The concept of “property as an insurance policy” may be one of the most important concepts you hear around property investing. This concept can allow you to invest in a low risk way, achieve your goal of financial freedom and live the life you want now
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0:00 – How this is different to traditional property investment advice
1:24 – How this idea of property as an insurance policy came about
4:11 – Traditional property investing advice goes like this
4:50 – The parable of the pharmacist
5:25 – What does property as an insurance policy look like?
7:40 – How this changes your investment goals
8:52 – Why this concept is SO POWERFUL
12:40 – You can still aim to achieve financial freedom as quickly as possible
14:50 – If you can understand this property investing becomes so simple
15:20 – How long is this going to take you? Maybe as little as 1-2 years
16:55 – If you found this interesting then do this
The concept that I want to share in today’s episode, maybe one of the most important concepts you hear around property investing. And that’s this concept of property as an insurance policy. There’s a lot of content out there talking about property as a way to get rich quick, achieve wealth achieved financial freedom. Heck, I’ve even created a lot of it, but a lot of that requires you or expects you to continually work and continually strive until you reach this defining point in your life where you’re either wealthy or you’re financially free, and then you can stop. That’s going to take an extremely long period of time and life is short, but property as an insurance policy, as an powerful, powerful concept that can allow you to invest in a low risk way, achieve your goal of financial freedom, but also live the life that you want.
Now. So there’s some pretty big claims that I’ve made about this episode, but let’s get into it and then you can decide at the end whether or not you think this concept is as powerful as I believe it to be. Hi, I’m Ryan from on-property, helping you achieve financial freedom. You can check out everything I do over on property.com. Dot. Aau. Don’t forget to subscribe as we weren’t new videos coming out every single week day. So this idea of properties insurance policy actually came about a little over a year ago where I was having a conversation on the phone with Ben Everingham who’s the buyer’s agent from pumped on property. Likely if you follow the channel, you know who Ben is. We do a lot of content together and we’re actually friends outside of work as well. So he had called main cause sometimes he likes to get my opinions on things and he was looking to completely revamp his property portfolio.
So Ben’s quite a successful investor at this point in time. His property, he wasn’t delivering him the cashflow that he wanted or that he would need if he stopped working, he wouldn’t actually be financially free from the cashflow. So he was a bit stressed about that, called looking at selling a bunch of assets, rebuying different assets in order to get that cashflow fast up. And so I started having the conversation with him and I asked him a couple of simple questions. The first question I asked him is, do you want to stop working? Do you need this income now? And the answer was no. He’s really passionate about his business. He loves helping people find and invest in property and achieve financial freedom themselves. He was really enjoying it at this point in time. He still is. And he said, no, I don’t want to start working.
Even if I was financially free through my properties, I would still keep working. So okay, that was question number one day on question number two, which was the really important question. And that was with your current portfolio, it’s not delivering you the results of financial freedom right now, but if you did nothing, and if you just left that, because I think at the time whose properties were positive cashflow, if you just left it, would they go on to pay themselves off and eventually give you the cashflow that you desire and the passive income that you desire? And he thought about it and the answer was yes. So he doesn’t want to stop working now and if he just leaves his proper portfolio, it’s working for him. It’s growing, it’s paying off debt, it’s going to go on and achieve the result that he wants. And so I said to him, I said, Ben, your investment portfolio is just an insurance policy in case something goes wrong with your business, something goes wrong with your health in case you don’t want to work anymore, you don’t need that cashflow right now.
It’s an insurance policy for your future. And that’s where this concept was born and it’s really taken about a year to kind of crystallize that and realize how important that idea was. It just came up in conversation that we were having, but I see it as so valuable for everyday investors out there and that’s why I wanted to share it with you today. So traditional property investing advice goes like this, invest in properties, maybe it’s 10 properties over 10 years, maybe it’s buy and renovate and sell. The whole goal of investing in property is to get you to an end point where you achieve financial freedom or you achieve a certain level of wealth and then you can quit your job, then you can be happy, then you can live your life. I don’t like that concept. I don’t like that we need to wait 15 2025 years or even 10 years in order to live the life that we want.
That’s just too much time to waste. I remember working in pharmacy and I was talking to the pharmacist at the time, she was 55 and she hated being a pharmacist. She just didn’t like it at all. And I said to her, why don’t you go and do something else? And she said to me, and the shook me to my core, she said, oh, I’ve only got 10 years left of my working life so I’ll just keep going. And I think I was about 20 at the time and it’s thought 10 years, you’re just going to ride off 10 years of your life doing something that you hate. So I don’t want that for you guys. So property is an insurance policy, looks like this. You invest in property, you invest in high quality longterm assets with good solid cash flow. That’s pretty important. Okay. The idea here is that the properties are able to pay for themselves or your property portfolio as a whole is able to pay for itself.
So you don’t need to worry about it. So when you have expenses, you’ve got management fees, your council rates, you’ve got your interest rates on your loans, obviously maintenance, insurances, all of that sort of stuff. You want to be in a position where the rental income coming in can pay for all of that but also be paying off your loan as well. So ideally you being in a principal and interest situation, which I know a lot of people are doing now anyway because banks are kind of incentivizing that with low interest rates at the moment. So you’ll be paying off your properties or there’ll be paying off themselves. And what happens is if you acquire enough properties that if they weren’t completely paid off and that rental income was now going into your pocket, you would be financially free. And we call these the foundational properties cause these form the foundation of your financial freedom.
So if you are able to acquire enough properties that maybe you’re not financially free right now, maybe they’re just generating enough cash flow to pay for their expenses and to pay a bit off the loan and that’s it. No extra cash is going into your pocket. You’re not financially free but they’re paying for themselves and they’re paying themselves off. Maybe on a loan term of 20 or 25 years. You’re not financially free now, but you know that if these properties were completely paid off, you would have a baseline level of financial freedom that in its core is property as an insurance policy you have a foundation of properties that if paid off would deliver you financial freedom and feasibly they are going to pay themselves off by themselves through the rental income into the future. So you don’t need to work a job in order to pay them off.
You don’t need to have a business in order to pay them off. You don’t need to sacrifice in order to pay them off. They are paying themselves off. And so the goal here is to, rather than striving to invest in property and achieve wealth or financial freedom and then stop and live your life, your goal becomes very simple. Your goal becomes acquire enough foundational properties that if paid off would achieve financial freedom for you. So you acquire those properties, you get enough cashflow either through investing in high rental yield properties anyway or building granny flats like me and Ben talk about in the two properties to financial freedom strategy. But you acquire those properties and they now become your insurance policy. So they now assuming things go well and you don’t have disasters happen, they now we’ll go on to create financial freedom for you in your future.
Now that may take 15 years or it may take 20 years or 25 years, but feasibly that is going to happen and as rents go up, you can put that extra rental income onto the property. You can also choose to accelerate that by putting more income onto the property yourself as well. But you now have that insurance policy in place. You have that foundation that’s going to achieve financial freedom for you. What this does and why this is so powerful, I believe, is that you now know that your future is secure. You’ve set up your insurance policy, so when retirement comes, you’ve got that income coming in. Do you still stay as a pharmacist? Do you continue to work the next 10 years in a job that you hate knowing that you’re going to be financially free anyway? There’s a really interesting idea because a lot of us stay in jobs that we hate because we are investing into our super.
We are trying to strive to live our lives, trying to prepare for the future, trying to survive and get through things, but what have you knew? What if you knew that your future was secure? How would that change the decisions that you make now? How would that change that? The job that you worked in right now, if you’re working in a job that you hated but you knew that your future was secure, you knew your financial freedom was secure, could you then potentially take a pay cut to change careers? Maybe that might even mean downsizing into a smaller place and might mean making some sacrifices in your life, not driving a really new car, but driving a cheaper car there maybe be worth it, making those sacrifices, not keeping up with the Joneses, but you know that in the future, your financial freedom secure, you want to live a passionate and a present life right now.
So that allows you to then assess your life and to say, okay, what I want the next 10 1520 years to look like if you want to stay in your job because you love it, great. If you love those interactions with people you love working with people, Great. I know a lot of amazing people in my life who don’t necessarily love their jobs, but they enjoy going to work because they enjoy the comradery, they enjoy making friends, they enjoy being around adults. Definitely as a parent with three children, you can crave that adult, that adult company from time to time. So I totally get that. So maybe you decide to stay in that job because it pays your bills and it’s good enough, but you can just sleep better at night because you know that your future is set up. Or maybe you decide to do something a bit more extreme and you decide to go after that career path that you’ve always wanted to go after.
Maybe you sacrifice the luxuries of life now to pursue that career path because you know that worst case scenario, you could always go back to that career or that job that you didn’t like but pays well. But also you know that in 15 or 20 years that those properties will have paid themselves off and then you become financially free. So when you have property as an insurance policy, when you’ve worked hard for those few years in order to save deposits, to be frugal, to research the areas, to buy those properties, to build the granny flats, to get the cashflow coming in. When you’ve done a couple of years of hard work to acquire those foundational properties and now you’re in a good cash flow position, the world becomes your oyster again. And you can have anything you want, but you can’t have everything you want, but it just gives you more flexibility in your life.
I don’t want you to stay as a pharmacist for the next 10 years. I don’t want you to live a life that you don’t enjoy for the next 10 years. I want you to wake up every morning excited to go to work, excited for what you’re going to give to the world and excited that not only is your future set up, your financial freedom is set up, and you will achieve that in the future, at which point you can stop working if you want, but you can go and live the life that you want now. So when investing in property, sure you can have the goal of I want to achieve financial freedom as quickly as possible. I think that’s great. Even after acquiring the foundational properties, which mean Ben called the foundational stage of your investment journey. You then move into stage number two, which is acceleration and that’s where you focus on how can I accelerate the payment of these properties are paying off the debt of these properties so you don’t have to wait just for the properties to pay themselves off.
You can also focus in your life. How can you generate extra income to pay off those properties faster? Can you raise the rent and use that to pay them off faster? Can you start a side hustle or earn more money through your career or be more frugal to get extra money to pay off the debts faster and achieve financial freedom and faster so it stops being an insurance policy and starts being your reality. But until then, at least you know you’ve got the insurance policy so you can invest and try and reach that point of financial freedom as quickly as possible and wealth. Hate your life up until that point. Click your fingers and be happy at that point, which look, I know isn’t actually true because I did achieve a version of financial freedom at 28 and that led me into even more depression.
So I did a video where I talked about my experience of becoming financially free and I’ll link that up in the description down below. Or I think you can go on youtube and search what does it feel like to be financially free and my video should come up. But yeah, when you achieve financial freedom at that point, you don’t click your fingers, you’re not instantly happy, so you don’t want to spend 15 or 20 years working towards that and then realizing that doesn’t make you happy anyway. Instead, think about this idea of acquiring those foundational properties, setting up your future, setting up your insurance policy, and then start exploring what’s going to make you happy. What is the life that you want to live? What’s the job that you want to work in? What are the relationships that you want to have? Start exploring that.
Start doing work that you’re passionate about. Start living a life that you can be proud of. So that is the concept. I think it’s a very powerful concept. If you can understand this, if you can get it into your life, property investing becomes a lot more simple. And the two properties to financial freedom strategy makes a whole lot of sense because you spend just a couple of years buying two houses. You then also build to granny flats one on each of those properties. You’ve now got four income’s coming in and you’ve set up your insurance policy and how long is that going to take you? For some people earning really good money, maybe they’ve got a business, maybe they’ve saved up a whole bunch of, maybe they bought their own house and they’ve got some equity. They could realistically achieve this and purchase their foundational properties within a 12 month to 24 month period.
So some people, you could be sitting here today listening to this being in a prime position in order to actually acquire your foundational properties within the next one to two years and have your insurance policy set in place. Now we’re in a couple of years time. Other people might be in a situation more like myself where I’ve got some debt than I need to pay off first and then start to invest. So maybe that’s going to be a three, five, seven year journey in order to acquire those foundational properties. So for me it might take me a bit longer. Some people it might be shorter, but I know that when I buy my first property and when I build that granny flat, I’ve got one foundational property that even though that’s not going to achieve financial freedom, that’s partial insurance policy. For me, that’s partial financial freedom when that property is paid off and then when I acquired the second, then I’ve got my baseline foundation, then I can look at acquiring the third and the fourth and the fifth so that I’m not, don’t just have baseline financial freedom in the future.
My insurance policy isn’t just baseline financial freedom plus whatever I have in my super that my future starts to become extremely wealthy as I buy more and more properties. So yeah, really valuable concept. I think this is going to change a lot of your minds a lot. It’s going to change the way a lot of people think about investing in property and the strategy that a lot of people implement. So I’m excited to bring this idea to you. If you found it useful, please do me a solid and give us a thumbs up. Subscribe. But also share this with someone that you love. Share this with someone that you care about, that they can go on to have this insurance insurance policy in their own life. And then investing in property doesn’t have to be extremely complex that it can be as simple as buying a couple of high quality properties, building granny flats on those properties, being in a positive cashflow position and allowing those properties to pay themselves off.
So please go ahead, copy the link to this, whether you’re listening on the podcast or on Youtube, or if you’re on the website copy yet, shoot an email or a text message off to someone else to say, hey, just saw this really cool concept. If you’re bored tonight given a lesson, so please do me a solid, give us a thumbs up, share this if you feel that there’s someone in your life that could gain use for it because I want to see you go on to achieve financial freedom. I want to see you go on to not just have an insurance policy but also not have to be a pharmacist for the next 10 to 15 years that you can go on to find out what your passionate about, about the best value that you can bring to the world until you can go on and do amazing things and live a really happy life.
So I’m really excited for you. I’m really excited for me. I’m really excited for this concept and I hope that you are as well. If you want to learn more about this idea of two properties to financial freedoms, then me and Ben did a video on that where we talk through the concept in more detail. It goes for about an hour. We talk about the numbers as well, and so I’ll link that up in the description down below or in the side here. If you want to go ahead and keep watching. Thanks so much for tuning in. Until next time, stay positive.