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 facts 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 . In the first time we did this reading , ben , we did chapter one , which was building your knowledge base . Chapter two , second week , was the psychology of investing . Then week three , ben . Was it the three steps , the four steps or the five steps ?
Definitely five . Bryce , Don't cut any corners . Definitely five .
Five essential steps to start . Then we did the fundamentals of investing Ben , which was fun . Then , week five , which was last week , we did a formula . It was called the property investment formula . And today , Ben , today , this is what we're going to do . The psyche behind the price .
So how does property prices grow , Bryce ? How do they grow ?
Well , ben , you know how we like to give people framework so that they can fish themselves . We want to teach them how to fish rather than giving them a fish . We're going to give them another one of those today how they can overlay this . Not only in any suburb in Australia , ben . This framework is actually going to work in New Zealand .
It's going to work in Europe , it's going to work in the Americas . In fact , it's going to work everywhere , because it's a fundamental , evergreen framework that's around human interest , human behavior and economic activity . So do you want to expand on one of those mate ? Choose whichever one you want to expand on .
Well , I'll lead off with the whole fundamental thing in terms of what drives property prices , that is , the level of demand and supply , bryce . So I'll start with .
That's more specifically , demand exceeding supply versus supply exceeding demand .
Very true . If we want to see property prices grow , that's exactly what we want to see . So , on the supply side , what we're referring to is this concept of land and accommodation stock on the land . So a lot of people make the mistake to think that houses are built , but it takes a while for houses to build .
But in greenfield areas there's potentially risk of severe oversupply pretty quickly when they cut up farmland and they make it into subdivisions and start building a new community out there . Now , the other way in which people also make a fundamental mistake is in regards to medium and high density accommodation .
So when a mega development is going to be built and there's four towers or five towers , that also carries the risk in regards to having potential oversupply there . So when we're measuring supply , we're not only just measuring the actual supply today , Bryce , we're also measuring the what's coming . What's coming ?
We're going to peek around the corner future supply .
That's coming around the corner because and that's why we like to buy in areas that are fully established right , not in greenfield areas , because in those fully established areas it's very difficult to bring on a lot of supply quickly when all the land is utilized .
The only way you do that is called backfill or infill sites , and those infill sites carry the risk of potentially getting an oversupply of townhouses or apartments , but not really much else , and so that is the fundamental from the supply side over to use for the demand side .
The supply side is really measured by , as you've hinted there , on the brand new side it's by completions and new approvals , so it's essentially those two .
Then on the established side , it's typically by either auction or private sale , and if we talk about the current environment that we're in , in the COVID-19 environment , those two measures have fallen off a cliff bend . There's no stock and there's certainly no significant major new approvals and the completions are all sort of drying up .
So the supply side is very , very dry .
Yeah , it is . Obviously we've got a bit of construction that's finishing off , but we've got this void that's coming up at the moment . We've obviously just seen the government announce some stimulus for the construction industry , so that's also going to hopefully help on the supply side .
But what we want to focus in on that is to sort of say be careful in terms of what you are buying for investment , Not so much for lifestyle . Go for gold If you want to live out wide or being one of those communities , good for you .
But in terms of capital growth , we're not thinking you're going to get much capital growth in those locations , so be careful in that area .
Now , that's the supply side .
Over to the demand side , Bruce . What makes up demand ?
Wow . Demand is driven by a number of things , ben , and we'll normally see it population growth , how many people are in a household , which is shrinking , and also your ability to buy , which is measured by your income and your interest rates and those sorts of things .
But typically we've distilled it into a framework that I use at the top of this Facebook live around human interest , human behaviour and economic activity . Most three things is what I hinted that you can overlay . Anyway , you're in North Melbourne at the moment , ben , so you're really around . If we go economic activity , how close are you to the jobs market ?
Well , you're in the shadows of the CBD , so it's pretty easy to get access to it . The human behaviour is largely around . What are people going to do on the weekends ? They can go down to the Vic market . They can go to the city and spend some time . There's some amazing restaurants . There's a few parks nearby . This has lots to do .
So that's human interest . And then the human behaviour is typically , what do people think of your , ben , if you live in North Melbourne or a suburb further out or a suburb further in ? So it's largely a combination of those three things which really make up the demand equation .
And I think also what we want to make sure that there's potentially false demand sometimes when we may just have a look at online search interest price and we get this scenario where everyone might be gawking at the really lovely and expensive homes in an area and we might think that makes up demand .
So we've got to also remember that true demand is not only the desire to get in but also the ability to be able to afford in that particular location . So you can be a statistic in terms of interested in an area , but unless you can afford it , you're not going to make up any demand equation .
That's going to push any prices higher soon in that particular area . So I think that's also an important takeaway . When we sort of talk about the demand elements and in terms of the first thing you want to look at as you filter this information in is , economic activity is number one .
So you can make the mistake of thinking , oh yeah , there's going to be demand in a particular area .
But if you've got really good economic activity in that city or that region and it's not just from a singular industry but from multiple industries and a lot of investment going in there , like our big capitals , then you've got every chance that that's going to create the jobs and that's going to put wages higher and that's obviously going to mean that people will
be able to afford to borrow more and then they'll become a statistic of true demand . And when you get that true demand , you're ultimately going to be in a situation where you can basically add to the demand side and push prices higher .
Folks , we are reading some highlights , stories and some concepts from our book , the Armchair Guide to Property Investing how to Retire in $2,000 a Week , and there's a couple of ways to get your hands on this .
All good bookstores will have a copy , so you can walk in and grab a copy , so you can continue to play along with us at home and maybe go back and revisit the previous Facebook lives , or , ben ? We've spoken to our publisher . We've got some copies in the office , so if you want us to send you a free copy , we will .
All we need you to do is to tell us two things , ben , where to ship it , and then give us the postage and handling . If you pay for the postage and handling , we'll buy the book and give it to you . So just tell us where to send it to you . But we're very proud of the fact that this is an evergreen book , ben .
It's not a book that only works in one period of time . It works no matter which market you're dealing in . So you talked about human interest . Sorry , you talked about economic activity , ben . Yeah , let's talk about the other two .
Well , the human behavior stuff is obviously how we go about life and how we act as homo sapiens and humans , like we're social creatures .
When we live in a democratic and capitalist environment , we do aspire to living a certain lifestyle and with that comes the status of living in those areas and the brand and their reputation and what we think is successful and that matters to people right , and so they will pay a premium to live in those locations as opposed to locations that they may not see as
desirable .
So I'm not going to name names , but if you think I know that , if you're thinking to yourself you could come up with a couple of really high desirable suburb names in the city that you're living in , or even streets if it's a small regional town that you're living in that have status and appeal and everyone would love , if they're successful , to live on those
streets or in that suburb or in that part of the community . But there are also other areas which might be the bad end of town or an area or a suburb that has a stigma or some type of perception problem , and it's those areas there that also would potentially take away owner occupiers from thinking about buying in those areas .
So that stifles medium to long term growth , especially if it's an area that's not close to the city that can potentially gentrify .
So the exception to the rural areas are areas that can gentrify , and we've seen plenty of those examples from areas like Fortitude Valley and into Sydney , where it's probably the inner west , or Alexandria , zetlands , those types of areas that are gentrified , redfern , and then you've also got areas here in Melbourne which you might be talking about Yarraville , seddon ,
futscray , those types of areas . So yeah , that's what you want to be talking about here , because owner occupiers control the marketplace . They represent 70% of the buyers and so they're buying with their hearts , not their heads . But if they can see opportunity in those particular areas , they can drive demand and that push price is higher .
But it's because they can change the status and that's that human behavior element . So I think that is one of the indicators that we're looking at , to try and see whether there's opportunity to buy in a particular location or not .
Now , status increase , ben , is something that seems straightforward If I have more wealth or I've had more knowledge or I have , it's largely around appearance and what people think of me on the positive . But it's really also about minimizing status decrease , which comes from what will I feel like I've made a silly decision ? What will people think of me ?
So it's really maximizing the up and minimizing the down that we need to be focused on . And in some cases you may be going into a gentrifying suburb , ben . I remember a suburb I won't say the name , but near where my parents live in Perth .
That was very much a negative status suburb which now that I've been gone , when I was growing up , ben , but now if I go back , that particular suburb has been exceptionally gentrified . It is still close to all of the lifestyle drivers . You get very close to free mantle and yet sometimes even I have a little head spin when I go .
Yeah , that actually is a desirable suburb now , because it was so ingrained in me when I was a younger kid that that was a negative status suburb which has now turned into a very positive status suburb . So they can change , but they take a little bit of time to change . It usually comes through a gentrification process of being close to the lifestyle drivers .
So we've got . We've talked about economic activity , we talked about human behavior and the third one is really around human interest , which is pretty easy for people to understand , really , isn't it ? What are you going to do on the weekend ?
Are you going to be sitting in your suburb with nothing to do with idle hands being the devil's tools which then works to making the status go down ? Or is it just full of life ?
Is it just have so much options that's got park and open spaces and close to the theaters and you've got the best cafes and you get the best smashed avocado and they do the lattes with all the art on it and all those sorts of wonderful things that make it just a great , desirable place to be . Really , what is what human interest is about ?
Whether it's walking distance to a train , particularly in the biggest cities of Melbourne and Sydney , where people will pay a premium not to be congested , not to be stuck in traffic , and so human interest really is the easiest one of these to understand , because it's about what do you do for fun when you're not working .
Yeah , and also the activity centres you know if they can play their sport , the sporting grounds , the schooling zones where their kids are going to have the best opportunity to learn and not necessarily be disrupted in terms of poor school schools or whatever that looks like .
So I think you're right , that's pretty easy and sort of blends into what we talk about in terms of the practicality test and the game of property investing , which if you're not familiar with that , then just Google that and you'll see us explaining what the practicality test and also the game of property investing is all about as well .
So there's definitely plenty of opportunity there for us . So that's the end . Yes , you go .
I was going to say . On page 144 we talk about a couple of property indicators around , property indicators being market indicators , demographic and human nature . We won't go into those , so we'll get people an opportunity to get a copy of this book and go through that . But I reckon we might round out this story , ben .
We talk about location , doing 80% of the heavy lifting , and on page 150 of the book we tell a story of two houses , two identical houses , which , when this and it's a story that you talk about a lot , ben , but when this concept lands around two very similar buildings but having two very different prices .
I think this is a fundamental concept to get , because once you get this , it's I reckon it's the biggest penny drop moment . I reckon you tell the story best . So tell us about the tale of two houses , ben .
Right , yeah , so I'll set the scene . So obviously we're going back over 150 plus years ago to the Gold Rush era , where we have a road , coven Co coaches running up and down a road taking gold from the mining fields of Ballarat , bendigo , castle Main and those particular areas one of the richest gold deposits in the world .
And then we've got an emerging city with culture and community , and you've heard me talk about this before , but Melbourne , per capita , was the richest city on the planet back in the Gold Rush era .
So you've got the leafy east areas like Hawthorne , campbell , el Q , turrack , and we're building these beautiful Edwardian and Victorian homes of that era and they've all been beautifully handcrafted . You know the craftsman ships his first class . You've got the lead light . You've got all the beautiful handmade rails going upstairs to the different locations .
You've got the large ceiling areas , all of the sort of fret work that's been done around the property , all of it just finished it off beautifully , right , and it's the same craftsman's who had been doing the properties located just on the Yarra there on the eastern suburbs of Melbourne , and also the same properties you've got being built in Castle Main as that
city starts to also grow .
But what is the broad intensive purpose has been . The properties look very similar in terms of the property , the floor size , land size , bedroom numbers .
I mean it's rinse and repeat price .
We're building the same type of properties and we're talking about significant assets here both of them but all we then need to do is fast track to today and that property in Castle Main , which would still be a significant asset in Castle Main , has owner-occupy appeal , scarcity value , historical significance all of those things might yield you $1.5 to $2 million in
today's market , whereas exactly the same property built and purchased at the same time would yield you maybe between $5 to $7 million in a Melbourne market . And that just tells you that location absolutely does 80% of the heavy lifting when it comes to that type of asset .
There's a section to the rules which we talked about high density and oversupply in that type . That's why it does 80 and not 100 . Then , correct , that's right , because it is land value that we're talking about here .
So land to asset ratio is the critical element and the land values tend to grow from the city out and what Bryce was mentioning earlier around New York , paris , london , all of the big centres , the Tokyos , the land value is significantly worth a lot more closer in and that spreads out .
So , irrespective of the improvements , which is the property on top of that land . It's that land value that gets you that long term return over time . Now you can still get it in a small block of apartments , in a boutique apartment , because you've still got a nice land size there in a particular location . So there's still capital growth to be had there .
But fundamentally that story was just about comparing apples with apples and putting a time frame of 100 plus years on it and it's really really clear in terms of the material gain that one's had over the other when they're like for like assets .
There you go , folks . I reckon if you're listening to this , you get a chance to watch that back . Just go back and listen to that , because it is so foundational .
It is so important that you understand that the difference between you having success as a property investor and the difference between you having disappointment as a property investor largely in our experience comes back to that . Probably a very high percentage of people who haven't planned properly .
That's one reason , but the other reason is they buy the wrong properties in the wrong locations . So that is really , really important .
What we're actually doing is we're building a pyramid of knowledge where we're ticking , ticking , ticking , ticking , ticking all of these key concepts then , because towards the end of the book , we're actually going to do case studies around how to get that $2,000 a week . So we are slowly building Ben .
We're building all the important frameworks that you need to have so that you can know how to successfully build a property investment . So next week when we do this , we're going to talk about the buyer's decision quadrant , ben .
So check around , stick around for that .
But today we talked about the psyche behind the price , which is largely around demand and supply what drives them and on the demand side , it's around human interest , human behavior and economic activity . So there you have it , folks . We are building out to help you understand how to build a popular portfolio . So , ben , it's been fun .
Just want to shout out to all the crew who are listening and watching to this we have a podcast each and every week that we go to to give insights , relevant current events , all those sorts of things . We do that every week , ben , don't we At thepropertycouchcomau . Hey , there , folks .
Bryce , here again , and we've got something super exciting to share with you , because we've been working hard on creating a brand new course that perfectly complements the book and this mini series . It's called how to retire on $2,000 per week .
In this course , we'll reveal never before seen insights into how we created each of the case studies in chapter 10 of the book . In fact , we're going to make it available to you first , just for being a part of this awesome mini series .
Simply go and get your hands on a copy of our bestselling book for free , and everyone who got a copy during this mini series will receive a special discounted price that won't be available anywhere else .
It's our way of saying thanks for tuning into our armchair guide to property investor mini series , which we hope is adding value as we show you how to retire on $2,000 per week .
All you need to do to get your hands on your free book is go to wwwthearmchairguidecomau and give us two things One , tell us where to send it and two , pay for the postage and handling , and that's it . We'll do the rest .
Once you leave your details , we'll rush out a copy to you and you can start reading along with us as we unpack the book chapter by chapter here . Once we release the course at the end of this mini series , you can dive straight into the teaching and start creating your $2,000 per week . So go to wwwthearmchairguidecomau today . Enjoy .