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3 FACTOR IN ONE WAGE
If a baby is on the cards, it’s imperative to
factor in living off just one wage.
“If it’s a young couple looking to start a
family, that property is going to have to do
some heavy lifting in terms of supporting
itself,” Kingsley says.
“In some cases, you have to chase yield
for couples looking at going down to
4 FOCUS ON ACCUMULATION
Gen-X should work on getting the
accumulation phase over and done with
within a 10-year bracket. If you start
accumulating when you’re 35, aim to
finish by the time you’re 45. Then focus
on retiring the debt by the time you’re 55
and voila, you can exit the workforce not
only early, but also wealthy.
“It’s never about the number, it’s about
the goals,” Kingsley says.
“A lot of people make that mistake.
They’ll say ‘I have four properties, worth
$1.35 million’. But they might not be
A more conservative and very
achievable strategy, according to
Kingsley, is to buy one property every
seven years, but make sure they’re
properties in blue-chip locations.
Kingsley, who is 42 but started investing
when he was 23, says anyone can follow
this strategy. Like many gen-X investors,
he had his first child in his late 30s. He
also upgraded the family home for a
“happy wife, happy life”.
McLellan adds it’s a good time for gen-X
investors to take advantage of equity
they might have, as interest rates are low,
rents are strong and most property cycles
“Duplication for gen-X is what you
should be doing at this point,” he says.
“Most people just want to pay off their
own home, but if you have two properties
worth $500,000, you can wait one cycle
and pay the other one off. Or buy a
couple of properties and set yourself up
On the other hand, Wemyss believes
planning to buy three properties over
five years is a “bullish” strategy for gen-X
investors, but definitely achievable.
“Gen-Y has 30 or 40 years until
retirement and if they accumulate
properties throughout their lifetime, it’s
likely properties will fund their retirement.
For gen-X, that won’t be the case,”
“If I acquire three properties within
five years and want to retire in 15 to
20 years, the cash flow will be positive
(by retirement) but not enough to
An alternative strategy, he says, is to sell
a property down the track to reduce debt
and live off the remaining properties.
“For gen-X it’s about buying property
as quickly as possible. You typically don’t
need more than three properties.”
He adds many investors want four or
five properties but if you already have
three blue-chip properties, you shouldn’t
need another. Everyone has a limit to how
much they can borrow and so it’s all about
buying the best quality, rather than the
“Pay attention to the properties you
already have. The biggest risk isn’t losing
money but wasting time. Time you don’t
get back. There’s never a bad time to buy
a great investment property and there’s
never a bad time to sell a poor one. If
you’re not confident you have the best
asset possible, you should sell it.”
5 TAKE A RISK
A gen-X investor has time on their side
and so they can take a risk, according
to Kingsley. This means they can pay
lenders’ mortgage insurance to leverage
an opportunity – they don’t necessarily
need a 20 per cent deposit.
“The comfort around the debt level you
take on is to justify the numbers,” he says.
“I advise clients to go higher than 80
per cent on a loan if it’s appropriate for
their risk profile. There can be a long-term
positive outcome if a loan is as high as 90
per cent (of the value of the property).”
Wemyss adds borrowing more than
80 per cent isn’t a problem for a gen-X
investor. What matters is affordability and
servicing the loan.
6 STOP PROCRASTINATING
What if you haven’t already jumped into
the property market? Stop procrastinating.
“If you have kids, don’t use that as an
excuse,” Somers says.
“A lot of people have the attitude, ‘My
parents couldn’t afford this, I’m not letting
that happen to my own kid’. But they
spend, spend, spend on their kids and it’s
the wrong attitude. Teach your children
good spending habits.”
By teaching children good spending
habits, you can save more money and
suddenly, there will be no excuse to
procrastinate. After all, these are the most
important years of your life, where you
have the chance to either set yourself up
financially or do nothing and then live in
“Don’t kid yourself, ‘We’ll do it later’.
That never happens. Have the right frame
of mind, you need to invest early.”
7 MANAGE DEBT
Families with children need careful debt
management, according to Somers. She
says there should always be a line of
credit of about 10 to 20 per cent of a loan.
This means if you have a $600,000 loan,
you should have a $60,000 line of credit as
“If something goes wrong you can live
off your equity,” she says
“But you can’t go to the bank when
there are no tenants or when you lose
your job. You have to set it up beforehand.
It may never come to that, but having
access to that money is really important.”
McLellan advises gen-X investors to get
a bank valuation on their current home, no
matter what their situation. Then, create
an equity loan.
“Then you know your exact borrowing
capacity and the loan you can get,”
“I’d then look at the middle to outer
ring, under the median house price (for a
potential investment property).”
æFor gen-X it’s about buying property as quickly as
possible. You typically don’t need more than three
properties.Æ Stuart Wemyss
COVER STORY // GENERATION WEALTH
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