Stop wasting your greatest asset
With most assets, if you make a mistake or miss an opportunity, there is a way to rectify and recoup your losses. But that’s not the case with your greatest asset, which is time. Time in your own life to spend as you wish and time in the market with your investments.
Traditionally people trade their time so they can get money in return. If you want to escape the matrix and live life on your own terms, you need to flip that formula around completely and find a way to trade money for time.
A philosophy is born
B Invested founder Nathan Birch often speaks about watching his father work his whole life in a tough job, only to pass away before he could pay off his house, retire and enjoy some of the fruits of his labour. For Nathan, it was an early life lesson. He didn’t want to suffer the same existence.
The idea of working a 9 to 5 for someone else for 40 years did not appeal whatsoever. He figured out that if done wisely, property investment could provide him with capital gain and a disposable income without him having to work for anybody else. He just had to trade his money (in the form of deposits and investment), for more time once he reached his initial financial goals.
Earning more time
Nathan did join the rat race, but only briefly, working two jobs and saving money as a necessary step to get to where he needed to be in order to build a passive income from property.
Fast forward a number of years and he has more than 230 properties, with a massive amount of net worth and hundreds of thousands of dollars in cashflow coming in each year. He is less than halfway through a normal adult working life and he has all the time in the world to focus on his hobby, which of course happens to be real estate.
Finding your own time
Not everyone can achieve what Nathan was able to. Few have the same passion for property investment and the lending environment has changed somewhat since he started out in the early 2000s.
But you can follow the example by putting the money you earn towards building a portfolio of properties that you purchase below market value, with upside for growth and positively geared with a good rental return.
If you do it right, those properties will earn you more time at some point, as they will be able to pay for themselves, with some left over for you. At that stage you too can live life on your own terms.
Using time to get you more time
The other type of time we mentioned earlier is time in the market. This is the key to building the most wealth you can. Australian property works in cycles. Values grow, then they plateau, then they may slightly drop, then recover back to the plateau. That’s a property cycle. From there, values are ready for their next growth cycle. Over the decades, a line on a graph representing property values travels steadily upwards. So the more time in the market you have, the more capital your assets will gain.
But some people lose money
Yes it’s possible to lose money. Usually it’s someone who buys at the top of a cycle and then have to sell during the correction phase. If they had found a way not to sell but to hang on, eventually they would have made their money back and then made more.
Even people that buy cheap, add value and sell for what seems like a big profit, also lose money, because they would have earned a lot more if they held onto the asset. When you sell a property, it will never make you another cent from that day forward. But if you hold onto it, inflation will gradually see you earn stacks more money from it, while the debt you have on it stays the same or is paid down.
The moral of the story is
Remember the first series of The Block? The winning contestants sold a renovated apartment in Bondi for $751,000, earning profit of $156,000 and a total prize money of $256,000. They were over the moon. That was in 2003. But take a look online at Bondi apartments recently sold these days… the real winners are the buyers of the properties on the show, because they are sitting on something worth $2 or $3 million, plus whatever rental income it has brought in over the last 18 years. All that money was earned by our greatest asset…time.