14 Mar Property Investment Strategy – Bushy Martin
Bushy Martin is the author of a book called “The Freedom Formula” that gives a great step by step guide to setting up your own ‘living by design’ life plan. In this interview, Bushy talks about his life experiences that have landed him where he is now, why he wrote the book and what you can expect by reading it. The book is available now – www.bushymartin.com.au
Kevin: I was absolutely delighted to receive a book in the mail called The Freedom Formula. I had been talking to the author for some time prior to that, Bushy Martin. Bushy joins me to have a bit of a conversation about the book and about lifestyle generally.
Good day, Bushy. How are you doing?
Bushy: Fantastic, Kevin. Yourself? It’s a real honor to be able to have a chat with you today, mate.
Kevin: Thank you, mate. I appreciate you saying that. Just a little bit about your business, Know How Property Finance, and there is a website to go to, to get a little bit more information about Bushy, KHGroup.com.au.
I want to give you a website, too, to go to, to get a copy of the book, which has just been released. It’s a been out for about a week, and I was privileged enough to get a copy of it pre-release and have a quick look through. I’ll give you that website to go and pre-order the book. There will be a link inside the commentary with this podcast.
That’s a long-winded way to say good morning. That’s probably the longest introduction I’ve ever done to anyone, Bushy. I don’t know why.
Bushy: Okay, I’ll take it.
Kevin: I said to you before we started this interview that I, quite frankly, didn’t know how to interview you because I just love the book so much. There’s so much in it.
I want to focus on just one very small part of it, and that’s about strategy and mindset because I think that’s such a key thing for any investor, no matter whether they’re in property or shares or finance and money, for them to get that right, Bushy.
Bushy: Yes, I totally agree. I think the issue with a lot of people is we live in a very time-poor world, Kevin, as we all know. Because we don’t get the time to sit back and really reflect on why we are investing in property, that can often lead people to making some mistakes around the style of property, the type of property, how much they spend on the property.
Where I like to start is to turn that on their head and property is actually the last thing that people think about. So, if we focus on the strategy piece – and we call it a “startegy” because we like to get people started on their journey to replace their income through property – then the strategy is really about getting crystal clear about how you want to live.
We break this down in some very simple what we call the freedom numbers. If you work how you want to live, it’s very easy to monetize that and what that lifestyle costs per year. Then we can look at what sort of a nest egg we need to generate to create that income on a passive basis so that you get your time back.
Then if we know what that timeline is – whether it be 5, 10, 15, 20 years – it’s pretty easy then to break it down to your freedom number, which is the number of properties and the style of properties that you need to be investing in.
To give you a really quick example, if $100,000 was enough to give you the lifestyle that gives you the freedom to do what you want when you want, then at a 5% return or the one in 20 rule, that means we need to create $2 million worth of income-producing assets. If you’re break-free timeline is 20 years, then with an average investment property around about $500,000, that means that your freedom number is two investment properties.
The number at the start looks pretty big, $2 million, but if you have 20 years and you invest in the right area with plenty of growth, then two properties is going to be enough to get you there. So, you just start to crystallize that.
I don’t know about you, Kevin, but I always hear this argument about cash flow versus capital growth. Now, if we adopt the approach of looking at where we want to end up, then all you need to do is look at where you are on the capital growth to cash flow curve, and it’s very easy then to adopt the right property tactics to get you there.
In very simple terms, if you are well below what your nest egg number needs to be – so if your current assets are worth less than $2 million in that example I just spoke about – then your focus is on capital growth. It’s not cash flow. If you reach that $2 million mark, then it’s about transitioning your portfolio into a cash flow exercise.
So, it attempts to de-mystified this argument around whether it’s cash flow or capital growth. It’s a matter of initially focusing on capital growth, and then moving and transitioning to cash flow at the time when you hit your nest egg number.
Kevin: I know in your book, you and your wife, Sonya, talk about living by design. That’s really what you’re describing here, that you’re actually designing your life – but there is no one size fits all, is there?
Bushy: No, there isn’t. That’s the beauty of it, I think, Kevin, because everyone likes to live differently. Everyone has different goals and expectations. Everyone has different timelines on when they would be in the position where they don’t have to work anymore.
The “living by design” exercise is something that’s probably born out of my architectural background, because as an architect for many years, you’re used to designing the future, visualizing what it looks like, and then making it happen. It’s something that we pretty much took for granted.
Sonya and I, when we first got together, we were on the bones of our behind actually. We had both come out of divorces, were starting again in our early thirties. We sat down and had a good look at how we wanted to live and went through that process I just spoke to you in relation to the freedom numbers.
The good thing about that is that’s become the real magnet that’s helped us stay the course, because we’re really clear on where we wanted to end up to be. That meant we weren’t distracted by every next shiny listing that hit the property market, which often occurs, again, as you would know better than I, Kevin.
The sad thing about it for a lot of property investors is that I think that over 50% of them sell the property within the first five years, and a lot of that is because they don’t have any clarity around where they’re heading.
If you live by design, you know where you’re heading, it acts as a magnet, but it also acts as a compass so that as things hit the desk, you’re starting to make decisions based on whether it’s going to help you get to where you want to be or not. It’s a good filter to make sure that you’re not being distracted continuously by everything else that’s around the place.
Kevin: You talk in the book, too, about two key attitudes, I guess. One is persistence and the other one is patience – understanding this is going to take a long time. It can take a while; it’s not going to happen overnight. But you need to be persistent once you have that plan. You cannot have persistence unless you have that strategy, unless you have that vision and that map in front of you, can you?
Bushy: Absolutely true, Kevin. And you pick up on two very key things there, the patience and persistence. Unfortunately, in our “instant iPhone everything” world today, the patience and persistence muscles don’t get a lot of work, and the end result of that is that people have forgotten success in anything actually takes time. If we treat time as our friend and know that good things are going to happen if we stay the course, then we’re less likely to jump ship mid-stream.
I don’t know about you, Kevin, but my folks came off the land, and they were used to planting a seed today, cultivating it, weeding it, taking it through the hot seasons, the droughts, and the weather to produce a good-quality crop after a period of time.
Well, our thinking needs to return to that because rather than expecting to plant the seed tomorrow and then reap the fruit tomorrow, which is pretty much how a lot of us live these days at the touch of the smart phones, what we need to be doing is getting back to that long-term approach.
And when I say “long term”, if we’re going to go through a safe, affordable easy approach with property, as you know, Kevin, the property cycle is anywhere between 8 and 15 years depending on what’s happened. So, you really need to be into the market for that long to really enjoy the full fruits of a complete cycle.
Kevin: I love what you’re talking about there, but I quite often think of life a bit like growing a tree. It’s the weeds that grow quickly; the quality trees take time. And there’s never, ever a better time to plant a quality tree than today and then start nurturing it.
Bushy: Yes, what’s the old saying? When is the best time to plant a tree? Twenty years ago. When is the second-best time? Today.
Kevin: That’s right.
Bushy: I absolutely, totally agree, mate. That’s where that mindset comes in. If we get our expectations right around success is going to take a while, and yes, I need to do my research, I need to be getting the right property in the right areas with all the right supporting growth factors that are going to help me get there. Once we’ve done that, though, we need to get out of the road.
We have a habit of wanting to play with things too much in this day and age, Kevin. Because we’re expecting this overnight success, we start stuffing around with things. Whereas if we make the very carefully calculated decisions early as part of that strategy and then once we’re into the market, we get out of the road and focus on our careers and our work and spending time with friends and family, and letting time, the tenants, the taxman, and capital growth do its work, then that’s where you get the best results, mate.
That’s certainly been in my case, that’s for sure. We’ve gone from ground zero to a portfolio of 12 properties over the last 20 years, and it now gives us a fantastic lifestyle, but most of that growth and most of the rewards have come in the last five years, Kevin.
Kevin: So true, mate. The book is called The Freedom Formula. It’s written by Bushy Martin, who has been my guest.
Bushy, tell me what we can expect to see or pick up inside the book? How would you summarize it?
Bushy: The book is really written for time-poor professionals who have an interest in property but don’t have the time, don’t have the knowledge, they don’t know who to trust, and they don’t know where to start.
It really takes you through a step by step process from woe to go and how to build a remote-control property portfolio that will replace your income over time while you continue to focus on growing your career, your income, and spending your time with friends and family.
It demystifies all of that. It gives you a really good baseline to be able to then judge where does property fit into the equation for you. It gives you the step-by-step process, which is the Income for Life Ladder that I describe in the book, that will take you through that, and it also points you in the direction of the right expert and elite team that you need to surround yourself with to make that happen.
Kevin: Yes, it’s a great read, and I strongly suggest you get it. The website to go and order it is BushyMartin.com.au. It’s called The Freedom Formula, and as I said, I strongly suggest you get a copy of it.
Mate, I want to get you back into the show a little bit more often because you make a lot of sense. Great talking to you, Bushy.
Bushy: You, too, Kevin. I appreciate your time. You have a great day.