at the start, focus on having a small portfolio, and you will very quickly realise how easy this plan is to achieve. Once you own three properties, owning seven, ten or even fifteen, is not that much more of a step!
The simplicity of this plan means that you don’t need to change jobs to achieve it, or even give up nights and weekends while you build and manage your portfolio. I am not offering you another way to spend your time making income; I am offering a proven method to build a portfolio with very little time commitment on your part.
Don’t ever think that you’ll have to invest a huge amount of extra hours running a portfolio. Keep that job you love - or if you don’t love it, give it a bit of time and you’ll find that your portfolio will give you the freedom to sack your existing boss and find a better one. Who knows? That new boss might be you!
I have always been a hard worker and I have always been a very passionate person; that is, as long as I am enjoying what I do and learning new things all the time. For me, The 3+1 Plan is not something that I would ever use to retire early; I simply use it as an emotional pillow.
You see, now that I have achieved the plan, I can rest every night in the knowledge that if I weren’t enjoying what I do, I would have the freedom to choose something else. Luckily, I absolutely love what I do.
One of my clients, Martin, used to spend about 50 minutes per day driving to work in traffic and 50 minutes per day driving home from work. He started at 9 a.m. and finished at 6 p.m. meaning that he would miss taking the kids, Thomas and Anna, to school each day. Once Martin and his wife had their portfolio set up, they realised that they could change that life.
Martin approached his boss about reducing his working hours so that he could take the kids to school and pick them up each day. He would be working from 10 a.m. and finishing at 3 p.m. This would mean that it would take him 15 minutes to get to and from work and it also gave him a lot more time with the kids. Martin’s quality of life increased dramatically as a result.
The best bit about the whole 3+1 Plan is that it is indexed to inflation, so you don’t have to worry about living into your hundreds! As the property’s value and the rent increases over time, you will benefit from these increases, ensuring that you will continue to maintain and even enhance your fantastic lifestyle.
Initially, your investment properties will, of course, be bought with mortgages, but the final outcome is to achieve 3+1 properties with no mortgages. How can you do this? The paradoxical answer is that you buy more properties with more mortgages. I recommend to many investors that you aim at building up your portfolio to 7-10 properties, all with mortgages on them.
Madness? No. Forward planning. As the values of the properties increase, you can gradually sell some of them off and use the money to pay down the mortgages on the others. In this way you can achieve 3+1 without mortgages a lot sooner.
At what point do you pay the mortgages off? My personal opinion is simple: don’t be in a hurry to pay your mortgages off; all that will do is to decrease the speed at which you can ultimately achieve The 3+1 Plan.
You will know when the right time is for you to pay your mortgages off, but don’t be surprised if, once you are in a position to pay them off, you decide not to, preferring to keep them and letting the value of the portfolio increase while watching inflation wither away at the value of your mortgage.
Another of the joys of The 3+1 Plan is that the payoff time can be as flexible as you need.
SET UP YOUR PROPERTY PORTFOLIO PROPERLY AND IT WILL RUN ITSELF
My Set and Forget Philosophy is the over-riding philosophy that will help you achieve The 3+1 Plan. For me, the reasons that I work with property are clear: it gives me a fantastic lifestyle and allows me to help others achieve the same.
Pinning down the over-riding philosophy on which I built my portfolio - a philosophy that pervades everything I do - was a ten-year quest, until I realised that the answer was right in front of me. It can be summarised in three simple words.
SET AND FORGET
Set and Forget is more than just a strategy for your portfolio or a way you set up each of your properties. Set and Forget is the philosophy. It is present in every transaction, in every strategy. In fact, it is perhaps the most important thing I do for those who want to follow The 3+1 Plan.
Set and Forget is about creating efficiency in your portfolio.
I first met Murray Gray in 1994 when we worked together on a software package that allowed sales teams to become highly efficient. Murray was the systems expert and he was able to make my ideas become a workable system for many of Australia’s top companies. We have worked together building portfolio-building software, systems and websites for over fifteen years now. Without his input and systemisation, as well as his ability to allow me to communicate to the masses through the web, it would have been difficult to get the portfolio-building strategies to the ‘efficient’ stage they are now.
Once you achieve this efficiency you will have time to do more of the things that you want to do, while the portfolio works itself. This is why I am so focused and passionate about Set and Forget.
Set and Forget, put simply, is:
Every little thing I do that has anything to do with property is set up so that I can forget it on a day-to-day basis for two years at a time; then I simply set it up again, so that I can forget it on a day-to-day basis for another two years.
So that raises three questions:
1.What do I mean by ‘Set’?
2.What do I mean by ‘Forget’?
3.Why do I say two years?
I will deal with each in turn, but first let me give you a practical example, in the way that I run my main current account.
•All rent is paid into my account between the 1st and 9th of the month.
•All mortgages are direct-debited out between the 1st and the of the month.
•All other direct debits come out between the 1st and the 10th of the month (personal loans, TV licence, Council Tax, credit cards etc).
As you can see, between the 1st and the 10th of each month there’s a lot happening in my bank account. During this period my cash flow gets Set and from the 10th onwards, I can Forget it because very little happens on my account. Each property becomes nothing more than a number and numbers are easy to forget. This means that I can forget the numbers and focus on living.
Simon Shankland, my business partner and director of portfolios, is a massive support in this respect. Simon worked at applying the principles in his own portfolio, as well as with our clients. His feedback
