Property Hub - Investment Insights & Inspiration - Realty Talk: Time To Double Down

Episode Date: July 1, 2023

As everything gets tighter and more restrictive, this week’s show helps you to optimize your ongoing property opportunities! An investor’s borrowing capacity has fallen over 30% as rates have risen, so we invited Stuart Wemyss to outline strategies that will maximise your ongoing property purchasing and refinancing power.   There is a housing crisis which has been heightened by rental demand and construction difficulties.   Get timely financial advice from Suvidh Arora on how to minimize your risks and make the best of your options. Reaching your lifestyle goals faster involves a unique approach that systematically helps you save more, reduce tax and invest better, according to Andrew Courtney who believes it is inside the The Doubling Game.  He explains the concept. RealtyTalk is part of the Property Hub podcast channel, your home for property investment insights, inspiration, and stories from Australia’s top property experts, investors, leaders, and analysts. Subscribe now to get every RealtyTalk episode delivered to you each week for free, and also get full access to Get Invested, the leading podcast for Australians who want to unlock their full ‘self, health, and wealth’ potential and get inspired by the stories of investors, founders, and entrepreneurs. NEW – Join the Property Hub community on Substack! Sign up to get Australian property news, opinion and episodes in your inbox: https://propertyhubau.substack.com/ Subscribe to RealtyTalk on the Property Hub channel: Apple Podcasts | Spotify | Google Podcasts | Email Property Hub is a collaboration between Bushy Martin from KnowHow Property, Kevin Turner from Realty, Andrew Montesi from Apiro Marketing and Apiro Media, and Australia’s largest independent podcast network DM Media. Business and partnership enquiries: [e-mail] omnystudio.com/listener for privacy information.

Welcome to Realty Talk, the show that brings together the country's most authoritative and respected property experts. Follow us on all the socials and subscribe for updates and exclusive offers. Realty Talk is powered by realty.com.au, connecting buyers, sellers and agents differently. Hi and welcome to Realty Talk, your property hub's go-to place for property investment insights, inspiration and stories from Australia's top property experts, leaders and analysts. I'm Bushy Martin from KnowHow Property Finance, and as everything continues to get tighter and more restrictive, this week's show helps you to optimise your ongoing property opportunities.

As your loan buying capacity has fallen over 30% as rates have risen and continue to rise, Stuart Weems kicks things off by unpacking strategies that you can employ to safely maximise your ongoing purchasing power and your refinancing capability. Given the housing havoc being created across a series of crises in affordability, rentals and construction, Suvid Aurora joins us to provide a finance perspective on what you need to be doing to minimise your risks and make the best of your options. And to round out the show, Andrew Courtney begins a two-part Realty Talk special feature by opening your eyes to the doubling game. a unique approach that systematically helps you to save more reduce tax and invest better in order to reach your lifestyle goals faster now before we get stuck into it if you're enjoying the

show we need to ask you a big favor that will only take a small amount of your time but will make a massive difference can you kindly take a couple of seconds now to subscribe to the property hub wherever you're enjoying the show to ensure that we continue to attract the best of the best guests so we can keep giving you the winning property edge. We've got lots of property gold to unpack so let's get on with the show. Successful property investment is a game of finance. Do you have the right team and the right game plan? Realty Talk is brought to you by Know How Property. More than mortgage brokers, Bushy Martin and his team of investment architects set you up with a sustainable strategy structured to lower your costs tax risk and stress while

increasing your capacity for growth know how has helped over 1900 homeowners and investors secure more than 800 million dollars in property wealth so get set to live more work less and live your legacy. Want to know how to invest in your freedom? Visit knowhowproperty.com.au. If you've been listening to property news in recent times, or you've been looking to secure a property, you'll know that the subject of borrowing capacity is on just about everyone's lips. The reality is that as a result of interest rate rises over the last 12 months or so, together with the addition of the 3% servicing buffer the banks need to add to your borrowing calculations, most people's achievable buying capacity has reduced by over 30%, which is

reducing your achievable property purchase price power. So what strategies can you employ to safely maximize your buying capacity moving forward? Well, to open your eyes to a raft of options and considerations, we're joined by accomplished author and the director of multidisciplinary financial advisory firm ProSolution Private Clients, Stuart Weems. So welcome back to the so Stuart. Hey Bushy, great to be back with you. Absolutely, yeah it's a very topical subject this one and continuing to be as things are still uncertain in the interest rate arena but to sort of get into the heart of the subject, what steps do we need to take to preserve and maximise our buying capacity? Yeah of course, look I mean obviously borrowing safely is key here so sort

of underlining the word safely which is not to say that we should borrow as much as we possibly good with we can without any consideration to how we're going to fund it of course yeah and you know quite often when investing in property we think property is the scarce asset that we need to really focus on but actually borrowing capacity is our scarce asset if i've got 10 million dollars of borrowing capacity or ability to put 10 million dollars into the market i'm sure over time i'll find enough really high quality properties to buy uh so so buying the whole finding high quality properties to invest in isn't really the scarce asset the scarce asset is really borrowing capacity from our own perspective so you know i just started to think about you know what are some

of the things that i've done or thought about or or discussed with my clients that have sort of helped them uh improve their borrowing capacity and a couple of years ago we realized my wife and i had uh we had about accumulated about six or seven credit cards we never really used them and we repay them every month and so forth so they weren't used as a credit facility but you know just over time you you tend to acquire these things and our limits our aggregate limits were over like a hundred thousand dollars of credit limits and of course we never use them yeah and and lenders will include even though the fact that we don't use them they'll still include it in their borrowing capacity calculation because they've got to assume that those limits are fully utilized

they have a substantial impact on your borrowing capacity. And so we got rid of, notwithstanding all the credit card fees, the annual fees that you pay for these credit cards as well. So now we just use mostly a, we've got one credit card and we use a Amex charge card. And the benefit of a charge card is that you still get the points, you know, you can still pay, repay at the end of the month, all those sorts of things, but doesn't actually have a credit limit.

And so therefore it doesn't have an impact on your borrowing capacity. So at times of very high interest rate environments, really any marginal incremental improvements can have a substantial impact on borrowing capacity. So these sorts of things are important to think about. Another one that people sometimes get caught out by when they change jobs and if they've got a variable portion to their income. So bonuses or commissions or these sorts of things. You know, normally I'll have a base salary and then a variable portion. If you change jobs, the lender will want to see at least one cycle of payments. And if that's an annual bonus, you've got to wait until next year's annual bonus.

And that's assuming that you've got other history as well at your past employers. So, again, thinking about, you know, if you're making changes to employment, speaking to a mortgage broker and understanding what impact that will have on your borrowing capacity. And therefore, maybe you can work out what you should do first, as in go and apply for a loan and buy a property and then change your employment, change jobs. Or if you're going to change jobs today, realize that maybe that'll take you out of the market for a period of time. And similarly, if you're self-employed, you know, speaking to a good accountant that understands how borrowing capacity works is really important too. quite often when we're dealing with clients we're thinking about how we're going to distribute income um do sometimes we um distribute income in a way that forces us to pre-pay tax yeah sometimes pay tax sooner than we otherwise would just because we want the borrowing capacity you know

so that we've got enough frank uh franking credits to pay a dividend or something like that yeah um we might not distribute to members outside of the immediate family group uh for a period of again to try and preserve that income for borrowing capacity purposes, or maybe even delaying some expenses to, you know, to make that particular year look as strong as possible so that we can have that conversation with the lender. So if you're self-employed, there's a few other sort of levers that you can pull to sort of improve that. But as you know, Bushy, it's also about using the right lender. And, you know, you don't want to be trying to stick a square peg in a round hole you know you want to make sure that some lenders are going to be um better suited to

some borrowers than others um and a good mortgage good experienced mortgage broker would be able to tell you that of course and um and just realizing sometimes you know changing lenders is part of the process it's a bit of a game of finance and um and sometimes you know you've just got to you've got to change lenders if if you want to proactively increase your borrowing capacity yeah so there's a few things there that people can think about but I think the overarching thing is you know do it safely and make sure you know the rules of the game you know make sure you know what levers you can pull in your own personal situation to improve your borrowing capacity made some very good points there yeah and just reinforcing the importance of selecting the right lender you know we look at

this all the time. I'm sure your team does as well. There's a, you know, from top to bottom, there's about a 55% variation across the lenders in terms of how much you can borrow based on exactly the same financial profile. Something I wouldn't mind sort of drilling into a little bit more, if you don't mind, Stuart, is around the opportunity to potentially reset loan terms and consider when the interest only exercise may or may not be a good idea. Do you want to expand on your thoughts there yeah definitely look when when lenders look at pre-existing commitments what they will do is they'll use contracted repayments so that is that they want to understand what have you already agreed to you know what are you already committed to doing so if i took out a

loan 10 years ago that loan when i first took it out would have had a 30-year loan term now if i've only been paying interest only uh over the last 10 years um the problem is i've now got only 20 years left in that loan term because i've already eaten up 10 of course and so when the lender comes to calculating okay what is stewart's commitment with respect to his existing loans they're going to say okay well stewart needs to repay this loan over the next 20 years because that's what he's contracted to do and so in that situation what i'd actually be better off doing is refinancing or resetting that loan term whether it's with the existing lender or with the new lender doesn't really matter that much. And it means that when they come to calculate what pre-existing

commitments I have, they can spread the repayments over 30 years again, instead of 20. And it's the same with interest-only terms. So an interest-only term just means that your total loan term is divided into two periods. The first period is interest-only, the remaining period is principal and interest, of course. And so again, virtually all loan terms are 30 years. So if I've got a five-year interest-only term, it means I've got a 25-year principal interest term. So to maximise my borrowing capacity, what I might actually agree to is, say, a two-year interest-only term. And that then leaves the remaining 28 years of loan term to be able to repay the loan and actually extends my borrowing capacity. So it is a bit of a puzzle and sometimes you've got to

think outside the square to try and get you to where you want to be. And quite often it's about achieving either lifestyle goals or really making sure we've got enough budget so we don't need to compromise on the quality of the property that we're investing in. And so if we can do a little bit of rejigging of loan balances and loan terms and so forth, sometimes we can get a client there without them needing to stick their neck out too much. Yeah, great advice. So talking about thinking outside of the square, I'd love your take on the pros and cons of creating so-called unlimited buying capacity by securing properties in special purpose vehicle trust structures that a number of accountants are promoting in the current climate what are your thoughts on that i've seen a few

iterations of this over the years bush i'm sure you have too uh in terms of people either coming up with you know fancy products or specific products for investors um we had a period of time where there was some some low dock loans i remember one lender before the gfc was lending 105, 107% of a property's value. We've seen it all before. And mortgages are a great servant, but a terrible master. And just because someone is saying you can borrow or you should borrow this amount doesn't mean you should. At the end of the day, that mortgage broker or banker that's trying to entice you into borrowing that amount isn't going to be around to help you make the repayments. They're not the ones taking the risk, you are. And building wealth is a marathon,

not a sprint. We need to, it's about endurance and hanging in there for 10, 20, 30 years and surviving that period. You know, if you can do that, then you'll build a lot of wealth. If you put yourself at risk and risk not being able to hold that good quality asset for that long period of time, chances are you're not going to make any money. The person that sold you the property and the person that sold you the mortgage, they'll probably do okay. But you, you're the one that's left holding the bag. So I would prefer to be conservative. I would prefer to be really considerate of, okay, how I'm going to be able to afford the repayments, which is not to say be ultra conservative, because I think borrowing is an asset as much as it is a liability. And if

you use wisely, it can really help you build wealth. And I think stretching your comfort safely is also a good thing to do, but don't be blind to the fact that you're going to have to make the repayments. And don't be blind to the fact that terms will change, that maybe you won't be able to repay interest only forever. Maybe one day you'll have to pay principal interest. Maybe interest rates will rise. Ask you all these sort of plan for the worst and hope for the best kind of scenario so i'm not a big fan of them um and uh they're they exist today they'll probably be gone tomorrow and there'll be something else to replace it but i would just really encourage people to be really sensible and safe um with with respect to to borrowings and the amount that

they're borrowing 100 totally agree and i'd want to reinforce the word borrowing safely that you mentioned uh you know in the conversation and uh you know having rainy day buffers and exit strategies before you even start. And as you well say, planning for the worst and hoping for the best is definitely the way to start the equation, not try and work it out after the event. But something I'd love your comments on as well, Stuart, because again, we hear a lot of talk in the property and finance circles about, you know, borrowing huge amounts to achieve goals. Do you think it's really necessary to do that uh it depends on your time horizon but generally no you know um if you've only got a very short time horizon in order to build wealth you've got to

take um what i would say is unacceptable risk and in a way so if you if you if your goal is to retire in five years time for example and you have no wealth today you've got to do something magical over the next five years but high risk means that there's a high probability doesn't work okay so let's put that aside for most people it's they've got normally some um pretty reasonable goals you know they're retiring 10 15 20 years whatever it might be if you buy the right asset and you hang on to that asset and let it do its thing it's not going to the returns aren't going to be linear they're not going to happen every single year there's always going to be bad noise around why the returns won't be there but in the long run the returns will be if it's a really good

quality asset. And so what really interests me is over the years, I've always seen these articles of this young person that went out and bought 20 properties in the last 18 months. And the thing is though, I've never seen, I haven't seen one bushy. I've probably literally looked at thousands, tens of thousands of different investor portfolios. I've never seen one that works that where they've bought a whole bunch of very average quality properties. What I have seen is a lot of investors with 10 or 15 really average quality properties that actually haven't been able to build a lot of wealth in dollar terms. And remember, we like to compare investments in percentages, which is good, and which we should do. But at the end of the day, we're going to

pay wealth in dollar terms, right? So if I buy a million dollar property today, and in 10 years, it's worth two, and in 20 years, it's worth four, I've got $3 million of equity. That's a lot of equity having to accumulate over a relatively relatively short period of time if you think about our our lifespan so my argument is quality trumps quantity every day of the week and not only is it much much lower risk that i just haven't seen the evidence that it actually works and otherwise if it if it works i would be doing it too absolutely agree and extremely well said It always has been and always will be about quality over quantity. And that's something that a lot of people really need to focus in

and really understand what a good quality property investment means, which might be a subject for us to talk about another day, Stuart. So, look, I really appreciate you coming on to share these very timely insights. And thanks again for your valuable contribution to the show today. My pleasure. Thanks, Stuart. Well, as you've just heard, there's a lot that you can do to preserve and safely optimise your borrowing capacity

when it comes to securing property. But be careful and be wary of overextending yourself and putting yourself and your family at financial risk because it's generally unnecessary to borrow huge amounts to achieve your goals if you're adopting a long-term investment horizon. Often people who accumulate lots of debt, just as Stuart has said,

may be overly impatient or investing in the wrong properties. But sustainably successful property investment has always been a game of quality, not quantity, so be patient and don't overextend yourself. If you'd like to know more on this and look at some of Stuart's other informative insights, check out prosolution.com.au. Keep watching and listening to your property hub's go-to place for all things property here on Realty Talk. Property deductions can save you thousands of dollars each year. To make sure you maximise deductions, you need to work with the most experienced quantity surveyor in the country.

BMT Tax Depreciation is the leading specialist in the industry. They've completed over 700,000 tax deduction schedules for residential investment and commercial properties Australia-wide. BMT guarantee to find double your fee in the first full financial year deductions. Call BMT on 1300 728 726 today for an obligation free quote. And following on from my recent chats with Steve McKnight and others on the current national housing and rental crisis and associated construction industry challenges.

As a number of builders have gone bust over the last 12 months, we've decided to dive deep into these troubling subjects from a financing perspective. So, Suvid Arora, the CEO and Chief Solutions Officer with Cinch Loans joins us to unpack his insights. So, welcome back to the Realty Talks, Suvid. Thanks, Wishy. So, to kick things off,

where are we currently with the national housing rental crisis and what's your read of the root cause as opposed to the many symptoms that people talk about? The housing crisis. Well, look, I think historically there's obviously been a lack of stock and then suddenly, you know, there's with the follow-on from COVID meant people wanted to move into the suburbs and, you know, we saw the CBDs becoming empty.

and just overall everyone wanting to own their own property and was was one thing a few years ago and then interest rates started rising and that has led to people suddenly again feeling they can't afford to buy so they are then moving more and more into rental accommodations but there's a severe undersupply when it comes to rental properties as well which is then leading to higher rental prices so we we are seeing rentals at you know record highs right now and there's increases happening to renters every few months um so yeah it's it's it's becoming a vicious cycle of sorts which which is uh increasing the cost of living for every household yeah no question about it and unfortunately governments at all levels have been pretty hands off the whole

supply equation for decades now and you know unfortunately I'm old and crusty enough Suvid to remember when state governments local councils and federal governments were all actually adding to the housing supply themselves but it was in the sort of late 70s early 80s where they went down this privatization road and and now unfortunately all fingers point towards the private sector and because the private sector are only going to build things if they know that they're going to be able to profit from it then we're in a situation where it's always catch up and when you pour in hundreds of thousands of new migrants coming to the greatest country on earth then all of a sudden we've got understandably a massive rental crisis and an undersupply which

is causing a whole heap of other issues so we're very interesting scenario but uh allied with that of course we've been hearing some pretty scary headlines about builders going under like the recent downfall of Port-a-Davis. So what impacts is this having from where you sit? Look, honestly, I mean, Port-a-Davis being a national builder of sorts, I mean, has grabbed a lot of headlines. It was one of the first big builders to go down. Technically speaking, they had, what, 1,700-odd houses under construction,

out of which a large chunk were still not on site. So it's not that it's impacted the supply by that much, but I think the root cause has been, you know, the undersupply. And then these builders are suddenly struggling because of the cost pressures with the way inflation has been. And again, we keep blaming COVID, but just the general supply of raw materials and labor and not having enough people, enough workforce, unemployment is at a record low. all of those factors have meant the cost of operating for these builders has gone up substantially and they're not allowed to and they shouldn't be passing that on onto the clients but that's where it has to be a bit more buffer or maybe some a bit more resilience within the system so that they can they can you know afford to carry on and not go under because it only takes one to

drive a sense of panic in the entire industry and that's what we're seeing and and you know the follow-on effects again could be even more crisis with rentals because people are scared you touched upon um immigration earlier immigration is probably going to increase this issue even more it's going to multiply things because where are we going to house all these people that are going to come we we have a rental crisis we have a construction crisis and we have a general supply of housing crisis. So we need to, someone needs to step up and, you know, talk about it

and make sure those are taken care of if we are going to continue growing the economy. I 100% agree, yes. And the fact that the, you know, most of our current issues are caused by the undersupply of sustainable and ongoing housing. We've got a construction industry where people have lost confidence in it

and they're too scared to sign up for a build. then that's only going to further exacerbate the situation and i think that you know i i really feel for the builders so that because a lot of them uh you know up until the last year or two were signing fixed price contracts with people to deliver a a property at a certain price within a certain time frame now those material and labor costs have jumped up anywhere between 40 to 45 percent so uh and you can understand that uh you know from a cash flow perspective that's put a enormous uh pressure on builders so it's it's it's i think it's completely understandable unfortunately that a lot of uh gone under as a result but i think that as you say there needs

to be uh some intervention amongst assistance uh particularly in the given the importance of housing supply to unravel all of these other associated effects that we've been talking about to shore up builders to allow them to have the confidence and then us as consumers to have confidence in signing contracts with them so that we can actually alleviate the situation. So really good thoughts on that. Now what do you think kind of needs to be done on top of what we just talked about to restore this confidence in the housing construction sector given its really critical role in that in the supply issue i think in in addition to um you know external intervention the the building industry in itself has to look from within as well yeah try and be

a bit more robust and see where they can you know do some uh not brand building i would say it's it's more about the reputation uh because uh as we all know that there's there's a lack of confidence right now and a lot of it is also stemming from uh you know in order to make up for lost revenue a lot of the trades are suddenly trying to increase the prices for what they're charging and that's putting extra extra pressure on these builders again so i think the the building industry as a whole also needs to come together and be prudent in what they are doing um and they have to look at the bigger picture not not just short-termism where they're trying to make whatever they can now or recover their costs but they have to look at a sustainable solution so that

they can all work together and give that confidence back to the consumer because end of the day the consumer wants the construction right there's no other way about it the government needs the construction australia needs it to happen right but it just this the industry as a whole has to come together and and and maybe the finance industry has to has to has to support it right the banks probably can can step in and and provide a bit more help or uh you know policies to work around these issues uh some of the lenders have actually stepped up with the crisis and come up with solutions where they they are trying to help their existing clients who are who are basically impacted by these things so i think the responsibility lies on not one but

a lot of associated parties and everyone needs to come together for this yeah very good point the days of the finger pointing exercise have got to stop we've actually got to get together and look at this holistically and in unison totally agree so given all of that then what do you think property players need to be doing to minimize their risk while optimizing their ongoing opportunities in the current climate i think look minimizing risks is again it's it's it's a it's an effort that everyone has to put in and and look it's it's hard to say in in a climate where everyone's sort of panicking the consumer's panicking you know rba is increasing their interest rates uh every month um people are panicking property prices might go down because

of the increased interest rates but at the same time how would they go down when there isn't enough supply and there's still demand and the demand's ever increasing so i think again it all comes down to you know getting some robust policies in place for everyone involved and when there's an opportunity for someone to do something not just to profit here but at the same time do good and and holistically for the entire industry and and for people around them i think they should be making every effort so that we can all come out resilient and and and united together out of this yeah very well said and uh taking that longer term approach rather the short-term grab-a-buck approach as you've touched on is a very good one and you've made

some really good points around this is there anything additional that you want to add in terms of what needs to be done to alleviate the housing and rental crisis along with the process of confidence in the construction construction sector then sir well at some point that the the costs have to start going down right or there has to be a limit to what they can increase by um and i think again we we've spoken in the past about interest rates for example and interest rates beginning to ease a bit should help with the confidence but at the same time that can't be the only thing that guides everything right um yes the the reserve bank has tried to use interest rates uh as the primary tool to curb inflation and other other factors but that can't

be the only factor it has to be again the responsibility actually comes down to each and every household as well we we need to be uh you know more prudent about our spending we need to make sure we are making our own contribution to curb that inflation to curb the costs to to make sure this is going to last uh for a lesser time than then everyone else is predicting and again if if everyone does their bit um the rb does theirs the builders do theirs the individuals to theirs will all come out winners out of this and and i think that's the approach everyone has to start taking yeah very sage words there so even and i really want to thank you for these educated insights again and thanks again for your time on the show today thanks a lot

it was a pleasure being here thanks of it well from our discussion it's abundantly clear that in order to alleviate the growing housing and rental crisis we need to stop the reactive short-term focus of finger-pointing blame games that are often misdirected at hard-working mum and dad investors, and instead adopt a long-term strategic and collaborative action orientated and accountable approach to appropriate sustainable housing supply that includes all levels of government in concert with the private sector, that embraces the immediate housing and rental solutions that we've discussed on the show previously, like house sharing and co-living, along with longer-term continuous commitments to building new and appropriate

housing stock. Now, from where I sit, the solutions are actually staring us in the face. But do we have the political will and the foresight to embrace and implement them? As they say, the only thing necessary for bad things to prevail is for good men and good people to do nothing. Keep tuning in to your property hub's go-to place for all things property here on Realty Talk. Successful property investment is a game of finance. Do you have the right team and the right game plan? Realty Talk is brought to you by KnowHow Property.

More than mortgage brokers, Bushy Martin and his team of investment architects set you up with a sustainable strategy structured to lower your costs, tax, risk and stress while increasing your capacity for growth. KnowHow has helped over 1,900 homeowners and investors secure more than $800 million in property wealth. So get set to live more, work less, and live your legacy. Want to know how to invest in your freedom? Visit knowhowproperty.com.au. Are you on a mission to invest in property to help achieve your version of financial freedom

so that you can work less and live more? But maybe you're feeling a bit frustrated because it just seems to be taking too long and it all feels too hard and a bit too complex. Well, many in this position blame themselves and work on improving their mindset and getting pay rises, but the real cause is getting your model changed. Now, this is where today's guest comes to your rescue by introducing you to the quite unique concept of the doubling game, an approach that can systematically help you to save more, reduce tax and invest better in order to reach your lifestyle goals faster. So to unpack this

in a two-part special feature, we're joined by Andrew Courtney, a co-founder of a multi-disciplinary financial advisory firm, Plantitude Wealth. So welcome to Realty Talk, Andrew. Thank you very much. Thanks for having me, Rishi. Much appreciated. Awesome, Andrew. Well, you've certainly captured our curiosity with that Dublin game expression. So in very simple terms, what is the Dublin game and why is this an important concept that we need to be across? So the Dublin game is a simple but very, very powerful concept that every single investor has to consider, right?

So let me break it down for you. If you start off with $1,000 and if you double that 10 times to 1 to 2 to 4 to 8, 16, 32, you double it 10 times, you get to $1 million, right? If you double that 10 more times, you get to a whopping $1 billion, right? So it's up to us as investors to work out what skills, right? What strategies and tactics we need to put into the equation to ensure that you can keep the doubling speed or your speed of doubling cycles going at a fairly rapid rate, right? Because most people kind of tap out at maybe 12 doubling cycles at 4 mil, sometimes at

at 11 doubling cycles so it's up to you and your ambition will determine what actions you need to take to achieve your end target which is the net asset position that you want that will ultimately you can they can provide you with an income that will supplement your income or replace it right so the gist is if you double 20 times starting from one thousand dollars you get to a whopping $1 billion. Love it. It sounds very exciting and very enticing. But if we sort of break that down a little bit, then what do we need to be paying attention to in order to take advantage of the doubling game concept? Absolutely. So there are three core things, right? You mentioned it earlier. There's saving more, reducing your taxes, and investing better, right? So the saving more

part is crucial at the front end of the doubling game. For the first eight or so cycles, you could save really really well and get through eight cycles right where you're hovering around that 250k mark right suddenly it's hard to save and go from 250 to 500 because you might not get there in one or two years anymore unless of course you're earning big big dollars right so then you have to consider well how are you lowering your taxes and how are you investing better and the people who play well are doing all three from the get-go and speeding it up dramatically essentially right the key thing to consider when when playing the doubling game is your net asset growth per annum as a percentage right so you add up what is the surplus cash flow that you're plowing into your

capital base right what is the tax savings that you're having that you're reinvesting again and what is the return on investment in dollar values now dollar value on your current portfolio including your superannuation your property portfolio your investment portfolio right once you add all those up suddenly you've got your net asset growth and if you work out the percentage you get that net asset growth you divide it by your net assets you get a percentage and that determines what happens next which is the rule of 72 you may have heard of this have you heard of this rule of 72 i have heard of the rule of 72 at 72 everything doubles in about 10 years i think from memory absolutely so what we've done is we've used this rule of 72 within the context of the

doubling game right through your net asset growth per annum as a percentage so what happens is you go 72 divided by your net asset growth as a percentage and then you work out your first doubling cycle how long it'll take you to achieve your first doubling cycle right that's when it becomes interesting because if you run through these particular numbers you can work out how many years it's going to take you to get to four mil eight mil 16 mil and for some of you 32 or 64 if that's the kind of target that you're after love it so it's definitely an exponential growth opportunity yet let's apply the doubling game to property how does it apply in the property spheres as you see it absolutely so so in the property space there there i mean it had it hits

on all three pillars right so the save more side of the equation if you've got a property that is negatively geared the saving more drops down a little bit because it's obviously costing you a little bit more money but the tax side of the equation you're saving more on tax aren't you right so you've got to drop on the cash flow you've got to increase on cash and more importantly if you're buying a robust property right you're getting a higher return on investment therefore the big question that you need to ask yourself with your property portfolio is what kind of loan to value ratio are you currently playing with because that determines the amplification of the return on investment that your property provides right that's how you do it perfect sense

So to put that in real terms, I guess the less cash you're investing, the higher the return because you're leveraging the bank's money to secure the asset. Am I reading that right? That's correct. Absolutely. Yeah, beautiful. Love that. So looking at that then, how can property investors speed up the doubling cycle using

property as the asset to do that? Yes, yes. To speed it up, well, the main thing is you have to have robust properties in your portfolio that's doing, that's providing you with a good yield and fantastic growth, right? If you can get those two things, excellent, right? Then the next thing is you need to work out what kind of risk you're willing to take on and what determines that is your ability to save. What kind of surplus do you currently have? Because your surplus will provide you with optionality with how aggressive you may want to be with your LVRs, your loan-to-value ratios, right? For people who are

hyper conservative, they may want to consider a 30% deposit because they wanted to get neutrally geared. So it's not costing them that much in a good yielding property, right? In a very low yielding property, you may have to put a 50% deposit down. So this is the challenge, right? It ebbs and flows and then multiple levers that you can pull, right? To work out, well, what kind of risk profile you're sitting in. And for the people who are hyper aggressive, that's when you can actually lever up and utilize a hundred percent debt or even more for some right and actually get a massive return on investment and if you can add value to that property what happens is it de-risks the equation and what happens is you get more equity out and thereby allowing you

to refinance and go again faster i love it so uh you've touched on this a little bit already but for those listening in how can we amplify the return on investment using property as that vehicle? Yes, yes. So it comes down to your loan to value ratio, right? So with the loan to value ratio, that determines how you amplify the return on investment. Obviously, the higher the loan to value ratio, the better it's going to be. And obviously, you can tack on tactical strategies in there, like doing a cosmetic renovation or a structural renovation, potentially a small development if you're keen on that side of the equation, right? So if you're buying well, if you can buy under market right you're doing very very well for yourself because if you're putting in as

little down as possible let's say you can go as high as a 95 loan to value ratio you buy in and you're buying 10 15 percent under market you're already at 80 lvr after three or six months of of acquiring this thing and that's how you can speed up the process dramatically now provide the returns love it well uh it sounds from what you're saying that you know why the well the doubling game is a brilliant concept the the limiting factors around that are going to be the equity contribution also your buying capacity and that's something that you and i are going to touch in on in part two of our special feature evolving around the uh the doubling game so i want to really thank you for opening our minds to the exponential growth potential that the doubling game concept offers

us andrew and thanks again for joining us and sharing this with us on the show today you're very welcome. Looking forward to the next one. Thank you, Andrew. Well, as you've just heard and seen, it's the frameworks and models of the world that we adopt that can actually transform our approach and results when we actually embrace them. So if you'd like to learn more, check out the doubling game at plentitudewealth.com.au. Keep tuned to Realty Talk, your property hub's go-to place for all things property. And that's another wrap for this week's show. Another big thanks to our special guests, Stuart Weems, Stuart Aurora, and Andrew Courtney. And before we go, make sure you don't miss another episode of your trusted voice for all things

property by subscribing to the Property Hub now on your favorite podcast player or wherever you're listening to the show, where you'll also get to enjoy the deep dive, get invested podcast delivered to you each and every week. Thanks again to realty.com.au, BMT Tax Depreciation, Appiro Marketing, DM Media and Southern Crossroads Stereo for their ongoing support. I'm Bushy Martin from KnowHow Property Finance and along with Kevin Turner and the entire Property Hub Realty Talk team,

please remember that the bad news is that time flies. The good news is that you're the pilot. That's more food for thought and we look forward to seeing you again next week. Miss something in this week's show or want to catch up on past shows? Do it anytime at realty.com.au where we connect buyers, sellers and agents differently.