Passively Making $120k/Year With Australian Property Investing? | The Landlord Society EP36

Summary

In this episode of the Landlord Society podcast, hosts Charlie and HD discuss a common situation faced by young couples like Bob and Jane, who are in their early 30s with a combined income of $200,000 and no kids. With a home valued at $1 million and $300,000 in equity, they explore how to leverage this to build wealth through property investment. The hosts guide listeners on how to potentially expand their portfolio to generate an additional $120,000 annually, emphasizing the importance of financial literacy, strategic property selection, and the role of a finance broker in maximizing returns while managing serviceability.

Takeaways

• 🎙️ The podcast 'Landlord Society' is focused on helping individuals build wealth and replace income through property investment in the Australian market.
• 📈 The hosts, Charlie and HD, discuss a common scenario where individuals have significant potential for wealth expansion but may not know how to utilize it effectively.
• 💰 The example couple, Bob and Jane, are in their early 30s with a combined income of $200,000, which is well above the Australian average, giving them a substantial borrowing capacity.
• 🏡 Bob and Jane own a home valued at $1 million, with $500,000 owed on it, providing them with $300,000 in equity that can be leveraged for further investment.
• 💹 They have the potential to create a passive growth portfolio that could generate around $120,000 per year, significantly enhancing their financial situation.
• 🏘️ The strategy involves purchasing two properties worth around $500,000 each, utilizing the equity from their home and bank borrowing capacity.
• 🔑 The investment properties may initially be negatively geared, but the expectation is for them to appreciate in value over time, contributing to the overall growth of the portfolio.
• 🌐 The hosts emphasize the importance of structuring investments properly, possibly through trusts or companies, to manage serviceability and future growth.
• 💼 They suggest considering the couple's future life changes, such as having children, and how these might affect their financial strategy and property investment decisions.
• 📚 The podcast encourages continuous learning and knowledge acquisition to make informed investment decisions and to replicate the success they've had through luck.
• 🤝 The hosts invite listeners to engage with them on Instagram for personalized advice and to build a network of support in property investment.

Q & A

What is the purpose of the Landlord Society podcast?

The Landlord Society podcast aims to help people build wealth and replace their income through the Australian property market using the Landlord Academy.

What is the situation that Charlie and HD discuss in the podcast?

Charlie and HD discuss a situation involving a couple, Bob and Jane, who are in their early 30s, have a combined income of $200,000 a year, and are looking to expand their wealth through property investment.

What is the average income in Australia according to the podcast?

The average income in Australia is mentioned as being around $90,000 per year.

How much equity do Bob and Jane have in their home according to the script?

Bob and Jane have around $300,000 of equity in their home, which they can potentially use for further investments.

What is the potential borrowing capacity of Bob and Jane?

Their borrowing capacity is estimated to be around a million dollars, depending on the bank they speak to.

What does the term 'DINK' stand for in the context of the podcast?

DINK stands for 'Double Income, No Kids,' which describes a couple like Bob and Jane who have two incomes and no children.

What is the potential annual passive growth portfolio that Bob and Jane could set up for themselves?

Bob and Jane could potentially set up a passive growth portfolio of around $120,000 a year.

What is the significance of the equity in the investment properties for Bob and Jane?

The equity in the investment properties is significant as it can be used for deposits, closing costs, and potential uplifts through renovations, thus enhancing their investment strategy.

What is the potential outcome for the two investment properties that Bob and Jane could purchase?

The two investment properties could be negatively geared, neutrally geared, or positively geared, depending on various factors including market conditions and property values.

Why is it suggested that Bob and Jane consider structuring their properties under a trust or a company?

Structuring the properties under a trust or a company could help manage tax implications, potentially push the properties to neutrally geared territory, and preserve their borrowing capacity for future investments.

What is the importance of having a finance broker in the investment process for Bob and Jane?

A finance broker can help identify and structure the investment strategy properly, ensuring that the properties are allocated correctly and in line with the couple's financial goals and serviceability.

How can Bob and Jane ensure that their investment properties continue to grow in value?

They can ensure growth by investing in their learning and knowledge about property investment, understanding market trends, and making informed decisions about property selection and management.

What is the potential impact of inflation on the perceived value of the passive income generated by the investment properties?

Inflation could erode the purchasing power of the passive income over time, making it less valuable in the future compared to its value today.

Why is it suggested that the income from the investment properties be used to pay off the non-tax-deductible debt on their home?

Using the rental income to pay off the home's non-tax-deductible debt can free up more cash flow and improve their overall financial position, while maximizing the tax-deductible debt on investment properties for better cash flow management.

What is the role of an offset account in managing the cash flow from the investment properties?

An offset account can be used to store the rental income, which can then be used to fund subsequent investment properties, thus optimizing the use of capital and cash flow.