Alright , folks , welcome back to the Property Couch podcast , and we have got case study day today , and the first one that we're going to cover off is someone who's probably done something that you may have considered yourself . Can we just uproot our life , get in a caravan and travel across the other side of the country ?
We work out if they can actually afford to do that , what else , ben ?
Yeah , Bryce , in this case it's people of my age group . We're going to talk to and unpack their story in terms of , yes , people of my age also need help too . So we're going to unpack a single female story in their 50s in terms of their choices and opportunities . And they guess what , Bryce ? They need property planning help too .
They do Now here's the stories that you've asked us to share folks . We're looking forward to giving them to you . Let's rip into the show .
Welcome to the Property Couch where each week , you get to listen to two of Australia's leading property and money experts Bryce Holdaway , co-host of Location Location , Location Australia on FoxTel's Lifestyle Channel and co-host of Escape from the City on the ABC .
And Ben Kingsley , chair of Property Investors Council of Australia and a back-to-back winner of the Property Investment Advisor of the Year Award . And both the partners of the multi-award winning Empower Wealth , Co-creators of more the free lifestyle design app , as well as best-selling authors of the armchair guide to Property Investing . And make money simple again .
Stay tuned as they bring you the Insiders Guide to Property Finance and Money Management .
Alright , folks , welcome back to the Property Couch podcast and , as I say every week to you , welcome back to the couch to you too , mate how are you ?
Oh , mate , it's a thrill to be here . It's obviously what we love doing each week , so thank you for inviting me back on the couch .
Now , what everyone's keen to hear , mate , is how was everyone getting together to watch the grand final replay , mate ? Was it all that you'd hoped it would be it ?
was actually . Yeah , it was a good night . Obviously , you know a lot more relaxed the second time around , definitely that case and you know short side story one of the guys who was there was able to get access to the cup the next day and so we've got some great photos of him and his son holding the cup . So , yeah , it was just lovely .
All great memories .
And now you pinch the pocket of the free man all small forward , so he must be having… .
I didn't know whether you'd bring that up , but yes , having shorts in the team is a gun small forward , so welcome .
There you go , folks . That's what it's like to have a destination club on the east coast and what would you call on the west coast ? Hopefully we'll become destination clubs . Hey , a bit of housekeeping PIPA webinar coming up on the 24th of October with yourself and Nicola McDougal . Tell us a bit about that , Ben .
Yes , so next Tuesday night Australian Eastern stand sorry , daylight savings time some 30 start bit of a Q&A talking about what PIPA is and then also , you know , a bit of a deep dive into the sentiment survey . So obviously you need to be a PIPA member .
It's $5 to join and then you'll be able to access and register for that and obviously what we record at the webinar will be on demand later for our members to watch it if they can't attend on the night .
Yeah , brilliant , nice one and two great minds getting together next week in yourself and Nicola always really great conversations . I love being around those as well , so people should check that out . Hey , ben , just a reminder that we on the 23rd of October , so when this goes out it'll be the 19th of October .
So in a few days time , we're going to launch our brand new course , ben . It's called Unpacked how to retire in $2,000 a week . So here's the deal , rob . We've got over 40,000 plus people who bought a copy of our best selling book , the Archer Guide to Property Investing , and a lot of the feedback we get is around chapter 10 , which is the case studies .
So what we did is we spent some time unpacking each and every one of those case studies so that people can actually see the assumptions and how it works and how all the moving parts work and what the sequencing looks like . And not only that , because we wrote the book in 2016 , so it's evergreen content .
We're really proud of the fact that it's evergreen content . A couple of things have changed along the way , ben , so what we've got is a comparison of 2016, . Brought it up to date . See what those changes are as well .
So there is some significant teaching in that package , and we only launch our courses throughout the year once , ben , and then we focus on the enrollment with the students that come on board . So I just wanted to let folks know that if you want to know how that works and get into the detail a bit more and see how it works behind the scenes .
You get an insight into how our online simulator works . Keep your ears and eyes peeled out for that launch , which will kick off on Monday , the 23rd of October .
So the way you'll be able to be notified , ben , is go and subscribe to any of our socials channels , whether that's YouTube and , by the way , our podcasts have been on YouTube , the video version now for a good maybe three months . I want to say so if you'd like to watch it , you can do that as well .
So YouTube , insta , all the usual suspects Facebook , because we will have notifications there . But the very first people to find out , ben , will be those that are on our newsletter list . So if you go to thepropertycouchcomau , on that page , you can get a free copy of Make Money Simple , again as a PDF .
That will give us your email address and you will be the very first to know if you actually do that . So I want to encourage everyone who wants to be a part of that launch to go on . Give us their details so that we can let you know . Can't buy it at any time throughout the year , ben , it's only available during this upcoming launch .
So let your friends know . Share it on socials , all those sorts of things . We'd certainly be appreciative of that . I said we're going to give away some copies today , ben , or some advanced notes , because we've never done this , is a brand new one . So the first one is from BC Sparkles . Says life changing stuff .
I've learned so much from this podcast over the years . So amazing it's free . So thank you for that , bc Sparkles . If you let us know , we'll give you a free copy of Unpacked . The next one , ben , is from Tito135 . Can't speak high enough . I'd rate this seven stars if I could .
The combination of highly analytical and tactical and strategic teachings of a property investment principle in an easy and simple way by two property sorry , by a top property advisor and a top buyage in the market Whatever better way that they are doing this out of passion , in a very authentic and ethical manner . So thank you .
So from seven stars , ben , to three stars . So just so that we don't read out all the five star ones , this is from one TLM podcast for too long . I've been listening to your podcast for a number of years , but recently I found myself listening less and less . The reason is your podcast are too long . Can you keep them to around 40 minutes .
I like to listen to podcasts while getting ready for work and driving to work . Because your podcast are one to one and a half hours . I find myself listening to other shows . It would be good to hear if anyone else agrees . Now , ben , I think it would be good to hear if anyone else agrees .
So we're actually going to put a social media tile up and we're going to ask you for what your preferred length is . So the reason I read that one out is because Stiggy actually has given us a little bit of feedback to Ben and said , listen , that you guys should aim for 60 minutes .
So we might not be able to ever achieve the fact that you and I like to speak a lot , ben , that we'd ever pull off a 40 minute podcast not like the old days where the first one was 19 minutes but we are certainly conscious of the fact that people want to listen to a whole bunch of listening opportunities through their week .
So our goal not our absolute deadline , but our goal is to keep it around the 60 minute mark . We'll see how we go today , ben , with the exception of if we get a guest . Look , we're just going to let the content roll and hopefully people can listen to it on the way to work and on the way home from work if they go over .
So let us know if you agree , ben . No , actually not you , ben . Let us know if you agree . Folks , as I said , on our social media we'll put up so you can give us some feedback on what your preferred length is , so that we can get some feedback from our people .
But , ben , there you go , three people who have got unpacked first to get their hands on it .
It's terrific , I mean , and you know it was a real joy to be able to put all of those case studies together . In fact , when we did it , you know , was it seven years later or eight years later ? In terms of what that story was , it's quite fascinating . Nothing has really changed in terms of , you know , double income , no kids , a family set .
You know , a single person , a younger single person , like you know , the nucleus of the people that were trying to help is all there . So you know , the times are just different . I mean , if you think about some of the acquisition costs for property back in those days to what it is now , well , that's what we said will happen , that's the power of compound .
So you get to see them revised in their newest formats and I think people will get some real value out of that .
If you're a student of property investment folks , you got to get your hand on that and check it out . So let us know . And finally , before we kick in today's show , ben , just a reminder around summer series if you go to thepropertycashcomau forward , slash my story .
If you've implemented any of our teachings or if you think something that you've done that can help others do the same , we want you to come and share your story . Our theme for this summer series is what does money mean to you ? So when you go to proprtycashcomau forward , slash my story .
There'll be a couple of options for you to let us know and we're going to feed that and speak to those points in the summer series and you and I are also going to give some feedback in the lead up to that as well . Around we've collected hundreds and hundreds and hundreds and hundreds , some would say thousands , ben , Tens of over 10,000 .
In fact , over 13,000 .
So we're actually going to share with you in the lead up in the podcast just before we kick off summer series on what money means to the majority of people , because we have got a data sample that is large enough , as Ben's just pointed out , and few , to get some real insights into that , and you might be surprised that a lot of them are to do with non
things . Ben , it's not about things .
It's about , not about material things , that's right , that are the staff , which is really cool .
So , folks I say this all the time I want to speak to the person who just had a little shift in their stomach right now , ben , when they their initial instinct was to go I want to come on summer series and then something just held them back and they went . Oh no , I don't think my story is interesting enough . Exciting enough there's . No .
I'm talking directly to you because I promise you that is the feeling of it . Every single one of our summer series guest has had over the journey . So please lean in , go to thepropercouchcomau forward , slash my story and I've done this a couple of weeks in a row , ben but ladies , please put your hand up . We want to hear from you .
We've got a couple of ladies lined up already been , and it's going to be a favorite Brilliant , brilliant , so excited . All right , today we're going to do in the theme of unpacked . Ben had a return 2000 a week . We're actually going to do some case studies today . This is the feedback that our people have given us in the server .
They want to hear these stories about real people going through some of the challenges that they are facing . So we've got three that we're going to cover today , which are super excited about .
So , whilst we get there , my mindset minute theme today is a quote that I came across by Robert Green , who is the author of the 48 Laws of Power , and there's a couple of other books that Robert Green's done , but this one was super interesting .
You are to be so foolish as to believe that you are stirring up admiration by flaunting the qualities that raise you above others . By making others aware of their inferior position , you are only stirring up unhappy admiration or envy that will nor await them until they undermine you in ways that you cannot foresee Interesting . So I've unpacked that .
So the first bit , ben , so the never be so foolish . People won't automatically admire and respect you , is that ? So never be so foolish as to believe that you're stirring up admiration by flaunting the qualities that raise you above others . Our assumption that that will get people to automatically admire and respect us is Flawed .
The second bit , saying by making others aware of the inferior position , you are only stirring up unhappy admiration or envy . Envy is just unhappy admiration that's creating negative emotions in others , as envy is wanting something that another person has .
But envy also creates siren enemies , which goes into this third section where it says that will gnaw away at them until they undermine you in ways that you cannot foresee . So these negative emotions confess to and drive people to take actions against you .
So I think the wisdom piece in that statement there , ben I mean it's in the theme of what you and I've been talking about for a number of months now is be modest and tactful in your Interactions with others , as they're not as interested in your stuff or achievements as you . Are Right , they are not as interested in your stuff or achievements as you are .
So how have we tried to do this in practice ? I guess you and I have tried to model this , ben , because when we started the pod , some of our some of the most influential people in the Wealth creation space were all about the trappings of wealth , and we want it to be different .
If you have a look at the cover of our book , it's got zero similarities to most of the people who like to put stuff on the book . Now , most of them likes what they're faced on , ben , so we we succumb to that . But quite often there's there's fancy cars , fancy jets , fancy boats , and so we didn't do that .
So we've tried to model that as best that we can , you know , on this podcast . And secondly , my own life . I I've done it where , despite the TV background , ben , I never talk about this ever in any of my social groups . I don't , I don't , I don't do it .
A lot of my talkie Base friends because we've only been down in this community for four years , they wouldn't know about it and if they do , they've never heard about it from me . So I've always tried to implement that In in practice as well as you or me .
So some examples of undermining that you cannot foresee is maybe sabotaging your reputation , some passive , aggressive behavior towards you . They can build alliances against you , undermining your projects or initiatives , or they might just be playing the long game . When you least expect it , something might pop up .
So To round this out , ben , I just want to remind folks about the man in the car paradox with Morgan Housel .
If anything has changed my mind personally , ben , in the last 10 years , it's this concept alone the most impact in the last decade for me , and it's this people just want to be the guy in the driver's seat , but when you see someone in the driver's seat , you don't actually admire the driver , you just imagine yourself as the driver .
So if respect and admiration is your goal , be careful how you seek it . Humility , kindness and empathy will bring you much more respect than the car you drive or the home you live in ever will . So I think we've achieved this in our own lives with the TPC , rather than just possessions as well . So there was a bit in that been , but I like that .
I like that . That quote given that don't fought the qualities above others . Don't make other people feel bad , because it may undermine you in ways that you cannot foresee . There we go .
Yeah , what's , on that been ? Well , my simple is just Get about working hard , living your best life . And you know I don't really care about how others judge that I just I just want to basically have a fruitful and purposeful life .
Yeah , and you know , as part of that and the work that we do here and the work we do in our advisory business is about making change and making meaningful impacts . And if people come and want to talk to us about owning a helicopter and a An append house in Bali or whatever it's like , well , we're not the right fit for you . That's not .
You know , that's not what we do . What we do is help households live comfortable , fulfilling lifestyles Based on a couple of investment properties and and they're super , and you know a bit of delayed gratification .
So I think from that point of view , and that's consistent with who we are , and so what comes through , hopefully , in our messaging is Consistent with that . And you know we're we're not here about you . You know , building a 20 plus property portfolio , some will there's always going to be , you know that percentage of people who will go after that .
That's fine , I mean , you know that's terrific for them .
But in terms of how we think we can best serve and how we've been true to ourselves is just basically doing the work Boring , predictable and conservatively in a lot of respects , because we use cash flow and modeling to determine you know the risk profile that we want to take and you know the risk profile that we want to take and we just go about doing it .
Yeah boring , just get to work . I like that a lot . So happy happiness is complicated , a complicated but simplified . It's just loving family , health , friendship , eight hours of sleep , well balanced children and being part of something bigger than yourself . So actually , money doesn't provide many of those , other than the time to be actually able to do them .
So there you go , folks .
Well said well said thank you , mate .
Uh , so the first case study that we want to do today , ben , is all about scratching an itch . So one of our advisors , amanda jichowski , has given us this case study . Now we are not going to be talking to the real names , but we are definitely talking to real circumstances here , folks .
So we've protected the innocent by changing , but today we're talking about um , brad and christy , and so , just so that you get a bit of an understanding of who this couple are , they're both in their mid 30s with a two year old son and a pregnant with um , a daughter . So there's no more plans of two children .
Brad works in ambulance , victoria , christy is an intensive care nurse who started parental leave during the process of of this planning .
They live in the long area , ben , and they have an itch to scratch which a few people might be able to relate to , particularly in the post-covid Uh environment , where that scratches to to leave the place that they are , jump into caravan and go and explore this country , and they actually want to do that and move to the Central coast Of new south wales to
raise their kids . So at first they were thinking of doing the move in maybe one to three years , but they called us and said we're about to put down a deposit on a caravan . We're thinking it's now or never , right ? So , um , so it's never been a better time to actually get super clear on what , what the ramifications of that actually means .
So , with christy on parental leave for a year and brad's job very transferable as an ambulance officer or a nurse , they really wanted to unpack what this looked like . So , um , so that's setting the scene first of all , been all right .
So the problem was that they wanted to solve for was um , um missing the opportunity to relocate now , before kids get locked into friendship groups and schools , which is super important ? Right , it's very difficult to move your kid would stop , impossible . But it's very difficult to move your kids Once they're locked into those um early school years , right ?
So their question was do we sell or keep their existing gelong home when buying the new forever home in the in the location ? They asked what if they sold that home ? Would that be bad for their financial future ? And what if the delays , um , you know the , the uh , I guess their ambition to invest ?
What if this delays that ambition to invest , which , um means that they have to work much longer than they hope to so , then these are all reasonable Questions that are floating around in folks mind . Should I move ? What will that impact that have ? Um , I'm in a career now , um , all of the uncertainties in the unknown .
So , um , now , before I throw it to you , I'll just quickly finish setting the scene here .
So , um , the other thing that was going on internally in their mind was well , and and this is this is the hardest part to work out is what if they'd actually don't like the central coast and then they sold back where they originally were , where their networks were , where everything was , and then they actually find it difficult to to buy back into Jalong , for
example ? Another thing was what if they didn't like being in a caravan for 12 months with a baby and a toddler ? That's all pretty reasonable .
And , um , what if they and here's a big one what if they did this trip that was Inspired by the idea of spending time as a family and checking out this wonderful country that we have in the caravan , but then Brad has to work so much that he he doesn't actually get to enjoy um being a part of , um , the the holiday experience .
So there's a there's a bit there to to to decipher , been oh there's , there's a huge amount and , and credit to them , both In their early 30s , in terms of making these assessments right .
You , you've got one life , you've got one opportunity to get the balance right and and in a way , even though they're not competing Um interest sometimes people see them that way security versus freedom .
So this , this ideal lifestyle , but also making sure that we're doing something that's not too crazy and is going to ruin our , you know , future prospects of financial security . Those sort of things , do you know , bang against each other's head .
So when I , where I want to give these guys kudos is they've , they've already got a principal place of residence in Jalong . So they've , they've started it , their journey . You know , and this is the practical element of becoming out They've got a house .
Before they basically started to think about children and now , with that security of that home , and yet , look , there is debt on that and they're now starting to push the envelope in terms of how much debt they take on .
You know , because , obviously , caravan , well , that can't be pulled by a normal car , there's got to be pulled by a four-wheel drive , so there's additional costs associated with that . So this is where the challenge now comes in in terms of practical thinking versus emotional thinking around what they tend to do .
So I think it's absolutely sensible that you'd get an impartial advisor to help you you know , have some conversations around that and not be too emotional or too irrational and try and bring it back to some practical outcomes . So I think that's money well spent when you're talking to an advisor , because they're not as invested .
They care , but they don't care as much where they're going to make irrational decisions based on emotion . They're going to try and bring some clarity and visibility in terms of what's happening here . So where do we go from here ?
Bross . So what's at stake ? So what's at stake for this couple , right ? Well , first of all , the heads were swirling with a whole bunch of what ifs , you know . So we always say that it's better to trade your life on paper than in reality .
If you have concerns about being at a fork in the road because you don't want to take one road , get down there and then realize you got to reverse back and get down there and lost time , lost opportunity . So it had a whole bunch of those . What is circling in their head ?
The other part was , if Brad was to leave the ambulance service in Victoria , that would close the defined benefit super , and that was a big risk . So the defined benefit is hard to come by and if you that would be , ben we might want to talk to this point , but we you don't want to opt out of the defined benefit lightly .
No , you don't . I mean the risk is the opportunity cost of losing that defined benefit , like a defined benefit in a super superannuation scheme . If anyone's inside a defined benefit , it's the best type of superannuation scheme you have in the marketplace . So it does allow for a continuation of benefit in retirement .
It's almost like an extra pension that you would potentially get as part of . You know , that's how most defined benefits are designed .
So the idea of why why do you know sort of Victorian ambulances and and you know the government set these defined benefits up for people like Ambo's is because there is a real risk of turnover of staff and so having that attraction net there and and then that sort of like a handcuff to try and keep you there .
So ultimately it's a trade off that Brad would have had to make in terms of wanting to move and realizing that he's for , he's giving up that . So what part of investing is all about is saying , well , if I'm giving up that , what am I doing to comp , you know , to supplement that ?
So don't just sort of give it up completely and then just go and live discretionary . What , what obviously Brad and Christie are going to have to think about is how are they then putting their money to work outside of that so they can cover the financial loss of losing a defined benefit .
So , for folks who aren't familiar with the defined benefit , quite simply compared to an existing superannuation fund , where you get the earnings in retirement and when those earnings run out , you start to reduce the capital and then it reduces over time to to zero , the defined benefit is effectively an annuity , isn't it , ben ? Where you just get the same amount .
That happens over and over and it doesn't have a an eating into a capital effect that most of us have experienced throughout superannuation .
And the bigger the balance you get , the higher that that annuity is is usually the models of a defined benefit super scheme .
So , and then a couple of other things that we're rattling around , is what would the new job look like in New South Wales for Brad ? Would he enjoy it , or does he have to stay in nursing long term ? And then here's a big one for for Christie .
Right , christie wanted to know if her , her preference when she returned back to work in the first year was to do four days a week , but didn't know if that was possible . Did she have to return back full time as well , or four days ?
So here's some really powerful things that they need to know , and they didn't want to jeopardize those results by not having a look , you know , around the corner over the horizon to see what happens . So , so , through the I guess , through the process of dealing with Amanda , there was a couple of epiphanies here .
One was they realized that 12 months is too long to be trapped in the caravan . So what they what ? So what they decided they would do to overcome that was add a rental property after six months . So they could at least know that if they wanted to to rent when they get there , they can .
They could do it earlier , they could do it a little bit later , but also sort of , I guess front footed . That you know I , I both I do a lot of caravan , ben . You've done it just recently for your 50th . You know that it can become a small place very quickly . So that's that's smart planning there .
And also what they will do is hold and rent out their Geelong place while traveling and rent on on the central coast first right , so it allows them to still have exposure in the marketplace whilst they're on the road enjoying that . So therefore , the worst case , ben , is they can return and the income helps during the trip .
So if they decide they want to do a big U-turn , house is still there and then they're getting a little bit of income along as they enjoy this adventure .
Yeah , look , I mean that's . That's a safety net , and and it's a sensible safety net to do it , Because the more wants that you're adding to your lifestyle by design , that is going to have an impact on cash flow .
So the trade off in terms of Christie going to four days a week is just a loss of of income in terms of being able to manage debt and potentially be able to make your money work harder for you .
So the idea behind these epiphanies is we're thinking about scenario modeling where it's like well , is that practical young family in a caravan for an extended period of time , no one getting any sleep , with the babies unsettled , like you know , how does that go ? For you know , mental health , all those things are all practical things .
So so bringing these types of scenarios in just allows the couple to make the invisible visible and see whether we can afford it or not . And so you know that comes back to your point about scratching that itch . Is this plausible , is it possible , and how risky is it ? Is it all being unpacked as part of this particular story ?
So is it plausible Is a good point that you raise there been , because what we realized is that holding on to their current home as an investment property and buying a new home in in the new location wasn't going to work for them because the costs were too high . So therefore they had to pivot . So , and and of course , where would it ?
Because all of their equity sat in the home , so they had a lot of lending against that equity right . So being able to secure a deposit to buy the new home in the destination location was going to prove difficult if they tried to keep that as an investment property then . So that wasn't part of the planning .
Yeah , no . And the other critical thing we need to understand here is that caravans . You know , if you want a modern caravan you're out of pocket around 60 odd to a hundred . I mean it's been 150 to 200 grand on some bands these days , right . So if you're looking at the caravan four wheel drive combination you're talking a six figure commitment .
Now if you've also borrowed money as part of that six figure commitment , well that's killing your borrowing power . And you know , like remembering that , and everyone says you know caravans are a hold , their value in some cases they appreciate that is that is in the current stage of the population cycle where there's a lot of baby boomers coming through .
But in 10 , 20 years caravans will be everywhere and their values may not last . So that's something you've got to be thinking about . Some similar to cars . They'll ultimately depreciate by around 16% per annum . So what's what the trade off here has been for Brad and for Christie is ?
They want the car , they want the caravan , they want to maintain that and it gives them flexibility about the lifestyle they want to live .
The trade off is we're not able to , if we're not working full time for both of us and we're not able to get those jobs and reduce that debt , then ultimately we're not going to be able to hold the investment property in Geelong and also acquire the new principal home in you know their future destination in terms of where they're looking .
So that's a trade off and it's a judgment call that they get to make based on the informed information that we provide them with .
Yeah , true so , but so they couldn't keep the Geelong properties investment property , but they could plan to buy a home in the new location and then get an investment property with all the right attributes and still come out in a strong position in the future .
So and here's the beautiful thing , right and it's a point that we've been speaking to a fair bit on our recent episodes Ben is for them with their super funds , all they need is one great quality investment property to reach their goals .
So the combination of having that investment property to fatten out the super that they'll get , given that they're in their mid 30s , means that they don't need to build this enormous property portfolio to achieve the gold outcome . So , by the way , the gold was $2,000 a week . Surprise , surprise here for them to have their passive income in retirement .
So , combined with super one investment property , having the right planning , they were able to do that . So part of the part of the juggle in chatting with Amanda is that they needed to understand that the car replacement amount and the frequency was eating weight all their surplus . So what we did is we played with time , target income and expense .
We played with those levers to realize that the time between replacements created a real opportunity to free up some cash flow for them . So and here's a couple of other things too they understood that Brad could work part-time , so he got a clear salary goal .
That plays into the question that was rattling in their head Will he be working the whole time whilst we're away or will we , there be time for us , to do this together ? So the answer is that they could still do that together and have that family , that quality time together .
And the good news is that Christie could do four days a week for the first year if they kept their rental property cost . We set a budget of $600 per week or below . So again , ben , just getting some real clarity around some of those big rocks that people wanna understand so that they can do it before they make the commitment to proceed .
Yeah and Bryce , the trade-off here was the result was that they would need to sell the Geelong property within sort of the next six to 12 months Because , ultimately , having the new baby , the new daughter coming along and then wanting to have a bit of that family time and their decision to basically have more quality time together meant that we weren't able to
continue to hold on to that owner-occupied property .
So they would cash out of that and effectively , that would allow them to have the money that they needed and the buffer that they needed to have a little bit of sort of flat cash flow , maybe even negative cash flow at that time , as opposed to some people might have said well , that's too much of a trade-off for us , so I'm gonna keep working those hours .
But let's come back to what their purpose was . Their purpose was to travel the coast and spend time and create memories as a young family and try and find the next destination and where they wanna put down roots and have that lifestyle by design . So that's the decision that they have to make .
So it meant that in terms of selling up and cashing out of their Geelong home , but there was gonna be a period of three to four years before they were able to then get back into full-time work , which meant that they had the borrowing power to buy a property in that sort of 850 sort of range , use the proceeds of the sale of the home that were still
remaining and in this particular case they're in the medical area . So no LMI for lending up to 90% , so that would then allow them to acquire that particular property , have some provision money aside for some renovations and so , and tied it up to what they wanna look like . So you can start to see the story that's playing out here .
With every decision there is definitely a trade-off in some of these particular stories and that had been the trade-off because , theoretically , what your gut tells you is I wanna hold on to that property as long as possible until we recycle that property into our new principal place residence .
We weren't able to do that because , from a model , well , the customer decides ultimately in terms of how they wanna play that out . So we just show them the pros and cons of that and if it's still plausible to Bryce's point before about optimization , they were able to do it and they were comfortable with that .
That gave them the freedom , the leisure time that they were looking for in terms of being able to do that . And they also know that they're in highly employable industries of nursing , so they know that they will be able to pick up work . So there's a lot of upside .
With the more time that they wanna work and the more hours that they wanna work in nursing , there is a real upside for them to increase that income and accelerate this outcome to their liking .
So this is giving them the roadmap forward , but they've obviously there's still a fair bit of upside depending on how much leisure time they want versus how much time they wanna start earning and a clear line of sight .
They're in the mid 30s , so what they decided they do was the trip and the relocation was something they just had to do . So they scratched the itch right . So , and what they were willing to do was work hard and upskill to have the lifestyle that they want as well . So very clear on the line of sight and what that looks like . So what did we do ?
We went through the literally just a list of priorities , went through them one by one , by one , and pulled all the levers that we can pull now and we talked income , expense , time and target . So there was a lot of those conversations and so pulling those levers meant that they could decide which one they wanna do and which priority .
So , but here's one of the things that we worked out through this process doing too many of the priorities that once broke their cash flows , and that's important . So , and by being able to identify where the breakages in those cash flows will come .
Because , to give some insights to the folks who are listening to this , there's two fundamental things we look at . There's a whole range of things around LVRs and break even points , but there's two fundamental things that we look at .
One is the monthly cash flows that people have , because the fundamental of spending less than you earn is a principle that we live by .
So we can see all of , because we model out all of the income that people have over time and all their expenses and clearly , when there's a gap between the income and the expenses , that's where we see the opportunity and in some cases you might find that the expenses actually flick over to be greater than the income and for some people that's fine .
But it relies on having something else , which is household liquidity and making sure that they were able to be able to fund that . Now , given that a lot of their cash flow was borrowed money and the fact that we wanted to make sure that they didn't overcook themselves on their monthly cash flows .
That helped determine which priorities you do , in which order to even that parameter around 600 bucks a week and rent in four days work . That was all taken into account there .
Yeah , it was . I'm looking at their models quickly now and I can see that you can see that significant dip in income , to your point where it goes into negative .
And then I'm looking at those buffers because ultimately this game is pretty simple Trap the surplus and make that money work as hard as possible for you , and in our case we use property as that vehicle .
And because you've got the leveraged outcome on that , you also need to have extra sensitivity around being able to afford that loan over the medium to longer term . So that's exactly what monthly cash flows and household cash flow position allows us to see in real time , month to month . As part of that particular story .
You then have a look at your debt level ratios and then you ultimately are having a look at the overall picture about when debt is gonna be retired out and how comfortable they'll fill in retirement , and that's effectively what we see in all the models that we're building .
And , to your point , you can ask for too much or you can want for too much , and if you're not building up a wealth basin behind that , at some point in time you're going to run out of cash and you're going to divest of all of the net worth that you've been able to build up .
So the idea is you've got to accumulate first and then basically live off that accumulation . So I think that rounds out what is a pretty solid story for these guys and I think for me . Some of the big takeaways are really simple , around a lot of learning that went on here .
For this couple , this is probably the very first time they've been exposed to such modeling and sequential sort of thinking around what's important to them and making decisions around priorities in their life . And when you're doing that and you're getting that informed by the data as well , you're gonna be , you know . Well , I always say make the invisible visible .
Once it's visible , you know you can believe that it's possible for yourself . And that knowledge and that confidence that comes from you know seeing that in terms of I cannot be what I cannot see .
Well , once you start to see that , you then start to say , okay , well , now I need to know how I climb the mountain and that now I need to know when I need to do those things in terms of how I took actions and the achievements and the transformations that occur off the back of that .
So let's summarize the end result then , because we got a couple of things to think about here . They found out that by Brad becoming casual and Kristian Prentaleve does affect their buy-in capacity , so they need to rent it first . Tick , that's what they worked out .
They also know that they're comfortable renting , knowing that when Kristi goes back to work and Brad had a longer employment history they'll be better placed to get the new mortgage and we're holding property during that time . So that's another tip .
They got the clarity to keep their principal place of residence while traveling , renting just to and sell just prior to buying their new home so they can fund that purchase . The plan also showed that they couldn't afford to hold both properties and also the plan was very clear on the defined benefits .
So they spent a lot of time around that for the super , so learned what that looked like by ceasing his employment and ceasing his contributions and how this would affect the retirement incomes . That was obviously a big what if ? That was rattling around in their head . And they also learned about the six year capital gains tax free rule when selling in Geelong .
So if you've got one principal place of residence , so that's good . But here's the really truly transformational stuff . One , it gave them the confidence to go .
Two , made them really excited to find out what came ahead for the family , but also reassured them that they could cover their finances during the trip and plan to get back into the market and buy the home , their principal place of residence when they got there .
There were parts of their journeys where they had different preferences but because they were able to see it , they were able to get in alignment with that and in a lot of ways they're excited that they could have their cake and eat it too . So they could still replace cars , they could keep the caravan , renovate .
They scratch the itch on private high schooling for the kids when they can send me retire and get the retirement passive income they want . So overall , a really good outcome for Ben , for a couple that could easily have stayed static in what they're doing and maybe not as been fulfilled as they hope to as a family . Or here we are .
They've gone down the path , wonderful time in their life , got young kids who are gonna benefit from being in the caravan and seeing all that has the East Coast of Australia has to offer . Hopefully they get in the caravan and go to the West Coast too , Ben .
But clearly just having the opportunity to spend that time building memories with their kids is something they will never regret . But at least the point around regret is that they got super clear line of sight on whether it's possible .
Yeah , I think for me , I summarized this by thinking about the mapping planning that they did on the journey that they're going on . If they didn't do that , they would have gone with the flow and there would have been a lot of missed opportunities , lack of optimization , a lot of opportunity costs lost . They've avoided the majority of that .
Now , is there gonna be a detour on their plan ? Are they gonna sort of look at and explore some things as they've walked a mile and seen a mile ? Maybe , but the best part about that is the knowledge that they've been able to pick up on the journey that they've traveled so far , which is only a short way .
They've got a magical life ahead of them , but they will be able to then anchor some of their thinking based on some of the knowledge that they've been able to build through working with Amanda and the team in terms of getting that story together .
So for me , it's clearly there's a huge amount of value in terms of what they're being able to get from this process , and it means that they'll hopefully make smarter decisions with confidence in terms of what that looks like , and they also know that they've got a lot of wealth tied up in cars and caravans , and so if things do get a little bit more tight or
opportunity presents itself to get a more significant asset , they've also can liquidate some of those and downsize some of those types of options as well .
So I think it's just another clear example of the importance of optimization and planning to become what you're planning to become , but also understand that there's gonna be some variation along that journey , as they so choose and wish to do over time .
And , importantly , ben . 73% of all property investors , according to the Australian Bureau of Statistics , buy wine investment property . So this plan said they only needed to buy wine investment property , so well and truly in the lane of not having to be an outlier to achieve what they wanna achieve , which is good , all right . The next one is the theme .
This is from one of our advisors , paulie Chu , and it's older demographics need help to Ben . So what's interesting is as again , circumstances are real , change the name to protect the innocent here . So we're going to talk to this client as Linda . Linda single . She's a full-time zookeeper and runs a dog training business and wants a plan for retirement .
So currently Linda is 54 and wants to stop working at the zoo at 65 . So we got 11 years there . She's currently renting in Sydney , close to Taronga Zoo , and although she has one investment property which was previously her own Rocupyre property , she wants to live in her own home in the Southern Highlands .
Ben , what a wonderful part of the world that is in retirement but is unsure how to get there . So at the time of the original conversation , linda had credit card debt , she had a car loan and , in her own words , didn't have strong management because I didn't know where my money was going .
But here's the bit of feedback for you and me , ben , which is why we're excited to talk to Linda's story today is on social media to the podcast , and we tend to focus a lot on young mid-30s , but those outside that demographic need help too , which is interesting , and we always say it's never too late to start .
So I think Linda can be a shining light for a lot of people on what this looks like . But , ben , just initial thoughts before we kick on on Linda's story , around how amazing it is that she's looking to make sure that her retirement is well thought out and well planned .
Well , it's a classic case for Linda , who's identified that she has a shortfall in knowledge and is lacking confidence because of that shortfall in knowledge . So for her to say that she needs help is a really positive part of that .
There's more to unpack in this particular story too , because once realizing the problem , she did actually start to think about using property investment business , which sells off the plan or house and land packages , and was pitched this idea of investing in buying land and then building a house on top of it .
Now , to her credit , it just didn't feel right for her . There wasn't enough information . So maybe 80% of the information sounded okay , but it's that 20% that left her with a little bit of doubt , and so that's really good that her gut told her to keep looking and she needed to sort of say like how are you addressing my issue around money management ?
You know , like that's the first thing I need to solve for how are you addressing so ? Yet you might have a product to sell me like a property , but in terms of how you're doing that .
So that's my initial observation here in terms of she's made a really smart choice in terms of looking for a fee for service opportunity to be able to work with an advisor and what am I gonna take away from ? That is the big thing .
So you know , if I was dealing with Linda for the first time , the big things that I'd be saying is I wanna make sure that I can convince you that money management is the essence of spending less than you earn , but also having clear understanding of where your money is , how to control it , where it all goes , and getting that household financial hygiene , that
money hygiene , sorted so you're built on good foundations . You're not built on sand , you're built on rock foundations . It's gonna be a really big story for Linda as we unpack . You know what she did .
So here's the problem we're trying to solve . On for Linda . She was concerned around missed opportunity , right ? So here's the fundamental question Do we sell the Sydney investment property now or do we do that later ? Can we afford to hold on to that property whilst we buy the owner-occupy property ? If you remember , southern Highlands is the goal here .
So she was unsure what she could afford . But here's the kicker she knew she had to take some action . So , as Ben has pointed out there , she did get exposed to someone who wanted her to buy something that we personally wouldn't necessarily recommend and in fact , I'll be emphatic , we wouldn't recommend around that house and land package .
But she was very clear on okay , this is where I wanna be in the Southern Highlands . How do I make that happen whilst I'm still going to be working for the next 11 years ? But so a hybrid model might have worked for her . So here's what was at stake . All right for Linda , and it's reasonable . What if she didn't choose the right path ?
She's at the fork in the road and she goes down the wrong road . That would jeopardize her retirement plans . And that wasn't palatable for Linda because she is a very hard worker . So she gets one to two days off per fortnight because she works weekends and overtime . But she knew she wanted to stop the job at the zoo at 65 .
So she could not afford to make any mistakes and also wanted to try and factor in current lifestyle , which included traveling and has a couple of dogs to take care of . So here's the epiphany that happened for Linda right . So she knew that she needed to be very clear and intentional on what it took to stop at the zoo .
Now she loved working at the zoo very much , ben , I'll just probably pause at this point here . Probably my kids would their dream job really working at the zoo . You're not wrong . Yeah , working at the zoo .
But she realized that she needed to get a roadmap to financial piece so that she knew what foot to put in front of the other , what was the optimization and what was the sequence . So , Ben , there was three scenarios that you might want to talk to here that we went to optimize for .
So we'll go through the three scenarios and then we'll tell you which one she chose .
Yeah . So the first one was to buy an investment property , selling her existing investment property , which was her principal place of residence originally , and then buy the new family home or her own or occupied home for around that sort of 850 mark in around 2034 . That's scenario number one . Scenario number two was sell the existing property and buy a hybrid .
So in this particular case , rather than waiting until 2034 , which is a long time away , because remember that 850 is going to be worth a significant amount of money into the future Then this idea of buying the hybrid with a little bit more value here sooner rather than later , so IE 2024 and then a potential investment property in 2025 .
Now , likely they would need to sell that investment property down the track because once Linda hits that retirement , that income that's coming from her full-time job ceases .
So you would be managing out how much cashflow you had to hold onto that property for as long as you could , but then you'll be potentially sell that property and take the capital gain as a lump sum of income , putting it into your savings or your super as part of that story as well . So that would be post retirement .
Scenario number three is sell the existing property to buy the hybrid at a little bit of a lower price point 850 next year and then the investment property in 2025 and potentially hold on to that investment property because you didn't spend as much on your own or occupied home .
Now , before we talk about what scenario that she ultimately settled on , what is really important and this comes to the point that we'll be saying to anyone who is aging gracefully and in their early 50s which I can talk to now the most important thing that we should always remember is owning a principal place of residence is really helpful when it comes to the
way in which the government looks after you right .
So we think about if you have an investment property and we know Linda was renting in Sydney , so her scenario was around the wrong way to be able to get some benefit because your principal place of residence is protected in terms of any means testing that's done by government and any support services that are provided .
So we would always argue for those people who haven't been on a long-term rent-vesting journey , who have built up a significant amount of wealth , that we would always love to see them with their own principal home , because they will potentially get other services from government that they've well and truly earned over the 40-odd years that they've been working and paying
their taxes , that getting that structure right . So that's what we saw here . So , to the point , sort of people , why are you selling that property ? You guys don't sell All the reason why we're saying so because she doesn't wanna live back in that location . Like she wants to ultimately retire in the location that she wants to live in .
So we wanna make sure that she gets the big rock in the jar being that own home for her and her dogs and then we can build around that in terms of the wealth creation .
So if we build context for that , Ben , you probably know this better than me , but for where she is in Taronga to Southern Highlands is probably a couple of hour drive , isn't it ? Just for those people who don't know that .
Yeah , yeah , yeah . Well , even with traffic it's a minimum couple of hours . You know you don't get a good run there any time of these days .
Yeah , yeah , yeah , because you're on the north side of the bridge and you're gonna try to get into the south side . So here's a couple of things before we reveal those three scenarios .
The process highlighted to Linda and this is a real powerful epiphany right that the longer that she left the owner occupy purchase , the more expensive this would be , from two parts One , the CGT that would need to be able to pay on the investment property and the cost of the owner occupied residence , which not only means a high level in , but it also means
that the amount of debt that we would have to be able to buy that would be higher . And given that we wanna get to retirement with minimal debt , if any , on our principal place of residence , that was great for her to see that .
And secondly , although Linda wasn't 100% set , like you know , highly motivated to go to the southern islands , but not 100% set this nudged her to consider as an option because it further confirmed all the initial ideas that she had from that initial chat to show what a realistic strategy looks like . So , all right , ben , here's the drum roll .
Which of those three scenarios that you talked to did Linda actually do ?
Yeah . So obviously , in doing the research in terms of what type of property that she may be able to buy in that particular location , it was pretty clear that 850 was just shy of the sort of asset that she would want to enjoy her time living in her new retirement location . So scenario two was the accepted scenario .
So it's a million dollars was a more realistic price point . And then , you know , the idea was to work on that priority list so maintain that income . So we're circa dropping , you know , sort of six figure salary working in the zoo at 65 .
And then you know , basically having a smaller income when she's doing her part-time work through her dog training business in terms of what that looks like . So the other important point here is it also was set . You know , we always talk about income , expenditure , time and target .
In this particular case , the income , the passive income , that we were looking to get was around that $30,000 a year . Remember single . Yes , travel was important to her , but there's not a lot of cost you have when you're living by yourself . So you've got your pets and then ultimately your health and those types of things .
So she was quite realistic about what her expectation was . Now , in looking at her model . It's really clear that you know that there's a really good story in for her in terms of you know , I would argue that she's because she's got a principal place of residence that's gonna have an enormous amount of value in it .
So she's gonna be asset rich , maybe cash flow poor , when she's in her 70s and 80s . So there is gonna be some flexibility in terms of how she might wanna realize that if she wants to ratchet up that income for any degree . So I see some really comfortable numbers in that sort of 20 to 30 year period after purchase . That she's , you know , got good savings .
So I would have thought that those numbers could be tweaked quite considerably because the vast majority of her wealth is trapped in her at that time when we have to sell the investment property in savings and super and also her principal place of residence . So good news story all around .
It is a good news story , so let's summarize what the end game looks like .
So there was a clear roadmap through retirement living in our own home with her dogs , Whilst being able to maintain her current lifestyle , which included travels to Europe in September 25 , which is clearly something that she was keen to do , and continue to rent where she wants to in the interim .
But if we talk about what the process gave to Linda , we'll just put it in our own words , cause here's some of the feedback that she gave . She said I found my advisor when I was researching how to use equity in my home to buy an investment property . The information out there was confusing .
Then I found the property couch podcast and bought the armchair guide to property investment book Soon after I booked a conversation with my planner . I only wish I'd done this sooner , like years sooner , as I'm now only 11 years from retirement . Regardless , a plan was developed for me that will get me to where I wanna be .
Had I done this in my 30s , my financial position would be incredible . Do it in my early 50s limited my options , but I now have a plan to see me into retirement and live the life I dream . So , without my advisor , I worry what my retired life would have been like . I'm so happy that I did not do this alone and used their incredible expertise .
The future is now or I like this line the future is now exciting instead of scary . I'm eternally grateful . So that's another good news story there from Linda Ben , to go with the Brad and Christie story . Now , Ben , if I'm a man of my word , I'm looking at the time going . There is no way that we can roll into third Now .
That's all right , because we're doing some more case studies next week . So our third one is about receiving an inheritance from grandma . So hang around for that next week .
Next week , we'll pick up that one . But how rewarding is the work that Amanda and Polly get to do . I mean , that's what I love about when you're entrusted with the responsibility to help households , like what we saw with Brad and Christie and also with Linda , it's just .
This work is meaningful work and it's a testament to the concentration , the application and all of that's going on , because we are playing with people's lives here and that's why it does need to be considered . In our case , we think it needs to be a little bit conservative .
We always wanna make sure that we've got adequate buffers and we're also factoring in variables such as high interest rates as well . So well done to , obviously , amanda and Polly with those two brilliant case studies , and congratulations even more so to those couples who are taking action on living their lifestyle by design .
And yep , in Linda , we can't go back in time , but we've mentioned that a few times on the pod , that when's the best time to start . We usually was 10 years ago . When's the next best time to start ? It's actually today .
So for those people out there who are thinking about what it means to you to be able to transform your situation and get confidence around that and I've finished off with some of the other feedback We've got . Amanda's now using MoneySmartz . Sorry , linda , my bad . Linda is now using MoneySmartz . She feels in control of the money .
She's using the more platform to do . I tell you that in itself is just that there's something that internally lets these people feel again back in control , and then you have that realization as well . Why didn't I do this thing earlier ?
It isn't that hard when you've got the right tools and the right systems , and in that case , the more platform is helping Linda go about her execution of their plan , and I think that's super powerful .
Ben , I rarely do this , but I'm incredibly passionate about helping people go through the process that we've just spoken to today . So if anyone would like to scratch that itch of just seeing what it looks like for them , just go over to our businessinpowerwealthcomau on the homepage .
There you can just leave the details and just come and chat to one of our team who you've personally mentored everyone throughout that team . So what you're hearing from our voice is here . You're hearing from our team , and just go and have a conversation and see what that might look like . And we take all the risks too , Ben .
So what we say is , if you go and speak to them and you engage to get your plan done , and we have a money back guarantee so you can come in and just go on the inside and just have a little squeeze under the bonnet and see what it looks like . I'm incredibly passionate around property investing . It's the property investing planning .
It's the reason why you and I are in business some 11 years later , Ben , because when you first showed me that , I said it was the missing piece , and that is a genuine fact . So people being able to model cash flows and see what it looks like and have a look around the corner . It's just we started the podcast because so many people kept getting burnt .
Ben , If you can actually see what your life looks like on paper , like these two couples or these two clients have done , you get to make really good decisions . So , in order for us to stick around our time goal today , Ben because today is not the day to blow out , given that I We've closed a moment- out , so let's wrap it up .
My life hack today is around finishing books . Now , I read a lot of books , Ben . I know you do too , so , but I probably read . I don't finish a lot of books , so I start and get to the middle of heaps . But in order for me to help finishing books because it's something that's playing on my mind I came up with this little hack .
I came across this little hack and I think it's really good . So a little trick to keep your attention . Finish chapters don't stop in the middle . So completing a chapter gives you positive reinforcement . It keeps you going . So if you meet a tough chapter , finish it so you can start fresh on the next one . I reckon that's good and I'll start doing that .
So even when I'm ready to put the book down , I just push through to the end of the chapter .
I think I'm a little bit like the current generation , Ben , where books are a little bit slow , particularly when you're reading , particularly when you can listen to one or sometimes I like to go and listen to the author talk about their book , because I usually get the key takeaways that I can think of but committed to finishing books . So there you go .
That's my life hack today , folks , If you suffer from the half-red book disease that I do . Make sure you don't stop in the middle of a chapter . Make sure you push through to the end . Ben , what's making property news ?
Yeah , I thought I'd just double click on where the change in rental is happening at the moment . I think it's really important to understand . So there's still a lot of news out there about that . Rental increases are continuing to keep going . But again , this is a clear reminder around markets in markets .
So just quickly let me give you the total of the 12-month change in rental supply in a couple of markets Hobart is 24.5% in terms of total listings over the last 12 months in change . So that's up , so that's higher supply , and so that's resulted in their vacancy rates of 2.5% , which is the highest across the country .
But what's also interesting about that is that it's meant that in terms of actual rental , what you can charge , that's actually down 2.7% over the quarter and 1.7% over the year . So this whole idea that property investors can just charge what they want to charge , no , it's ultimately a situation of supply and demand .
The only other market where we're seeing across the country where the rental demand or listings or should I say total listings of rental properties is also in positive territory is Canberra , which is around 10% , 9.9% . Funny that they also too are experiencing a drop in rental yields and rental , basically median rents .
So that's just basically showing you that it is a product of the market , of supply and demand , the economics associated with that , and so that's also falling . Now you might also argue at vacancy rates of 1.8% .
Traditionally you might be thinking that's putting pressure on rents on the upside , but it doesn't help when you've got a government who enforces a rental cap . So that's probably also playing in to their negative number as well . So just a little bit of a takeaway on the data for this week , mate .
Nice . Hopefully the community benefits from getting that intel . Thank you , mate . So again , thank you to our client circumstances . We've obviously kept their names separate , but their circumstances were brilliant opportunities for us to showcase some of the great decisions that people get to make if they do things well .
So , mate , before we go , just a reminder , folks , we already had planned to do more case studies next week , so that third one that we promised would definitely be next week as well , mate , but until next week , Ben Knowledge is empowering , but only if you act on it . See you next week , folks . Hey folks , bryce , here again .
I just wanted to catch you real quick before you go .
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