Property over Shares
We are absolutely obsessed with property. Here is a completely biased video on why we love property over shares.
Book a free strategy session – https://onproperty.com.au/session
1:06 – How we got into property in the first place
3:51 – What is it about property that you prefer over shares?
4:16 – Property gives you a level of control that stocks don’t give you
5:50 – You can use leverage to increase your return
7:03 – There is a clear path to financial freedom
7:51 – Stocks can go to zero, but property is less likely to go to zero
9:03 – Approximately 70% of people are in the market for their own home, not to speculate
10:01 – You can manage your risks
11:19 – As society becomes wealthier that wealth flows into property
14:02 – There are advantages to stocks also
16:00 – You can make money in property and shares
17:01 – Get a free strategy session – https://onproperty.com.au
The Best Financial Advice We Have Ever Received – https://www.youtube.com/watch?v=3ZY9EFGW30o
Ever since I can remember, I was absolutely obsessed with property and shares, just never really made sense to me and I remember my mom first explaining shares to me and for some reason my brain just couldn’t understand it even though it’s so simple. But in this episode we want to talk about why we like property overshared and so rather than it being a totally unbiased property versus shares video, this one is Hashtag biased because we both love property. We both have websites and businesses in the property industry. Uh, but we want to talk about our view. Why are we getting into property and why we love it so much. It’s such an interesting one man, because you know, me doing or you’re doing a property versus shares, unbiased version just doesn’t work because you’ve got such a heavy 10. I’m like, I’ve got friends that are completely financially free from chairs.
I’ve got friends that have financially free from business and property and you know, the share thing makes a lot of sense to me. But from a touch feel like love for something properties just so interesting and exciting to me. I don’t, I don’t even know what it is sometimes. Well, let’s give it back to the start and how did you get into property and why did you fall in love with it in the first place and then we’ll talk about more specifically the aspects of this investment vehicle that we like so you guys can see whether you think this is something you want to pursue or maybe you will pursue shares instead. It’s super interesting man. Like I like a lot of other people read Rich Dad, poor dad and that was the reason I got into property. Now I kind of wonder if Robert Kiyosaki was talking about shares, if I would have been a guy because I’m fine.
Whatever he was selling at that time, I was 23 years of age. I didn’t really know anyone in my life that was financially free or doing what I wanted to do and it just made sense that I could go save ten cents and someone will give me ninety cents to go buy an asset. That historically in Australia over the last hundred years is gone up on average of eight to 10 percent. So it just, it just made sense like artlifting property I thought for whatever reason, because I’d lived in it, I could go and purchase good quality property. And. Because you lived in a house? Yeah, because I lived in a house, like I felt comfortable with them for some reason. I’ve been to Mcdonald’s before. So there’s that and I can run a successful franchise probably if you read the manual. Yes. Um, but like in reality I just thought it made sense.
I could understand that taste with the cost of buying property days where the cost of the audit, this is united and projections that I could potentially make longterm through cashflow, through growth. And it just wasn’t very complicated, which I love. Like I like simple business. I like simple property and for me the property journey really started for me when I read c Dot McKnight’s book zero to 130 properties in three point five years. And because I never really got in on the capital growth, negative gearing train, my parents did that when they invested that would negatively kid a saw them lose money
on their property and really struggled financially owning a negatively geared property. So I had that negative aspect to property investing. But then when I read say mcknight’s book and learn about positive cashflow property, I was like, yeah, it just clicked in my brain and made sense that if you invest in something, again, you’re leveraging someone else’s money by buying borrowing money from the banks, but the fact that you can make a positive cash flow on top of all that, and I could see the way to financial freedom, which was my goal was to be financially free by the time I was 30. So it really fit into that. It’s funny that you say that because I had the exact same cow. I had absolutely no idea how it’s going to do it. All I knew is that I wanted to have choices in my life and the easiest way to have choices was to not have to work because of money and to not be chasing money through income.
So what is it about property now that you have invested in property that you prefer over shares? I liked the fact that 12 month period in Australia I need about five percent of properties actually sell, which means there’s follow up, you know, volatility in the marketplace. I don’t have a huge stomach for risk personally. And so the fact that it doesn’t ever flow by 10, 20, 30 percent a year genuinely makes me feel a lot better. I think something that really drew me to property is that level of control. That by buying a physical property investment, if you buy something that has renovation potential or you buy something that has granny flat potential or you buy something that has subdivision potential, then you got so much more control over the management of your assets. Whereas if you’re buying stocks, so if you buying apple stock, I don’t have a say in how Tim Cook runs the company or what products they’re released, so have they run that business.
That’s what always took me away from stocks was just the fact that I don’t have control and I think that might have come from working in a news agency at the Lotto Cana for so many years and seeing people just relinquishing the control to a lotto ticket and hoping that they’re going to win and their financial freedom rested solely in the hands of that Lotto ticket or the government in the form of a pension and I think I saw people putting their life to chance and I just didn’t like that aspect. And so for that reason, stocks never really appealed to me because I fell. But hodgen have that control and that might be my naivety. Like not looking into stocks and enough to work out how to try it in such a way that you can do it and have that control. But yeah, that was something that really drew me in property is that you can do the research for an area you can like, you can look at all of that sort of stuff and you can buy in what I feel is a low risk way. But then you also have more control over your asset. Yeah, I. The other thing, there are a lot about property now. My friends in St Louis is the most dangerous part of property. But
I do personally like the fact that I can use leverage one of my buyer. So what I mean by that is I can put down twenty cents and I can borrow a dollar
so you can buy a property for a dollar. Is that what you’re saying? That’d be nice.
But I love this concept that I can actually use leverage to achieve what it is and I’m looking to achieve. So if I’ve got $1 or $100 for example, and I go and get a five percent return on a stock, I’ve got $5 in my account. But if I, you know, go and borrow $100 and I go and put it into property and the property’s worth a thousand bucks, you know, I’ve made $50 over that same year just with leverage and that compounds out over time. Like if you’ve got more money working in the marketplace for a longer period of time with an average growth rate, you can do so, so, so well.
And I think like that obviously works in the reverse as well. Like you’ve, you’ve leveraged leveraged 10 to one, then you can lose your money a lot quicker if the property market goes down and your property goes down. But then that’s why I love the positive cashflow aspect of property is that you’re not just investing for that capital growth. That because it’s an income generating asset that can pay for itself. If the market does fluctuate and go up or down, you’re still making money and you can afford that asset. Anyway. I like the idea that by investing in property, there’s a clear path to financial freedom.
I love that about property because let’s say I own the property outright and I’m getting a thousand bucks a week from it. That can effectively never be taken away from me for any outright. I’ve got the bank document as long as I keep the property in good condition and
that continues to come in where even the safest company in the world with the best long term dividend returns, you know, if the marketplace changes or they want to start spending money, that dividend can be ripped off. You’re straightaway the dividend can go or the stock can implement. Like I was watching a video, I haven’t been fascinated with marvel and their story and they went bankrupt and their stock went from like $33 down to $2 and something that would make a good bite to have bought it, didn’t they? Yeah. Well then like dizzy ended up buying it after ironman came out for like $4,000,000,000. It went crazy, but yeah, that idea that you don’t have control over that company, over time, that company could go to nothing and you could lose that money. Whereas the chance of a property going to nothing if you buy in a good solid area is pretty pretty slim. Like he’d be buying in a mining town. Yeah. Well that’s a risk that you’re definitely taking, but if you’re buying in a metro market and you’ve done your research and you know that this suburb longterm over the next 20 years is likely to perform pretty well. Then you recently that Gov zero is pretty low and just the idea that a property can pay itself off and then you just own that asset outright so you borrow 90 percent or 80 percent of it and then if you can get
into positive cashflow position over the next 15 years, it can pay itself off. I still love the fact about property that the strange rain and if you look at the demographics in Australia in most areas, about 30 to 35 percent of people are in their own home outright about another 30 to 35 percent in most areas of trying to pay off the asset outright as well. And then you’ve got 30 percent of people that will never afford to get into the market place or that are too young to be in the marketplace are too old and they’re gonna, you know, rent those properties. So what I love is it 70 percent of the people that are in the marketplace in Australia in it because I need a roof for their families and that’s the Australian dream as opposed to trading the market place. So it’s not speculative investments.
Yes, they’re buying it for personal reasons. They’re buying it for personal reasons. And then that also creates less volatility and as long as the Australian dream is still to have a roof over our heads at some point in our lives and ownership of something, then I feel like you know that that drain can continue to carry on. And so there’s obviously still risks in the property market. We’re not saying properties without risk. Of course we love property that I know. We feel like we can quantify those risks. We can manage those risks as well. But doing our research and by buying in the right area, but choosing the right cycle of the market to buy in. So not buying in Sydney like at the peak of the market, but rather buying in like we just saw a video non news that you know, Brisbane and southeast Queensland have done really well over the last 12 months of water in 12 months.
Yeah. Yeah. And so buying at the right time of the cycle, buying property under market value, buying property where you can add value, where you can add cash flow because have all these elements of control so that even if the market wants to go backwards, if you’re in a positive cashflow situation or if you’ve got ways that you can grow equity in your property through renovation, then you can actually work yourself out of that negative situation. I absolutely loved that adapt property and you know, anybody that does well out of property businesses or shares always has a longterm outlook on what they’re doing. You know, they’re generally talking in seven, 10, 15, 20 year cycles, minimum. So, you know, property shares, regardless of the market fluctuations over the longterm historically do extremely well. And one of my favorite things about property that a lot of people don’t talk about is as society becomes wealthier, wealthier, like as the cost of electricity for example, comes down as the cost of international travel comes down as the cost of everything, like food is significantly cheaper now than it was 10 years ago. Effectively. Like when you factor in inflation, like Neil hasn’t moved in 10 years. Like how the fuck can be expensive, the water. Um, but it’s like in this world where the costs in most things in our lives continue to decline. All of those benefits is people’s wages grow in the cost of living, decrease over time, just end up going straight back into property. And
so because people will have more free money, they’re using that to borrow more and to buy.
Like is there anybody that’s been around for 10, 20, 30, 50 years, understands that as there’s a surplus of excess funds, that surplus always gets absorbed by the property market. And that’s been happening in America for hundreds of years. Your volume is, it is because property for some reason, the lane as long as it’s privately owned will always sell for as much as people can financially pay for it in the area and so, you know, cycle dependent. Sometimes the price comes right down in a JFC and sometimes the price is right up at the top of the market, but you know, Sydney for example right now is in a state of decline for no other reason than people just can’t afford to pay the prices that Dow paying for properties a year ago anymore because lending is harder because the international investors in our longer in the market, because the government’s made it hard too and you know, sentiment has dropped the supply and demand equation in that particular market. So you know, a market, we’ll get to a price point where people can still afford to pay for it and all of the surplus funds have gone into that space and then it will flash out until it becomes affordable again. And then the run continue.
So that’s something that we’ll need to create another video about that concept that as their surplus funds in the economy that they naturally funnel their way towards property like this is would love to understand that I don’t understand that.
Like if you want to understand it, just check out Phil Innocence book the Secret Life of real estate and banking where he shows in 250 years of American history and Fred Harrison does the same thing in 350 years of European history. Shows it every time there’s a gain, the money always ends up back in the land prices and that’s why there’s people that own land that end up very, very wealthy longterm because about once every 20 years, you know, the land prices double in those developing countries around the world and always having a predicted to continue to do that. It’s just, it’s crazy to understand that stuff and that’s why probably so powerful.
So yeah, as you can say, we love property. I personally haven’t invested in the share market yet. It’s something that I want to do. Looking at it at the moment, I’m not looking to get in right away. Um, you know, from what I, what I hear like that it may be topping out, but definitely something that I want to look at in the future and diversify my portfolio. I do love that with stocks you can get in for a lot cheaper, whereas property you not only need to have a good solid deposit but you have to be able to borrow money and there’s a lot of people who can’t do that. So I do like for stocks that you can get in for cheap bar that you can invest in, dividend paying stocks so you can get that positive cashflow. So I do like that aspect of it. It’s definitely something that I want to explore and start doing in the future. But I think I still love property more.
Yeah. I think I’m always going to be a property guy, but there’s absolutely a time and a place fish as um, you know, sometimes in the stock market everything goes on sale. And if you know when those times are, you can pick up, you know, apple at, you know, fifty cents in the dollar and that’s exciting and that’s when I’ll be in,
that’s what, that’s what I’m looking for because being in cryptocurrency, you go through cycles way more extreme way quicker and so experienced that sort of stuff. And I feel more confident in cycles now that to buy when everyone else is selling like to by the end of July. Yeah. Rather than buying at the peak like is something that I want to do.
What I love about Crypto is I’m in nine months effectively you say full 20 here real estate. So um, and that’s the cool thing about stocks as well, like about every three to seven years you see a full 18 year property cycle in a very short period of time. And so, you know, just understanding timing and understanding those micro markets enables you to become a much better share crypto or property investor longterm. And I think the skills are very applicable between each, if you understand the timing of when to buy and when to sell.
Yeah. So obviously you can make money in property or you can make money in shares. Whichever way you do it is completely up to you. They require different skillsets, but as you improve your skillset in property or as you improve it in shares, you tend to make more money. The more you know, like the more you learn, the more you can earn. So it’s really up to you guys what you want to pursue. We’re obviously biased towards property. We’ve kind of explained how we got into property as well as why we love property. For me it’s that positive cash flow. Just make sense in my brain and having that level of control. And for you it’s that plus other things.
Yeah, I’ve just got a passion. Like I love renovating properties. I like developing them. I like building them and I like renting them out for a premium and really high quality areas. It’s just a lot. Creating that housing first strategy.
It’s fun. It’s challenging. It’s, yeah, really cool investment vehicle. So what do you guys do? Is Up to you. We obviously love property. You can check me out at on-property dot com dot EU, where we talk all things, property investing and financial freedom. Ben Runs a buyers agency called pumped on property and they’re actually offering a free strategy session, so if you’re interested in investing in property and want to learn more about that, want to know where you’re at and where you want to be and how to get there. Then ben and the team over at pumped on property. I can help you work out a strategy to get there, so I got to own property.com dot a u and there’s some links to that free strategy session over there. Thanks so much for watching this video, guys. It’s been an absolute blast. Why don’t you check out our previous video that we did on the best piece of financial advice that we’ve received in our lives. I’ll link that up over there or in the description down below. Thanks so much for watching. Until next time, stay positive.