467 | Back To The Future: Are Our 2015 Investing Strategies Still Relevant Today?

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 are partners of the multi-award winning Empower Well , co-creators of Moa , the Freelife Style Design Act , as well as bestselling 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 .

But one thing that we can be super grateful about living in Victoria , mate , is we get a public holiday for a horse race , which was a couple of days ago . So how did you spend your public holiday , mate ?

If you want to go to theproppicashcomau forward , slash my story . Stiggy's been sifting through and we've received some rippers . So , ben , one spot left . So if you don't act on that little urge that's in your tummy right now that says yep , I want to tell my story . I think it can help some people . You'll have to wait 18 months .

Well , I embellished a little bit there . It's probably 12 and a bit months , but a long time you've got to wait to come and share your story . So , folks , I'd love for you to do that . Theproppicashcomau forward , slash my story . We're about to go into summer series and it is a wonderful part of the year . We want to share your stories today .

Hey , ben , today is I'm going to do my mindset minute theme as a way to set up what we are going to talk about today . Okay , that's good . So I'm going to riff off a few quotes from some , some famous folks who've got some philosophies around reading . First one is the more that you read , the more things you will know .

The more that you learn , the more places you'll go . Okay , so that was , of course , the famous Dr Seuss , from his book I can read with my eyes shut , which was first published in 1978 . And it's one of his many works that promote the joy of reading and learning . So it's number one .

Number two and then the 33rd president of the United States , harry S Truman . He says not all readers are leaders , but all leaders are readers . Okay , let that one land . And then the third one here is course , wouldn't be , wouldn't be right , if we didn't have an uncle Warren quote . He says this read 500 pages every day . This is how knowledge works .

It builds up like compound interest . All of you can do it , but I guarantee not many of you will do it . So the question I want to ponder to you , ben , is is reading enough ?

Okay , so we've got three prominent people a president , one of the most famous investors in the world and , of course , dr Seuss , who's the author of , or the star of , a lot of books , including the cat and the hat .

Right , but I'm going to pose that you're going to get more out of reading one book that's great five times than you are from reading five ordinary books , and this is where the pursuit of master exists . So I want to delineate between reading , reading , reading , reading versus active reading and making sure that you land what's going on here .

So if you read one book that's great five times , we're going to argue that that's better than reading five ordinary books . Right ? So you say it every week , ben knowledge is empowering , but it's only empowering if you act on it , and acting on it requires understanding , and understanding requires going a little deeper than just simply exposure to some concepts .

Right , you need mastery , you need to reread , you need to re listen , you need to rewatch , you need to re chat until you get it right . So let me think about what are some of the books , ben , you might have some that I've given you no notice on this .

You might think , as I'm reading through some of the books that I've read more than once , and so Morgan Housel , the psychology of money . I quote Morgan a lot on this podcast and I for a grateful that you nudge me on that book . I've read a book by Napoleon Hill called Outwitting the Devil , which has got nothing really to do with spirituality .

It's just a conversation about human behavior and how to get elite performance out of yourself . Read that multiple times . Ben Dale Carnegie how to win friends and influence people I reckon I'm up to four on that . Josh Kaufman's got a book called the Personal MBA . Because I love business and understands all the concepts .

I probably read that a couple of times , maybe into the third , and I reference it lots . It's a great one . So Don Miguel Ruiz has a book called the Four Agreements . I reckon I'm on fourth lap of that on the audiobook .

Russell Brunson has a book Expert Secrets on how to craft stories and tell better stories and how to understand how to share those stories with the community that you want to build . Jayman , who we've had on the podcast , he's got a book called Elegantly Simple Solutions to Complex People Problems . I'm probably on fourth read of that .

And then Robert Childani or Kildani or Seal Dhani or however you say Robert's surname . Ben has got a book called Influence . That's a tough book to get through . So I reckon I'm on the second one for that , definitely in the second lap . And then there's a bunch of podcast episodes that I listen to over and over because I mind map everything , ben .

Books that I love , I mind map them . Conversations that I want to remember , I mind map them . If there's a course that I'm going through , I mind map it because it's the way I structure my mind so that I can easily recall the bigger patterns that are going on . So why am I banging on here , ben ? Why am I banging on about this ?

It's because simply reading books is not enough . It's actually absorbing the content that's in the book . So if you have come across a book that you like or come across a resource that you like , we want to suggest that you lean in .

So that's my long segue , ben , into what I want to do with you today and we've got another one planned in a couple of weeks' time Is I want to do a throwback Thursday compilation throwback Thursday with you , ben , where you and I actually go back and revisit the past and have a look at some of the concepts that we've talked about , that are intuitive ,

ingrained , part of the DNA of the conversations that you and I have on this podcast , the conversations we have with our team and the conversations that we have with our clients . But we want to make sure that we revisit some of the fundamentals that need to be revisited , ben , so we can go a bit deeper and so that our community can get it .

So you up for the ride , mate .

So it works today as much as it did the day that it came out of our mouth , so we can speak to the evergreen nature of it and in some cases , our audience relies and hopes that we continue to grow and evolve as well over the journey . So we'll also make a point where we think that there might be a tweak 100% that we know in the time .

So let's rip into it . The first one was super fun . The episode title was we Fix Bad Property Investment Advice , which some people may say it lacks a little bit of hubris there , ben , but stick with us , we'll talk that through . Here's the date , ben 23rd of February 2015 . 15 years , a little while ago . And here's the key concept we talked about .

We talked about barbers , we talked about the two common regrets and we talked about who you seek your advice from . But we can't kick this off without first revisiting the barbershop analogy , ben , so fundamental to it is the cornerstone analogy for this entire podcast , so I'll set it up and then I'll get you to give some feedback on it . Right ?

So the idea was this that someone who'd been operating a barbershop that was cutting hair for $25 per haircut for several years established player , lots of clientele and all of a sudden , when the shop next door came available , they noticed some movement and some activity .

Someone else take up the opportunity to run a business here and , lo and behold , what did they do ? They opened a barbershop , right ? So here's a vendor who's been there for 20 plus years doing $25 haircuts . And what does the new vendor do , ben ? They put a big sign at the front of the lay frame that says $10 haircuts .

So the point of the story is this what does the established player who's been in this market for some time do in response to someone who's clearly doing a price cut on what they have been doing for some time , which is going to get them to compromise on their quality . What do they do to respond ?

Well , a lot of people would say well , we're going to have to match the $10 haircuts . But no , this person doesn't do that . They put their own A-frame out the front and it says $25 haircuts .

We fix $10 haircuts and we've got to let that land , because the person who gets a $10 haircut and then goes to the barber next door later to get a fixed band ends up paying $35 for a haircut . So that is the cornerstone , fundamental analogy of this entire podcast and our industry , and it's set the sale for you and I .

Here we are eight years later from that very fundamental story .

So ultimately , the customer pays , and our view on that , as we've unpacked since February of 2015 , is how many people have we heard stories from Bryce ? Or like , yeah , I bought something off the plan , or I bought a house and land package and it hasn't performed well ?

Well , we always had the view that we're here to help fix their thinking around investing and making sure that they made smarter decisions around what to buy , and so that's ultimately the story here .

In fact , bryce here's a little story for you last Friday was walking back from the meeting , back to the office , and down the road there's a little pop up wine shop and his A frame says cheap wine , and so I just couldn't help myself , right , couldn't help myself . So I went in there . I've never been in this pop up shop before .

I said can I speak to the owner ? And and they're going , yeah , sure . And I just said , hey , you're a frame outside , can I give you some advice in terms of you know how to fix your A frame ? And he said , sure , because it says it says cheap wine . I said no one wants to buy cheap wine . What they want to buy is good wine , cheap .

So in terms of getting the value story right , and so ultimately yeah yeah right , so it still might be really good wine . So you've got to let everyone know it's good wine . But no one wants to drink cheap wine . They want good wine cheap .

So it's sort of just , you know , highlights to people in terms of our story and what we're trying to do is there's no substitute for value . It's how you ultimately pay for that value and if someone can demonstrate that the wine is good or in terms of the property investment advice is good .

But you can't get good property investment advice if you're selling from a stock list Like ultimately it's first of all , it's limited in the selection in terms of what you do and secondly , we've proven to people before that ultimately , if you put a side by side investment property next to each other and one is new and one is second hand , the second hand one

will outperform because the second hand one has more land value in it than the new one does . So it's clearly mathematically non-probable that the new property will outperform the existing property , all things being equal . So from that point of view it's just another little , you know , a push in the right direction in terms of how you get educated .

.

You know I can't quote it directly , but we've talked about the Barbershop analogy a number of times and the amount of times that people have come up to us and said , hey , listen , this is what I'm considering , what do you think and I am a podcast listener kind of reinforces my mindset minute theme about exposure is not enough , because even if you've heard the

concepts that we talk about and again , this is a naivety from me I figured once we told the people the information , once they heard it , it would sink in and it was done . Job was done .

But I guess which is the theme of this throwback Thursday today is we want to reinforce some of these fundamental points that if you are interested in having your haircut fixed , not only will you pay the original price of 25 bucks , but you'll also pay the original $10 that you threw away as a result of trying to take a shortcut or , in some cases , for some

people , they didn't really know that they were getting the wrong sort of haircut until after the experience . But we've been passionate , we've set a journey , we've turned up every Thursday as a result of that one analogy , folks . So we want to make sure that one lands for you , to make sure you get it right .

Now , another thing that we spoke about in that first episode been which has been a recurring theme , and at the time we didn't know how much this was going to be impacting our life .

But the two most common regrets that we hear people say is number one I wish I didn't sell insert address suburb of a property that they'd had in their previous history that they wish they still had their hands on .

And then someone else saying and you'll see it in our reviews too , ben , I wish I had found this earlier , I wish I had have started earlier , I wish I had made sure I took that first step earlier .

So that's where we do a lot of that unpacking around cash flow analysis and borrowing power and before we do anything around asset selection and strategy . So number one , but the big one here , bryce , I want to want to double click on right now because we have , you know , fast forward to today .

We have a situation now where interest rates are where they are and that is making you know cost of living pressures and holding onto that property harder than ever . And I'm sort of saying to people do whatever you can , do whatever you can , because to Bryce's point he always talks about , this thing shall pass and it will .

The cycle will correct itself as the economy slows and then , you know , ultimately we get interest rates coming back down . If you can ride out that period of time and let's call it the next 12 months by doing anything you possibly can to hold onto it , then you are going to be in significantly better shape . You get no compounding interest on zero value .

Just remember that . You get no compounding interest on zero value . So the moment you're holding onto that asset and think about the recycle cost . If you want to come back in later on , so do whatever you can to hold onto that property .

Do not sell is my advice to people , if they can , because that's going to be really valuable for you over the course of the next 10 or 20 years .

I thought there were stories that you read about in the past with the Spanish flu and stuff that happened to people in the past . That just wouldn't happen to us . And of course , that happened . I never thought that we would have an event like Brexit happening . I never like , if you think about all of those things that have happened in that eight years .

Ben , as we were standing at that microphone actually it was Stiggy's phone at this point in time because we were recording on a phone . That has happened . But the price how many people who are listening to this podcast right now would love , love , love , love to go back and buy some real estate at 2015's prices ?

I don't think there's anyone who's seriously a student of our podcast who wouldn't just blindly go and put their name on titles , probably even spoke to Stockman back then . Right , wouldn't have performed as well , but you probably as a result of the pandemic , you had a once in a lifetime event that rose all ships .

So here's the real hard part for people to do . If they go , let's fast forward another eight years , ben . So what does that make us 2031 ? There's probably a lot of people who will be listening to the podcast go . There's not a single person who wouldn't love to go back and pay 2023 prices 100% .

I'm not gonna say names , but my first experience with a business was effectively a bunch of enthusiastic amateurs running around on the leadership of someone who'd been there and done that before us .

And I remember the general manager who came into that business said he's never seen anything like it , just the fact that there are so many enthusiastic amateurs running around getting people to be interested in properties . And it landed on me . I'm thinking , huh , isn't that interesting and it's not too later . That story landed where I go . I have a history , ben .

I've put it in the book . I've set it on this podcast for new people to our podcast . They might not be aware of this , but I was what would be considered a spruker . My very first experience was helping investors on that side of the fence . But here's the deal , ben . I , hand on heart , thought I was doing the right thing .

I promise you with every being in my heart I thought I was doing the right thing , so that qualified me as a very enthusiastic person , but it didn't hide the fact that I was an amateur , had an accounting degree , I was working at a chartered accounting firm in West Perth .

I was doing tax returns for property investors that I love doing , but I had such a journey to learn more stuff back then , which was back in 1998 . So enthusiastic amateurs . So here is the other concept that we want to land here . Sometimes the people that you're dealing with can be on one of two sides of the fence .

The first one is they can be knowingly trying to get you into something that's not in your best interests , or you could be on the other side of the fence , ben , where there's people who think that they're trying to do the right thing and they're unknowingly getting you into the wrong type of property .

advising and giving tailored solution for each customer . There is not as much money in it for them , I promise you . They get a fee for service and they certainly aren't earning the hundreds of thousands of dollars . And so those people they make peace with , however , they make their money . If they're not , I'm in sales and that's exactly how the world looks .

But those people like yourself , bryce , who has a conscience and you work out once you've realized hey , hang about . I want the best outcome for the customer and you know I'm willing to do that . You basically take the right pathway in terms of how you advise people .

So , that's , you know the outcome of being an enthusiastic amateur and as you build up that skill and as you build up that knowledge .

And the right pathway is usually through advising clients in terms of making smart decisions about where the land is , what the existing property that sits on it , and you know what's the productive use of that land and how's it going to grow over time .

And to your point , ben , there was a significant change in the amount of renumeration that was on offer . Right so that . But if I wanted to sleep at night and I wanted to stay true to my own values around helping people , I needed to tread the path that was pride versus the profit path .

And look , to be honest , ben , with the information that you and I know on how to get people interested in property and the ability to use properties of vehicle , we could quite easily use that knowledge to sell out a big subdivision . We could a big off the plan apartment tower .

And if you look at the mass , the amount of revenue compensation that you and I could get would be nothing short of extraordinary . But at the end of the day , it's at what expense ? And you and I both , which is why we've been mates for a long time .

Why we've been doing this for a long time is because we both share the same view that you need to help other people get what they want . So , which is a concept that we did in this episode , ben , and it's a quote , and it was . It's a zig-zagal quote . It says you get everything you want in life . You can just help enough other people get what they want .

And I've thought about that as I was writing these notes , ben , because I actually think zig's done the right thing by saying that's what you do , because quite often we as humans are self-interested , so you gotta put the self-interest first , which is you get everything you want in life comma if you just help enough other people get what they want .

And I'll be honest and transparent , I've used that as a motivator early days , but now I'd actually think about it in the flip . Right , if you just help enough other people get what they want , you get everything you want in life .

If you actually lead with the other people first , ben , the other becomes a byproduct of that , rather than being the driver at the beginning .

And if I've , if I started with that as the motivator and it's now been flipped I promise you folks that the joy , the absolute joy that we get from seeing other people implement the frameworks we've talked about since the 23rd of February 2015 , implement it , get the job done , make a significant difference .

It's why we get so much joy as we lead into summer series . It is , you know if I hark back to the Tony Robbins stuff , ben the two spiritual needs that we have growth and contribution because we've got certainty , uncertainty , love and connection and significance . They're the needs of the flesh , but the spiritual ones are growth and contribution .

So if you flip Zig Zigla's quote around and you go , if you just help enough other people they want in life , you'll get everything you want in life . That comes from that growth .

That became a theme for some time , so have a interesting that we used to Today we use it on certain projects .

It first went to air on the 6th of March 2015 . And here's the meta themes or the concepts that we talked about Self-education , which property to buy , and should you be advised or convinced , is some of the stuff that we talked about then . But what were some of the key concepts that we chatted about in episode two ?

So it's science and art is the message here in terms of understanding that . So , building that education a fought up , I suppose , in terms of and building layers upon layers in terms of your knowledge . That was one of them . You must educate yourself to succeed in this game .

So we always talk about if you're getting advice from somebody , make sure you're educated enough to be asking informed questions . Now , they should hopefully have a greater amount of subject knowledge than you do If they do it every day , think about it as part of years of developing up their experience and their knowledge .

But you also need to have enough competency to be in the conversation and comprehend those things , and that's why I always say there's no such thing as a silly question , because you should always be asking as many questions as possible to build up that baseline knowledge . Number three is not every property is created equal .

Okay , that's when we first started to talk about our big story here and I mentioned it earlier around established versus new and its performance there , and at the time , back in 2015 , student-a-com was the sort of next big thing .

Now , if I think about all the thing that sort of comes , you know , from the that went from Student-a-Com because that was all about cash flow . Then it went to Granny Flats , and then Granny Flats then went into NRAAS properties and then NRAAS properties went into . Now , there , you know , the flavor of the month is NDIS opportunity .

So you can see there will always be new innovation into the marketplace in terms of ways to encourage you . Oh , and don't forget SMSF , you know , in terms of being able to borrow . So think about all of those things that weren't around in 2015 . So the big story there was , you know , everyone chasing cash flow out of Student-accommodation as part of that .

And finally , in wrapping out the key concepts , we talked about the difference between advising versus convincing , which was obviously the lead story in terms of the actual title of the app .

The barrier to get access to it was high . It's probably a better way to say it . We had a couple of magazines at the time and then those magazines had people putting in lots of advertisements in to try and entice people . So the magazine was largely the number one source in the country for getting easy access to the information .

So what we were trying to do at this time , ben , is we put regulations versus education . You were there with the mouthpiece going you need to have not only the advisor giving you the right information and they need to have a minimum standard of service , which you were saying become a QPIA .

But we were also saying at the time going and , folks , you can outsource the execution , but you can't outsource the understanding . And we were really stamping our feet loudly to go folks , we need you to understand and bear in mind we're only two episodes in here on a mission that we were trying to .

Here we are with a body of work behind us , but then , ben , we only had a body of work of one episode behind us at that point in time and we're waving our hands around a lot and we're doing the property expos and we're trying to contribute to the magazines where we could , but the speed at which people can get their information now in 2023 , is so short .

But back then the runway was long to try and land a message and get people to get it . So you were definitely in this episode trying to say folks , there's two responsibilities here . If you're an advisor , you've got a foundational responsibility to make sure that you have some form of integrity in the information you're giving .

But you're also saying to the folks just in case your advisor doesn't have that foundational understanding , you have to make sure that you understand it .

You know , buy new , don't buy existing . And they have their claims and their angles and you know , all trying to find a cut through to get the attention of potential customers . I mean , make no mistake , in terms of these days , the only reason why people are doing podcasts is that they want leads into their business .

They're selling you something in terms of what that looks like . So now you know , of course we've got to say here we've run an advisory business , but we were running that advisory business from 2007 , before we actually started to do more broad education .

Broadcasting effectively is what we were doing , so we could get our message out there further , because that was part of . You know , we see so many people doing dumb things with money and so many bad decisions being made around investing , so we wanted to basically broadcast that there . But now you know , the angles have been all about , you know .

You know myth-busting or they're wrong . So there's a lot of that sort of conflict that's going on .

But just make no mistake , it's all about them wanting to sell you something in terms of the fundamental , evergreen principles of property investing in terms of buy a great asset and hold it for the long term and live off the passive income and create the capital that is evergreen . Nothing will stop that forever . In terms of how you do that and the product .

You know how active you want to be in terms of the productive use of that land in 20 or 30 years time to turn one into two or one into three or whatever that looks like . That is an opportunity for you .

But if you buy three or four really good properties and hold them for the long term which we've been pretty consistent about since day one that's not going to change and I think that's , you know , they're the core messages that I would say to people .

You don't necessarily , because the whole idea of the reason why they do these , you know , want to get an edge and an advantage is they want to . You know , oh , we've made this much profit . Everyone's looking for an easy and quick way to wealth price Everyone , and so they'll .

There will always be enough people that'll be suckered in to that message of quick , instant wealth as opposed to boringly slow , passive . And we won't change our course . We are ultimately going to be here saying the same things about boring , reliable , long-term growth .

Everyone else will try their little tactics on the side and , you know , look at the return we got for this particular client and work off these elevated returns and , you know , claims that may not even be substantiated . We'll just boringly go about educating our community and making sure that they're making their money work as hard as it can for them .

But back then I was so naive , ben , I actually I was actually concerned because content was very much in its infancy . Back then , you know , we were doing a lot of pioneering stuff back there , both with our video production and with our audio production . I actually thought it would be a bad thing for our business .

I thought if you gave away all the secrets , no one would want to come talk to you .

But then what you realize , ben , over the journey and I hope that this part of the message lands to some who's listening to this it's actually not the knowledge that you need to like , we need to be worried about .

We're trying to do everything we can to affect the behavior , because it's 80% to do with science and 20% to do with the science and 80% to do with the behavior . Did not know that back then , ben Did not know that . I thought it was going to be the end of our business .

We just said let's just do this and let's just help people , and we'll keep an eye on it to see if our business just shuts the doors because no one needs any help anymore . But that's how naive we were . Folks around podcasts being a marketing move , just for saying , just for the record . So here's a couple of quotes .

There's three quotes , and I know that you want to really lean into one of these , ben , but here's his direct quotes from that episode back in 2015, . Right , so ? So Marty McFly takes us into the , gets the flux capacitor Ben , into the where we go the DeLorean , off we go the DeLorean .

So we said this the time to buy quality assets it's when it's a depressed market . This is a buyer's market . So back then , ben , we were even trying to tell people that counter-sickly cool is good . Wealth creation through residential properties in type this is your quote is entirely possible , but you must educate yourself and work with smart professionals .

So even back then you were trying to get them on the track . But what about this one , ben ? There's a bit of there's a bit of updating to do here . There's a strong correlation between income and property prices . This hits into economic activity , human interest and human behavior , which we would discuss in later episodes . Boy , did we discuss it in later ?

I mean , if you look at Warren Buffett's Uncle Warren's essays , he likes to buy great businesses at fair value , right , and so ultimately , the concept there is really simple that if you're going to go into certain markets that offer you good value , then you will buy when others are fearful and that'll be greedy . So that's that .

That's the concept in terms of what that looks like . So we've always been consistent around wanting to buy . You know long-term markets like Melbourne and Sydney . They are the markets where all of a majority of wealth is created and incomes are significantly strong , you know , for a bulk of the marketplace that then drive those values . So that hasn't changed .

What did evolve is we got more scientific around supply and demand and looking for markets that had that probability of short-term growth for some clients who needed that equity boost straight away in terms of looking at that .

So that has been an evolution in terms of introducing both counter-cyclical in terms of buying when others are fearful , and that will play out again as in these interest rates stay a little bit higher for a little bit longer . So there will be some tremendous buying opportunities , I suspect later this year and certainly into 2024 .

But then , yeah , come , let's come back to that final point . I mean in terms of strong correlation between income and property prices . So it's very clear , everyone you know this is underfutable in terms of what's true . So you look at unrefutable , irrefutable , thank you , irrefutable , my bad In terms of land values in certain areas around developed cities .

So why is it that land values closer to the city ?

So , if we just do sort of a very simplistic example , an 800 square meter flat block two kilometers from the city , right , and we're talking about a developed city , not a town , developed city versus 40 kilometers away why is it that that land value , considering it's serving exactly the same purpose of putting a dwelling on top of it , so let's say it's a single

use dwelling why is it that you know , as an absolute minimum case , that the land value is three times higher ? What is it ?

What makes that land value three times higher than the land value that might be 40 kilometers out , and in some cases it's five , some cases it's seven , some cases it's 10 times more in terms of as you move around the city and all that is the whole story of what economics is .

It's the measurement and understanding of human interest , human behavior and how people react and how they value those types of assets .

So when you put all of that infrastructure around it , the lifestyle drivers , the amenity , amenity and also that human biological need to be associated and mingling with like-minded people who we want to break bread with , and all of those things , that is the intrinsic value that you see in terms of seeing those land values grow in those areas .

And so I've got greater amenity , I've got greater flexibility , I've got greater convenience and people put a price on that land in that particular location .

So that tells you in terms of the economic rules around how these things work from a sustainable point of view and that's the endurance of long-term return as opposed to what we've always talked about short-term demand and supply . That is what's measuring interesting value over the short term , but what sustains that .

The essential long-term growth that you're going to get out of property is fundamentally around the productive use of the land and the attraction and demand and scarcity of that land , and that's it .

So we're consistent in terms of what that message looks like and ultimately , if you make an argument for that block 40 kilometers from the city , how do you make the argument that that's going to have the infrastructure or the amenity around it that's going to sustain that when everything comes from the center ?

And yes , you will have satellite cities and sub-cities , like what we've got in terms of Sydney , where you've got North Sydney as an example , or you've got Crow's Nest or you've got Parramatta , where these sort of sub-centers are being built up around .

But yeah , and so you will have areas like Strathmore , which sort of borders on both accessing the main CBD but also now bordering Parramatta or getting access to Parramatta . So it's those types of nuances that are going to make that land value continue to grow , and we also know that the ripple effect is also true .

So , coming back to the question around income versus property prices , what's evolved there in our thinking is its wealth . Okay , wealth and land value , land to asset ratio .

That has been the evolution of our thinking here , because what you will also understand around income is , as we build wealth and as the power of compound ultimately grows , we can also be quite informed in terms of how we manage our tax affairs and how we manage our money .

So you will see , for instance , that if I have a certain structure around me , I can manage how I deliver income and how I declare income .

So when you sort of see ATO income levels of people in certain areas , you've also got to remember if they're running a small business they could have had retained profits inside the company and not delivered any of those profits out so you can manufacture and control the amount of income that flows into certain households .

So just looking at household income alone is not enough . What you now need to be looking at is basically the overall wealth of a household , and that's obviously hard to measure in terms of the way in which we can control the flow of income and what we disclose as our income .

So then that correlation between , that direct correlation between income and property prices is a little bit harder to make that strong connection .

But there's definitely a correlation between the people who have the most resources and the property , and so those resources in some suburbs are reflected by the amount of income they have . In other areas it's reflected by perhaps the incomes not as strong , to your point , ben .

But I guess , ultimately , I think another evolution that we've observed over the journey since we've published these back in 2015 , ben , was we actually ended up confusing some people who would listen to these episodes maybe six or seven years later , when the market had moved , because back then there was such an opportunity to still stay close to the CBDs .

Even a lot of the gentrification that happened on the western side of both the two metropolis in Australia and on the west coast in Perth and the same in Adelaide , those gentrification weren't as mature as fast forward to 2023 . A lot of that gentrification in those areas is very much mature .

So it's about being as close as you can to these big cities , but we need to adapt and so then it becomes close to the satellite cities . But when you're overlaying the information that we shared in those early episodes , right now , into 2023 , they still apply around human interests , human behavior and economic activity .

So if you think about Geelong , that would sometimes confuse people . They go , hang on . But you're getting further and further away from the Melbourne CBD . Sure , but as you move further away , you're getting closer and closer to another satellite city with a bunch of other things that make human interest and human behavior for people . That makes them tick .

Same with the Gold Coast and the Sunshine Coast and Wollongong and the Central Coast and Mandra and help me out here Ben Christie's Beach and all those places . As we move around the country , as you're getting further and further away from the headline act , which is the big capital city , which back then in 2015 , we could still get super close to those .

Now we've got to make sure we still have the same principles involved in our thinking so that we overlay those principles to where we're buying . They're still . Where are they going to get the jobs ? How are they going to get access to them ? What are they going to do on the weekend ? And the status test .

Will my status go down , will my status stay the same or , importantly , if there's a perception that your status will increase , that will also have an impact on the performance of the asset and the performance of the suburb .

We're working with a 20-something or 30-something and they've got a certain amount of income that doesn't count you out of getting in property . We've always got to build a strategy around who we're working for and what their income story is . We still go back to the fundamentals of ABCD in terms of how we build that story .

So now for the millennials and the Gen Zs yeah , it's potentially a different approach because ultimately you can't sustain these raising the deposits are difficult and then being able to sustain the shortfalls on these high-value properties .

So I think it's really important to understand yeah , that was then , this is now , so the market has moved , so strategies for different sort of investors are real . We can cut a pathway for a particular investor in terms of their current situation .

But if we get a sort of early 40-something household double household income on 450,000 , make no mistake what we're buying .

We're going to be going close to the city and we're going to be buying those scarcer assets that ultimately have an arachnopyrapiel versus , because we also know with those types of customers , they're not going to want to have six or seven or eight . They want this as a passive investment . They want to be active .

They're working very hard , they're getting their flesh for those people that they're earning that income from . So I think it's just a reminder for everyone . It is still horses for courses , but at that stage , to Bryce's point , yeah , we could buy within five kilometers of a CBD in 2015 for under sub 500 grand . Now the world has changed .

Those properties , sort of , are floating in that sort of 1.3 to 1.5 range in terms of what we were buying back then to what we're buying now in terms of those , the houses , the point being , folks is in 2031 , you look back and wish you could have bought the 2023 prices , like we are talking about 2015 .

And then the third episode the title was the four pillars of mastery . Then this was the 13th of March in 2015 . And we covered some meta concepts around the property investment formula . What was that ? We made a big statement , ben , that budgets don't work . Back then that was big and bold and we talked about grandmas money jars .

But some of the key concepts in that In that episode was the four pillars of mastery around A for asset selection , b for borrowing power , c for cash flow management and D for defense . That was pioneering stuff back then . Hopefully that's been our contribution to the property investment landscape . Then we talked about there was a science behind investing .

It's not just a transaction . We said it's a process , not an event . We also talked about the ABCD . That C comes first . Sadly , c wasn't first in the alphabet , because that would have been nice for us then we needed everyone to remember ABCD . But C goes first . We talked about the narrative at the time .

Leading up to that was debt servicing debt to hold these properties . We reshifted it to talking about okay , what surplus do you have at the end of your month that you can put towards that ? Then a couple of other things , but where do you want to kick it off for you then ?

These were our pillars around our investment principles and we weren't going to waver from them in terms of , especially when you're playing with other people's money , it's all well and good , you can sit here and I can talk about my multi-million-dollar property portfolio . Well , that's my money , that's my risk , that's my mindset .

When someone else is asking you to actually engage hundreds of thousands of dollars or millions of dollars of their money , it's a completely different ball game In terms of your responsibility . Sure for yourself , something goes wrong , you can fix it If you're getting a professional guide who's going to help you to get to this outcome .

It's meaningful that you need to be consistent around your frameworks and basically how you treat and respect that money and how you put it to work .

We would build everything around that cash flow story , unpacking future plans and looking at the impact of that cash flow , and then start to putting the optimisation to work , what borrow and power we could get to comfortably afford . We would obviously set higher interest rates 7.25 was our long-term interest rate back in the day , just to give you some context .

Then ultimately , once we knew that , then we would obviously use our fulfilment signs in terms of taking action and what we'd go out and spot , negotiate and purchase for our customers .

Then , now that we've got lots of debt , that first bit of defence was around the cash flow , but the second bit of defence was about how that cash flow is coming from the individual and we need to now protect the biggest asset in any household that's starting to accumulate wealth and that's the personal income of that person .

So we'd start to look at income protection , life trauma , tpd type insurances that meant that if something went wrong , we wouldn't have to divest of that property and end up in a really bad place . That really important completing the circle around how you would set up for success when you're playing with other people's money was really important to us .

What I'd come out of was my initial exposure to the property investment world was definitely debt servicing debt .

So what that meant is that you would actually build up a portfolio of assets and then you would actually harvest some of the equity in it and spend the equity on lifestyle in the knowing that the portfolio would grow in value at a faster rate than your spend . So we talk about $2,000 a week , ben .

What that meant was adding $2,000 a week in debt to the portfolio , or more simply by a hundred spend it in a year , come back to the portfolio next year , borrow another hundred .

And so the theory at the time was sure you were actually using compounding in reverse , because the interest payments were starting to capitalize and build up , because you bought the right properties and because you had enough of them .

So you had seven properties and then you just kept turning them , the snowball would run at a faster rate than you were spending it . And so fast forward to now , ben . It's thankful that the pivot happened back in 2015 , because , except for a very select few , that game can't be played anymore .

The lending landscapes changed so much that if you had had that strategy , you'd be stuffed .

Conservatism has always been the bedrock of the way in which we like to play the game . We don't want to take too many great risks . Now some clients who would come to us would say you know , prospective clients , I want this , I want to do this development , I want to do this , I want to build .

You know , I want 30 , which is not the right advisory firm for you . Right , it was just ultimately turning those people away . It's not where we want to be . The only commitment we ask them to live up to is their spending habits , and so that's why we introduce money smarts and that's why we talked about the state of the wallet .

Plays with the state of mind . I have no doubt , and this was my biggest you know thing for me , for 20 years , I worried about money . For 20 years , I worried about how much money I had . I don't worry about money at all now right , I'm at the other side of this .

I've been doing this for almost 30 years , so you know that compounding story , that cash flow story , is strong enough where I just don't have to worry about money . But that's the mindset piece that you're talking about . The behavior is hard .

So , and still to this day , bryce , you know , one of the biggest things for me is you know , when we start to introduce the money smart system is still a lot of people honestly believe that they manage their money well , and I mean , I don't know how they're benchmarking themselves or what system that they're using , but being solvent is not managing your money

well , you know . But you know the hard part for people is don't take away things that I enjoy . But the reality is is that if you want to create wealth where you don't have to worry about money in the future , you're going to have to make some tradeoffs . And so , you know , I still see people now not necessarily using money smart system .

In fact , our Facebook page , where we talk about make money simple , again , there's a little survey that people get to fill in , and I was reviewing that recently and I saw in there that a lot of people like what's the biggest problem . I don't know where all my money goes . And then like are you using a money management system like money smarts ?

No , like , what do you expect ? What sort of outcome are you expecting to get ? Now , what we have learned is money , the money smart system . When you combine it with wealth , speed and wealth clock inside the more platform , it is a sophisticated money management system , right , you know , and it requires very , very little effort if you run it properly .

So you know , but I still see people like you're using money smarts , no , or you know , and I sort of not working for me or whatever I go , all right , well , you know , even though there's a need that obvious for some people , the juices and worth the squeeze . And I just say to those people all right , well , good luck .

You know , if you're not , even if you're not even setting yourself an annual surplus target in terms of what your income , then you're behind the April in terms of actions and behaviors to get the results that you want to get to . So I'm really passionate about that , as you can tell , because I'm just it .

Just , it strikes me as I knew it would be the case . I mean , you know I've talked about Paul Clithereau's report for the federal government years ago where , you know , 90% of people said they're okay at managing their money . And you know , and I don't really need any help . Well , the reality is that's just completely the opposite to the truth .

But people continue to keep telling them their story , you know , and reinforcing the story that they're okay at managing the money . Well , I couldn't agree , disagree more strongly , because I see it in the evidence of every financial fact .

Find that I see in households there is wastage , there is slippage , there is no control , there is no system , there is no behavior .

Well , if you're going to make this a thing , if you're going to want to drive outcomes , you're going to have to change something , otherwise you'll get the same type of outcome 100% and I guess the the money system to Ben is , if you have a look under the bonnet of the money smarts particularly .

But if you and just so you know the book can be , clearly the book can be summarized in a couple of pages because that's what we used to do . But if you look at it , it is ridiculously simple . It is painfully simple , right ? So therefore , it cannot be complex . It cannot be the complexity that people say it doesn't work , ben .

So if we go back to what we said earlier , it's just behavior stuff . Yeah , 100% , money is just behavior stuff . But I promise you we made the statement budgets don't work . What we meant is alone , they don't work . They need a system to support it .

We gave a an , introduced a modern day jazz system , which which was the money smarts , and we were super proud of that . So here's a couple of statements we made . Here are direct quotes from that episode been back in 13th of March 2015 . You just said this earlier the state of your wallet plays with the state of your mind .

That has never been a true word spoken . Running a household is like running a business . What ? How can you say that Our house is not a business ?

Well , financially , you've got to treat it the same way , because there's money in and there's money out and you've got to make sure there's a profit at the end , ie a surplus that you can start saving and put to work . And then the third one here .

This is from you , ben If you don't spend money on investing , you can't make it , you can't do nothing and expect your wealth base to grow . Wow , well , wisdom you had back then , buddy .

And you're like no , no , no and to your conservative nature and from that little , from that little spring , that little um green shoot , we now have this .

There's heaps of people in the marketplace who are now , uh , focused purely on trapping uh surplus cash flow and putting that into their portfolio and not having to rely on a increasing debt um cycle for that to happen .

And then there's a lot of people that have looked at what you've done , um , and then tried to try to copy it for for their own um servicing with clients . So I think that , um , you should take away a lot of pride from , from that mate , from some of those early days of thinking about changing the nature and changing the paradigm of how we do this Well .

I mean it's it's really simple that if you go through life and you see all these get rich quick schemes and you see all these people trying to create wealth , whether through crypto or through trade , share trading or whatever the ones who are , who are , you know , there's one percent of the people who are making all the money , a bit like network marketing or

whatever it is in terms of amways and all they're making . All the rest of us aren't making the money , and so the but it sounds easy , it sounds sexy . So all I just did was step back from that and say you know what ?

I'm looking at the longterm players in terms of how they're doing it , and they're boringly predictable about their approach , and so my , my fear was that people would get into too much debt and they would get themselves into trouble , and so I just thought this is a more safer journey in terms of doing that , because again , I see these you know wealth creation

strategies and all of that , and these tax effective strategies and all come and go thinking people get an edge . They need an edge . Just need to basically do what you said you were going to do , and just do it simply over a long period of time .

Ben , I've got to say I really enjoyed it , If I'm honest , just going a little trip down memory lane but also just reinforcing my mindset minute that it's not about listening to the full catalog and then just saying I've listened to the full catalog , it's actually going all right .

There is three foundational episodes that I bang on at the end of every episode where I say folks go and listen to the first 20 . We've just spent one podcast just refreshing some of the core concepts from those first three episodes and , hopefully , our audience .

So we're gonna do Ben , propertycashcom , you actually get the cheat code for the first 20 episodes . So I wanna acknowledge the work that Stiggy did for that and just suggest , if you don't go and do that , folks , there really isn't an excuse , to be honest . Hey , I just wanted to do a little shout out before we move on to live .

Actually , ben is to the Stig . Right , this podcast is very much about the Stig , but if we go back , then started on her handheld Samsung phone , then it moved into you and I being in the studio and we had separate mics on . So she had two tracks that she had to cut together and we used to record it on yep .

For those of you who are doing the YouTube , ben's giving you the version of the first one there . For those of you who are not on YouTube watching this , you will not know what he just did , but the point is that she did that and then we moved to the two tracks and then she had to merge those tracks and bring it together and turn it around .

Ben , turn it around in four hours . Ha , remember that she turned around . For now , you know , thanks to the pandemic , everything is online . The tracks are all merged , our editing is at its core level , so much more straightforward .

But then our new team of Stigs then put together our YouTube production , which is , I've got to say , ben , I think it's very impressive , but that's something for the people to decide . But there is some incredible viewing . If you like to watch better than listen , go and subscribe to our YouTube channel .

But yeah , we're trying to make these resources timeless and evergreen , so that you get the concept . Hey , my life hack today , ben is around kids bed routine , right ? So just pause . Maybe a moment's silence for all the parents who are listening to this . Going gosh , we'd rather poke our own eyes out with a sharp stick than go into the bed routine .

And it feels like it's getting harder and harder right , yeah . So here's a little hack that thank you to my wife for this one . But we've got one of those old school tables , ben , that we rehabbed . So we found this old heavy wooden dinner table . We sent it off to someone who turned it .

We got it back , so it's got the timber on the top and it's got the white legs and everything . It looks my wife's done a great job , but it's super solid , right , super solid .

So what she did is she went to Kmart and this is not a paid plug , ben , just for the record she went to Kmart and got a table tennis package right which has this net that you can stretch , right , it's just got this retractable net that you can pack away super easy . Then you just clip it onto each side of the dinner table .

So now the bed routine , because , particularly my youngest , who's so active and just needs to keep moving we play table tennis for 20 minutes on our dining table because we don't have a table tennis player . And so now and everyone's loving it , so we now set it up .

Okay , seven o'clock is when they get , you know , showers and all that sort of stuff , and from seven , 30 to eight , we can do whatever we want to do as a family just to wind down , and so they're now loving the table tennis and it's getting everyone active and involved . It's making a difference getting them to bed , ben . So I'm thinking it's the lie .

Facts . They're so far , so good . We're about two weeks in and it's been amazing . So I figure all of the parents that are out there who don't have amazing dinner tables , ben , because I don't think it's gonna work if you've got this incredibly exciting thing .

But so for those folks who are listening to this in the air in Turac and they've spent a squillions on their table , right , maybe not , but for the rest of it , who don't have very , very expensive dinner tables there you go , try that . It's working . Combine that with lying next to Jack when I'm putting to bed and get the chats Start that it wins Ben .

So we talked about that , but here's the why , the big why , question Bryce . So finish off in terms of okay , there are the returns , but why am I seeking those returns ? So I thought I'd just read out to you in order of most popular , and so 1,541 people responded to this survey , bryce .

So the number one reason why people invest in property is to be self-funded in retirement , without any reliance on government support . They want to pay their own way , bryce .

Number four was to retire earlier to have the options to work less , so getting their time back , a power of time , bryce 1,087 people voted for that one . Number five was and I , like these next couple , I can't trust the government not to change superannuation rules or change higher taxes in my super Yep . That's almost a given .

926 people will and the others will wake up to that over the course of the next few years . Number six was to provide for my children . So that's pretty cool . 904 people responded that . Number seven governments won't be able to sustainably afford to fund the pension . Therefore , I don't want to rely on government for my retirement .

So that was 57% of people responded that one 889 . Number eight was build financial legacy to pass on inheritance to my next generation . And number nine , which only 192 people basically said Bryce . I really like the people who fill in this survey to become rich .

Yeah , the difference between that last one and the second last one , Ben , was about 600 and yeah , so 814 people said they build financial legacy and then the bot just drops out , basically to 192 who are doing it to become rich .

They were altruistic aims that they were going for , not materialistic aims that they were going for , and only 192 people said let's use that rich word , that's interesting , that's compelling . Compelling evidence right , I have a few people who hear that , yeah , and obviously to all our community who filled in that survey .

Are these aspiring Australians who are basically , if it is to be , it's up to me , not relying on government ? So a good story there .

So hopefully we bridge the gap on a couple of those things and hopefully for those of you that have been with us for a little while Ben , they've done a lap or two . It's a refresher For those of you who joined the property couch movement later and they haven't had a chance to circle back .

Hopefully that was fundamental and foundational for you to reinforce your learnings , mate . But until next , week .

If you're new to our community , I want to encourage you to listen to our very first 20 episodes , as the concepts we share in EPS One through 20 are foundational principles , pillars and frameworks that you need to know for you to get the best value from our content week to week on our show . My little tip is to listen to it at one and a half speed .

Now , for those of you that are time poor and don't have the option to go back to the beginning , don't worry , because we've got you covered as well . We've created a binge guide that summarized these foundational episodes into one easy to digest booklet so that you can get up to speed super fast .

So go to the show description on whatever device you're listening to now and simply click on the first 20 episodes link to download it straight away .

Oh and , by the way , whilst you're there , you'll find a few extra goodies for you , including a link to download our lifestyle by design app more , the home of Wealthspeed and Wolfcock and our hugely popular MoneySmartz money management system , as well as how to get free copies of our best selling books .

Now , just a reminder that anything we cover on this podcast is not considered to be financial advice , and we certainly recommend that you seek out expert advice tailored to your unique circumstances , and everything we talk about is general in nature .

Folks , I wanna encourage you again to click on the show description , wherever you are listening , to access all the free goodies we have for you Until next week .