This snippet is from one of our previous episodes: How to Fix a Frankenstein Portfolio Before It’s Too Late.

When Bryce and Ben first started working together waaay back in 2012, they realised something fundamental. Successful property investing is a process, not an event.

Out of that realisation came their signature five-step framework, now used by thousands of Empower Wealth clients to design their ideal lifestyle and build sustainable property portfolios.

In this TPC Gold bonus episode, they revisit that framework and explore how it can help any investor — even those with a “Frankenstein Portfolio” — get back on track.

You’ll hear:

  • How to apply the five-step system to your own portfolio
  • Why property investing should always follow a clear, repeatable process
  • The three biggest mistakes investors make (including chasing hotspots)

Need Help Realigning Your Portfolio?

If your investments feel a little all over the place, you’re not alone. Our Property Wealth Planning team at Empower Wealth can help you sort through the chaos, make sense of your numbers, and get your investment strategy back on track.

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If You Enjoyed TPC Gold | Why Chasing Hotspots Doesn’t Work (And What to Do Instead), You Might Also Like:

Transcript

Bryce Holdaway
We’ve got a five-step process. And the genesis of this is quite simple. You and I (when we first started collaborating together back in 2012), we sat down and we said: Property investing is a process, not an event. There isn’t a process out there; let’s create one. And so we came up with the five steps, which is Step One: Clarify. Step Two: Evaluate. Step Three: Plan. Step Four: Implement. Step Five: Manage.

And we’ve then built our process… the way that people go through our journey of lifestyle by design, through our business around those five core fundamental steps, Ben. And what’s interesting about those and in the context of a Frankenstein portfolio is if you have a portfolio, one of the questions is: Is it too late to come back?

No it’s not, because all you need to do is go through those five steps: clarify, evaluate (which includes: How have you arrived at your Frankenstein portfolio? What were you trying to intend? And then go back and say: What is the end game?) Then we’ll put a plan in place. Then we’ll implement the plan, and then we’ll test and measure going forward. And then we’ll rinse and repeat on those five steps.

Ben Kingsley
So I think yeah, in sort of coming up with that framework Bryce, I remember those conversations that we were having, you and I. You had a system to buy your 16 odd properties. I had a system to buy the properties that I was buying. But we hadn’t really organized our thoughts around that. So I remember you making it really clear that it’s a process, not an event. And, you know, off the back of that we thought: okay, well, you know, what would those steps entail?

And I think we’ve landed quite nicely at that same sort of thing I would say happens in the medical world where something’s not quite right, so I need to clarify what it is. We need to do some tests and work out what’s possible in a treatment program. Then we need to put that treatment program into a plan and execute on that. We need to implement it and measure it, and make sure our body and mind is getting back to where it needs to be.

And so that’s the management piece as part of that. So I think this framework can actually work in other areas of your life as well. And I think that’s why it has been so well received by the thousands of clients that we’ve looked after over the years, because we kept it simple. But people understand that and it’s proven to be very successful as well.

Bryce Holdaway
It’s in our latest book too, Ben.

Ben Kingsley
Yes, it is.

Bryce Holdaway
Okay, so what’s the three biggest mistakes that people make to get themselves a Frankenstein portfolio? I’ll rattle them off, Ben. And then you and I will lean into those. But the first biggest mistake that you can make towards a Frankenstein portfolio is chasing hotspots based on headlines. Hype, number one.

Ben Kingsley
Yeah. I think this comes back to fundamental investing and being really sensible about it. So when I think about hotspots, I think about people rushing and I think about people potentially cutting corners and not doing reasonable due diligence. You know, as part of that particular, in the sense that if I’m impatient, if I’m rushing and if I don’t do my reasonable due diligence in terms of the fundamentals… and I’ll let the community ponder this question.

And this question could be as simple as: Why is it a hotspot now? Why is it valued at its current price point? In other words… what are the mechanisms, the machinations, the conditions that have that market at that value at that moment in time? And just keep asking the five “why” questions. That is grounding, fundamental work that you were doing in what we call reasoning modeling. In terms of so why is that? And then why is that the case? Because ultimately, people sort of say, well why is land on the fringes of a city worth less than what it is closer into a city?

Now if you’ve been listening to our podcast long enough, you’ll know the answer to a lot of those questions. In terms of the productive use, the margins of safety, the lifestyle, the status, and all those other things that we talk about. But that’s what you’ve got to be thinking about, because a hotspot by its very nature will eventually not be a hotspot.

A hotspot can’t stay a hotspot forever. They will go through cycles. But then you’ve got to say: well, what’s going to drag that hotspot to perform over the next five, ten or multiple decades? There’s got to be some other fundamental mechanisms that need to drive the value of that land higher, because if they’re not there, then yeah, you might have had a sugar hit in terms of a quick win. But how was that? Was it a rational sugar hit? Like an exchange traded fund?

Bryce Holdaway
NFTs.

Ben Kingsley
Thank you. And you know, because all of a sudden it was the flavour of the month. But really, what’s the value of a digital image? In some cases, it’s basically worthless, right.

Bryce Holdaway
Yeah a Collingwood image, it’s worthless yes.

Ben Kingsley
Yes but not if it’s holding a cup or something like that.

Bryce Holdaway
You’re happy most weeks, but you don’t seem to be happy on the last dance as much.

Ben Kingsley
I know that feeling very well.

Bryce Holdaway
Well, at least you’re happy most weeks mate.