[PDF] - Born To Be Financially Free | Sydney - August 2014 (c) PDF Document

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Born To Be Financially Free | Sydney - August 2014 (c) PropertyInvesting.com Pty Ltd 1

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Born To Be Financially Free | Sydney - August 2014 (c) PropertyInvesting.com Pty Ltd 2

Mr. Earl Nightingale

From: The Strangest Secret

Buddy Up

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Born To Be Financially Free | Sydney - August 2014 (c) PropertyInvesting.com Pty Ltd 3

Now Keep Keys Open… To Start With…

“Is now a good time to be investing?”

Some Reality…

You can’t invest yesterday
You can’t invest

tomorrow, today

You can only ever make the

best decision, here and now

So It’s Your Job…

1. To make the best

decision you can

2. With the information

you have at your disposal

3. That’s congruent with your goals

But…

In the absence of

knowing what to do:

– People do nothing; or – They rely on others

Always Check…

Expertise
Experience
Motives
Responsibility

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Born To Be Financially Free | Sydney - August 2014 (c) PropertyInvesting.com Pty Ltd 4

Session One

About You

Questions

How old are you now (in years)?

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Born To Be Financially Free | Sydney - August 2014 (c) PropertyInvesting.com Pty Ltd 5

Questions

By what age (in years) do you want to have achieved your primary wealth goal?

Questions

How many years do you have left to achieve your goal?

Questions

How many hours per week do you presently work?

Questions

How many hours per week do you presently sleep?

Questions

How many hours per week do you presently rest?

Questions

How many hours per week are left?

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Born To Be Financially Free | Sydney - August 2014 (c) PropertyInvesting.com Pty Ltd 6

Questions

Of those remaining hours, how many would you say are currently ‘idle time’?

Questions

$ How much do you earn per annum? (pre tax)

Questions

$ How much do you think you would need to earn per annum (pre-tax) to be financially free?

Questions

Using one word, how would you describe your financial situation?

Questions

Using one word, how would you feel being financially independent

f your need to work

for money?

Questions

Who has had the biggest influence on the way you think

r act about money?

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Born To Be Financially Free | Sydney - August 2014 (c) PropertyInvesting.com Pty Ltd 7

Questions

In one word, describe his / her / their financial situation?

Questions

In ten words or less, describe your primary wealth goal?

Questions

In one word, why are you here today?

Session Two

Steve’s Top Seven ‘Mission Critical’ Investing Truths

This Session

Mission critical

investing lesson

Incredible wisdom

for maximum success

Apply the theory to you!

Truth #1

As long as people live in houses you can make money from property investing

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Born To Be Financially Free | Sydney - August 2014 (c) PropertyInvesting.com Pty Ltd 8

Aussie Property

Fundamentals remain strong

– Population growth – Proximity to Asia – Stable democratic government

Truth #2

The Pathway To Maximum Profit

Pathway To Maximum Profit

1. Make the most money

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Born To Be Financially Free | Sydney - August 2014 (c) PropertyInvesting.com Pty Ltd 9

Profit Quadrants

G G I M

Source: The National Housing Supply Council data

Pathway To Maximum Profit

1. Make the most money
2. In the quickest time

Pathway To Maximum Profit

1. Make the most money
2. In the quickest time
3. For the least risk

Insights

Real estate is

usually sold on the best case scenario

It’s your job to

find the flaws

Least Risk

By what margin does the upside benefit

utweigh the downside risk?

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Born To Be Financially Free | Sydney - August 2014 (c) PropertyInvesting.com Pty Ltd 10 Pathway To Maximum Profit

1. Make the most money
2. In the quickest time
3. For the least risk
4. With the lowest aggravation

Aggravation

Types Of Aggravation

1. Investment aggravation

This Happened To Me… Aggravation

Types Of Aggravation

2. Personal aggravation

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Born To Be Financially Free | Sydney - August 2014 (c) PropertyInvesting.com Pty Ltd 11

Options

$119,058 $109,103 $17,686 Potential Profit $260,826 Build 3 x townhouses Cash Needed $142,906 2 Lot Subdivision $249,386 Build 2 x townhouses

Remember The Mantra

______ money
__________ time
_______ risk
_________ aggravation

MOST QUICKEST LEAST LOWEST

Truth #3

INPUT = OUTPUT

Four Constraints

1. Time
2. Money
3. Skill
4. Risk Profile

Application

How are your constraints limiting your wealth potential?

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Born To Be Financially Free | Sydney - August 2014 (c) PropertyInvesting.com Pty Ltd 12

Insights

How are you trying to reap a full time outcome but only contributing a part time effort?

Truth #4

Buy Problems & Sell Solutions

Insights

If there is no manufactured profit to be made, the only way you can make money is via generic market gains.

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Potential Skill Based Profit Solution Level Of Investor Skill Problem

Problem / Solution Matrix

A. Cost
B. Comfort
C. Convenience
1. People
2. Property

Solutions Problems

Insights

And to supersize profits… Massive profits can be made when you position yourself in front of a favourable trend

Property Trends

Trends are like streams:

they carry you one way or another

Float along in the good times
Paddle hard in the bad times, just to

maintain position or even stay in the boat!

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Rams Plaza, Ft Myers, FL USA

$667,500

($23.18 psf)

Purchase Price Rams Plaza: Key Details Details

5 shops + 3 warehouses + separate building + land

Date Acquired 9 September 2013 Size

Land (sq ft)

108,473

Building (sq ft)

28,794

Problems At Purchase

Bank REO
31% occupied
Some minor deferred maintenance
Questionable area

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The Solution

Better management

– Now fully occupied

Cured deferred maintenance

– Cost $69,500

Area improvement

52,581 sq ft 108,473 sq ft

The Profit

5/14 9/13 8 Months Owned

Rams $

Post Reno Price $737,000 Revaluation $1,150,000 Equity Gain $413,000 % Increase 56%

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Truth #5

Let The Why & When Determine The What & How

Investing Approaches

1. Asset approach

– Buy ‘good assets’ – The outcome you achieve is dependent on the assets’ performance

Investing Approaches

2. Outcome approach

– The outcome you desire shapes the assets you acquire

Insights

Properties aren’t all the same… some are better for growth, some are better for income, some are just bad.

Picking A Winner… What’s your approach?

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Business is most intelligent when it is most businesslike.

Benjamin Graham, The Intelligent Investor

Why

1. What non-financial outcome(s)

do you want from your investing?

– Provides the context for your investing – Gives you the motivation to keep going – Gives the money meaning

Why

1. What non-financial outcome(s)

do you want from your investing?

2. How much is that going to cost?

Annual Income Goal: $

When

2. When do you want

to have achieved that annual income goal? Deadline:

What

What property investing

product is most relevant?

– Type – Location / Condition – Cost – Area knowledge – Savings for deposits – Borrowing ability

How

What property investing

strategy is most relevant?

– Most money – Quickest time – Least risk – Lowest aggravation – Time – Passivity – Skill – Risk tolerance

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Born To Be Financially Free | Sydney - August 2014 (c) PropertyInvesting.com Pty Ltd 18 Now repeat the process…

For the property you are thinking about buying

Truth #6

There Are Riches In The Niches

Investing Niche

A field of expertise
A problem you can solve better or

more cost effectively than anyone else

In a location or manner

where the trend is your friend

Niche Examples

Positive cash flow

– Regional property – Sub-letting – Vendor finance – Lease options

Niche Examples

Buy & Hold

– Student accommodation – Rooming houses – Period homes

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Born To Be Financially Free | Sydney - August 2014 (c) PropertyInvesting.com Pty Ltd 19

Niche Examples

Quick Cash

– Strata titling multiplexes – Renovating 1950’s dual living homes – Property options / flipping property

Niche Examples

Other possibilities

– Commercial property – Overseas Investing – Air rights – Mixed use

Four Steps To Success

1. Find a problem
2. Create a solution
3. Make it scalable
4. Evolve / customise

Truth #7

Property Is A Money Game

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To Get Finance Money Game Rules

1. How much down?
2. How much back?
3. How much time?
4. How much risk?

Conclusion

A Summary Until Now

The Path Most Travel

Buy pretty property (solutions)
Rely on opinion rather

than skill and strategy

Generic growth:

buy, hold, hope, hatch

Insight

How much control do you have over your investment outcome?

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The Path Least Travelled

Buy problems in your chosen niche
Apply skill and strategy to outperform
Manufacture profit with generic

growth a bonus Joel Bauer

2 day Passion2Profit
Personal break through
Build ‘Brand You’
Communication and

persuasion techniques Joel Bauer

Sydney – 6th / 7th Sept
Tickets retail $990 each
My gift to you…

2 × tickets free

Limited availability

Session Three

From 0 To Financial Freedom

This Session

Investing margin
Financial Freedom

Methodology

The Freedom Matrix

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Part One

Investing Margin

Session Theme

mar·gin [mahr-jin] noun

1. The space around

the printed or written matter on a page.

Session Theme

mar·gin [mahr-jin] noun

2. An amount allowed
r available beyond

what is actually necessary: to allow a margin for error.

Session Theme

mar·gin [mahr-jin] noun

3. A limit in condition, capacity,

etc., beyond or below which something ceases to exist, be desirable, or be possible.

Revelation

The money gives margin,

and the margin provides confidence

And the confidence

provides a sense

f freedom.

Margin Reality

One in four Australians survives on social security payments

Source: Courier Mail, 9 August 2013

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Born To Be Financially Free | Sydney - August 2014 (c) PropertyInvesting.com Pty Ltd 23 Two Remarkable Stats

What percentage of Australian couples aged over 65 rely

n government

assistance as their major source of income?

64.6% Two Remarkable Stats

What percentage of Australian’s living alone and aged

ver 65 rely on

government assistance as their major source of income?

76.1% Two Remarkable Stats

What percentage

f Average Male

Weekly Earnings is the Pension?

Two Remarkable Stats

What percentage

f Average Male

Weekly Earnings is the Pension?

27%

The Aged Pension

$383 per week

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Part Two

Financial Freedom Methodology

The Old Way

Lived off my wife’s salary
Income from accounting practice

channelled to property investing

Incremental positive cash flow property

Insight

Given property is now so much more expensive, you’ll most likely run out

f money before you reach

your financial freedom goal.

The New Way

Step One: Nominate an annual income goal

$800,000 $600,000 $500,000 $400,000 $300,000 25% $1,000,000 $750,000 $625,000 $500,000 $375,000 20% $1,333,333 $1,000,000 $833,333 $666,667 $500,000 15% $2,000,000 $1,500,000 $1,250,000 $1,000,000 $750,000 10% $2,222,222 $1,666,667 $1,388,889 $1,111,111 $833,333 9% $2,500,000 $1,875,000 $1,562,500 $1,250,000 $937,500 8% $2,857,143 $2,142,857 $1,785,714 $1,428,571 $1,071,429 7% $200,000 $150,000 $125,000 $100,000 $75,000

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The New Way

Step Two: Nominate your desired % return

$800,000 $600,000 $500,000 $400,000 $300,000 25% $1,000,000 $750,000 $625,000 $500,000 $375,000 20% $1,333,333 $1,000,000 $833,333 $666,667 $500,000 15% $2,000,000 $1,500,000 $1,250,000 $1,000,000 $750,000 10% $2,222,222 $1,666,667 $1,388,889 $1,111,111 $833,333 9% $2,500,000 $1,875,000 $1,562,500 $1,250,000 $937,500 8% $2,857,143 $2,142,857 $1,785,714 $1,428,571 $1,071,429 7% $200,000 $150,000 $125,000 $100,000 $75,000

The New Way

Step Three: Calculate your required investment capital

$800,000 $600,000 $500,000 $400,000 $300,000 25% $1,000,000 $750,000 $625,000 $500,000 $375,000 20% $1,333,333 $1,000,000 $833,333 $666,667 $500,000 15% $2,000,000 $1,500,000 $1,250,000 $1,000,000 $750,000 10% $2,222,222 $1,666,667 $1,388,889 $1,111,111 $833,333 9% $2,500,000 $1,875,000 $1,562,500 $1,250,000 $937,500 8% $2,857,143 $2,142,857 $1,785,714 $1,428,571 $1,071,429 7% $200,000 $150,000 $125,000 $100,000 $75,000

The New Way

Step Four: Nominate your desired deadline

$800,000 $600,000 $500,000 $400,000 $300,000 25% $1,000,000 $750,000 $625,000 $500,000 $375,000 20% $1,333,333 $1,000,000 $833,333 $666,667 $500,000 15% $2,000,000 $1,500,000 $1,250,000 $1,000,000 $750,000 10% $2,222,222 $1,666,667 $1,388,889 $1,111,111 $833,333 9% $2,500,000 $1,875,000 $1,562,500 $1,250,000 $937,500 8% $2,857,143 $2,142,857 $1,785,714 $1,428,571 $1,071,429 7% $200,000 $150,000 $125,000 $100,000 $75,000

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Your Education Budget

$ Education Budget % % Your Willing To ‘Pay Forward’ $

Req. Lump Sum

The New Way

Potential Skill Based Profit Solution Level Of Investor Skill Problem

The New Way

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Session Four

Your Ideal Property

This Session

Inputs and Outputs
Your I-Deal Story
Your I-Deal Profile

Part One

Inputs & Outputs

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Your Ideal Property

Your time
Your money
Your skill
Your risk profile

Input

Insights

Are you doing what’s most profitable, or what’s most fun (or what’s easiest)?

Your Ideal Property

Your time
Your money
Your skill
Your risk profile
Right profit
Right strategy
Right person

Input Output

Your Ideal Property

Your time
Your money
Your skill
Your risk profile
Right profit
Right strategy
Right person

Input Output

Conclusion

You won’t source a great property investment until after you’ve started contributing great inputs (time, money, skill, risk).

What great deals are you too busy not looking for?

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Part Two

Your I-Deal Story

Question 1

My investing approach: Passive Active

Question 2

My desired profit outcome: Growth Income

Question 3

Minimum profit of: $____________

Question 4

Frequency (timing): per __________

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Question 5

Profit will be: Made Generically Manufactured

Question 6

Using this strategy: Buy & Hold Sub-divisions Vendor Finance Renovations Lease Options Developing VCB

Question 7

I have cash available of: $____________

Question 8

I have equity available of: $____________

Question 9

I can afford to borrow: $____________

Question 10

I’d like to invest in this suburb / area: ______________

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Your I-Deal Story

I am a (1) investor. My ideal property is one that will deliver a (2) profit of (3) per (4). This profit will be (5) using the (6) strategy. The specifications I need to work within are available cash of (7), access to (8) equity and an ability to borrow a further (9). The property will be located in the suburb of (10).

Narrative Review

Is it coherent?
Is it congruent?
Is it feasible?
What do you need

to make it happen?

Part Three

Your I-Deal Property Profile

Property Profiles

Why create one?

Focus
Clarity
Specificity
Outsourcing

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Components

1. Location

– Affordability – Relevance

Strategy
Target market
Demonstrable profit history

Components

2. Property

– Construction – Land size /

rientation

– Age / condition – Floor plan

Bedrooms
Living area
Garaging
Heating, cooling etc.

Components

3. Numbers

– Purchase price / terms – Profit

Rent / Cash flow
Growth: historical / forecast

– Exit strategy

Sales price

Components

4. Strategy

– Technique – Target market – Time budget – Money budget – Team

Conclusion

You give yourself the best chance at succeeding when you match the right property, with the right price, and adopt the right strategy that’s targeted to the right person.

Session Five

Don’t Buy A Dud

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Part One

Why Is Real Estate Risky?

What Most Do

Buy an asset someone

else thinks is good

But carry all the risk

and responsibility if it’s not

Risk Exists Because…

1. Conflicts of interest

Risk Exists Because…

1. Conflicts of interest
2. Bias

Risk Exists Because…

1. Conflicts of interest
2. Bias
3. Ignorance

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Insights

Property is almost always sold on the best case scenario

Instructions

Watch video very carefully
Be absolutely quiet
Make no sound
Really… make no sound!

Part Two

Risk Reduction

The Risk Equation

By what margin does the realistic upside benefit

The Risk Equation

By what margin does the realistic upside benefit Outweigh the realistic downside risk

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Upside benefit

What profit?
How much?
When?
How?

Downside risk

How much?
How?
Steps to mitigate?

Part Three

Due Diligence

Business is most intelligent when it is most businesslike.

Benjamin Graham, The Intelligent Investor

Insights

The more things you leave to chance

Insights

The more things you leave to chance the more chance things will go wrong

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Due Diligence

“Separating the facts from the opinions.”

Steve McKnight

Before Looking

Create An Acquisition Plan

Insights

Don’t waste time looking at deals you won’t buy!

Four Phase Approach

I. Phase One – Understand the deal

Insights

Don’t start Phase One until you have the property under contract

Four Phase Approach

II. Phase Two – Understand the numbers – Identify the risks

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Four Phase Approach

III. Phase Three – Call in the experts – Form your buying opinion

Session Seven

Strategies For Increasing Rents

This Session

1. Charging low rents
2. Advanced property maths
3. Ideas for increasing income

Questions We’ll Answer

1. Is it ever okay to charge

less than market rent?

2. How can quantify the

benefits of increasing the rent?

3. What are some strategies for

achieving higher rental returns?

Background

Investing Approach #1

– Passive

Rely on others
You get what you get

and you don’t get upset

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Background

Investing Approach #2

– Active

Set your goal
Act strategically to achieve it
Build a team but maintain
versight and control

Part 1 Charging Less Than Market Rent

Why Do It?

– Low rent is better than no rent – Start low and work your way higher Best approach is a ‘move in special’

1. Attracting tenants

Why Do It?

– Don’t want to upset the tenant – They might move out! – They might call me names or act aggressively Blame a third party / event or offer incentives

2. Low Conflict / Aggravation

Why Do It?

– A bird in the hand is better than two in the bush – It can be expensive to find a new tenant Manage the property well Offer a (re) signing bonus

3. Secure Cash Flow

Why Do It?

– Don’t upset the cart – I’m not greedy… I’m happy getting something, even if I could get more This is an investment. Offer charity to people who need it.

4. If It Aint Broke…

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Consequences

– Less rent equals less cash flow – Lower cash flow equals lower value

1. Impact On Return

Consequences

– Will your bank allow you to pay less interest if you don’t increase the rent? – Lower rent = underpricing risk

2. Under Compensated For Risk

Consequences

– The ‘Ralph Rule’

3. Adverse Tenant Psychology

Conclusion

Accept it in the short term

if you have to as low rent is better than no rent

But make it temporary

and secure tenure through incentives

Part 2 Advanced Property Maths

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