cared about it. That’s definitely not. Um, but yeah, just towards that sort of lifestyle thing. And I feel like you’ve moved towards that as well, which is that this strategy works well for people who are like us and who can get on the same bandwagon and they’re like, I want choices in my life. I want lifestyle friends and family. And spending time with them is important to me. Looking really good too. The neighbors driving the best BMW or Tesla or whatever it is at the time. You know, having a mansion on the water, if that’s your thing, if that’s what is important to you, then the strategy might not work because it’s more longterm. It’s more like deep rooted in who you are and what’s gonna make you happy. That’s what we work with a lot of things.
Clients as well that do that. Like we’re still. We still like. It’s not like we’re not saying no to capital growth. I know to high quality properties at least at pumped on property. All we’re doing is trying to give choices so that people go, it doesn’t have to be a or B, it could be a, B or c depending on where is it your coming from and having achieved some things and having life Brian in my life and some other people that I connect with in the same way that are living a different path because of their choices. It’s made me re evaluate what’s important. I’m deaf. The music’s not over inmate like I still feel like at 32 I’m so excited about the future new businesses doing stuff, but it’s also like living in the present moment. Enjoying like where we are and there’s a lot of people that I think can relate to that, like just having choices around time is a huge thing.
Well that’s the power that we felt right. Since we have that choice ourselves of what we want to work on or whether we want to work or not. Then it really unlocked something in you that you’re like, okay, now I want to. You get really passionate about work and like you said, the music’s not in you. You get passionate about it and I hope that this strategy will help people lock away their financial future and then have that freedom to feel passionate about something like we do and like as you were saying like I was probably being a bit polarizing is that you can like this strategy, we do still target capital growth and you can also multiply. The strategy doesn’t have to be two properties, it can be four, it can be a can we 16. Like you can go as far as you want and two properties would like we’ve worked out, the numbers would roughly net you around 100 grand a year in today’s money.
Once they’re completely paid off and obviously you rough figures, not financial advice, but yeah, like if that’s not enough for you, then you could go more. You could double that or triple that or whatever. You could get up to the point where, you know, you could do a million dollars a year and that, this is the cool thing. Like I was talking to my broker about this concept and he said as a person sort of getting started in investing, um, you know, whether you’ve got your own home and you’re investing or you’ve got one investment property and you’ve got a home or you’re just completely getting started. No Bank ever sent you any too much cash flow come back next year. You know what I mean? Like when I bought my first property, they were negatively geared properties before tax and you know, that’s why my service ability got caught and now you know, big periods of time.
Pretty much all of my journey personally have been periods where I can’t borrow it and I’m sure a lot of people watching this or listening to this can relate to that, but if you’ve got properties that net or gross gratiot about six to seven percent rental returns, then you begin to look more favorable for the people that you need to. If you want to take it further. And also having that confidence that you’ve locked in your future, as Ryan said before, like enables you to feel more creative and go off in different directions based on passion or you know, this is part of my strategy for my portfolio. I still definitely buy the highest quality capital growth oriented properties as well, you know, but there’s cashflow ones for me enabled me to buy those ones with confidence and not get caught out from a cashflow perspective.
If you know, it doesn’t end up the way that I expect it to. Or you know, something happens in the marketplace that we don’t expect and there’s so much flexibility in it as well. Like you can lock in those properties and then you could go ham investing in whatever way you want, like however complicated you want, and that investment strategy could be to flip properties for a profit or it could be to renovate or it could be all of these different things that you don’t have to just invest one way, but I’m not. I think knowing that you’ve got that locked down or even knowing that you could accelerate that if you want. So we say 25 years, so you could do a principal and interest loan at 25 years. You could do 30, you know, or you could then once you lock in those properties and you’ve got them, you build the granny flats, then you can take ownership and work on cutting that 25 years down to 20 or 15 depending on your age. Depending on how motivated you are. You can like we can. You can put extra money on your learning if you want. You can pay it off faster. You don’t have to wait 25 years. That’s what I like to do.
That’s like worst case. You arrived there and that’s the best part of it because we know 85 percent of all other rosie’s wine. In fact, I read something yesterday that five percent of Australians are actually financially free in retirement. Twenty five percent, one in 20, one in 20 of us, 20 percent can live and survive using their own money and then 80 percent of us in our generation are expected to end up in the pension which crushes me. Which is why this strategy is awesome. But as soon as Ryan told me about it, I went, I’m not a white for 25 years topic. I neither are you clearly. So what? How would I do this? Based on the different stages of my life that I’ve gone through and as Ryan said, starting something on the side, working a second job, which I did for years and years and years, saving a bit more, getting a higher paying job, developing the skills to enroll money and your job. Starting a business, buying one other property, holding that property for 10 years and then selling it and if you buy the right property and do the right things to that property, you know you might be able to make a nice chunk of cash and and wipe off debt that way like this.
You could do that. Let’s get a chunk of cash or even buying another property that has good cashflow. Even spinning off positive cash flow, you could use that to pay down the financial foundation properties. This is what foundation probably needs to change, but yeah, you can use the cash flow to pay down the loans on those two properties and then once they’re paid off, you can live off those properties, but you still got extra generating cashflow and then you focus can shift to paying them off so you’re financially free on maybe 100 k a year or whatever it ends up being. But then you’ve got other properties in the wings that you’re paying off and so in another five years, your income is going to jump once those are paid off. And so there’s so many opportunities to either accelerate it, so to lower the timeframe from 25 years down or to grow it and to increase the income from like a lower level to a high level. What I love most about this concept is there’s a lot of things in company
which have an life in Australia, in western countries where we always focus on the future. I’ll be happy when I’ll be financially free when these concepts of living in the future. What I love about this concept, because it doesn’t rely on capital growth and things you cannot control, is it immediately puts the emphasis back on me as an individual, which I like personally because I like to take responsibility for myself and as investors that enables us to start thinking about solutions rather than the challenge of waiting or doing tricky strategies to get to the result that anything that makes you start thinking creatively on solutions eats awesome. Because we’re smart. We figure stuff out. You know what I mean? And the way that you tried your of how to get there
faster is up to you. And that’ll work for you. And it’ll be different for the hundred other people, you know what I mean? So I think if you give yourself interesting questions for your mind to think about, you come up with interesting solutions and so if you’ve locked in your future and now your question becomes, how can I accelerate this? How can I do it faster? You’re going to come up with weight. It’s like you don’t need us to tell you ways to do it. You’ll find ways to do it. It’d be passionate about it. Now I really, really, really excited about this and exploring about it, exploring it in bit more detail and obviously checking out the beer that you did, which works through the nitty gritty a little bit more than this as well. And so if you guys have any names, suggestions though, better than financial freedom foundation, um, which kind of sounds like a charity financial freedom foundation.
So if you have any other names for that, please leave them in the comment section down below. Or if this sounds like your keen on this idea, but you feel like you couldn’t execute it yourself. And it’s too complicated than Ben and his team over here at pumped on property, do a lot of these kinds of purchases and a lot of these grants that builds and stuff as well. And so if you think that this could line up with you, you want to invest, but you can’t do it yourself and you need some help, then Ben and his team are offering free strategy sessions to listeners of today’s episode. So head over to on property dot Kondo, you for such session. If that sounds like you, you can read about that over there and you can pick a time in your schedule that works for you. We can have that strategy session. So yeah, thanks so much for tuning in to this more casual episode where we’re kind of like, it’s darling, but now that we’re putting out the vibes and the thoughts are just free flowing. So we hope that you guys liked this different episode and until next time, stay positive.