The Property Investment Timeline Explained

Today I want to share with you a really powerful concept called the Property Investment Timeline. Through this time line you’ll be able to map out and see exactly how property investing can change your life in the long term, but also how you can gain massive choices and freedom in your life in as little as 2 years.

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1:08 – How Most People Invest In Property
3:24 – The ‘2 Year Strategy’ Explained
5:43 – Stage 1: Buying Property in the First 2 Years
9:16 – Stage 2: Getting Massive Choices In Your Life
16:47 – How To Get Help Implementing This Strategy

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Transcription:

Ryan 0:00
Today, I want to share with you a really powerful concept called the property investment timeline. And this is something that I think is going to completely change the way that you look at property investing, and show you how you can actually change your life through property investing, both in the long term 1520 years down the track, as well about how you can create choices and freedom in your life in the short term, and how you can create those freedom and those choices in as little as two years using the two year strategy. So I’m really excited to share this one with you today. And I think this is going to revolutionize the way you look at property and help you really visualize how it can change and impact your life and how it’s so achievable. And so what we’ve got here is a timeline going from zero, all the way up to 20. And each of these is representing years of our life. And so zero, this is the start, this is where we are today, if you’re listening to this in the future, you started zero, not when this was published. But yeah, as you’re listening to this, today, we are at number zero. Now what most people do and how most people will invest in property is within the first year or maybe two years, they’ll go ahead and they’ll purchase an investment property, that might be a house, that might be a unit, some sort of investment property. And what most people do in Australia is actually purchase property where the expenses are greater than the rental income. And that’s called negatively geared property. And I’ll represent that with a downwards arrow with money there representing that it’s actually losing money on a weekly, monthly or annual basis. Now, what this means is that we own an asset, but the rental income isn’t paying for the asset. So we need to put money into it. So how are we going to get that money? Okay, most of us we have a job, or we have a business, which then we put some extra money from the job or business into that property to keep it afloat to pay for the mortgage. Now, what we hope to happen is that over time, if we go 1520 years down the track, that house that we bought for a certain amount is now worth a lot more money, maybe we’ve paid off the debt on that property or paid off most of it. And now we can go ahead and sell that property for a profit. Or we can go ahead and live off the rental income for that property. But in the meantime, from zero all the way up to 20 years, we are tied to our job, and we need to have that job in order to support the property. And to pay off that property. rental income will grow over time. So maybe we’ll reach a point around here where it becomes cashflow neutral and starts paying for itself, we’re going a long period of time where we’re kind of tied to our job and tied to our lives. So long term, this can be a great way to generate wealth, a lot of people make money through property using this strategy. But obviously, the more properties you buy using this negatively geared strategy, you know, you’re starting with a little bit of negative money or negative cash flow. And then as you buy more properties, that negative cash flow grows, and as you buy more that negative cash flow grows again, as they need more and more money in order to afford these properties. And eventually, you don’t earn enough money in your job. And so you can’t afford it. And so you get tapped out in how many you can own until you go ahead and sell some of them for a profit or until the rental income grows. So what I want to show you now is a strategy that we’re calling the two year strategy, when as little as two years, you can actually gain choices in your life. And this comes through building up a portfolio in the beginning. So in the beginning phase, which we call the buy phase from zero to two years, that’s when we focus on buying high quality assets. So high quality houses in good areas in Metro markets that are likely to grow and be in demand over time, as well as generating positive cash flow from those properties. So those properties actually not only cover themselves and cover the mortgage and cover the expenses, but actually generate extra income as well. So what we do is we have our buy phase, then we have our phase of about another 13 years or it can be a little bit longer, which we call our choices phase. And this is where you focus on actually paying down the debt on those properties. And the reason we call this the choices phase is because you get choices in your life at this point, which we will talk about in a minute, but you actually have choices of how fast you want to pay down this debt. See, remember we got positive cash flow coming in. So we can actually use that positive cash flow to pay down the debt and the property will actually pay itself off. Or we can continue to work in our high paying job and put that towards the debt as well will actually get choices in our

life. And then we reach the third phase, which we call lifestyle and that is where you know we own the property. Completely outright. And we can now go ahead and we’re actually financially free and can live the life that we want. But the idea here is that we start living the life that we want over here at two years, not waiting until year 15 to 20, when we’re old and gray to actually start living the life that we want. So how can we actually take these choices that we get in lifestyle and actually move it all the way back to year number two. And that’s what’s so powerful about the two year strategy, not about achieving financial freedom in two years. And you’ll see through this strategy that that doesn’t happen. But it’s about getting choices in your life at the two year mark. So basically, what we focus on is in the first one to two years, is that we go out there and we buy a high quality house. Now we want to apply all the fundamentals of Metro markets, high quality markets at the right time of the cycle, buying goods, others buying a good property under market value with potential to add value to the property, all those underlying fundamentals we want to put into this purchase. So it’s got the best chance of success, we then go ahead and build a granny flat on that property. So in the backyard, we can build a granny flat. And what this means is we’re now actually getting two sources of income from the one property. Now me and Ben did this video on how to generate up to $15,000 in passive income from one property. And that’s the idea here, the property is around 400,000, and rents for 380 per week, and the granny flat cost around 120,000 to build and rents for around $300 per week. So that’s how we get our interest expenses on the mortgage looking at 3.3% because interest rates are so low at the moment. And then the income is the combined rent there as well as some depreciation on the new build. And so that gives us $34,000 in total rent, or $37,000. In benefit, if we include that tax benefit, which you obviously need to speak to your accountant about. This is just a super rough example. So after we take away the mortgage repayments, as well as other expenses like management fees, we end up with a positive cash flow of somewhere between 12 and $15,000 per year. So you can start to see how this is different already from the previous example, where you are actually tied to a job. So in the previous example, we needed a job in order to pay for the properties here, we don’t actually need the job, because the properties actually generate extra income, which goes into our pocket. Okay, so Alright, we’ve got that there, we’ve got that property. And we’ve got at generating a positive cash flow there. What we want to do now is actually go ahead and duplicate that and do it again. So let’s go ahead and do that. Again, we’ve now purchased two properties, built two granny flats, and we’ve got four incomes coming in, in total. The goal here is to actually do that within the first two years. So within one to two years in this buying phase of your property investment journey, you’re actually buying two houses, and building two granny flats, how you do that is up to you saving deposits using equity, all of that sort of stuff is up to you. And we’ve talked about that in previous videos. Now it doesn’t have to happen in two years, it could take you five years in order to do it could take you 10 years, depending on your income. For some people, they can actually do it in as quickly as one year, the owner really good financial position, it’s not hard to go out there buy two properties straightaway, then get the builders to build two granny flats at the same time. And within a year, you’ve actually built up this foundation, other people as well, instead of doing two properties, they might want to go ahead and do four, or six, or a or three, or one or 10. And depending on what you do depends how big your income will be at the end here in the lifestyle phase. So you can actually change this and mix it up. We’re calling it the two year strategy, because a lot of people can buy two properties, build two granny flats within two years. And that’s achievable for most people. Now, how does this give us choices at the two year mark. And that’s what I want to talk about now. Well, as we saw previously, these properties are positive cash flow by about 12 to 15,000. Now, depending on the property you buy will change the numbers behind that this is just a super rough estimate here, but their positive cash flow. Now with this positive cash flow, we can actually use that and put it into our pocket, or what we can do is actually use that to start to pay off the mortgage on these properties. And so what you’ve got

in this situation, and if I just hide some of these pictures here, it might make it a little easier to see but what we’ve got in this situation Is that each property is kind of a silo, in and of itself. So you’ve got your life over here, right? This is you living living your day, or maybe this is you, maybe you like to wear dresses like I do. And this is you or this is you and your partner, living your life, and you each have your jobs that earn you money, and you have your expenses, like the house that you own, or the house that you ran, you know, you’ve got kids that to pay for all of that sort of stuff. And so you’re living your life, you’re working, you’re paying for your expenses in your life, you’re in like your own little financial silo here. Now, these properties are also in their own little financial silos where they’re generating income, all right, the income is coming up here, but then the incomes actually going back into the property in order to pay off the debt, build up a buffer fund, pay for mortgages, pay for maintenance, all of that sort of stuff. So this is a silo and you don’t need to pull out your hard earned money in order to pay for this property. So it’s in its own silo, the second one that you buy as well, okay, it’s generating income through rent. And that’s going back in to pay off these properties. So what this means because the properties are in these property silos by themselves, is that you spend the hard work, this is you and your spouse, or whatever your situation is, in the first two years, you talk to your hard earned money, and you bought these properties, okay, you use it for deposits, you use it to get loans, and you purchase these assets. But now these assets are kind of just doing their thing. And from year two, to year 15, or maybe going up to year 20, or maybe 25, depending on how much the rent increases, and how much you used to pay down the debt, etc, these properties are just continually paying themselves off. And as you get to your 10, you know, you’ve paid off a bunch of the mortgage, so the interest is less, so it’s paying itself off faster. You know, how compound interest works, and all that. But basically, over time, because we’ve got this loop happening, you reach a point in the future, let’s say 15 years, where these properties have now paid for themselves. So when it comes to debt, you’ve got zero debt on the properties. And once we reach this point, okay, let me let me duplicate these pictures here. Just so we can say, Alright, once we reach this point, and we’ll go ahead and move our housing granny flat over here, they are now paid off. And what happens in this situation is there’s no longer a mortgage to pay, which is our biggest expense. So once we reach this point, and our mortgage is paid off, instead of having a silo around these, where the money is going up, but it’s coming back in, instead of having the silo, we pay for the expenses, but then the extra money actually goes into our account. So this is where we reach the lifestyle or the freedom phase of the journey is when they’re completely paid off. But how does this help us today? How does this help us year two? Well, the thing is, once we have acquired these properties, and they’re paying themselves off, we know and have pretty good certainty that as long as something catastrophic doesn’t happen, that over time, these are going to pay themselves off, and eventually give us financial freedom. So we’ve got our foundation for financial freedom. Now all we need to do is to wait the allocated time until we achieve that. But we hear we know that we’ve got that set up, we know that it’s ticking away, we know that it’s doing its job, and delivering us financial freedom, at some point in the future, that might be 15 years might be 20 years. But basically, if we continue on the journey, continue investing the money back into it, we’re going to reach that point where these properties, the debts paid off, and we can now live off

the rental income from those properties. So this then gives us choices at year number two. Because once we’ve built up this foundation, and we’ve got our financial freedom set in the future here that is going to happen. We can now make choices in our own life here, as to what we do with our life. Let’s say we have a job, and we absolutely hate it. Let’s say our boss makes us angry. We’re just not passionate about the work that we do. Well, we know that we’ve got financial freedom in the future. So maybe we can scrap that high paying job that’s making us miserable. And we can go and get a I don’t know what pitcher to draw for another job other than a tie. But we can go and get another job that actually brings us happiness in our life. And that actually makes us feel fulfilled. Maybe we won’t earn enough money. But if we downsize our house or cut our expenses a bit, we can live a fulfilling life. In this two to 15 or 20 year mark, we can actually work in a job that fulfills us, we can spend the time to pick our kids up from school and drop them off or be the soccer coach or travel, or take extra holidays a year or do what it is that we’re passionate about in this two to 15 year window, because we’ve got the security and because we’ve got the knowledge that we’ve set up our find our foundation for financial freedom, so we’re gonna have to focus on the money and our how we’re going to retire, we know that this is coming down the line. Let’s now from year two, up until when we achieve the financial freedom, let’s actually start living the life that we want right now. Now that we’ve got our foundation, let’s start living the life that we want, you still need to pay your bills, you still need to pay your mortgage or your rent on the property that you live in, you still need to pay for food and your children and you travel still need to work in order to do that sort of stuff. The properties aren’t supporting you yet. But the knowledge that they will support you allow you to make different choices in your life, and to not feel as trapped in the job that you’re in. And so this is how you can set yourself up for financial freedom in as little as two years. And how you can gain massive control over your life in just a short period of time. Because you’ve created that Financial Freedom Foundation of those properties that will pay themselves off. And so I hope visualizing this on the timeline has really helped you to see how this can actually play out, and how this can actually change your life for the better over the long term. I’m really excited about this, I hope you’re really excited to we’re calling this the two year strategy because it can be done in as little as two years. And for those of you who are really well off and want some help and to actually hire professionals to find these properties help you build the granny flats, then Ben and the team have Pumped on Property do help people do that. And they also have a free strategy session so you can get on the phone with them. Talk about your situation, talk about your property timeline, and where you want to be and the choices you want to get in your life. And how many of these you want to build, maybe you want to do two properties and two granny flats, maybe you want to do three or four. And they can help you actually design a strategy and show you what your next steps are in order to get that underway. So that’s strategy sessions completely free, go to onproperty com.au forward slash strategy. And you can learn more about that over there and book in a time that suits you. They’ll help you get clear on that strategy, you can then decide to hire them and work with them if you want. Or you can go and implement that strategy yourself, which a lot of people have done with success as well. So again, go to onproperty. com. au for strategy for personalized help around this property investment strategy, and your own property investment timeline. I wish you the absolute best in your property investment journey and your property investment timeline. And I hope that this has changed the way you look at things and showing you how your life can be dramatically different through property investing in as little as two years. Thanks so much for tuning in. And until next time, stay positive