Hey there folks . It's Bryce here , and Ben and I are excited to bring you our new podcast mini series based on our best selling book , the Armchair Guide to Property Investing how to Retire on $2,000 per week where we give you an insider's look at the making of our book , chapter by Chapter .
Now , the reason this mini series came into being is because , back in 2020 , we did a series of Facebook Lives to help us bust out of COVID lockdown blues and , instead of reading the book word for word like an audiobook , we told behind the scenes stories , chapter summaries , anecdotes and back stories to bring each chapter to life in a unique and insightful way .
Now we've brought together all the audio from these sessions , so you'll see for yourself why more than 45,000 copies and counting have been read on the way to retiring on $2,000 per week through investing in property , and we talked about these concepts in our trademark casual and conversational style .
So if you've ever thought about retiring on $2,000 per week or wondered how to live a life by design , doing what you want when you want , or you've dreamed of travel or philanthropy or anything in between , then this mini series is for you .
We want to give you the Armchair Guide to actually do it for yourself , and if you'd like to get a copy of this best selling book for yourself to play along at home , you can get a free copy at www TheArmchairGuide . We'll rush out a copy of the book to you on us if you simply pay for postage .
We hope you enjoy the series and you design a lifestyle that you want to live . So dive in and enjoy each episode as you learn how to retire on $2,000 a week . All right , ben , here we are back again .
Here we are , Bryce .
I'm excited . It's been fun . I'm actually knee-deep in reading the audio book too . Ben , I've been in the studio . Bryce , I'm surprised how long it takes to get through . But , folks , for those of you that are joining us for the first time , we have methodically been going through our best-selling book here .
The Armchair Guide to Property Investing sold over 20,000 copies . So the first Facebook live , ben was doing chapter one Building your Own Knowledge Base . Chapter two was the psychology of investing and the time target , income and expense . Third chapter , which was , I think , one of the more meatier sections in this particular book .
We go through a lot of concepts there in chapter three , and today we're actually going to pivot to part two , ben , because part two is now all about the theory Before we're talking about the foundations .
Yes .
Now we're going to talk to the theory . So chapter four is exciting . It's the fundamentals of investing , ben , and this goes to the heart of your aha moment , as to why you were excited about chasing property as a vehicle , ben .
It does , bryce . I mean , the lead up to that is really that what is money ? Well , in effect , money is just a commodity . Right , it's the biggest commodity in the world , outside of what I would hope to think is love being the number one and most important commodity in the world . But without that money is everything right .
It's sort of dwarf's oil and iron ore tenfold . It is incredible in terms of the exchange of money going around the world . So we sort of do a couple of scene setting pieces around what is money and then what is wealth ?
Well , obviously , wealth is a way in which you can make that money go to work for you , and we always talk about making that money work hard for you and not leaving any money on the table in terms of getting that money organized and thriving that through our money smarts , which is also part of what we've talked about .
But then it leads into Bryce , one of the most powerful things in the universe , which is compound growth . So do you want to take us through compound growth ?
Yeah , well , compounding is really , really powerful , because , ben , we'll let everyone in on a little secret here . We're actually talking about a get rich slow scheme . Correct , we're not talking about a get rich quick scheme , because the power of compounding is that it feels like . For if you've ever seen a graph , I think we might have one in here .
But if you've ever seen a graph , when it comes to compounding it's pretty flat at the beginning . It's not until the very end when the compounding effect the snowball running down the mountain starts to become significant .
So when you apply that to property investing , it's not until you talk to the people who have been investing for multiple decades , ben , where you start to see , wow , they bought that back then in 1978 , or they bought that back then in 1986 for that price .
And now , when you compare the value that you've got now , you go , wow , that's actually that's not been linear growth . That's been . That's been significantly exponential . So really , that's that's the exciting part about property .
You've got that compounding effect which is essentially saying a dollar at 10% interest means at the end of the year I've got a dollar and 10 . But then on the next year the interest is actually calculated on a dollar 10 , not calculated on a dollar , and so that compounding impact over time makes a significant difference .
But when you combine compounding and then the cash on cash return , then it comes from leverage . There's some powerful words in here , ben . There's compounding , leverage and investing , and when you put those three words together , it's just . It's just a beautiful thing .
That's right . I think the fundamentals are these when it comes to investing , you get two types of returns . You potentially get an appreciation in the asset hopefully not a deterioration or depreciation in the asset . So you want to try and find assets that are appreciating or businesses that are potentially growing , which means their value is increasing .
And then there's profit and income in terms of how that might be distributed . So in the share market we see you get dividends and that's basically surplus cash that's not needed for the business . That's paid out to all the shareholders . When it comes to property , it's really simple . That's just rental income .
So we measure those in two ways capital growth , which then is the compounding component that Bryce was talking about , and the other way in which we measure the yield , or the income , I should say , is what we call a yield measure .
So that works out the value of the asset times by the annual return , and then we get that divided and we basically get a percentage of that . So they're the fundamentals in terms of what we're trying to achieve , and then we go into property .
One of the most powerful things there's two sort of key takeaways for today , and that is the first one is cash on cash return .
So when you put leverage into a conversation and an example that we use inside the book is one about you know the small business owner who owns a limo service for weddings and special events and effectively he's got one car he works out that it's going to take him a while to save up to buy that second car , but he knows that if he gets that second car
he'll get more bookings , because if you're going to take the bride , you might as well take the groom and the groomsman and the bridesmaid all in different cars , and that's how you work it out . Then there's potentially the extended family , the direct family , all those people .
So he's worked out , or she's worked out , that getting another car , but they can't afford it . So what they do is they borrow money and they work out how many bookings they need to get for that car to start making the money . Now it's no different when it comes to property investing . It's very difficult to be able to save up and pay cash for a property .
So in reality , we potentially need to get leverage . Now . Leverage is very powerful in the sense that it amplifies the return that you're going to get . So we want to be really clear that , as you amplify that return , you also potentially amplify the risk .
So we always talk about making sure that it is productive debt and that you also and why we spend so much time talking about money management , especially in these times where you make sure you have ample buffers and all those types of things .
So if something does go wrong , you're not forced to sell the asset , but the cash on cash return table that we have in the book . And the camera is not going to do that because it's not auto adjusting , it's on manual . But you can see there , bryce , you want to take us through that , thank you .
Well , let me tell you the backstory to that Ben . We wrote this book . You and I wrote this book in 2015 . We published it in 2016 . Here we are in 2020 .
We are living through a pandemic , and what's really really good about the agenda that we set up when we wrote this back in 2015 is so that in 2020 , if you picked up this book , it actually would still apply .
And what we didn't know when we wrote the book is , if you picked it up during a pandemic because I didn't anticipate living through a pandemic I've got to say Ben . No , but if you do if you do live through a pandemic . These concepts are actually evergreen .
So it's been really really nice to revisit that to make sure that clearly this is information that we've been doing over 20 plus years . And what's interesting is you and I aren't picking up this book and reading it once a year . Right , it's part of us , it's part of our DNA .
But it's also nice just to go back and make sure that the words that were coming out of our mouth into the written word were still relatable today , which has been nice .
But essentially that on page 91 , and so what you're saying is in that table it's having $100,000 to invest with no leverage and $100,000 to invest with leverage , and it goes through an example to show what the return is on that $100,000 cash by adding leverage into it .
I was thinking before about my year nine physics class , ben , and if you think about a seesaw , which has typically got the fulcrum Ben in the middle , so that you've got the seesaw sort of tipping equally on either side , but the power of leverage comes if you move the fulcrum from the center of the plank to maybe the 80% down the plank , so you've got 20%
on one side and 80% on the other . What you find through that basic physical , that physics experiment is the leverage that you get from that particular setup means that you can lift an object that is much , much heavier because , you've moved the fulcrum .
How they built the pyramids cross . How they built the pyramids . They worked out that it was leverage . Mm .
They had no engineer , they had no scientific calculator back then , ben , it was just using leverage . So that is essentially what it's kind of like for investing . You've moved the fulcrum away from you funding the whole amount to moving it to 80% , where 80% of the power is coming from using other people's money via the bank and the remaining 20% comes from Ben .
Either you , you saved up a cash deposit or , in the wonderful world of equity release , you don't even need to save up for a cash deposit . You might be able to have access to it anyway . But for those folks who want to play it along , page 91 , you can see exactly this particular table . Ben and I have had many , many conversations about .
This Was your aha moment , ben .
It was .
This is the reason you got into property .
Yeah , property is traditionally a low volatile asset , so I wouldn't be advocating for anyone to look at doing any type of leverage into just any asset class .
It can be very , very dangerous because you can see volatility in certain marketplaces , but when it comes to residential property , the confidence of shelter , the land that underpins that , and the history of low volatility has meant that you're able to control a bigger asset . And so , in this particular case , you've got $200,000 investments .
They're both getting the same return , but one has a $400,000 debt , which means that overall , the $100,000 has bought you a $500,000 investment asset , as opposed to the other $100,000 has bought you just the $100,000 investment .
So what that means is that you're getting a 26% return on your $100,000 in cash , even if you are still paying the interest on the debt , versus only getting a 10% interest if the return was 10% on both sides .
So it was a light bulb moment for me , bryce , and it took me on a journey in my early 20s to buy my first property , and I haven't looked back since .
Yeah . So there you go , folks . So the fundamentals of investing . So we cover off leverage , investing , compounding , we go through what is money ? It's a form of barter . It's got an element of trust to it . Back in 1971 , the US dollar was unpegged from having gold reserves so effectively , it was at that point then where we just moved into a point of trust .
You've actually got a trust and part of that is knowing that if you hand over a hundred dollar bill , you're actually good for it . But in some economies that's not the case . So we're lucky that we do live in an economy that has a lot of trust around our currency and we trade with partners that also have trust in the currency .
But look , it's around understanding what money is , understanding how to leverage it and then working out what you can invest in , and we actually go through here . Then we talk about cash , we talk about shares we talk about a whole range of investments .
Risk versus return .
Because of the power of leveraging around that cash on cash return . That's why we both been excited around property . I fell into that excitement then . I was just more excited about Jan Summers writing on a whiteboard about getting financial freedom , and then I learnt some of this stuff along the way after I'd invested .
But I just want to round it out before you give your closing thoughts on this chapter , ben Sure , but what's interesting here is we put a table that you and I have quoted a fair bit over the journey around how many people buy more than one investment property . This is on page 101 .
Yes , and what's really interesting for a lot of people , if you see mainstream or not mainstream media , if you see property investment media , all the magazines , all of the digital assets , even listening to our podcast , you think that everyone's a property investor . But the reality is not .
Many people are being 91% of all property investors , based on the data received from the Australian Taxation Office , as measured by tax returns that are launched that actually are claiming rental income and deductions 91% Ben . 73% for one or two , and 73% of people stop at one Ben , almost three quarters .
Yes , now , having one's better than none , but you're not going to get a passive income on that , are you ?
No , you're not , Bryson . I think that also highlights the other critical point and that is what level of return you're going to get . So we get that into part two and part three of the book when we start to talk about not every asset is created equal , and that's also true about the property market .
So we want to also let you know that you can't just go out and buy any property asset and gear it or leverage it , because you could get into a lot of trouble in that . So we want you to understand the concept of demand and supply , the fact that property is bought with the heart for most people who are owner or occupiers , as opposed to the head .
So we've got a lot left to unpack for you as we go through the next chapters in the book . But , bryson , I just wanted to highlight I was , whilst you were just talking that through , I caught a little note from Matt . Is it Matt Feely ? Who says to us read both books and use the system , saving 30% of our income compared to under 5% amazing results .
Now , what Matt's talking about there is our that's brilliant news .
That's what we do , man .
Again , our Money Smart system . This is all for you . This is . We just want to make sure you don't make the mistakes that we made on our investment journey when we were first starting out .
So by imparting this knowledge and paying it forward from two people who are financially free , and sharing that knowledge means that the next generation of people can also do that , and people our age who are just starting to think about what retirement looks like for them is also part of that story .
So I really appreciate that , matt , and thank you for sharing that your transformation story in terms of how setting up Money Smart and then obviously trapping that , and I look forward to hearing more about your property story , as you choose to one buy your big rock in the jar or to invest in property into the future or Ben .
That's exciting to hear stories like that . I gotta say I'll never , ever get sick of hearing feedback like that . So thanks for sharing . If anyone else has had any similar experiences , we'd love to hear from you . So that's it for me , ben . On the fundamentals of investing , next chapter we're going to go through , ben , the property investment formula .
So folks stick around for that . If you it gets very interesting .
From this might benefit from this .
Why don't you send them over to our facebook page ? They can catch up . You can see the first three chapters . They can clearly watch the replay of today , ben , and then next week we are going to have a go at the property investment formula . Mate , this is fun .
Yeah , I love it going through this with you talking about the highlights and talking about some of the back stories . Part of it , but the property investment formula . The next chapter is a . That's the four pillars you need to master .
It's something that people should get their head around and if you've got any interest in property investing whatsoever , you should catch that one terrific .
Look forward to it , then . Until then , bye for now , but just remember if you want to get a copy of the book , jump on there right now hey there folks .
Bryce , here again to say thanks for tuning in to the latest step of the armchair guide to property investing mini series , which we hope is adding value for you as we show you how to retire on $2,000 per week . Now , before you go , ben and I are keen to get a copy of the book into your hands , so we've bought a copy for you .
All you need to do is to get your hands on it is to go to wwwthearmchairguidecomau and give us two things one , tell us where to send it and two , simply pay for the shipping , and we'll do the rest . Once you leave your details , we'll rush a copy out to you and you can start reading along with us as we unpack the book chapter by chapter here .
And if you like the audiobook version , we've got you covered too . You'll receive an option to get that when you enter your details , and you'll be able to get your earbuds on that too . Go to wwwthearmchairguidecomau today to get started . Enjoy .