Simple vs Complex Property Investment Strategies: Which is best?
You can invest in property using very simple strategies or very complex strategies. In this episode we look at the pros and cons of simple vs complex property investment strategies.
Book a Free Strategy Session – https://onproperty.com.au/session
0:00 – Introduction
0:59 – What is a simple property investing strategy
3:15 – It doesn’t have to be one or the other, you can do both
4:59 – Pros and cons of simpler strategies
6:33 – Short term complex strategies can be super successful, but also higher risk
8:33 – Simple strategies tend to take longer to make money
9:50 – Why we are so passionate about financial freedom and simple strategies
11:40 – Property investing as an insurance policy *new concept*
13:43 – Mixing simple strategies with complex strategies
15:33 – Having a supportive environment so you can invest successful with complex strategies
18:41 – Next steps to getting clear on how to invest in property
2 Properties to Financial Freedom – https://www.youtube.com/watch?v=Pj8gLiDEz8Y
When it comes to investing in property, there’s so many different ways you can invest. You can invest using really simple strategies and have success things as simple as buy and hold property, or you can invest using really complex methods, things like strata titling, commercial properties and development subdivision. There’s so many different ways that you can invest. We want us to talk a bit about the pros and cons of simple versus complex property investment so you can get an idea of each and decide which strategy is going to be best for you. Hi, I’m Ryan from on Property Dot Com dot a u
helping you achieve financial freedom. Today I’m joined by Ben Everingham from pumped on property. How’s it going, Ben?
Awesome, man. Hey Don.
Yeah, very good. So you’ve done a mix of simple and complex investing in your own portfolio. Um, I know that you’ve done that with clients as well. Really excited to talk today about that idea of like simple versus complex. What’s good, what’s bad about each? So people can decide what’s best for themselves.
Yeah. So why don’t we define what a simple strategy really looks like to you and me these days because simple 10 years ago looks very complex in terms of what I thought I needed to do. And simple today looks seriously simple.
Yeah. Well, I think a perfect example of a simple investment strategy for me is the two properties to financial freedom strategy. Um, if you guys haven’t seen that, then go ahead and Google it, you know, it will show up and you can watch videos on that, um, or I’ll link in the description down below. But the basic concept behind that strategy is you purchased to high quality properties. You build granny flats on each of those properties. So you’ve got four incomes coming in and then you work to pay off those properties over time. And when they’re paid off, you divert the money that was going to pay off those properties. And now all that rent is going into your pocket after the expenses of the property. And so that’s just a pretty simple strategy because all you need to do is buy two properties or you need to do is then build to granny flats on those properties and then basically focus on paying them off.
And so there’s not a lot of complexity there. There’s not a lot of niche skillsets that you need to have in order to pull off that strategy. Um, most people can do that, assuming they can get loans in order to purchase the properties and if they can save the deposits and most people can actually achieve that and achieve at baseline level of financial freedom. And then compare that to a complex strategy, which I remember talking to one of your friends or your wedding who was investing and he was started titling commercial properties, so he would buy ’em logic blocks of commercial property. So it might be, you know, in the corner where you’ve got five or six shops or whatever it may be, but it’d be under one title. Um, and he would then go about strata titling those properties and then selling them off individually basically. And so you just need a very different skillset and a more nice skillset around doing that. Developments, the same development, you can have high profit, but there’s high risk associated with it. So you need to be quite a skilled in order to pull it off. I think like simple really, you can be a low skilled investor and have low risk and still have a good chance of success. Complex strategies tend to have more upside if you do it properly, but also more risk and you need to have more skills to do it.
Yeah, it’s an, it’s an interesting one. Um, as you said, luck. I’ve executed on both strategies and what I wish I had known when I was just starting out or even middle of the way through my journey is, you know, it doesn’t have to necessarily be one or the other. You can start with a foundation of a couple of really high quality properties with great longterm potential for capital growth. Great upside in terms of something you might be able to do to them in the future. And really strong cashflow maybe through a secondary dwelling on age. And you can lock away that foundation knowing that you’re going to get there in the future, um, and then come back to sort of more complicated strategies if you want to or if you have the right skill set where you can make those shorter term chunks of cash over a one to 10 year period and use those jumps to pay off of debt.
So, you know, I don’t think there’s anything necessarily harder about buying a home and chatting attendant in it, in the right area at the right time. Then there is the guy there and do a subdivision. But that’s probably because I’m in the property space every single day. And you sort of learn the lessons with a good team of advisors around you. Um, oddest, think then something glossy, are excited about doing it the hard way or the big way or the risky way that a lot of investors get sucked into, particularly through like seminars or get rich quick vids and all that other stuff yet. But you know, most people that actually, it ended up much, much, much better off in Sydney 10 years ago. If they could have just bought two properties and held them, then I would have been from, you know, making 100 or $200,000 every year speculating all the way through and then, you know, losing some money at the top or the bottom or whatever.
Yeah. So I think, um, let’s look at some of the pros and cons of the simple strategy and then we’ll look at pros and cons of the complex strategy. I think one of the pros with the simple strategy is that it’s a lot easier for people to get into. So even buying your first property is going to be pretty overwhelming. There’s a lot of stuff that you need to learn that you need to experience for the first time working with banks and with mortgage brokers, dealing with contracts, dealing with settlement periods, building and pest inspections. Like that’s all sort of stuff that you never get to really experience in everyday life unless you work in the property industry and you’ve got to do that with a complex strategy as well. And then some. So I think simple strategy, the pro is that most people, the things that you need to learn can be learned quite easily or you can get through it without really knowing much. Like it’s quite difficult, like you can stuff it up, but um, you know, it’s a lot easier to wrap your head around.
Market’s really, really
forgiving a simple strategy for a 10 to 15 year period where the market is brutal with a complex strategy if you don’t execute it, let alone overlaying market condition at the time. On top of that. Yeah. And so simple strategy is that it’s probably easier for everyday investors or people who haven’t invest to start investing in using that strategy long term. It’s probably more forgiving as well if you’re looking at that like 10 to 15 plus year period, if be looking super short term, then I guess that’s probably a more complex strategy anyway.
You know, if you’re a short term investor, which is completely cool, like I’ve got friends like Tim who was at my wedding, I’m like Michael who does a lot of speculating in my life and I look at them and I’m like, wow, it’s crazy if you do it successfully, how well you can build, you know, paper wealth or cash in the bank to be able to do other things with. But man, it’s dangerous for the average punter who doesn’t understand it or you know, doesn’t do the right due diligence or doesn’t have the right team of advisors around them. Um, you know, I’ve got a client at the moment and she’s an older lady from Sydney that you introduced me to and she’s doing this very complicated strategy. I’m in south Brisbane at the moment on her own that she did before starting with us.
And it’s a one into full lot subdivision. It’s taken a two and a half years longer than she expected. All of our cash has been tied up in it while she’s doing it. And she stuffed up the feasibility, which means she’s going to exit out at a loss after four years of her money. Now she’s at a stage of life that it’s very, very difficult to get that four years back then, you know, over 55 years of age for her. And she’s also lost the opportunity to buy it, you know, close to the bottom and hold a couple of really good quality properties in some of the other markets in Australia. So, you know, it’s, it’s, it’s can sometimes be a double edge sword. And I see people getting really attracted to something that’s high risk because it’s flashy. But the reality is I think people can do much, much, much better by having a baseline, you know, then then they’ll ever get from just speculating all the way through and you know, talking to a 6,000 investors now, I think in the last five to 10 years. It’s crazy. You know, after looking into their lives, how many people just come unstuck. And I suppose that’s probably. Yes. You know, they say 50 to 60 percent of aussies actually lose money in property, which is just really difficult to believe when you look at the longterm performance in every market in Australia.
Yeah, and I think that’s like one of the cons of the simple investment strategy is that it does take longer to make money and to achieve financial freedom, which is why so many people are drawn to the complex strategies that promise that in three years, you know, you can make excessive amounts of money and be financially free, which is awesome. Like if you can do it, great, but there’s more risk associated with that and I think that’s why that two properties to financial freedom strategy where you go through those stages of acquiring those foundational properties and then you go into that stage where you’re consolidating and you’re paying off those properties or like accelerating the payoff of those properties. I really liked that idea because you don’t need to achieve financial freedom in order to get that security in your life. That you will have financial freedom in the future. And so, I don’t know. Simple strategies don’t give you financial freedom short term, but they can just be so much. There’s just so much easier to implement and to make money on long term and to get that financial security that like obviously this video is kind of coming out bias because we both prefer simply investment strategies for the average person, but yeah, at the end of the day it’s up to people what they think is best for them.
Well, where I’m coming from is artist one, everybody in the world to achieve financial freedom. I know I want that as well, but that’s. I go, you know, because of the, how much better the world will be when people start realizing that you know, more stuff isn’t going to necessarily make you happy or you know, have to stop doing jobs that they hate or spending time with people that are toxic for them and they’ve got choices in their life to enjoy themselves. Travel, train, start businesses, volunteer, whatever it is that people’s passionate and spend more time with their kids and family. You know, that’s where this is coming from. And I think if I look at the number of people, like something like 50 percent of builders in Australia go bankrupt over the course of their career, 80 percent of developers in Australia go bankrupt within a 10 year period.
It’s just kind of when the professionals and the odds are against you, you know, I’ve gone through three, what you’ve taught me from a complicated strategy, which was all about making short term chunks of cash and getting a big chunks of equity in the bank to a cash flow oriented properties. A separate business of mine that provides me with an income. If I can’t make an income at some point in the future through something else. And that kind of makes you sleep better at night. You know, that kind of suits the person who liked us as children who has a good business or a good job. And he’s just looking to try and income stream down the line. That doesn’t like risk. That doesn’t like huge amounts of debt that you know, doesn’t buy the heart that you have to do it the hard way and go develop or buy 10 properties in 10 years and all that other stuff that for the last 30 years in Australia has worked because things were always good and now that we’re going into different times may not be the most effective path of least resistance to where they want to be.
Yeah, and I think you touched on something really important there, which I actually think we should create a video around because all of the messaging is around property as a way to get to financial freedom, but no one really talks about this concept that we’ve been working on for the last year, which is property investing as an insurance policy basically. So in that a lot of people look at property investing, achieve financial freedom, leave the job and the life that you hate to live the life that you want. Whereas we now have kind of come to save property, investing as an insurance policy so you invest in property that will then go on to achieve financial freedom. For you, but then you go and live an awesome life and you work in a job like you live an awesome life and your work in a job that you love, that does pay your bills, that does allow your kids to go to private school or whatever it is that you want to do, but you live in Allston live today where you’re earning money, but you’ve got the properties there that if something happens and you know you don’t have that job anymore, then you can fall back on those properties until you find something else to work out or until you find something else that you’re passionate about.
So this idea that property investing is an insurance policy. I like that for the simple investment strategy and that also people who have an awesome life. Now I say the complex strategy really can be a really great way to make large chunks of cash to accelerate your financial freedom to move you forward towards. I think towards that really high level of wealth as well. And so complex strategies are great for people who are maybe already invested using simple strategies and they want to take the knowledge and the skills that they’ve built, they want to expand on that. They want to grow themselves. A complex more complex strategies can be a great way to do that and they can niche down and find specific opportunities. Bucket once you had the skills, they’re complex strategies can be low risk if you invest properly and if you had the skills to do it properly and can be a great way to build wealth way faster than the simple strategies,
you know, in terms of my investment strategy moving forward, knowing what I know I’m going to have this low risk, high quality bread and butter, sort of strong cash flow, strong longterm growth thing going on here.
So that makes you financially secure, right? And financially for a. and so then it’s like layers. You’ve got that foundational layer that no matter what happens, you can fall back on that and survive. And then I’m guessing you’re going to add on top of that is the higher risk stuff, but high return, that’s it. Like you know, you can take that risk because you’ve got the foundation
exactly and you know it. It looked like buying existing properties first for me and then I started renovating and then I started building granny flats and then I’ve built four or five brand new properties and then I moved to subdivisions. So you’ve got this buy and hold really high quality stuff, but then over time as you build those skill sets that enables you to take away some of the risk associated with actually actioning it and your marketing intelligence, your ability to do, to analyze things properly and the processes you have become stronger and that enables the mistakes to sort of or some of the risks to disappear market condition dependent. So it doesn’t. Again, it doesn’t have to be one or the other. I just think starting off with the foundation is a really smart thing. If I was doing it all again, I’ll just go straight up hard at two properties to granny flats and as soon as I’d done that I would be going, okay. What does more of that look like? Versus more of shorter term chunks of cash to be up to speed this process up.
Yeah. Well then you’ve got your foundation, you’ve got that insurance policy and then you can decide, okay, do I want to do more of the same thing? Do I want to go for big chunks of equity so that I can do other things? You kind of had that flexibility to choose it once you had that foundation there
for sure, and that’s in a very, very supportive environment where it’s very difficult for me to fail with property, like getting to spend every single day in this industry for seven years. Father-In-Laws brother, builder brother-in-laws or built out other brother-in-law’s of builder. Almost all of my mates are tradies or share trainees or crypto traders or property investors or business owners and it’s kind of like as these pool of people that I’m constantly associating with that have these ideas, get all of that support and that team of advisors and people that you can lean on like Eileen on you. There’s zero chance I would’ve been able to be successful in that in a lot of people, like 10 years ago. I didn’t have any of that support and it was much easier to fail. It was much easier to make big mistakes without understanding that I was making him. So I, that
I think as well something that people should be aware of and something that’s really helped you is that you aren’t driven by like grade to do like a quick deal. Like I remember you did that deal in the past where you’re going to. It was like a development deal where you’re gonna meet. Yeah. Guaranteed. Like 100 grand. Yeah. Ended up losing tens of thousands of dollars on that deal because you just jumped at it and was in a way like a bit naive and a bit greedy. Whereas now like good deals come past you and you’re like, Nah, I’m not going to do that. And then you wait. A great deal comes up and you’re like, okay, like I, I guess I guess I’ll do it. So you know, you had that um, self diligence and that knowledge to pass on things to not get greedy just because it’s one opportunity that came past you, like I’ve seen you really wait for the right opportunities before you jump on them. And so that’s something to be aware of as well with the more complex strategies is that if you have the patience to wait for those deals that are exactly the right fit for you, that are lower risk, but still have a good chance of return that really fit your skillset. If you can wait for those and not be greedy and just jump on any deal that you think is going to make money, then that’s going to increase your chances of success as well.
Absolutely. Like the quality of your future is determined by the quality of your day to day habits and the quality of, I suppose, the systems that you put in place in the analysis that you put in place to actually make sure that you get the right outcome in patients in
focus is absolutely key. With this stuff that we’ve talked about on so many other videos, so they have some pros and cons of simple versus complex property investment strategies. I think really our message came across quite clear that we support starting with a simple strategy that really builds a solid foundation for financial security and financial freedom. And then once you’ve got that, then expanding upon that, but obviously what you decided to do is up to you if you want to pursue complex development strategies and then by all means, go for it. We wish you the absolute best. Build up your skills, become an awesome developer. You know, you do you and you do what suits you and your financial goals. Um, what we talked about today really lines up with us and our financial goals as well as like the clients in the audience that we tend to work with and speak to.
So we hope that this has been helpful to you. If you would like to sit down and talk to someone and try and get clear on what your next steps are to begin investing in property and moving towards financial freedom. Then ben and Simon and the team over at pumped on property are offering free strategy session so you can get on the phone with them, get clear on where you’re at, where you want to be, and what you need to do to get there. That’s a really invaluable resource that they’re offering for free, so head over to on-property
dot com dot a u. You can book a free strategy session over there at a time that suits you, but yeah, thanks so much for tuning in today, everyone. We wish you the most success in your property journey and until next time, stay positive.