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TPC Gold | You’re Rentvesting… But Have You Set It Up Right?

This snippet is from one of our previous episodes: Q&A: Loan Structure for Rentvestors and more! 

More and more Aussies are turning to rentvesting—renting where they want to live while investing where they can afford. 

But while rentvesting is a smart strategy for many, there’s a crucial piece of the puzzle most investors overlook… 

Have you set up your bank accounts and loan structure correctly? 

In this bonus snippet, Bryce and Ben answer listener Aaron’s question about how to manage money when rentvesting—and break down the banking structure you should be using to get the most out of your investment properties. 

They unpack: 

  • Why your offset account placement matters (and how it can save you money) 
  • Whether to have one account or multiple for different properties 
  • The bucket system that simplifies cash flow and protects tax deductions 
  • Why filling your offsets before making extra repayments could be a game-changer 
  • How to structure your loans from day one to keep your options open later 

Don’t let a poor setup derail your rentvesting strategy…

Far too many investors lose thousands by not getting their structure right from the start. 
 
Book a free consultation with the Mortgage Broking team at our sister company Empower Wealth and make sure your rentvesting strategy is built to performtoday, tomorrow and long into the future. 

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If You Enjoyed TPC Gold | You’re Rentvesting… But Have You Set It Up Right? You Might Also Like:


Transcript

Bryce Holdaway
Here’s the next one Ben, from Aaron. 

Aaron
Hi, Ben and Bryce. My name’s Aaron. Absolutely love your podcast. I binge listened to 220 odd episodes in three months when I first found out about it. I’ve just got a question in regards to structuring your bank accounts. We rentvest. Understand if it was a principal place of residence, you’d want all income coming into that offset account. But because we rentvest, just wondering, do you have one bank account where all the rent and all the mortgages come out from? Or do you have a separate bank account for each property where the rent and subsequent mortgage repayment comes out of? Didn’t manage to hear anything about structural bank accounts in any of the podcasts. So apologies if I’ve missed it and you have discussed it. But I don’t think I have heard anything about it. So very interested to hear your response on that. Thanks again guys, you guys are absolute legends. Cheers. 

Bryce Holdaway
Thank you Aaron for binge listening to 222 episodes in three months. I think that would have been some effort. They probably don’t want to hear our voice for a bit there.  

Ben Kingsley
Well, he’s probably right too, in the sense that we do a lot of our lending structure explanations in some of the webinars we do and certainly in some of the visual teachings we do because it’s hard to talk about without demos. But I’m going to have a go, Bryce. I’m going to have a go. So here we go, Aaron. In theory, you’ll always have a minimum of two accounts relating to your investment purchase. You will have, because we uncross-securitise, so we don’t cross-securitise in terms of the lending structures that we do. So you’ll have a loan of up to 80% against the investment property.  

Now we all know that when we purchase a property, we need to work out what the remaining costs will be to finish off that purchase. So if we’ve got 80% against that property, the other 25% (meaning the other 20% of the value of that property plus the 5% for costs) have to come from somewhere else to complete. We call that funds to complete. So in a lot of cases we want to use equity out of an existing property, which is hence introducing that second loan as opposed to paying cash. So some people might choose to pay a portion cash or they may choose to pay a portion equity.  

Our best structures are that once the property investment is set up, you’ve got 105% lending against that property which allows you to move forward with that purchase. Now, in terms of all of the payments and the money flow, this is where it’s really important to follow our rules. And our rules are based on our MoneySMARTS money system where we have (and even though you’re rentvesting which means you don’t have an offset against your principal home), you must have an offset against one of your investment properties. And so we would always say, depending on which lender you’ve chosen for price and also feature, that we want at least one of your lenders to have an offset. Now if both of your lenders have offset opportunities, then we would put the offset against the lender that has the highest interest rate.  

Bryce Holdaway
So it’s a mathematical discussion, isn’t it? 

Ben Kingsley
It is. It’s all about the numbers, right? So in theory, you put your offset – your primary account against the highest interest account, and you fill that bucket. Okay? You do not pay the loan down; you fill the offset bucket next to that loan. And all rent goes into that account. It’s really important that you understand that. So all monies flow into that account, and then all repayments are made out of that account. We would also say to you as well, because that offset is a standalone account and not a loan account, by doing so, you would also be putting all your income into that account. Now you might be saying, well, I’m not saving interest in doing so because ultimately it’s not my principal place of residence, so you’re reducing my interest costs, which means I may not get as much back.  

Now we don’t know whether you’re negatively or positively geared so we would always still say, organize your money that way. In terms of making your expenses, you’ll have a choice there. If you’ve got some money in available redraw or still some buffer lending, then we would say for expenses, use that money as opposed to using the money that you have in your offset account. Because ultimately, over the course of time, you’re going to do one of two things. You’re going to fill up all of your offset buckets which means that technically you’ll have no debt if you were to give that money back to the bank.  

Or if in 20 years’ time, 10 years’ time… you do choose to change your strategy, which we always say if you’re gonna be rentvesting, it’s probably for the longer term. But if you do choose to sell those properties, take that bucket of money and you put that, because it’s obviously after tax, all of your income going in there, take that money to put against your principal home, which reduces your non-deductible debt and it also ensures that your deductible debt against your investment properties are giving you the best advantages for you and your family.  

Bryce Holdaway
Yep.  

Ben Kingsley
So, I mean I could draw that but that’s how I would say it in words.  

Bryce Holdaway
I think the buckets is the best visualization for a podcast, Ben. It’s like, just line up your buckets against the debts. And if you visualize that the bucket that’s the most expensive, Ben, just have that as the biggest one. That’s the one you fill up. And when it’s filled, where does it overflow? Onto the next one, which is the next biggest one. I haven’t seen a better analogy than that. You’re just filling up buckets. I’ve got a private loan where offset’s full at the moment, Ben. So I just found, then I’ll just put an offset against the most expensive investment debt that I have so that I can reduce some of the interest that I’m paying, which is important.  

Hey, another extension of that, Aaron, and we have talked about this previously, but it’s worth mentioning is that some people have big cash when they’re buying their principal place of residence, and therefore, because of this huge cash component, they then go to the bank and say, well, I’ll only borrow a smaller amount, whereas our recommendation is you go and borrow the maximum amount that you possibly can and then put your money into the offset account. So say the net was, you had $300,000 in cash, Ben, and you were gonna buy a million dollar home and so you’re only gonna borrow the difference. No, that’s not a good example. $300,000 cash and $500,000. So you’d only borrow the difference of $200,000. We’d actually say: no, go and borrow the full $400,000. And then actually put the whole $300,000… well you’ll tip off $100,000, you’ll just have $200,000 in offset.  

That allows you to control your cash, it allows you to control your liquidity; make sure you don’t sleep with one eye open at night. And if you’re disciplined with that money, it’s actually really, really good because if you at some point pay off the home and then realize that the house is actually a good investment, probably we’ve talked about this previously, you would just move that bucket of money and you’d go and lean it against the next optimal interest rate loan that you have.  

Ben Kingsley
Brilliant. 

Bryce Holdaway
So it’s very good, Aaron. Very good question. Thanks again for binge listening to 220 episodes in three months. 

 

TPC Gold | Come Celebrate with Us: Our Book Launch & Live Event!

In today’s celebratory episode, Bryce & Ben share behind-the-scenes stories of our brand-new book: How to Retire on $3,000 a Week – The Property Couch’s Playbook for Passive Property Investing… which hits stores TODAY!  

It’s the ultimate culmination of ten seasons of property investing insights, sharpened and refined through years learning with (and from) our community and clients. 

This isn’t just an updated version of The Armchair Guide—it’s a full rewrite, packed with new strategies, insights, and a fresh, easier-to-read structure to help everyday Aussies map out their property investing journey. 

Find out: 

  • What inspired this new book 
  • Why the first two books weren’t enough—and how this version fills the gaps 
  • How you can join Bryce & Ben LIVE in Sydney to celebrate 

Live in Sydney? Come Say Hi!

Ben and Bryce are doing a one-night-only event at Dymocks’ flagship George Street store on Tuesday, 1st July from 6:00pm–7:30pm. Tickets are just $12 and include light refreshments. Plus, you can purchase the book and get it signed on the night! 

BONUS: We’ve got 5 FREE tickets available for our TPC community! First in, best dressed… head here to claim yours. 

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How to Retire on $3,000 a Week – The Property Couch’s Playbook for Passive Property Investing is available now at all major booksellers, including: 


Transcript

Ben Kingsley
G’day folks, it’s Ben and Bryce here and this is one of our little bonus episodes, but it is an important bonus episode, isn’t it Bryce? Because today is the launch of our brand-new book: How to Retire on $3,000 a Week – The Property Couch’s Playbook. So mate, congratulations. And yeah, what inspired us to pull this together, mate?  

Bryce Holdaway
Well, I’m glad you asked, Ben. It sounds like we’ve rehearsed that. But look, the idea was very, very straightforward. We were super proud of our first book. But when you’ve been in the game like we had (the first book was prior to the podcast), and one of the things that the podcast has been able to give both you and me… Well, I shouldn’t speak for you; I’ll speak for myself. It’s given me an opportunity to sharpen the way that I think about the concepts around property investing because we’ve had to over (the last) 10 years. 

Ben Kingsley
Yeah. 

Bryce Holdaway
So it’s like we had another go at it. It’s like: Okay, if we were going to do that again, what would we do different? So the truth be known, when we started out, it was going to be a revised and updated book. But then by the time that we finished the scribing Ben, it was 90% different. Therefore, hence the reason why it’s new rather than revised and updated.  

Ben Kingsley
I just sort of describe it as: you’re doing a new build and you’re doing a custom build or you’re doing a significant renovation on a property and you do all your planning and you speak to your architect or designer, draftsman or whatever, and you build it and you think… If you have the benefit of hindsight and you go, maybe, probably next time we could have done that, next time we could have done that. But effectively it’s fusing these two books into this (one book). But it’s completely refreshed and rewritten in certainly a lot easier reading style, takes people on the journey that they need to go on. And as you say, there’s some fresh content, new content in there. Obviously, it’s been a long time since we put the Armchair Guide to bed. And so this one now has got, yeah, a whole new section of new insights around different types of markets. When we start talking about entry level markets and blue-chip markets and those types of things…  

Bryce Holdaway
Then there’s just stuff that we just had another opportunity to talk about. So to say we’re proud of this would be understatement folks. We’d love for you to get your hands on it… and look, it’s 20+ years for Ben and I that you can just fill into a weekend. So get yourself your hands on it. There’s a couple of ways that you can do that, if you go to the big bookstores Ben. But we’ll rattle off a few that’ll help you: QBD’s got it, Big W has got it, Amazon, Dymocks, Booktopia. So go to all the big booksellers. They’ll have their hands on it. But we’d also like you to just check where you normally pick up your books. That’ll be a start. And Ben one of the things that we’re excited about doing… correct me if I’m wrong, I’m not sure if we did this on the first one sort of 11 years ago, but we’re cutting a lap up to Sydney and Dymocks have invited us into their flagship store, Ben.  

Ben Kingsley
They have. 

Bryce Holdaway
On George Street, no less, in the winter in Sydney. So that’s happening on Tuesday, 1st of July at 6.00pm to 7.30pm. So we want to invite our audience. Wouldn’t it be great, Ben, if Dymocks was just full of Couch-ers? If they all turned up and wanted to say hey. 

Ben Kingsley
Yeah, would be nice to meet some of our community up in New South and the Sydney market. So tickets are $12. It is a paid event, but you’re going to get a little bit of refreshments and potentially even a little glass of Vino.  

Bryce Holdaway
Bevo. 

Ben Kingsley
Little bevo as part of that. Yeah, so there is a little bit of alcohol for those people over 18 years of age and can show their ID. So your money is going to cover the cost of that and of course you can buy the book at Dymocks on the night. If you buy the book, we’ll also potentially be able to put a little signature in there, a little note.  

Bryce Holdaway
We’ll have a little note. So just so you know, that $12 has got nothing to do with us folks. It’s the Dymocks show. We’ve just been invited to turn up and talk and have a chat. Ben, we’re pretty shy blokes… I’m not sure that we will be able to; we’ll struggle to be able to.  

Ben Kingsley
Yeah, I think we’ll struggle.  

Bryce Holdaway
So TPC does have five free tickets available. So how can they get one of those, Ben? 

Ben Kingsley
Well, I think it’s got to be first in best dressed, doesn’t it, Bryce? So if you’re an avid listener or maybe an Empower Wealth customer or whatever… But you’ve got to be quick because they’re going to be snapped up. But please, if you are going to attend, you know, obviously no shows wouldn’t be great, but yeah, do your best to get there. And if you legitimately have time available on the 1st of July between 6 – 7.30pm at George Street Dymocks, we will get the tickets out to you.  

Bryce Holdaway
Very good. So there you go folks. It has happened. We set the goal; we achieved it Ben and our hope is that it serves you. We hope that it does for you what it says on the front of the books: that you actually get to retire on $3,000 a week. So we’ve given you a Playbook folks; only one thing left to do! Go and see us on Tuesday 1st of July between 6-7.30pm if you live in Sydney. We would love to say good day to you. Please come up. Please say hello. We’ll have The Stig with us. So you’ll probably want to have a photo with her. And if you can’t make it, go to QBD, Big W, Amazon, Dymocks, Booktopia… you’ll be able to get your hands on a copy.  

Ben Kingsley
Don’t forget the link to buying the tickets for the event is also in the show description.   

Bryce Holdaway
There you go, folks. We would love for you to get your hands on a copy. 

 

TPC Gold | Why High Earners Stay Broke (And How to Fix It)

This snippet is from one of our previous episodes: Secret To Making Money While You Sleep – Chat with Tom Panos. 

Some people earn six figures but still have nothing to show for it. Sound familiar? 

In this week’s bonus episode, we’re hearing from the always-insightful Tom Panos, one of Australia’s leading real estate coaches, auctioneers, and media personalities.  

Tom has worked with top-performing agents and seen firsthand why so many high earners remain financially stuck—despite their impressive pay checks. 

The Harsh Reality: High Incomes Don’t Always Equal Wealth 

Tom shares a no-nonsense take on why many professionals struggle to build wealth. He highlights a common pattern: 

  • Driving a $100,000 car on lease payments 
  • Wearing $1,500 suits 
  • Taking luxury holidays that cost $15,000+ 
  • Yet only having $5,000–$10,000 in savings 

As Tom puts it: “They’re spending more of their money and time looking like they’ve got money than actually accumulating it.” 

So, what’s the solution?  

The Path to Real Wealth: Hustle, Save, Invest 

Tom lays it out plainly: if you want financial freedom, you need to play the long game. This means: 

✅ Hustling and grinding in your 20s and 30s
✅ Saving aggressively instead of overspending on lifestyle
✅ Investing in property to build long-term passive income 

He explains why property is the ultimate “escape plan”—allowing investors to build a financial safety net, create wealth while they sleep, and eventually live life on their terms. 

Want to Learn More? 

If you’re serious about escaping the paycheck-to-paycheck cycle and ready to set yourself up for a wealthier future, don’t leave it to chance.

Join our FREE Masterclass and learn how to build a rock-solid property portfolio—without risking your lifestyle or making costly mistakes. 

👉 Get started here 

__________________

If You Enjoyed TPC Gold | Tom Panos: Why High Earners Stay Broke (And How to Fix It), You Might Also Like:


Transcript

Bryce Holdaway
You mentioned before that you buy whenever cashflow allows and hold them for the long term. You’re in the newspaper business which is in the business of reporting on property either booming or busting, and to be honest we’re about to face some headwinds with the news that we receive.  

Tom Panos
Yeah. 

Bryce Holdaway
How do you mentor people who come to you for advice around property? You know probably with the backdrop of (the) Becoming Warren Buffett documentary, the ultimate long-term investor. What advice do you give to people to say: hey look, you’ve got to play the long game here and you are going to face some of these headlines but stay the course. Do you get that question and how do you handle them?  

Tom Panos
Yeah, yeah, look, I do. I get that question all the time. But I mean, ironically, I get that question from people that rock up with a $100,000 car that’s got, you know, lease payments of say, two and a half thousand a month, they’re probably wearing a $1,500 suit. And they most likely have just come back from a holiday – that between air travel, accommodation, and drinking and partying money, they’ve spent 15 grand.  

Ben Kingsley
On their credit cards.  

Tom Panos
And they’re frustrated because what they’re doing is they’re making decent money. Because most of my conversations are with people that are in the sales professions and they’re making decent money, but they’ve got like five, ten, fifteen grand in the bank because they’re spending more of their money and their time looking like they’ve got money than actually accumulating money. So the first thing I say to them is: guys, drop the ego and understand that what’s going to give you absolute freedom in your life is not getting the approval of other people but being able to put yourself and create. You’ve got to plan the escape out of, whether you’re working in the corporate world or whether you’re working as a tradesperson or whether you’re working as a real estate salesperson, you’ve got to plan the escape. No one’s gonna come and rescue you. You’ve got to plan the escape. And for me, property investment is the escape.  

When I’m talking to a young guy, I’m saying to them, even if you write a million dollars in commissions, even if you make a million dollars in commissions, you’ve got to pay about half of that to your real estate office, leaves you with $500,000. Out of that $500,000, you’ve got to pay two admin staff, leaves you with $350,000. Then you’ve got to pay the tax office, right? So you’re going to pay a third of that, even if you’ve got a company set up, leaves you with $200,000. And you haven’t even yet bought a cup of coffee, you haven’t paid your rent, you haven’t paid your car lease payment, you haven’t paid any school fees.  

So how can you win when you play that game when you’re playing against someone else who might have $5 million worth of real estate? Well actually, don’t even talk about $5 million. Let’s talk about if they’ve got $1 million worth of real estate. They make money while they sleep. They’ll make 10% on January 1 each year because they’re playing the long game.  

So what I say is: be prepared to hustle and grind and do it hard for the first three, four, five years in saving money…in being comfortable going to bed at night knowing that you’ve got a mortgage out, which means that you’re losing a bit of flexibility in life, because it means you can’t just pack up and say, that’s it, I’m disappearing, I’m moving over to Spain for six months and partying, or I’m doing that; it creates you to have to be disciplined. Ben and Bryce, this is what I said then: Hustle and grind and save and invest in property in your 20s and 30s so you can start chilling in your 40s.   

Ben Kingsley 
Oh that’s great advice, some really great advice.   

Tom Panos
Sorry for going on, but you can, like (see) it upsets me when I see a lot of people make good money. They got great turnover, but they got zero left over.   

Ben Kingsley
They’ve got nothing to show for it, have they? They might have a few great memories in the memory bank, but a lot of it is… You know, the power of property investing is if you do the hard yards early, this can be the passive power of that income for not having to do much for it. It’s just incredible. Once you build that base wealth up, it just continues to be in perpetuity. You just continue to keep getting that rent, that passive income. The value of those assets grow and you know, you talk about the different stages in your life: the time you get, the choices you’re able to make and, you know, money’s not everything. Let’s be clear about that. But what it does allow is the choice to do what you want to do. 

 

TPC Gold | Living Off Equity: Smart Strategy or Risky Move?

Welcome to the first bonus episode of 2025!

In today’s snippet, we’re answering a question from listener Lou, who’s wondering: Is living off equity a smart strategy for early retirement—or a risky move? 

Bryce & Ben break down the pros and cons of borrowing against equity, why passive income is key, and how having the right exit strategy can make all the difference. 

Plus, they unpack the common mistakes investors make when relying too heavily on equity and share insights on how to structure your portfolio for long-term success. 

For the full Q&A episode, tune in here: Episode 147 | Q&A – What’s Your Exit Strategy? Are You Retiring or Have You Bought a “Dud”? 

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Now That You Know More About Living Off Equity… What’s Next?

We hope these insights help you on your journey to building a successful investment property portfolio and securing your financial future! 

But if you’re serious about retiring on $2,000 a week through property investing, don’t leave it to chance. Join our FREE Masterclass and learn how to build a rock-solid property portfolio—without risking your lifestyle or making costly mistakes.  

What You’ll Learn in This Exclusive Masterclass: 

How to Buy an Investment Property Without Impacting the Family Budget
Think property investing is only for the wealthy? Discover proven strategies that allow investors of any income level to start building wealth through real estate. 

How to Retire on a Passive Income of $2,000 Per Week with Just 5 Properties or Less
Master our 5-step framework for correctly financing, buying, and holding properties for long-term success—no matter where you are in life. 

Your Most Burning Property Investment Questions—Answered!
We’ve compiled the most frequently asked questions from our 40+ years as property investment advisors, so you can skip the guesswork and fast-track your success. 

👉 Register Now

Want to Dive Deeper? Check Out These Episodes:


Transcript

Bryce Holdaway
Alright here’s the first one from Lou (via) Facebook message: Hi guys, long time listener. You take the edge off Sydney commuting, thank you. My husband and I currently have six properties in New South Wales, nothing in Sydney Metro yet, valued at $2.3 million.  

Ben Kingsley
Very good. Well done. Congratulations.  

Bryce Holdaway
And an LVR at 64% with a dollar sign at the front. 

Ben Kingsley
Almost neutrally geared right there. 

Bryce Holdaway
And listen to this…a gross yield of 8.2%.  

Ben Kingsley
Oh goodness me. Sorry, apologies. Cash flow positive. 

Bryce Holdaway
You went early. 

Ben Kingsley
Cash flow positive!  

Bryce Holdaway
That’s cash flow positive. We’re both 40ish with two kids under five. Wow, they’re busy. Our aim is to retire early with $100,000 income. Reading your book, watching the videos and listening to the podcast, I am wondering if retirement income is always based on rental income alone. Or do you ever recommend borrowing off the equity as part of an early retirement strategy? With major buffers, of course. We’ve been very wrapped up in the acquisition phase that it’s hard to see where the end is, especially when rents seem to creep up so slowly. I would love your thoughts on living off equity as part of the strategy. Thanks, Lou.  

Ben Kingsley
Thanks Lou. So there’s a bit going on there. The one thing I don’t have is the income story and I don’t have the super story. So one of the big things that we always talk about when it is your overall passive income, we don’t disseminate or dissect into what is coming off the property versus what’s the overall wealth story. So you might have some shares mixed in with that…definitely some super, unless you’re maybe self-employed and you haven’t been paying yourself super, which you should because it’s a very, very effective way to invest.  

The reality is this…we always talk about getting the money in your offsets to continually keep filling the buckets. So technically your interest is lower and at some point in time you could either retire the debt or you could have all this equity built up, all this liquidity. So it’s not that traditional borrowing and living off the equity because obviously when you do that there’s interest on interest and that’s not necessarily what I would consider a successful way of doing that because the other thing that we don’t know from Lou is: how much money do they want early versus how much money do they want late?  

So as an example, if you’re 95: How much are you going to spend of that money? Are you going to still be travelling the world? Are you still going to be jumping out of perfectly good aircraft? So you’re going to be doing all this adventure stuff or no, you sort of you know are going to be teetotaling and just sitting back and relaxing and watching the world go by and spending less? So a lot of people might want a little bit more earlier on and that’s where the idea of having that liquidity piece is important, or if they want to basically have that money indefinitely and pass it on to the next generation, then the reality is going to be that they can do that. But it all comes down to looking at those overall numbers.  

On the whole, I’m not a big fan of living off equity. I’m more of a fan of retiring the debt and obviously doing an exit strategy where you might sell one down and time that exit out. it would come down to modelling the numbers, modelling the growth story, because with an 8.2% overall gross rental yield, I’d be fascinated to have a look at what those properties are like and whether they’re getting lots of growth. But if I’m already at 64, I’d be paying those down and there may be one more in me in terms of a growth asset. So if I was looking at their portfolio, I’d probably say get me a growth asset in there and then by doing that, effectively I would sub out maybe one or two of those, even though they’re giving really strong cash flows, I might sub out one or two of those higher yielding properties that are giving me no growth in retirement. So I’d exit out of those over a period of time.  

Bryce Holdaway
Mate I like the cut of your jib. The point here is, you know, they’re relying on increase in rental alone. The important thing is if you’re effectively channelling the money back to retiring debt, you’re still increasing the rental pool through debt reduction. So that’s one thing. And two, it’s about, for me, this question, because I must admit my early strategy was the harvesting equity part of it. Thanks to you, meeting you many, many years ago, that’s swung around. But the question is, are you active or are you passive? So we would be considered active, we would be considered more likely to acquire more properties than the average person. Statistically we know that not many people buy one, and then of those who do, 73% (stop) at one. Chris Gray for example, he does that. And he’s got heaps of properties right. So he is a more active investor than someone who is more passive.  

Ben Kingsley
Correct. 

Bryce Holdaway
So therefore he’s got eternal confidence in the fact that he’s got this portfolio in the east suburbs of Sydney and will continue to grow over time.  

Ben Kingsley
And he’s value adding.  

Bryce Holdaway
He’s turning apples into apple pie. 

Ben Kingsley
Yeah, and he’s doing, you know, sort of penthouses on top of blocks of apartments and all that type of stuff. So he’s a lot more sophisticated. He’s solving bigger problems; taking on greater risk for better rewards. 

Bryce Holdaway
So that’s where people have got to work out on the scale where they are. And it’s a white knuckle ride because it relies on properties always growing and what about the fact that in the next few years we might be in a lower growth environment and if you’re racking up debt at $100,000 a year but you’re in a low growth environment, that might leave you with some anxiety around what your retirement looks like.  

Ben Kingsley
If you’ve got a $10 million property portfolio. Risking two of it. Well, that’s okay, isn’t it?  

Bryce Holdaway
But we see a lot of portfolios in this business and not a lot of people are there. So put a ring around if you see yourself as an active or a passive investor. Because if you’re passive, well then it’s more likely to give you less sleepless nights to do a debt retirement strategy and live off the passive income. If you’re active and you just get your kicks out of property and you see yourself putting on tool belts and renovating, well maybe living off equity might be for you.  

Ben Kingsley
And for these guys, it sounds like they’ve gone regional. To get those types of yield, it’s unlikely you’ll find them in any major metropolitan area. You might have one in Darwin or something along those lines. So the reality is, if you’ve perfected what you’re doing and it’s working for you, and you’re not having the tenant challenges with bad tenants in some of those locations, because I’d love to know some of the stories around each of the properties and what’s happened and the good tenants and the bad tenants, because that’s usually what you get.  

You never get a perfect run in terms of good tenants when you’re sort of looking at those types of yields in some of the regional areas. But the reality is, is if you’re up for it and you’ve perfected what you’re doing, you can keep replicating. The real question is, once you then forecast those cash flows, you’ll know when you need to stop as opposed to, you know, if you want to keep going. Because property has a high in and out cost, doesn’t it? It has a high recycle cost. Cost to get in, cost to get out. So it’s important that you don’t just keep chasing them down, when retiring the debt and living off the passive income could be the (way to) go.  

Bryce Holdaway
One of the more profound statements I heard you say very early on when we first met Ben was you said: This is my goal. This is my passive income goal. I don’t need many more properties before my portfolio is done. Job is done. You speak to Jane Slack Smith, job is done. She’s not acquiring anymore. And that was counterintuitive at the time because you can have this sense that you just gotta keep buying. Gotta keep buying, gotta keep buying, gotta have 20, 30, 40. And he who dies with the most property wins.  

But the reality is if you’ve got a clearly defined end point and you reverse engineer what that end point looks like….it takes away all the mystery and it gives you a step-by-step approach of what you actually need to do. So the fact that you can put the cue in the rack and then over time have no pressure to keep up with the Joneses, no pressure to keep up with the person who wants to be on the front page who’s got 10 or 12, because you’re actually progressively walking towards your goal with three or four or five properties.  

Ben Kingsley
Yeah, and so it’s never about the number. It’s about the income that it gives. And so if I was to go back and think about what I was thinking in 2005, it was around that $140-$150k mark. Once we were able to sort of develop the simulator and the cash flows and all of that type of thing, I’ve tweaked it little bit. It’s gone up to $160k. But it’s been at that $160k now for probably five years. And now I know what I need to do. So I’ve got one more acquisition to make, and then basically retire the debt out, and I’m done.  

Bryce Holdaway
Very good. So there you go, Lou. I guess the last point on that is The Rule of 25, Ben. If you know how much income you want, multiply it by 25 and it gives you the amount of income producing assets debt-free you need. So for example, if you can live your life off $10,000… multiplied by 25, you need $250,000 worth of income producing assets outside of your family home. But if you need to do that by $100,000 (then you need) two and half million. So you work out your number and then reverse engineer that income.  

Ben Kingsley
And so the beautiful part about that is that’s working off of 4% yield. So people will understand that it’s obviously four 25s or 100. That’s how it works. If you’re chasing a higher yield like a 5% yield then it’s the rule of 20. So it’s as simple as that. But we call it “The Rule of 25” purely to base on if we’re in this historically low interest rate environment, then it’s better to be conservative and it’s better to sort of say yield and rental yields might sit around 4% for a longer period which means capital growth is still going to be pretty strong. So it’s always a good point to make.  

Bryce Holdaway
Hey good question Lou, I think it’s on everyone’s mind Ben, as they’re building a portfolio. “What does my exit strategy look like?” So hopefully that’s been helpful to the folks. 

 

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