How To Invest In An Uncertain Property Market

Transcription:

Ryan 0:00
Something is always happening in the global economy, in the Australian economy, in different cities as to what’s affecting the property market. But it’s important that you take action, regardless of those things, despite those things, sometimes because of those things. So today, as we have explored this mountain, we want to talk to you about what you can do in your own personal investing, and what actions you can take to take into account what is happening globally, like right now in the economy, what is happening nationally in the economy, and how you can protect yourself from the worst, and take advantage of the best. Hi, I’m Ryan from OnProperty, helping you achieve financial freedom, we are currently lost in the woods and did not remember which way to go. And that’s how a lot of you feel sometimes when you are looking at the economy and being like, Well, what do I do? I’m just lost in the woods. How do I make sense of all this data? How do I make sense of what may or may not happen? How do I make a decision and buy something? Or don’t buy something? Am I gonna lose all my money? So Ben loves the data, he understands the data much better than I do think

Ben 1:09
we want to roll down there, actually, we’re gonna walk down there, we’re gonna

Ryan 1:13
roll down the hill, apparently? Didn’t we come by the road? Oh, my God, who knows where we are. We’re gonna take the path less traveled, and hope it makes all the difference. So how can you take action? Despite what sort of things should you consider? That’s what we’re going to be talking about. So Ben, laid it off.

Ben 1:34
Yes. So sorry for not giving you guys eye contact, I’m just managing my risky

Ryan 1:41
Rola ankles, as the old man we are today, we won’t recover as well, when we started making videos. So you know,

Ben 1:47
for me personally, talking to some of my clients who are in the finance industry around the world, I think, managing your risk in a marketplace, it’s a little bit more shaky, really comes down to cash flow, as well as I suppose, like reducing the risk as much as possible. For me personally, it means if I’m investing this year, or next year, which I absolutely plan to take advantage of current conditions, I’ll be looking for long term assets with growth potential time that the right particular part of the market cycle, but more than anything else, and more importantly, than previously, really looking for cash flow as well. So for me, that means back to the strategy, personally, of houses, in good quality locations with great cash flow, as well as secondary dwellings or granny flats. So that, you know, I’m creating a surplus income every single week from that asset, and that’s providing me with, you know, that stability, whether my business doesn’t do as well as it did last year, or your job doesn’t do as well. Or maybe you won’t even have a job, you know, what I mean? Like, managing the downside in a turbulent market is the most important thing to thriving in one, as well as, you know, moving confidently through one as well. And that’s

Ryan 3:00
the thing, I think, managing the potential downside risk mitigation, doing what you can to avoid risk and actually kind of preparing for the worst. Yeah, hopefully not expecting the worst, but definitely being prepared for it, that if it does happen, you’ve got some buffers in place to weather that storm.

Ben 3:19
You know, this wouldn’t be the year if, you know, you’ve got $50,000 sitting in the bank, for example, and you go absolutely all in on one property. You know, what happens if the property doesn’t rent out for a little while longer than you expect? Or what happens if you lose your job, you know, sort of look like the other day, who came really unstuck from Melbourne in the GFC. He owned a big manufacturing business at the time, for some reason, he owned two principal place of residences, one holiday home and a home that he had his brother in. So he had four or $5 million worth of debt that wasn’t producing any income, which is fine when his business was going well, but he didn’t prepare for the downside, ended up having to sell all of it, literally all of it for a $2 million loss. He sold it for 50 cents in the dollar of what it was worth. And this is why I always talk about the buying opportunity is in this mid cycle slowdown point plus the the jF says and now he’s back on his feet. How do you have had assets producing cash flow, he could have weathered the storm held through it. Those assets were not just picked up for 50 cents in the dollar, but went back to that dollar value and then doubled to $2. He would be worth an extra $5 million today, if he could have just got through that two or three tough years. And that’s

Ryan 4:34
the thing it’s looking at, okay, what could potentially happen, and how can I weather that storm? And so whether that be what could potentially happen, I could potentially lose my job, or my business could have a downturn and I won’t have income to support a negatively geared property. And it’s about preparing for those sorts of things while at the same time, still taking advantage of the opportunities that are out there. So

Ben 4:58
one of the downsides the upside of buying in a market like this is there’s less investors there’s more people that are scared and you know there’s less money in circulation so like for me this is a buying signal i told you off camera that i’m moving my acquisition from later this year to now because i you know i can taste the blood in the water like it’s there like right now and the numbers haven’t come through on that blood yet but i can feel it and ben is now a client of his own company i’m a client of mine company i’m on my board and it feels good like it feels exciting to be like buying an asset at a good price point in a good market adding cash flow to that asset getting it to the point where it’s two or 300 bucks a week positive from day one after the granny flats build and then not stressing on it like if interest rates rise to 7% the loan covers itself if i choose to pay principal and interest on it or the bank forces me to i can cover it if my business’s loses 50% of its income stream you know i’m not forced to sell the properties and that’s really really important position to be in i think

Ryan 6:04
i think one thing and what a lot of people do in order to mitigate the risk is that they do nothing and they’re like okay well i don’t want to be in a position where i’m in debt if i do lose my job or if the market goes poorly and goes backwards and i end up in a tight spot and have to sell at a negative so the only solution people come up with is to do nothing but the problem with doing nothing is that sure you’ve minimized your risk but there’s no potential upside because you’ve done nothing so it’s really about balancing minimizing your risk and trying to maximize your potential at the same time and as ben talks about what he’s looking at doing is investing in properties that produce cash flow because that way if the market goes backwards the properties are still paying for themselves rents tend to not move as extreme as property prices do or on the same cycles so just because the market might drop doesn’t mean rents are gonna drop

Ben 6:57
yes it’s already increasing because what’s happened for the last three years in brisbane is that money stopped flowing into not just private investment but also development people have continued to move up here and now a market that was balanced this chronically under supplied i’ve seen the vacancy rates drop across the board by half to 1% in every suburb we’re buying in and i’ve seen yields lift by $20 in the last quarter yes these things happen in different ways and anyone watching this it’s over the age of 40 needs to put their hat on and remember where they were in 2007 to 2011 when globally and in the media it was the worst time to buy in history and it would have been if you had a board in the first two years but you know where you could be had you have taken advantage of that marketplace at that time now in terms of australian stocks american stocks commodity prices property prices around the world and you know it’s uncomfortable to do the opposite of what everyone else is doing a lot of people are buying sydney and melbourne at the moment that’s actually the norm again probably not my cup of tea personally at the moment because i don’t want that negative cash flow asset hovering over my head but other markets around australia worth considering

Ryan 8:11
and we did find our way back in case you’re wondering where do you find our way back to the car but one thing that i want to touch on before we close this off is that you’re managing your potential downside but then you’re also investing in a way that you can take advantage of potential upside so if the market does go up in value then you benefit from that so you’re not just minimizing risks you’re still looking for good opportunities despite what the market does and the fact is despite how much data we can analyze how many books or articles ben’s gonna read on data because let’s face it i’m not going to

Ben 8:46
i can answer that probably 50 books out of those 10,000 articles

Ryan 8:51
you still don’t know what’s going to happen because one government official can make a different decision and or someone can get elected that you didn’t expect or a whole myriad of thing Coronavirus can happen that you didn’t realize was going to happen and throw everything that you predicted out of whack

Ben 9:06
so what i predict short term is zero growth and zero income from my assets what i expect over 15 to 30 years is very different than that and that’s what i want to be clear with people on never thinking short term i could not care less what happens with the market this year all my personal investments but i do put myself in a position to be able to thrive over a 15 year period and that’s a very different way of investing that’s really important to acknowledge because i don’t know what’s going to happen next year for you for me for my clients but i’m confident that over 15 years that buying at the bottom of the cycle getting cash flow buying properties that you can add value to at the right time makes sense historically but everything i used to forecast is based on history and as you said like no one saw the Coronavirus coming china is shut down right now like these things happen right

Ryan 9:59
away fires before that bush flooding and who knows so there can be turbulent times all the time and i think it’s just about mitigating your risk but also looking for potential upside as well so if you need some help thinking if you’re paralyzed by the current state of the global economy if you’re paralyzed by the national economy if you’re paralyzed by not knowing what to do and you just need someone to help guide you to talk through your situation where you’re at what you’re trying to achieve and what could potentially be a good investment strategy for you then ben over the team have pumped on property do offer free strategy sessions so you can get on the phone to them talk through where you’re at talk through what your fears are they can help you to overcome those fears and helps you get a strategy in place so you’re not paralyzed anymore and so that you can move forward with confidence and decide to do whatever it is that you want to do so head over to onproperty com au to learn more about that and to book a time with then they’re not booked out because they do

Ben 10:58
go super fast and i have one thing before we wrap it up man like there’s an incredible guy that we’ve both followed in the past called jim rohn an american philosopher business guy investor and he you know used to get paid big dollars from the fortune five country companies they go in there and talk about the future right like that’s what he did and he walked into a meeting with the top executives at one of the biggest companies in the world and they said you know jim we’ve got a question for you he said what is it and he said they said can you tell us what’s going to happen in the next year and he said it’s your lucky day boys i’ll tell you exactly what’s going to happen about what’s happened every year for the last 500 years there’ll be opportunity mixed with hardship and that’s how life is right like there’s good times and there’s bad times we don’t always get the timing right but we know that people investing in stock shares commodities whatever the thing is businesses generally do better over the lifetime than people that sit on their hands because that is a sure way to get to the pension you know what i mean yeah like they’re not going anywhere if you’re doing nothing

Ryan 12:03
great way to end it you’re not going anywhere do nothing thank you so much for tuning in today we hope that this helps you we hope this helps you overcome your fear and the confusion and overwhelm around what’s currently happening so we wish you the absolute best go to onproperty com au to check out the free strategy session if you want and go ahead and check out the video that we did talking more about the current global economy the national economy the data behind that ben geeks out on the data go ahead and check it out otherwise until next time stay positive

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