WCC 1: How many properties do you need

Good morning gang. Good morning, Monday, fresh start to the week. Monday morning, it is a little bit chilly here today, John, if you’re listening in maybe not as chilly as Melbourne, but a bit cold, but good morning, everybody. Welcome to the week. A quick question for you today. How many properties do you need, how many properties do you need to retire on or create the passive income that you want as a property investor? How many properties do you need to create that income that’s gonna get you what you want some point in the future. I’ve said this a few times before, morning trainer, you know, and I think I’ve talked about it last week, the three stages of property investing, acquisitions, the buying, the consolidation, the keeping, the fixing, the maintaining, and then the lifestyle, the transition into, you know, whatever that might be for you. Might be for you from a passive income or cashflow, whatever it might be, how many properties do you need? How do you go about calculating that? It’s quite a simple process from a big picture, point of view, you add up the rents, the rent, and then you take a look at how much passive income that you want into the future and, you know, add them together. And that might be three properties, it might be four properties, it might be five properties. The challenge is for most of us, it is debt-free property, debt-free property, morning to your trainer. Debt-free property that you want. So then remember the first stage is acquisition. Okay, if I need five properties to generate $125,000 worth of income, rental income, then that’s what I go about doing. I go about acquiring and purchasing those five properties. Now, remembering when we have our investment properties over time, those rents will go up over the next 10, 15 years, those rents will go up. Now, a lot of people think that they will double and by large statistically, the rents will not double. The values often double, the rent do not double. So they go up another 50%, half, okay. Morning Alex, morning Patrick. So by large, the stats show. So if you buy something and it’s renting for 500 bucks a week now, in 10 years time, it should be renting for 750 to 800 bucks a week rent. That’s usually what the stats show. Now there is an anomaly in this, and this is where we come under a little bit of scrutiny often where I recommend lots of apartments for your cashflow in the future, rather than houses, because houses’ rent grow slower than apartments’ do closer to the CBD. You can go check these stats out yourself, a property, one to two K from the CBD where there’s employment, there’s cafes, there’s restaurants, those rents have statically grown stronger than houses in the past. Give you an example, in Sydney, we had our clients buy properties in a place called Ropes Crossing $200,000 houses just after the GFC, which were renting for 600 bucks a week. Very strong, very nice. And one bedroom apartment in Sydney, in Redfern, $600,000 apartment, a few years after the GFC. And which one do you reckon today? Rents for $1,200 a week. I’ve already given you the answer, I’ve given away the answer, but it’s certainly not the house in Ropes Crossing. The house in Ropes Crossing is just worth under a million bucks. The same with apartment we had the value, not so long ago, just under a million bucks as well, but the apartment, one bedroom rent for 1,200 bucks a week compared to the house only rent for 850 at Ropes Crossing. So for me, if you’re looking, how many properties do I need in the future? The question becomes which properties, what type of properties? Because houses will have less net cash flow, than apartments, which area, location, infrastructure do you want them in? And so how much debt-free do you want those properties as well? Because here’s the drill, right? But most of us, we’re not gonna pay them off a hundred percent until very late in life if ever. I’m not, I don’t believe that you should pay completely debt reduced the properties a hundred percent. I reckon about a 40-50% LVR is about the right number. Whenever I’ve done my mathematics and done the analysis on our cashflow tools are 50% LVR and your rent’s going up 50%. Boom, there you are. You’ve got your positive cashflow like there’s no tomorrow. So guys just wanted to sort of touch base and would you have to think about that. If you want to work out the cash flows, we’ve got a little free calculator, free cashflow calculator hit us up, hit me up in the chat below. Say yeah, Jace or something like that. And I’ll send you out the, I’ll get you the link to the cashflow calculator. How many properties do you need? Add up the rents, go about purchasing those. That’s the first stage. Don’t worry about debt reduction yet. Don’t worry about the positive cashflow of those properties yet. None of that rubbish because you can’t confuse the acquisitions, the buying with the owning, okay? Because they’re two different behaviors. They’re two different economic outcomes at this point in time. And so buy the properties you want, and then later on, we can decide to debt reduce or add value to increase the rent, okay? And this is so you can renovate the rent goes up or you can debt reduce the rent goes down and then the net result becomes your positive cash flow in your pocket as you go. Now, I always say to people, listen, if you’ve got a good super contribution strategy, if you’re smart with your super, if you’re contributing to your super then in a good way, okay. Jace, no worries, Peter, if you’re contributing to your super over, you know, 30, 40 years of work, and you’re smart about what you buy, your super should take care of at least two days of your 2-3 income that you want in your future. And I say your property investments will take care of the other two to three days of your property in cashflow for your retirement in the future. What we do say to people, if they wanna retire early, if they wanna start darling back is I aim to buy back for your own sanity, buy back a Monday or a Friday gang. It’s pretty amazing if you have a three day week, a three day weekend, or a four day weekend, how much more energy and interest in life, you have going the distance working an extra, you know, three days a week or whatever it is. But anyway, a few people shout it out for the calculator. So that’s no problem I’ll get that out to you. Jason and Neil asked, do you report on advice on towns? If so, how much? Jason we have a membership. It’s called a lifetime mentoring program mate. We’ve got coaches all around Australia. Maybe we’ve got a couple of webinars on this week mate. So if you want to check those out, you can chat to one of the coaches and work out what program might be right for your brother. So may track us down pretty easy to find us on the Facebook page. You’ll see events wherever you are, wherever you live. Just jump on one of those, might have a listening to the coach. They’ll be able to tell you all about what we get up to, how we coach and help property investors all around Australia and New Zealand. So sweet mate. So again, yeah, how many properties do you need? It’s not as many as you think. And for me, you gotta be smart about that. There are a few properties out there that are interesting when it comes to high cashflow and listen, the right one, the right high cash flow property, it’ll be fine, but they do carry a bit more risks. So you really got to analyze what that means, you know, now and into the future. And now I’m going, hopefully everyone’s well, great to see everyone on this morning and thanks for all your comments. I’ll get one of the team to hit you with a link and you can go download the free calculator and hit us up with any questions. If you’ve got, if you wanna know a little bit more. Alright, gang, take care. Hopefully everyone’s well, stay safe and alright until tomorrow, by then chat then. Bye bye.


About the Author
From a small town boy growing up in the remote outback of rural Queensland, to becoming the founder of Australasia’s most powerful property wealth creation engine – Positive Real Estate Group CEO Jason Whitton is on a mission to change the way we look at wealth.