How James Turned $40K Into a Property Portfolio Through Rentvesting

Want to live where you love and build a property portfolio?

This week on Get Rich, Molly Benjamin chats with James from InvestorKit to unpack the growing trend of rentvesting - renting where you want to live while investing where you can afford.

James shares how he turned a $40K deposit into a booming portfolio, what to know before using equity to buy your next property, and the biggest mistakes first-time investors make (hint: don’t take advice from your mum).

You’ll learn:
✅ What rentvesting is and why it's growing in Australia
✅ How to buy smart - even on a low income
✅ The difference between good and bad property debt
✅ Strategies to build wealth without compromising your lifestyle

Whether you're property-curious or portfolio-ready, this episode is packed with practical advice to help you take action.

CHAPTERS

00:00 – Intro
02:09 – Meet James: How he ended up in property and InvestorKit
03:12 – What is rentvesting? Explained simply
03:39 – James’ accidental rentvesting story
06:23 – The Australian dream vs. the rentvesting reality
07:32 – Molly’s rentvesting story: Bondi life + Toowoomba investment
08:21 – Mindset shifts: Rentvesting vs buying to live in
10:30 – Where to start as a newbie property investor
12:17 – How to find a hot market (without the overwhelm)
13:39 – Comparable market analysis 101
14:23 – What to look for in a good investment property
15:14 – Why buyer’s agents are worth the investment
16:04 – Using equity to grow your portfolio
18:29 – Yes, properties can go down in value
19:09 – Common mistakes first-time investors make
21:27 – Real example: The $20K in 10 years regret
22:17 – Why diversification matters in property
23:26 – Molly's drive-by property visit (lol)
23:54 – Community Q: Can I buy again with just $50K equity?
25:48 – What does 'refinance' actually mean?
27:19 – Should I pay off my mortgage or buy again?
29:40 – Should we be worried about government property law changes?
31:43 – How James bought property on a low income
34:42 – Creative ways to buy when you're cash-strapped
35:35 – The panic of pre-approval: Don’t rush it!
36:25 – Rentvesting: City vs Suburbs vs Regions
38:40 – Why staying in your community matters
40:07 – What James is reading: Start With Why by Simon Sinek

LINKS AND RESOURCES FROM THE EPISODE

InvestorKit's Tools and Calculators: https://www.investorkit.com.au/advanced-rental-income-analyser/
InvestorKit's Whitepapers: https://www.investorkit.com.au/whitepapers/
InvestorKit's Podcast: https://www.investorkit.com.au/podcasts/
Realestate.com.au (for market research): https://www.realestate.com.au
Domain (property listings & suburb data): https://www.domain.com.au

CONNECT WITH JAMES KERR

Website: https://www.investorkit.com.au/
LinkedIn: linkedin.com/in/thisisjameskerr
Instagram: https://www.instagram.com/investorkit.com.au/
Facebook: https://www.facebook.com/InvestorKit/
Youtube: https://www.youtube.com/@investorkit

CONNECT WITH LADIES FINANCE CLUB

Join our free Facebook group - Ladies Finance Club Money Chat
Website: https://www.ladiesfinanceclub.com/
Instagram: https://www.instagram.com/ladiesfinanceclub/
LinkedIn: https://www.linkedin.com/company/ladies-finance-club/

TAKEAWAYS

• Rentvesting allows you to live where you want while investing elsewhere.
• Having a clear goal and plan is crucial for property investment.
• Using equity from your first property can help you buy more properties.
• Don't let emotional attachments influence your investment decisions.
• It's important to understand the difference between good debt and bad debt.
• Government laws rarely have a long-term impact on property values.
• Low-income earners can use guarantors to enter the property market.
• Team up with friends for joint property investments.
• Diversifying your property portfolio can mitigate risks.
• Rent vesting offers flexibility in lifestyle choices.

SOUND BITES

"You need to have a good plan."
"Don't just focus on one property."
"Don't rush to get into property."

TRANSCRIPT

[00:00:00] Molly: Welcome to Get Rich, the podcast that helps you do just that. Get rich and stay rich. Hey, I'm Molly Benjamin. I'm the founder of Ladies Finance Club, one of Australia's largest financial education platforms for women. But before I started helping thousands of women take control with their money, I was a hot financial mess when it came to my own finances and not the fun kind of hot, more like crying in a supermarket, wondering where all my money went kind of hot.

[00:00:29] But here's the thing, if I can go from financial mess to owning a share portfolio, investing in property, and building wealth. Then you can too. My mission is simple to make women rich because when we have financial freedom, we have choices, confidence, and control over our future. Every week on Get Rich, I sit down with some of the best experts in the industry to break down how we can all start investing, growing our money, and creating long-term financial security without the jargon, boring bits or overwhelm.

[00:01:02] Because when women get rich, we don't just change our lives. We change the world. So if you're ready to start making some smart Money moves, hit that subscribe button and let's get Rich together. Hey, welcome back to Get Rich, the podcast that helps you do just that. Get rich and stay rich. I'm your host, Molly Benjamin, founder of Ladies Finance Club, and my throat is a little bit rusty.

[00:01:26] Today I am getting over a little bug, but today we are diving into a topic that I. Absolutely love rent vesting. So we're gonna be chatting what it is, how to do it, and why it might just be your smartest move into the property ladder. It's something that I personally did, and I talk a bit about my journey on the potty as well.

[00:01:43] And I'm joined by the lovely, delightful James from Investor Kid, a buyer's agency, helping Aussies grow serious property portfolios. And James walks us through how he accidentally became a rent investor and how he turned a $40,000 deposit into a thriving. Property portfolio and we also chat about like mistakes he sees and unpack how to get started with just a little bit of savings.

[00:02:09] So whether you think you've missed the boat or maybe you're gearing up to buy again, this episode is packed with practical tips and mindset shifts to help you take that next step. Let's get into it. Awesome. So thank you so much for joining us on the show, James, it's great to see you again.

[00:02:26] James: Likewise. It is so good to see you, Molly.

[00:02:28] It's so good. Last time I saw you, you were up on stage with a microphone in hand in front of a couple of hundred wonderful women getting very excited with probably some of the best venues and canopies that I have seen in a long time.

[00:02:39] Molly: We do love a Canna Pay here at Ladies Finance Club. So, as I mentioned in the intro, I was super excited to have you on the podcast because you are living and breathing Rent vesting.

[00:02:51] This is what you do. So I was wondering, James, can you just tell us and our listeners a little bit about what you do and why you do it?

[00:03:01] James: Yeah, certainly. So for those of you following along at home, I am head of growth at Investor Kit. So Investor Kit is a large buyer's agency, so our job is to help people buy investment properties.

[00:03:12] All across the country build really big portfolios with the objective of fulfilling their goals and aspirations through property and through wealth creation. And I came about this role in a bit of an interesting way. So I got started in investing, uh, only around 2021 through my previous work. I was beginning to get very interested in property and this idea of trying to help property businesses or, or help my own journey through property.

[00:03:37] And I sort of started working in the industry parallel. I work across all the divisions from marketing all the way through to research and beyond to create the best possible business that that we can. And as you can tell, I love to talk. I love people, and that's really my biggest drive. I'm just really here to share all the learning knowledge I can to help people be better.

[00:03:53] Molly: Awesome. So let's get into it. For those listening, and I'm talking about the term rent vesting, and they're like, hold up, Molly, what is rent vesting? What's your definition of rent vesting?

[00:04:05] James: So my definition of rent investing is basically in the title, right? It is that you are renting a property you can't afford or you can't justify the cost for buying your forever home just yet.

[00:04:15] But you have seen the potential of getting into the property market. So you choose to go off and buy an investment property somewhere else across the country at a price point you could afford, so that you can allow that equity growth to, to compound over time while you get to live wherever you want to live and, and you can afford in doing so.

[00:04:33] Molly: And so you actually did this yourself, James?

[00:04:35] James: Mm-hmm. I did. Indeed. I didn't take, tell

[00:04:37] Molly: me a bit about that.

[00:04:39] James: Well, let me preface it by saying this was a total accidental rent investor journey. My wife and I did actually buy our first property. I. I can't even tell you when anymore, to be honest. It feels like a lifetime ago.

[00:04:49] But, but we, we bought at a time when Melbourne's market was still quite low, you could get a home for about 450, 460,000, which we did. And I think it was a pretty poor choice at the time. 'cause we were stretched like you would believe, even at that price point, we were stretched and some circumstances in our life changed and that meant that, that we needed to actually go and move in with family.

[00:05:09] We needed some support around us. So the home became an accidental investment and it. Didn't go particularly well. So while we were renting, oh, while we were staying with family, the concept sort of came around for me, which was, I love living where I'm living now. Like I'm living in a multimillion dollar suburb.

[00:05:25] I can never afford this. Or even if I could, the repayments would kill me. I would never have a good lifestyle if, if I'm paying four, $5,000 a month on, on a property. It's just didn't seem feasible. But what did seem possible was the idea of actually. Selling that home, which we did and we made a loss on, to be very clear, hence why it wasn't a great journey, but I took what I had left over, which wasn't much.

[00:05:47] I think it was about 40 or 50 K, and I used that to buy property down in Perth because my logic said that that's quite cheap. Back then, you could buy for about 300,000. And, and that's gonna go up, but it's not gonna cost me much. It's kind of mutually geared, positively geared. And then I can stay here in, in Eltham where I live.

[00:06:04] I can stay here, but I'm building a nest egg. I'm building and compounding wealth. So yeah, that's what we've been doing. And to be very honest with anybody listening, it is actually a tough road to stick to for long term. Because constantly in our society we have this concept of home ownership. It's so intrinsically tied to this idea of the Australian dream, right?

[00:06:23] You've gotta have the house, two and a half kids, white picket fence. And there's some idea that success is tied to the idea of owning your own property. My perspective is, but I am owning my own properties. They're just not ones I'm living in. And at some point I will buy a home to live in, but there's no doubt that it can be a tough journey.

[00:06:41] If you're lucky, you find a good place to rent for a long period of time. But I also know that people can sometimes find it tough to get into rental, and that's the fear behind can I do it? And that's where they feel the safety sits in buying a home to live in.

[00:06:55] Molly: Yes. 'cause I think that's what we see and pe and I think especially having traveled around the country doing our property road show, there were conversations where people, yeah, they have this thing in their head where they're like, no, I must buy a home and it must be a home I live in.

[00:07:11] And also very much constrained as well around. And I want it to be like. Close to where I live now. We want it to maybe be near family, but they might not be areas that are gonna see growth. So I know for me personally, I am a current red investor. I bought in Toowoomba where I could afford, because I live in beautiful Bondi.

[00:07:32] I'm literally looking out over the beach now. There's no way I could afford this $3 million apartment. But to pay, you know. X amount every week in rent, I totally can. So I'm really glad I'm not paying the mortgage on this. And then what I've seen was, you know, using experts, using buyer's agents. I bought in Toowoomba and I actually checked yesterday, James, and I'm pretty chuffed with myself because that property I bought in January and it's December now.

[00:07:58] That went up a hundred thousand dollars.

[00:08:01] James: Whoa. That's amazing. Congratulations.

[00:08:04] Molly: I was like, what? And I checked a few different like websites and it was all giving me the same figure. So I mean, I love it. I'm pretty happy with that because otherwise I would've just delayed delayed. I wouldn't have bought in Bondi just 'cause it's just not possible for me with where I'm at right now in my journey.

[00:08:21] James: No, and I think you raised a pretty good point, which is this. I think there's two aspects to this. So first off, if you've bought a home to live in, then that was absolutely the right choice for you to make at that time. And, and this is where we gotta be clear, is that we, we can get stuck into this space of, did I make a mistake by buying a home to live in?

[00:08:36] Should I actually be doing rent vesting and all these things that entirely based off your circumstance and your situation. And I typically get asked questions too, like, what's a mistake you simply making? Or did I make a mistake in doing this? And I go, it's only a mistake. If you had a clear goal in mind and then you made a choice.

[00:08:53] Deviated from that goal. So if your goal was to build a multimillion dollar portfolio and you wanted to buy multiple investment properties, but then the first thing you do is buy your primary place of residence, that could be a mistake. 'cause it might stop you from then doing these other things. Yeah.

[00:09:07] But it's not a mistake. If that's what you wanted and if, if that's the choice you're after, then lean into it by all means. I think that's really, you know, that's really, really important. But then the other side of it is, is people, there's that fear, uncertainty, and doubt principle, right? So it's sort of a fear of.

[00:09:19] Is this gonna work for me? Like, what if I make the mistakes here? And that's the uncertainty is, is this the right choice? Will it grow? And then there's that whole doubt of, well, can I make the right choice here? How am I empowered to go off and find, you know, a good property? And then when you do, it's like, it's exciting for the first week.

[00:09:35] Yeah, I, I bought an investment property, but then kind of nothing happens for the next year. You're not seeing the instant growth or return. So it can feel quite challenging. It can still feel like you've made, did I get it right, until you have that moment that you've just had, you know, 12 months later.

[00:09:50] Molly: Woo. And and that's the thing I was like, for me to have worked and made an extra a hundred k in my business or in like a normal job, like. That's huge. So yeah. And I was literally someone who was like, there's no way I will make a profit like property investing. I've left it too late, the market's already gone.

[00:10:10] It really plays with your mindset. Mm-hmm. Getting on that property ladder. So I wanted to just say, if I'm listening to this podcast and I am where I was maybe 12 months ago, and I am brand new. I live in. In an expensive capital city, which you know, a lot of them are, and I'm going, okay, this is all sounding great.

[00:10:30] Maybe I should think about. Property investing. What would be some good starting points for me as a complete newbie?

[00:10:38] James: So, I, I think like everything, I dunno everyone's circumstances, so just, just treat this as being quite generalist probably in nature. But if you're serious, if, if you're really serious about investing, the first thing you need to do is set up a goal, create a plan, and a strategy.

[00:10:50] It's, it. Don't just focus on, I wanna get that one property. You really need to sit down and consider what sacrifices am I prepared to make to grow a good portfolio Now. One is amazing in terms of buying properties. A lot of people get stuck on one that's around 70% of investors run. One becomes hard to get to two, even harder to get to three, you know and beyond.

[00:11:10] It's not impossible, but the first thing is get really clear with your goals. Why am I doing this? Because holding an investment property isn't easy. There is particularly now with interest rates, the likelihood of it being negatively geared and therefore costing you money to hold is. Very high. So you've gotta make sure you can comfortably do that.

[00:11:28] But then also too, you have to hold true to it because if you want to have great wealth over time, then you might need to buy three or four, in which case you need to have some hard chats with yourself or your partner or whomever you're doing this, this journey with around how am I gonna increase my income?

[00:11:42] What am I prepared to do to make that work? What sacrifices can I make to save and maintain my financial buffer and safety net before I get started? So I think that's really crucial. I certainly know that 'cause mine was an accidental journey. I, I got lucky, right? I got lucky. The first place I bought happened to be.

[00:12:00] A cracker like, like you, Molly, I got mine valued the other day and I nearly fell off my seat when I found out how much it had grown. Yeah, but you know, you have to make sure you've got a good plan. Alright? That's the first thing goal or at attend plan. Then the next thing you wanna do is actually start quite high up when it comes to property, and that is by looking at markets.

[00:12:17] Now it can get complicated. I think the simplest way I can put it is you're looking for market pressure. So you wanna sort of look at a. A region or a suburb, you know, Queensland or something, and then you're wanting to jump into realestate.com, uh, or a few other places. And what you're actually looking for are things like days on market for property, if there's low stock.

[00:12:36] So you know, if you're seeing a couple of thousand people visiting each home, that's usually telling you that there's not a lot of stock or availability. And same for rentals. If there's not a lot of rentals available in that area, then it's giving you a pretty good indication that something's happening.

[00:12:49] You know, there's movement going on. This could be a place worth looking at. Yeah. Now. In terms of where the markets and the listeners are like, James, just tell me where to buy. Like just tell me which places to go. I would say that if you're curious, a really good approach you can take is to follow any number of the top buyer's agencies out there, domain realestate.com.

[00:13:06] Nearly all of us will be putting out information quite freely around where current hotspots are, and that's the really big thing, if I may stress this, which is if you're making the sacrifice for home ownership. So that you can rent where you want to live and then buy where you can afford, then you want to get ahead quite quickly.

[00:13:22] You really wanna maximize that investment property, don't you? It's gotta, it's gotta be a winner. You wanna get hot markets, you wanna get ones that are gonna go up a hundred thousand a year like you've had Molly, and then repeat that time and time again. Yeah. So looking for the markets first is a good one, following what some of the top players are doing to help point in the right direction.

[00:13:39] That's where you'd get to. Then below that, that's when you just need to start building up your skill sets around something called comparable markets. So you, or analysis, comparable market analysis. So you just wanna get good at comparing properties so you find one, you think it's kind of a good property.

[00:13:54] It's priced at X. How do I know if that's a fair price? Looking at what's sold recently, finding properties that look similar will just help you give some governance around what's a fair price to pay so you don't potentially pay too much, too little. Now, I know this is getting complicated, right? But we've done market at that very, very high level.

[00:14:11] You know, you're looking for those days on market hotspots, et cetera. Now you're kind of looking at comparable prices, and then when it comes to picking the asset, best way I can put it is don't look at the home and go, would I wanna live there?

[00:14:23] Molly: Common

[00:14:23] James: mistake, like treat it as a business. This is not about what you would deem as being a great home.

[00:14:28] It's about what that market needs. So typically, freestanding homes are going to be a better asset than many others, three bedrooms or more. 'cause that applies to families or couples who need an office to work in. Generally a garage is favorable, particularly lockup if possible, for off street. Trying to get a home that's not on a big, busy road, you know, sort of suburban back streets is a winner.

[00:14:49] Yeah. Avoid things by roundabouts. Avoid being near graveyards. Make sure there's definitely not a flood plain, like there's a whole lot of due diligence you can put in there.

[00:14:57] Molly: Yeah.

[00:14:58] James: But that's a way to get started. Then hopefully you're in a winner.

[00:15:01] Molly: Great. Yeah, absolutely. And I think as well, this is where I'm a big advocate for buyer's agents because there's no way I would've found the property I found without a buyer's agent.

[00:15:14] And I know this is something you guys say and I, I say it as well, like this is a big purchase. Like if you buy property, you might be, you know, be spending anywhere from like. 400,000 to like a million dollars on a property. Like if you're gonna spend this much, it's worth just paying that little bit extra to get an expert to kind of go, yay, nay.

[00:15:37] This is what we think. This is what the area is we see. Yeah. So that's why I think the money is so worth it. Another question I have on that is, okay, so that's kind of like for that first time. Person on their journey, the the Jane. What about Allie who already has her first property? Tell us a little bit about using equity to them buy that next property and that being a strategy.

[00:16:04] James: Yeah, absolutely. Well, maybe let me recount it to my journey, right? 'cause just touch on that buyer's agent thing first. So I didn't know what buyer's agents were back in, I think 2019 or 2020 when I was getting started. I happen to have a very, very good friend of mine who had just gone through. A school to learn how to become one.

[00:16:21] I was like, oh, this is kind of interesting. So you buy property for people, right? But when I was looking at investing, I went through all that stuff I just mentioned before in terms of trying to find markets and so on. I spent maybe six months trying to do it myself, and when it came down to it, I could never trust myself to make a good call.

[00:16:38] So when I went to buy, that was exactly right. I used a, the user buyer'ss agent so that they could locate the property and do all of the negotiation, manage all the paperwork. I outsourced the entirety of that decision making to somebody who does this every single day.

[00:16:51] Molly: Yeah.

[00:16:51] James: And the agent in particular that represented me had bought, not only did he have over 15 properties himself or something, but he had bought over 200 in that year alone.

[00:17:00] Wow. So all those little lessons you can learn now. Just highlight from that biting going on. So when I got my first property, I put in about, at the time, 40 50,000 of my own money. Over the next year. It grew by around 110,000, 120,000 as well. Now. I was able to use that Equity and equity is just the growth that your property has had over the year against the loan that you originally took out.

[00:17:25] And this is why often when you're talking to banks, they're refer to something called LVR Loan to Value Ratio. Mm-hmm. Most banks will lend you up to 90%. So simple terms is, is a case of if your property has grown by a hundred thousand and it's now worth 500,000 as an example, and you've taken that a loan for.

[00:17:44] 400,000, you can now top up, you can go back to the bank, get it valued, and then they'll say, Hey, you've got this amount of cash available on the property. We are happy to let you take that 'cause we'll hedge it against the property. So you essentially pull that cash out, sits in your bank account just like any normal bit of cash, you can then use that for a deposit on the next property.

[00:18:03] Wow. And the banks obviously then got collateral. They know you've already got an investment. They're more favorable to borrow and you can use this strategy to repeat. So theoretically, you've only put in your own cash once at the beginning and from there on in. It's just the growth you keep pulling out to get there.

[00:18:19] Molly: And I guess that's only if you make that right decision around the right property. And then that is going up and not going down. I mean, do properties go down?

[00:18:29] James: Yes, they can. Yeah. Yeah, they absolutely can. Look, there's murky gray water around this, right. But I mean, we know that certain assets and certain types of properties can go down in value and it's often depends on the market at the time.

[00:18:41] So over a long enough time horizon, everything goes up. Yeah. But just like the stock market, you've got periods where it can drop or it can slow, or it can rapidly grow and so on. We have seen units go backwards in value. We've seen house and land, uh, packages go back in value. Commercial assets as well. It can happen.

[00:18:57] Yeah. It's, it's not overly common, more likely. It's just very, very, very, very slow growth. Yeah. And the growth you've had in one year, we've had clients that have only seen that over 10 years of holding it. Yeah.

[00:19:09] Molly: Mm-hmm. Yeah, absolutely. And I, I know when I was looking and with the buyer's agent and we were looking for properties, he was like, send me ones you like.

[00:19:18] So I was like, okay, so these are some, I think, look. Great. You know, I was looking for certain features, I was looking for land size and the ones I sent to him, he was just like, absolutely not because of this, this, this, and this. And I was like, oh wow. I had no idea. Like literally no idea. So what are some other like kind of mistakes you see?

[00:19:41] Kind of, I guess everyday buyers, so sorry, everyday Aussies make when it comes to purchasing an investment property.

[00:19:49] James: Yeah, so I guess, you know, just coming back to it, to us is the mistakes is always a bit of a circumstantial thing, but if we were to say. If their intention was to buy was to grow an investment portfolio.

[00:19:58] Right. Common mistakes are, oh, and forgive me for saying this to any parents out there, but listening to parents or listening to the wrong people around the decision to buy. I mean, generally speaking, we do lean in on, uh, friends or family, but unless they themselves own five or six or seven properties, yeah, they're not gonna be able to give you the best advice.

[00:20:16] The other common one that we see is people buy in their own backyard. They might not just buy one in their backyard, they might buy two or three. Yeah. And their logic is, I want to be able to go and visit the property. Right. And I say, that's your first mistake. Your first mistake is having an emotional attachment to these properties.

[00:20:32] Yeah. And it's not being open to the idea of running it like a business. 'cause you have to, you actually have to be comfortable with fact that it is not your home. It is a renter's home. That'll be a place that will provide safety to somebody else. So you need to pick what's right for those markets and don't drive past it.

[00:20:47] Don't be that landlord. That drops by and goes, oh, you know, this is, just wanted to check if the house is okay. Another mistake as well is, and forgive me for saying it is often you're buying the wrong property first because price is limiting factor. So an example might be you buy a unit. Now, units just historically, classically, broadly do not grow at the same rate as a home.

[00:21:08] And there's an argument for, well, at least I got on the property ladder. It's like, yeah, you did. But if you had waited another six months or a year to buffer your savings, whatever you needed to do or explore other options for support like guarantor, then you could have bought a free standing home that would have rapid growth and therefore get you get your head quite rapidly.

[00:21:27] Molly: This is so interesting, James, because I literally have, um, someone who is in, um, ladies. Finance club and we were chatting the other day and they're like, oh my gosh. And it was a few years ago now, but they had bought an apartment in their backyard because their mom said it was a good choice. And do you know how much it went up in 10 years?

[00:21:47] It went up like nothing. Yeah. I think it was up like $20,000 in 10 years. Oh my God, man.

[00:21:55] James: Yeah, exactly. E, exactly. And that's such a hard thing to live with. And I mean, we see it every day. We have a lot of people that come through our business. I. Who have had a similar experience and now it's that bitter pill of I can't get that time back, but what can I do now to get ahead to make up for it, so to speak.

[00:22:12] And it's like, it is tough. It's really tough, but generally it is listening to the wrong people around the advice. And it is this idea of buying in your backyard so you can see it putting all of your eggs in one basket. Nah, like the thing I wanna stress around listening is all markets go up. At different times than different ways.

[00:22:29] Yeah, but you, you really want to have a logic around diversifying your portfolio. So Sure. If you buy in Melbourne, maybe Melbourne goes up in price. Yeah. And your three properties you bought there are gonna go up in price. But if you'd bought one in Perth, one in Adelaide, one in Queensland, one in Victoria, you can then ride all those market cycles.

[00:22:46] And classically, you can buy properties for cheaper in these areas too. So that $500,000 unit could be a $470,000 home in grace smear, for example.

[00:22:56] Molly: Yeah, absolutely. Yeah. No, I think that is such a good point and about diversifying as well. And if people go, oh, but I, you know, I wanna be able to see it. Like it took, I think, took me nine months to go see my first investment property.

[00:23:09] Like I Did you actually go visit it? I visited it because I had an engagement party in the same town, and I just said to my, I didn't even go into it, I just went out the front of it and I was like, I was like, oh, this is cute. Great. I mean, I'm never gonna live there. But it was nice and I was like, happy with it.

[00:23:26] And for me it was very much, this is a business decision and it's actually not gonna get emotionally attached to this at all. We had some questions from our LFC community, so I thought if it's okay, I will ask you them. And I know that you know no financial advisor, not an accountant, but one of the questions we got was one from of one of our ladies, and she said.

[00:23:54] Hi James. I already own a property that's gone up 50 K. Can I use that to buy another property or would you recommend waiting until it grows even more? I.

[00:24:04] James: That's a great question. So first of all, congratulations, well done. That's also pretty good growth, I'm guessing over this last year or six months or or so on.

[00:24:12] As Molly has said, not the financial advice, and I also don't fully know the circumstance. So if the assumption is, is that you've only got 50 K, that's all that you'd be able to get from the property and it's all the cash you'd have, the short answer is. No, you, you, I think most people here would know that you can't go off and buy a home for $50,000 or with a deposit of 50,000, but if the actual total equity available in that home is roughly a hundred thousand dollars, which is kind of the ballpark figure most people need now to get into property, then by all means you can, but something I should stress is.

[00:24:45] And thi this is something I, I like people to get their heads around is you can access equity whenever you want. And it doesn't just have to be because I'm about to buy. So there's this whole concept of building up a safety buffer or like a war chest, right? So all the properties are costing you maybe five or six K per year to hold roughly, you know, just out OFP pocket expenses.

[00:25:03] You can refinance whatever you want, pull that equity out. You can have it in a hundred percent offset account, which is against your loan. For those of you curious about how an offset account works is it's essentially, let's say you've got a hundred thousand dollars that you take out as a loan from the bank.

[00:25:18] You use $20,000 to buy or fix up your home. You're left with $80,000. You've got that thing an offset. The bank will consider that as being something that you've used to. Pay off that loan. So it'll only charge you interest on the difference between that 80,000 and that a hundred thousand. So in your home, if you pull out all your equity, you leave it at an offset, doesn't change your interest rates, but you've got that cash there, you can then do that a couple of times until you have got enough cash so that you're ready to go ahead and buy.

[00:25:45] But in short, yeah. Sorry, go on.

[00:25:48] Molly: Oh, I was gonna say, when you say refinance, just as someone's unsure what refinance means, could you just break that one down as well?

[00:25:53] James: Yeah, absolutely. So very typically with with property investing. You do interest only loans, you're not touching the principle of the home.

[00:26:01] You're doing interest only. Most banks have got it for four to five years, and the goal is generally at the end of that time, the bank usually won't let you do it again with them, so then you just hop to a different lender. Refinancing is literally when you go back to the bank. Could be the current one you're with, could be a new one, and you just say.

[00:26:17] I would like to have my home valued, and then I want to refinance my loan against that home. Mm-hmm. Now you can choose in that moment to refinance for the full value of that new home and pull out that equity. Or you could just choose to go for a new rate. But that's what it is. So. When you are getting ready, this is back to that question before about pulling out equity, right?

[00:26:36] Is is when you're getting ready to buy, you typically do that. You do like what you did, Molly? Yeah. Get a bank to do a valuation. Find out it's gone up by X amount. Great. I'm gonna go to the bank because now I might get a lower LVR lower loan rate, which means I'll get a better interest rate. I can pull out the cash and I can have that sitting there as a buffer ready for our next purchase.

[00:26:55] Molly: Awesome. Thank you. And the next question, it's slightly similar but slightly different, so I thought I'll ask it anyway. This question was about should I pay off my mortgage on one property or should I just keep going and buy another, because I know sometimes debt doesn't sit well with people. They like, they, they think, well, I've got this property, I need to pay it all off before I buy my next property.

[00:27:19] James: Yeah, yeah. And I'm assuming we're talking about an investment property. So I think something that's really good to have a discussion around is good debt versus bad debt. So a property is good debt because it's attached to an asset that does go up in value, and it also has such intrinsic worth and function.

[00:27:36] So it's not like a car that we all know depreciates like a stone. Buy a $50,000 car next year it's worth 38,000, and then so on. That's bad debt, you know? Yeah. A home is good debt. So I think first of all, being comfortable with, it's important because that's what's gonna allow you to grow a big portfolio.

[00:27:51] You need to be comfortable at some point in the future to go, man, I've got a million dollars worth of debt, but I've got a $3 million portfolio. Because all that you do at a point like that is you consolidate, which I'll touch on shortly. So when it comes to paying down. One of the biggest things that I, that was a very sobering moment for me when we bought our first place, was I was doing principle and interest repayments as our home we're living in, and I was paying it down, you know, over the year, sort of $50,000 or something odd in repayments.

[00:28:16] I remember sitting down with my broker, I. We ran the numbers, actually how much of the principle of the property I'd paid off over that time versus how much interest I'd just given the bank. And at that $50,000, it only equated to about $7,000 coming off. Oh my God. The loan. And this is the same for everybody.

[00:28:32] If you go and actually look at how much of the principle you actually pay off, and then if you look at how much that loan costs you over 30 years, it is scary. You know, it's sobering. So the short answer is. If you've got lots and lots and lots of income and surplus cash paying down a property, if that's the right thing for you, go for it.

[00:28:51] Maybe that is just the right thing for you, but the alternative is don't throw excess cash into there. Instead, put that cash into savings to buy the next investment property. Maybe pull equity. You can repeat this a three few times. You can leverage that home you've already got, obviously as, as collateral, and then in the future.

[00:29:10] You can actually sell down a couple of those investment properties when have grown up in value. You can use that to then clear the debt and you will do it much quicker, earn much more as a result, and you're allowing multiple properties to grow, not just the one that you're trying to pay down. So you'll always end up better off.

[00:29:27] As a result by going through a strategy like that. But again, it's worth having a look. I would just suggest looking at how much you're actually paying for that home and whether it's worth the million dollars or so that the interest is, is asking you to pay. It's very sobering.

[00:29:40] Molly: That is. Oh my gosh. And another question we got, which is a great question, just around government laws.

[00:29:47] So there has been chat that maybe government laws around property might change. Is this something that we need to be kind of concerned about or keep on our radar? I.

[00:29:57] James: Look, look, broadly speaking, there are very few laws that could come into effect, which are gonna have traumatic impacts on property. Some of the biggest ones we know would be any changes or abolishment around capital gains tax.

[00:30:09] Molly: Yeah,

[00:30:10] James: it, it will create a change for a brief moment, and then it will settle just like interest rate changes, create panic for a brief moment, then they settle. COVID, right? Like panic for a brief moment, then it settles. More than likely the greatest law reforms that could come in place that will have an impact would be ones that affect stock mobility.

[00:30:28] So stock mobility is just how easy is it for somebody to transact on a home? Yeah. So if they, if they brought out changes to maybe access to money, like they're making it much easier for people to access finance, for example. And I know there are schemes already for this, but that could be something that plays an impact if they make reforms around stamp duty.

[00:30:45] Right, so when you're selling, you're not suddenly slugged with 40 or the $50,000 in stamp duty, so therefore it's easier for somebody to transact. Things like that will have an impact. Now, if the question is, should I be worried about those things? Absolutely not. Timing the market doesn't work. Time in the market does.

[00:31:02] Mm. Yeah. And we have had so many blips happen over time, but as I said before. Over that time, things have still consistently gone up. You need to know that you've only lost when you sell if you're selling at a bad time. Otherwise, you just hold and you keep going. Now, there's always gonna be external factors, microeconomic ones that will affect it, but in terms of government reforms, very few of them are going to have a dramatic impact for the long term.

[00:31:27] Molly: Yeah. Okay. Fantastic. All righty. I think that was all the questions there from the community. All right, James, another question. Okay. Low income earner, what are ways that you can get on the property ladder faster? I.

[00:31:43] James: I was a low income earner when I bought, bought my first place. I think just the, the backstory there was when we were looking at buying my, it was about seven years ago, right?

[00:31:52] We're in a really, really great place. My wife was running her own business. I was working in a really cool company too, where I was on the up and up. I was running quite a lot of divisions. We were working a lot, a lot of different agencies, and it was amazing. And we bought our home and yeah, wasn't the best choice, but we bought it.

[00:32:07] We were happy. And, um, very soon we're expecting our, our first child. And when my son was born, it was like the most incredible moment ever was. It's life changing for anybody listening here, they know when a child comes into the world. And it was that moment of like, life cannot get any better on the up and up with career.

[00:32:24] Uh, my wife's got her business. We've got a home like we are living that Australian dream. And then it just totally fell apart.

[00:32:30] Molly: Mm-hmm.

[00:32:30] James: So I'm sure many listeners here have probably experienced this too, but my wife was hit with very extreme postpartum depression, very extreme. We had a child that wouldn't sleep for more than 20 minutes at a time, and in a very quick period, her health just deteriorated as a result of that.

[00:32:45] And she ended up in and outta hospital for a very, very long time. Over the next year for a very long time in that same year, obviously, not only did she have to follow up her business. The company I was with started to fall over as well. I was trying to look after a very unwell wife. I was trying to raise a child.

[00:33:00] We were living in per family's home for the support, hence why we moved out of the, the home we were living in and everything just fell apart. And I went, this is so scary how quickly life can change. Hmm. My earnings have dropped drastically. You know, there were periods where I wasn't getting any money for.

[00:33:15] Six or eight weeks at a time. And I went, I, I, I don't have a safety net. I wasn't prepared for this. I cannot allow this to continue. So that became my catalyst for going in to buy an investment property. 'cause I just realized that there was something about that that was gonna be a safety net for me psychologically for the future.

[00:33:30] But I didn't have much money now, fortunately. At the time, obviously, the government had some incentives during COVID where you could pull money out from Super. That's what I did. That helped the limited savings I had as well worked towards it. But what I did was I spoke with my family and I actually got my parents to go guarantor.

[00:33:47] Molly: So

[00:33:48] James: guarantor was a tool that I used to get in with very low income. I was making about 60 to 80 K at the time. I had very limited in terms of cash. Now, guarantor's a great way to do it because obviously that can increase how much you can borrow. It means you don't need as much as a deposit, and you've essentially the bank's saying, well, if everything goes wrong, we've got this asset here.

[00:34:09] Now you're a hundred percent accountable to the loan, but the bank looks at you more favorably. So that's a way of getting in. You know, if you've got low savings and low earnings. Another way, and this might be a bit challenging, but we are seeing lots of people now looking at using self-managed super funds to buy property.

[00:34:25] And again, it's because they haven't been able to save a lot outside of their income.

[00:34:29] Molly: Yeah.

[00:34:30] James: But maybe between them and a partner, if they're doing it together, they've got around 170 odd thousand in super, which is a perfect amount to then buy a property inside. A self-managed super fund could be something worth looking at.

[00:34:42] Other options, which we're also starting to see as a bit of a trend is people actually doing joint ventures. Like teaming up with a couple of friends. Yeah. To buy an investment property. Now that's quite new. I think there's a lot of. You gotta really wanna make sure that's the right group of people you're doing it with.

[00:34:55] Have legal

[00:34:56] Molly: done. Yeah, yeah. Have

[00:34:57] James: all the legals done. Please have the legals done for everything. Like, for essentially everything. But it is another way it, it's another way of people actually being able to collaborate to, you know, to buy a property. But those are kind of your three main ones. I would always preface this by being, don't rush to get into property.

[00:35:11] Make sure you've got the safety net in place. 'cause once you buy the property, as I'm sure you experienced, Molly and I certainly did. First year was just filled with maintenance. There are all the little things that come up from having a tenant in there. Pipes have gotta be fixed here. Cleaning's gotta be done.

[00:35:24] Those out-of-pockets can get at you. So even if you're trying to do this option with low savings, also make sure that you're thinking about that cost of holding for the first year. So ensure you've got a bit of a buffer. I.

[00:35:35] Molly: Yeah, absolutely. And I love what you say about that as well because once I got my preapproval and I was searching, I felt almost like this panic that, oh, well that's a great house, but what if it goes, what if someone else buys that house?

[00:35:47] And what my, my kept going is, Molly, there are lots of properties out there. It's okay. Like if we mixed one, it's fine. There'll be another one. Yeah. So I would say as well,

[00:35:58] James: yeah,

[00:35:58] Molly: the don't panic piece.

[00:36:00] James: Which is so tough, right? 'cause everyone's always got fomo. Always got fomo. And that feeling of missing out on a property is tough.

[00:36:06] Like it is tough. But I love what you've said, Molly. There are thousands of properties out there. You'll get one.

[00:36:13] Molly: Absolutely. Oh, and actually what we might do is, final question. Rent vesting, city versus suburbs or versus kind of city versus regions. What feta.

[00:36:25] James: I love that. Do, look, I'm a suburb guy. I love it.

[00:36:28] Like where we are living is out in the bush. You know, we're about 30 Ks out from the CB, D. We get to do bush walks every morning. It's just, it's perfect Big transition. Used to be the beach guy and now I've gone all the way out the other end. This is entirely subjective 'cause I think a lot of it comes down to what you're doing for work, what lifestyle that you're after.

[00:36:45] What I like about this question is it also touches on. An element of the mistakes Yeah. That people sometimes make in rent investing, which is, you know, you can go and rent in some of the best parts of town you can Absolutely. You might not be able to afford to live in, I don't know, two rack or Bondi or somewhere, as you've mentioned before, if you owned, but you absolutely can when you're renting.

[00:37:04] So I think part of it is, I. What lifestyle am I after? And then go and chase that. And the beauty of the Rent vesting component is you're not tied to that location forever. So my journey with Rent Vesting was we started in the city, we did all the popular little places, tiny units in Collingwood, semi house in Richmond, you know, so we could live that city life when we were younger.

[00:37:24] And then we've just progressively, you know, we've moved out to the suburbs as we've gotten older and we've had kids. But I love that in January when our lease is up, I have the freedom to say, you know what? Time to go back to the beach. Let's go and rent down in, in the Hamptons, or something like that. So it's really up to you and it's just, what lifestyle do I want?

[00:37:42] And go from there. Yeah.

[00:37:44] Molly: I love that lifestyle piece as well. 'cause I know for me as well, like I don't wanna not live in Bondi right now in my life. You know, I don't wanna live in the middle of. The suburbs like, you know, I'm. In my mid thirties. I still love going out. I still love meeting friends and all my, all my community is around me.

[00:38:03] So yeah, for me that's something that's really important. And I remember speaking to like, I think it was a life coach or something like a couple of years ago, and they're like, what's your dream morning? And I was like, it's walking the beach. It's doing some journaling, it's going, getting a coffee. And she was like, what's stopping you doing that?

[00:38:17] And I'm like. Actually nothing. So that's when I moved to the beach and I, you know, I could have that dream morning every morning. And then what I love about rent investing is then I still have a property and it's still making me money and I'm still on the property ladder and I still get so proud when I can say to people, as a single business, female business owner, I got on the property ladder all by myself.

[00:38:40] I love that.

[00:38:40] James: So yeah, it's so amazing. And if I may, the final point is that just an observation I've had and certainly from my friends over the last decade when that pool to buy the home had become so strong and they were committed to that. And the idea of anything else, the idea of renting or or investing is just not what they're after.

[00:38:57] Yeah. The biggest thing I noticed was displacement as their friends and their lifestyles usually like what you are doing, Molly was in these inner suburbs of Sydney usually because. Our parents could afford to buy there when they were youngest. So we've grown up there and then the displacement comes 'cause we can't afford to buy.

[00:39:12] So for the sake of owning our home, we then move kilometers away and we actually leave behind big friends groups. We, we then obviously form our own communities. That can happen, but that displacement is massive. Like I, I, I remember my, um, my brother and sister-in-law, they were Bondi people too. They wanted to buy.

[00:39:31] Best place they could afford to buy was up in the Blue Mountains. So they made this huge move up to there, which is an equally beautiful place, by the way. Yeah. But it took 'em a while and all their friends are back in the city. So there's that element I think is just worth considering. What, what are you giving up to own?

[00:39:45] Do you want to do that? Is it right for you? Go for it and do it if you want, but I'm, I'm like you. I like the fact that we can still be in our communities.

[00:39:53] Molly: Love that, James. Well, thank you so much for spending some time with Ladies Finance Club on the podcast. You're welcome. A question we ask all our guests is, what are you reading at the moment or have you read anything great that you would recommend Usha or the audience?

[00:40:07] James: Ooh, that is a really good question. I dunno if anybody's gonna be excited. About what I'm reading at the moment, but I'm doing a lot of introspection around leadership and development. That's obviously just a big passion. So I'm actually revisiting some old classics of mine from Simon Sinek, and at the moment I'm reading, you know, start With Why.

[00:40:26] Yeah. And I'm using that to just. Kind of recenter myself and make sure I'm staying true to my why, but I'm reading that. And then I, I'm also in the process of reading this one from Phil Jackson and, you know, um, NBA coach about 10 rings and just his journey for building teams that were high performers and high, high performing cultures.

[00:40:44] But Simon Sinek's book, start With Why. Amazing Read amazing speaker too. We should get him on this podcast, Molly. That'd be incredible. Oh my God, that's the

[00:40:50] Molly: dream. I saw him a few times in London and he is, oh, he is equally as amazing life. Thank you so much James. And James is from Investor Kit. You can check them out.

[00:41:00] I'm gonna put links to all their websites, their blog, and all their content in the show notes. So go check it out.

[00:41:07] James: Please do. You'll find plenty of good information in there. And Molly, it was such a pleasure. Thank you so much for having me on here and for all the listeners as well. Thank you for putting up with me for the last 40 minutes.

[00:41:16] I hope that was valuable.

KEYWORDS

rentvesting, property investment, equity, investment strategies, real estate, buyers agent, financial advice, property market, home ownership, investment portfolio