The 2 Year Strategy – Set Yourself Up For Financial Freedom
It’s possible to set yourself up for financial freedom through property in as little as 2 years. Really excited to share this strategy with you.
The 3 Phases of This Strategy
Stage 1: Creating The Foundation For Your Financial Freedom
Looking at the numbers behind this strategy
Where in Australia Can You Implement This Strategy?
What If Something Happens In The Market? Fundamentals of This Strategy
Stage 2: Getting Choices In Your Life
how you can set yourself up for financial freedom in as little as two years and despite the name this is not a get rich quick scheme you won’t end up being financially free within two years time but you will have set yourself up for financial success in the future so really excited to share with this strategy with you today about how in as little as two years you can set yourself up with as little as just two properties as well this is not buying 300 properties in two years so ryan from onproperty helping you achieve financial freedom i’m joined by buyer’s agent and good friend ben everingham from pumped on property how’s it going ben
that’s your life while brad well how you doing
yeah good we are both working from home in you know isolation at the moment now this two year strategy has three distinct phases phase one is the buying phase where you’re actually purchasing property potentially adding granny flats to those property to get jool income from those properties that’s probably the most active stage of this journey and that’s where within two years you could potentially buy two properties build two granny flats and then be set up stage two i think is really exciting and that’s getting choices in your life because you’ve set yourself up for financial success in the future you may not need that high paying job that you hate anymore you may be able to go out on a limb and move to a different state once these restrictions pass you may be able to live your life more consciously and pursue things that you want because in the background you’ve got those properties working to pay themselves off to set you up for financial freedom in the future in the choices phase as well you could decide to continue to work hard and to pay off the debt on those properties to get to stage three quicker which is lifestyle phase and that’s where you actually achieve financial freedom you have enough cash flow coming in from your investments that you don’t need to work anymore so we’re going to talk through those stage one buying properties which is the most active stage phase two is getting those choices in your life which is super exciting and stage three is the lifestyle and that’s really where the journey begins so ben do you want to kick it off with phase one the buying phase and what sort of properties are we looking at to actually set ourselves up for financial freedom in as little as two years
sure so as always we want a quality foundation like ryan said we’re not going out there and rushing and buying hates properties and i personally have no intention of this massive property portfolio because it feels like a headache so what we want is quality foundational properties which means metro markets if you can afford them close to the city or the beach nice big 600 square meter plus piece of land we want quality suburbs with good incomes good infrastructure and good potential and if you can you know we’d love you to buy it at the right time of the market but again you know that’s not always possible for everybody they want to buy close to home so we’re not talking about super expensive properties you know true foundational properties that i helped a number of clients set up over the last year hemet from down there in sydney was one of those clients where we literally bought one property worth about $400,000 which rented for 400 bucks a week we then build $120,000 granny flat which rented for another $280 a week to her then as a single mom with one income and some kids in school she was only able to afford a second property which was $300,000 um so that was a little bit further away from the city than i would have liked but she was okay with that that property that we bought for 300k is renting for $330 a week and then she build another $120,000 granny flat which is renting for another $290 a week so you know these don’t have to be million dollar properties with big price tags although you know if you want to get closer to the city or closer to the beach then you can obviously step up that price point two
yeah and so we will go through the numbers now so you can actually see what this looks like and how this can affect your cash flow in the short term and long term but just the status simply the two year strategy is within a period of two years if you’re able to purchase two high quality properties in metro markets so we’re not talking about regional tiny country towns or mining towns there’s no like price arbitrage here or doing something crazy and fandango this is just high quality properties that in 15 2025 years people are still going to want to live in that area because it brisbane or it’s in whatever city in australia that you decide to do this in so the idea is you buy two high quality properties you then build a granny flat on each of those properties and depending on what area you invest in you need to make sure that you’re able to do that and then you rent both of them out and over time you pay off debt but within those first two years the goal is to buy those properties and to build those granny flats and depending on your situation may change the numbers of this how expensive you go or how cheap you go, it may also change the timeframe of this. Some people can actually implement this in as little as six months, they’re ready to go. It just however long it takes them to find the properties and settle on it and get the granny flats built six months is probably the quickest someone could do it, maybe three, if you just find a couple straightaway.
But no, no, I have worked with a number of people like Jude, George Jane’s, Karen, my brother Simon did it in just over six months, I plan on doing it in six months over this year as well, like I’ve already gone a few of these properties. But I know I need two more. So I’m going to do the two properties strategy again this year, because it’s such a buying year, it’s just, you know, for people in strong financial position six months, 12 months, two years is extremely simple. For other people, obviously, it can take a bit longer because you might have to create a plan, save your deposit by the first time, you know it can be it can be a little bit longer for people that are running lower incomes or that don’t have equity or savings in the bank right now.
Yeah, so it could take two years could be shorter, could be longer, you can adjust it based on what you want. You can also change this from two properties to increase it to three, or four or five, depending on what you want your end income to be once you achieve your financial freedom. So let’s look at the numbers for this, which we just did in a previous video, which I’ll link up down below. But basically looking at properties around the $400,000 mark, which Ben is buying for clients in Brisbane right now. $400,000 for that property, say a 10% deposit, and then building a granny flat on that property which costs around $120,000. In order to get that bill, you’re looking at renting the house for around what did we say 390 per week?
Yeah, 390 per week.
Yeah. And then renting the granny flat for around $300 per week, giving you a combined income if you look at 50 weeks per year, so allowing for some vacancy of around $34,000 per year in income from those from the house. And from the granny flat. If you look at the moment, we’ve got historically low interest rates. So interest on the house and interest on the granny flat ends up being somewhere around what is it 14 or $15,000 per year on that. And then you’ve got other fees in there like manager fees, council rates, water, insurance, maintenance, etc, which works out to around another $7,000, give or take depending on your property. At the end of the day, if you can get some depreciation as well, from the new build of the granny flat, you could end up in a net position of around positive 12 to $15,000 per year in cash flow as you buy the property once the granny flats built, and both of them are rented out. And so that can actually immediately put you in a stronger financial position cash flow wise, because you’ve got this extra money coming in.
What’s most important about that man is that as you said, We are in historically low interest rates. So these numbers will work out on a 3.3% interest only home loan. And as Ryan said, with a 10% deposit on the home and a 30% deposit on the granny flat. So a lot of people out there that have been sitting on good cash or good savings or got out of the stock market right now could absolutely afford to do this, you know, you don’t need to be massively high income earner to do this either, which is what I love, you know, this sort of strategy work my brother Simon. And at the time, you know, he wasn’t earning six figures. He was, you know, just on a moderate single income wage, where, you know, he was able to successfully execute the first half of the strategy, which was to buy the two homes, and now he’ll go and clean them up. And that’d be granny flat. So there’s multiple ways you know, you could buy one home, build a granny flat straightaway, you could buy one home, then the other home and then come back and build the granny flats. You know, whichever way that sort of tickles your fancy, you can do it tinkering.
But that’s completely true. So you can actually implement this by going and buying the two properties first. And if you’re in a buyer’s market, and you feel like it’s a good time of the cycle to get in at the bottom, you may want to actually spend your resources on acquiring the land and the houses first, which might put you in a negative cash flow position short term, but you’ve acquired those assets. And if you feel like you’ve got a stable job and you’ve got that stable income coming in, then it can make sense to do that and build a granny flats later. If you want the cash flow, you might buy a house first build a granny flat. Once that’s all set up, then you might go on to number two, but obviously if it’s taking you time to do that, and resources in terms of a deposit for the granny flat as well, then you know you may take longer to buy the property which depending on the cycle you may need to pay more for the second property so there’s pros and cons to both of them but that is that that you know in a nutshell is basically that’s basically the two years strategy is within a short period of time acquiring to high quality properties in high quality areas building granny flats on them so you get julie income from them and then just overtime paying them off
like that’s it like you don’t wish on your behalf years ago bro like i personally bought 12 properties in the last 10 years you know and i would say eight of the properties were completely wrong you know what i mean like i’ve sold those eight properties now if i have had this strategy from day one or maybe when i own 1234 other assets like a lot of the people that are going to implement this strategy have far out my life would be easier like imagine 10 years ago right we knew about this and i bought a couple of houses in sydney for 500k for example when you could get them for 500k build a couple of granny flats on them now they’re worth over a million dollars ah they’re providing 800 to 1000 bucks ah awakened rent and i’d worked out how to pay them off like you know this used to be possible in sydney unfortunately you can’t legally build granny flats in melbourne but you know brisbane is sydney and melbourne 2025 years ago so long term the population is going to look the same and that’s why i’m so excited about this particular opportunity like it just makes so much sense for me because i hate to lose money week to week i hate to lose money year to year and i hate to be over leveraged or scared in these types of markets because i have to maintain my job just to keep my head above water so this is a even if you lose your job or your businesses doesn’t work hopefully be able to hold these properties and still achieve financial freedom concept
yeah so the idea here is that you own the properties the rental income you get from the properties is more than the expenses on those properties which means those properties pay for themselves completely but they also pay themselves off and so that will move us into stage two which is choices but before we get into stage two i think it’s important to talk about okay well what what if something happens in the market or what happens in the market and looking at you know ben’s previous investments and buying units or building a new build out in a regional area you know it requires so many things to go right in order for you to make money and the fundamentals are kind of want to talk about the fundamentals of this strategy comes back to minimizing your risk and buying high quality long term assets so we’re not trying to yeah buy something in a mining town that’s going to go up by 100% in the next two years in order for us to make money but if the mind shots we lose everything that’s not what not what what we’re talking about we’re talking about metro markets which when we look at the data and when we get data from michael mckusick and core logic and all of these other places metro markets tend to outperform regional areas by a factor what is about 1%
per year 86% in the last 25 years man so what’s that almost like what two to 2% plus 3% per year on that yeah
i don’t know i can’t do the compound math in my head on that one but you looking at metro markets you know closer to the city or the beaches tend to perform better than the outer ring of the metro market houses as well from the data that we look at tend to perform better than units so you’re doing a lot of fundamentals here in terms of picking the right asset that is most likely to perform well over the long term you also need to do your fundamentals here of looking at market timing in terms of property markets because australia is not one property market is made up of lots of little markets sydney and melbourne a very different to brisbane and the way that cycles work in those markets hobart’s different perth different darwin’s different they’re all different and work on different cycles so picking the right market for the right time is really important and then fundamentals as well picking the right suburb within that market and then picking the right pocket of that suburb and the right property to do this with within that so that’s all stuff we’ve covered in previous videos and we’ll cover again in the future but it’s important to do your fundamentals here so you’re buying that high quality asset you
know what i want to say is and this is something that i’ve only just realized which is why i’m looking to buy another couple of properties shorter term is this is a time based opportunity as well so like i said 1015 years ago when you could buy in sydney for four or 500k this strategy worked beautifully and i’ve shared the person who inspired this you know not just the you you created the idea ryan but he had done it 15 years before you had it and this guy owns three houses he’s never owned more than $105,000 per year he bought three houses 15 to 25 years ago and sydney about 15 years 12 years ago, he built the three granny flats on them. He owns basically all of them out right now they’re all worth between 1.1 and $1.3 million. And every one of them rents for over $1,000 a week now. And what I’ve just realized is that Brisbane right now in this current stage where you can buy for 345 600k means that this works. But during the strategy of trying to do an ncp now spending $1.3 million on a house within 20 Ks of the city, and then 150 grand on a granny flat just to get 900 bucks a week in rent doesn’t work, as well as buying a 400k home building 120 grand granny flat, whose construction rates are so much cheaper in Queensland, and getting 650 to 700 bucks a week in rent. So as Brisbane moves through its cycle in the next 15 years, prices will go to 500 600 700 800k. And then the window on this opportunity to set yourself up for financial freedom so easily will close unless you want to spend more money or it’ll
move to another market like Perth or something like that.
Yeah, but also something to think about is short term fluctuations in the market aren’t as important with this strategy either. So given the current economic climate that we’re in at the moment, if the market does stay stable, or if the market does go down, this is actually a long term strategy, you buy the high quality assets that will be valuable in the future in 1520 years, people still want to live there and still want to rent those properties, you’ve got the positive cash flow coming in. So if you do have negative capital growth, in the short term, you’ve got the cash flow to continue to pay the mortgages continue to keep your head above water. So you can see through those more difficult times, and that you can get the long term growth. So in terms of you know, timing and market perfectly, you don’t necessarily need to do that. But obviously, you want to time the market as best you can to get as much capital growth as you can, because that just makes things easier moving forward. But this is less a strategy that relies on capital growth, and more, you just want a high quality property that the rental income is going to go up over the years, and the value will go up as well. So stage one super simple two properties, two granny flats, that is the two year strategy, then you move into stage two, which is where you actually get choices in your life. And this is something that I find so exciting, because in such a short period of time, you don’t have financial freedom at the end of two years. But you’re now buying yourself choices where you can live more in line with your values. You can live more consciously in line with your truth and what you want from your life. So do you want to talk a little bit about that? And what kind of choices This is buying for people, even though they’re not financially free yet?
Yeah, so the most beautiful thing about my position, and literally hundreds of our clients now is that 15 2025 years from now, I know that my properties will provide you with a passive income. And insurance policy means I’ll never be on the pension. It means that if my Superfund, doesn’t work or doesn’t work out, I’ve got this passive income coming through. And what that gives me that certainty in the future that so many people are craving that they don’t have is the ability to take choices in line with my heart and my values. And you know, my consciousness now, so I don’t, I love property, like I’m one of those rare people that actually just gets up on a sheet and I fuckin love it. But for those of you that don’t love investing, or don’t love risk, or that who likes risk, you know, seriously, but for those of you that don’t like taking this sort of action, it’s a couple of small steps to guarantee your financial future and then get rid of that job you hate. changed careers. If you want to change careers, start that business, get that side hustle going cut down to four days a week in work, like I’ve done for the last two and a half years, or my wife now doesn’t have to go back to work unless she wants to, after our third good because we’re in a stable financial position. And I don’t need as much money today, because I know that in the future will be okay. You know, travel more volunteer, start a community organization or just chill the hell out and do nothing and take some time in your life to actually slow down. Figure out who you actually are and who you were when you’re a kid. And then start to live the way that you want to live today, which is for me more health more time with friends, more time in the caravan more time doing seek content like this with Ryan that contributes to a better world. But figure out what you are without the fear that you have to worry about your financial future.
It takes time to figure out who you are when I was financially free. bonuses took me 18 months to two years to kind of even get a grounding But the idea here is simple as that you spend those first couple of years or however long it takes for you building up that fan. They are now like in their own little silo where the income from that is both paying for the expenses, and also paying it off. So even if you just kind of left it to its own devices, it’ll pay itself off over time. And within like 15 or 20 years, it will actually pay itself off completely if you keep adding the rent increases onto the mortgage, etc. So that’s kind of just over, they’re doing its thing, you know that in 15 or 20 years time those properties will be paid off, and that full rental income. So we started around 34,000, if you add around two and a half percent per year, within 15 years, that gets up to around $49,000 in rental income from that property, you have a couple of them completely paid off, then you can start to see how that could generate a full income for you. And so you’ve kind of got those siloed off, you know, they’re working away, they’re going to create, create your financial future for you and your financial freedom for you. You don’t really need to actively do a lot to maintain those and to make that happen. And now it comes to your life. And you can say my financial future set up, how do I want to live my life, you still need to pay your bills, you still need to pay your rent or your mortgage, if you own your own property, you still need to pay for food, you need to pay for toilet paper, you need to pay for all of those things. But you may not need a high paying job that you dislike, you may be able to actually cut back on that maybe cut some expenses in your life, but live more in line with what you want. Because you know, eventually you’re going to reach phase three, which is the lifestyle phase and financial freedom phase. And so that just allows you choices in your life. And so for some clients, they’ve actually decided to leave their high paying jobs to move into state to move up to the sunny coast in Queensland where they can have a better lifestyle. And they know they’ll find some sort of job that they’ll learn enough to get by until they reach phase three, until they’re completely financially free, but allows them to kind of make those choices in their life to trust in themselves that they’ll be able to pay the bills, but do something more in line with what they value. Also, in that stage to have choices, you can actually decide, I actually love my job, I love working hard, I love earning good coin. And what I’m going to do is actually earn good money in this time, and actually pay off that debt faster, I’m going to earn good money in this time and buy more properties and build more granny flats, you can actually decide that and reach phase three or lifestyle faster than someone who reaches phase two and goes I’m just gonna chill have a low income but a cruisee life. While these pay themselves off, you can actually say now I’m going to stick with the high intensity stick with the high pay, but I’m going to pay them off faster. So I’m financially free faster. So that choice is up to you and what you do.
You know, I personally probably sit in between those phases like in between those two ideas, like I don’t just want to sit on a beach and chill out for the next 20 years because I’ve got kids in private school and because a lot of my purpose in the world is contribution. And that contribution also makes me good money. But I don’t want to bust my ass off 60 to 80 hours a week like I did three years ago, for the seven years before that just trying to make money and wearing myself out and burning myself out. So you know, there’s a combination to where you can earn good money. But maybe you don’t have to work five days a week, maybe you can work for maybe you can take two or three extra weeks of unpaid leave a year or two or three weeks, a year out of your business to spend, you know, 678 weeks a year doing the other things that are important to you. Like, you know, maybe you don’t have to start work if you’re really working hard, like I was talking to one of our clients, Dan us in London, he’s a solicitor only good coin. But you know, he’s waking up at 6am working through to 10 o’clock at night, every single day. And you know, he’s in that category where he’s just bought his first place building his first granny flat, he’s now just decided this week to engage us again to do a second home second granny flat, he’ll do a third one next year, he’s prepared to bust his ass off for this time to accumulate them and then dip out a lot of debt very quickly. And then he plans to move back to Australia, you know, work in a good law firm in Sydney four days a week and take the pressure as he moves into that next stage of life. So wherever you sit, this is the beautiful thing, you are in the driver’s seat. And you get to make the choice for your world.
Yeah, and then phase three is in lifestyle where they completely paid off, you’re now living off the rental income of your properties. That’s when I guess the journey really begins and you really get to decide what to do with your life. Or really you should have actually done that in phase two making those choices anyway so that
today, don’t wait for that because I promise you like it’ll never come unless you decide to do it. Now.
Yes, really, you do the hard work for two years, then you make the right choices in your life. And then when phase three comes you might not even notice that phase three comes except that now you’ve just got more cash flow coming in from the properties so your travel can be more lavish or you can just decide to fully retire If you want, or phase three and lifestyle as well, you can really start to build your wealth as well. Because if you’re got full, fully supported income coming in to support your lifestyle, then any work you do, or businesses you start or investments you do on top of that is kind of the cream that goes ahead and build your wealth sets you up, set your family up and your kids up for the future. So in a nutshell, that is the two year strategy. And we’re super excited to share that with you. If this does sound like something that you may be interested in doing to set yourself up for the future, then we do offer free strategy sessions where you can get on the phone, talk to ban or one of the team and actually talk about your situation where you’re at how you can implement this and actually set yourself up and your future up as well. So head over to onproperty com.au. To learn more about those free strategy sessions, booking a time that suits you get on the phone with one of us and actually get set and get the next action steps in place to start making this happen in your life. Who knows in two years, you may be on the line with us talking about how you did it. And you may be able to make those choices in your life, knowing that your financial future is set up. So again, go to onproperty com.au to learn more about that and to book in a free strategy session. Otherwise, we wish you the absolute best. And we’ll go ahead and link up to the video where we went deep into the nitty gritty of these numbers of these properties both how they affect cash flow in the short term and long term. So go ahead and check them out if you want otherwise, until next time, stay positive