The magical number of 7
7 year cycles
7% capital growth
7 investment properties
Top 0.7% of wealthiest retirees in Australia
For hundreds of years the number 7 has had significant meaning. We can now transfer this mystical theory into some practical application with wealth creation and more specifically investing in property. For the last 100 years property has grown at approximately 7% per annum. What this means is that on average property will double in value every ten years. We also can look back historically and see some 7 year cycles that are quite prominent as well. We can see 7 years of high growth, 7 years of slow growth and 7 years of stagnant growth. These cycles can date back to ancient Egyptian times where in the story on Joseph and Pharaoh. Joseph had the ability to see omens and interpret dreams. The famous story tells of Joseph interpreting Pharaoh’s recurring dream, which revealed that they would go through 7 years of great harvest and abundance and then go through 7 years of famine. Joseph advised Pharaoh to store a percentage of food and grain during the years of growth so they could survive through the years of famine. This is a great lesson that can be applied today in the context of investing in property.
It is not the size of debt that people should be concerned about when investing, what’s more important is the cash flow impact or income to debt ratio. Investors get into trouble when they are highly geared and then cash flow becomes tight and all of a sudden their property portfolio is a burden to them and they end up liquidating, which defeats the whole purpose of investing in property (which is holding for long term and maximising capital growth).
There is a significant number of people in Australia that own one investment property, however the number of people that own two drops dramatically. At Property For Wealth we believe to create wealth through property and enjoy a great retirement or even retire early, you need to get 7 investment properties in your portfolio. If you can hold 7 properties for a conservative 14 year period (two 7 year cycles), then you most likely will be in the top 0.7% of wealthiest Australians. Firstly, only 1% of Australians retire on more than $50,000 per year. If you had 7 investment properties right now, then you would have close to $2.5million of property in the market. Remember at 7% growth then your properties will double in 10 years, but let’s be conservative and give yourself 14 years for them to double. Net result would be $2.5million net worth and at 5% return on investment you would have around $100,000 in passive income after exiting the strategy.
So why do people get stuck after one property? Because they buy the wrong property don’t structure their finances correctly, and manage it poorly. They also don’t take the time to get educated on money management and mindset. You can’t expect someone to buy 7 properties straight away and be instantly successful. Just the same as 80% of lotto winners lose it all – they haven’t developed the mindset or the skills to deal with that sort of wealth.
At Property For Wealth we help our clients build successful property portfolios and get to that magical number of 7. Working with us means you have a team of professionals around you to help establish and clarify your strategy and then implement it in the most prudent and effective way. The key to building a great portfolio is making sure the properties do not impact your lifestyle. Imagine having 7 properties that were totally self-funding and you didn’t have to sacrifice the things you enjoy. Each client receives an individualised strategy and then we source the best properties in Australia to grow you portfolio. We project manage the whole process and take the stress out of investing.
