Everyone has their own idea of what financial freedom looks like. To Lloyd Edge, an investor boasting a multi-million dollar property portfolio, financial freedom means having the security to live your desired lifestyle, live in your dream house, and follow your passions. In today’s episode, we speak with Lloyd about how he secured his financial freedom through real estate investing. We begin our conversation by tracking his journey from being a teacher to becoming an investor. Lloyd talks about his motivations and his need to build something bigger than his job. He opens up about mistakes he made early in his investment career, the mindset shift he underwent, and how setting goals and developing the right strategies kick-started his success. We dive into the power of positivity and education when starting out as well as surrounding yourself with smarter, more experienced investors. Lloyd discusses why creating different sources of income can unlock more choices in your life before sharing what he looks for in investments. A sound investment strategy, Lloyd provides details on the ‘property trifecta,’ his way of manufacturing equity, and ensuring that his investments aren’t shackled to market forces. Lloyd’s story shows that anyone can find success through focus and by following their passion. Tune in to hear more about securing your financial freedom.
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“Financial independence, I think, means different things to different people. For me, it’s certainly allowed freedom, it’s not just about the financial side of things but it’s also about lifestyle choices and so I sort of talk about financial freedom and lifestyle choices.”
Welcome to Ritter on Real Estate, the show about how to passively invest like a pro. On each episode, I interview real estate experts who give their top investing advice, strategies, and tools that break down the insights and the practical steps to avoid the pitfalls and make better investments. I want to help you passively invest like a pro. This is Ritter on Real Estate, and I’m your host, Ken Ritter.
[0:00:36.9] KR: Hello fellow investors, welcome to Ritter on Real Estate where we focus on how to passively invest like a pro. I’m your host Kent Ritter and today, my guest is Lloyd Edge. Lloyd is an investor and author of the book, Positively Geared, which he wrote about his journey from teacher to building a multimillionaire dollar property portfolio and achieving financial independence. Lloyd is joining us from all the way on the other side of the world, from Sydney Australia. Ao very excited you can be here Lloyd, I think it’s such a cool part of this medium, this podcast that we can reach out and talk to like minded people — not only in our neighborhood but all the way across the world.
And it shows that there’s folks all over that are looking to achieve their financial independence, right? Excited to hear your inspiring story today and talk a little bit about how you got there so thanks Lloyd for being here. Why don’t you tell the listeners a little bit about yourself?
[0:01:31.6] LE: So I can, it’s really great to be with you and you know, really looking forward to this. Yes, a little bit about myself. I mean, obviously these days I have a very large public portfolio which is completely passive income which basically allows me to give a life out of my own terms, allowed me to sort of quit my full-time job and things like that a few years ago.
Going back a few years, I was a teacher and didn’t really have any real goals beyond that. And I was concerned that I wasn’t going to have the financial stability when I got older. And when I wanted to sort of start a family and things and when I came to retirement and having things like the pension that we have over here and simple animation and stuff like that, I didn’t think it was going to set me up very well so I decided I needed to sort of start venturing into some kind of investments.
For me, that was property. I found property was something that was more tangible and less volatile than some other forms, such as shares and things. I was — I really got into property investing. For me, it was quite interesting because when I first started investing, I didn’t really know what I was doing. I was just sort of going out there and buying a property and then buying another property. And then sort of wondered why I was in lots of debt and not earning lots of cash flow at the time.
I thought there must be a better way of doing that. And it wasn’t until a little bit later on that I really set myself up a strategy and some goals. And I was really — when I set myself some goals, of what I really wanted to achieve and then work out how I was going to get there and change the type of properties that I was going to buy. That actually allowed me, the,n to achieve that passive income which then allowed me to quit my teaching job and then, essentially, be just doing property as my full-time venture these days.
[0:03:11.7] KR: That’s incredible. I love the story of how you kind of took hold of your future, recognized that you weren’t going in the direction that you were hoping to be in as you’re looking down the road. And you made a shift, right? And then, I’m sure that shift took incredible mindset, right? To be able to take that leave, I’m sure it also took an incredible amount of education. Those are a couple of things that we’ll dig into today, I’d love to hear more about it. But talk to me about — you gave us some insight that you were — you didn’t see you were going in the direction you wanted to go. But what was the moment that really prompted you to say, I need to make this shift here?
[0:03:47.1] LE: I think that was probably a couple of moments there but it was really when I was working as a music teacher and the work was not — I wasn’t employed full-time so I was working as a casual. And the work wasn’t particularly reliable, I wasn’t consistent and things like that. That’s kind of — I thought I needed to set myself up to be a little bit more stable in the future. You know, not a lot of income, not very consistent income but I also sort of got to the stage where I also realized that even people who have full-time jobs — that’s not particularly secure. And we’ve actually seen that in the very current climate, where the world is going through this pandemic that full-time jobs aren’t that secure.
And that’s actually what I was feeling like many years ago. And that’s when I really decided that I needed to take a hold of my own finances. Because I think that, for you to really get ahead, you actually need to take control of things. Make money, work for you rather than you working for money. And it just dawned on me that you shouldn’t be having to sort of work an [inaudible] for a boss. You know, working nine to five — as we call it over here, every day. But I really wanted to, you know, just try to create something that would actually be a little bit bigger than just that job.
Because you work your job. I wasn’t finding, that particularly rewarding and things like that. And I really just wanted to create a bit of a future for myself because I knew that in the future, I’d have a family and things like that so I want to start building something for that.
[0:05:13.2] KR: That’s awesome. What does financial independence mean to you?
[0:05:16.9] LE: You know, that’s interesting. Financial independence, I think, means different things to different people. For me, it’s certainly allowed freedom, not just about the financial side of things but it’s also about lifestyle choices. And so I sort of talk about financial freedom and lifestyle choices. For me, I just give you an example. When my wife was having our first child and you know, she had to make the doctor’s appointments and stuff like that during the day.
I could go and attend all those appointments with her without having to ask my boss or anything for time off, because I wasn’t working for a boss, essentially. I had the choices to be able to do things like that. So essentially, it means being able to spend time doing what I want, when I want to do it, and things like that. Financial freedom for me, it also meant you know, buying our dream home. Having built up a portfolio over the years, we now own the home that we want — which is in a nice home on the water over here in Sydney. But you know, obviously, a dream home means different things to different people.
I think essentially it means, not worrying about where your money is going to come from. Not worrying about how you’re going to put food on the table or — even if things happen, say in our coronavirus pandemic, you know, not worrying about how you’re going to pay bills in three months time, six months time. Whatever happens, just having yourself setup so you're not really worrying about things and that factor essentially.
Financial freedom essentially. Financial freedom there, lifestyle choices and it allows me to do other things as well, spend time donating to charity, and those kinds of things that I guess. In a sense lead to a more fulfilling life than just working essentially.
[0:06:55.2] KR: Yeah, I think those are some great points, financial independence doesn’t mean that you have to be driving around in a Maserati, right? It’s the, I think, the freedom of time and the peace of mind are huge, right? The ability to pursue what you want because I think if people are — I think if everyone was pursuing something they’re passionate about, I think the world would be in a much better place, right? You could do a lot more good.
[0:07:19.8] LE: Yeah, absolutely. I think it’s really important that you do something that you're very passionate about. I think when I first started teaching, I was quite passionate about it. I got to the stage and it’s probably getting back to your question before, one of the driving points for me is I started to lose my passion and it wasn’t so much the passion for the teaching itself, as much as it was for perhaps the politics within the school system that we have here and things like that.
But I was definitely losing my passion and you don’t want to — I remember when I thought to myself, I don’t want to be working here for the next 30 years and then regret not making a decision to make a change. I actually made that change and I think it’s really important to actually follow your passion and you know, create something for yourself.
[0:07:59.3] KR: That’s such a good segue to where I wanted to go because you talk about making such a massive change from being a teacher to developing a real estate portfolio and you know, you’ve written a book called Positively Geared, you’re clearly a very positive guy. I’d like to talk about mindset a little bit. How do you develop the mindset to be able to make that shift, such a big shift, right? Believe that you can go out and you can create a real estate portfolio and take that — the risk of leaving that full-time job and that, I guess, perceived security.
[0:08:39.3] LE: I think it’s probably a few things there but one of them is definitely education. So you do need to, I guess, be around other people that have a bit of success. So I did read a few books and I did, you know, attend a few seminars and things like that. But it also comes from having a bit of success so when I first started out, I didn’t really know what I was doing. And the first couple of properties I bought would probably be pretty slow and didn’t do much.
I’ve still got those properties and I look back all these years later and they’ve actually done quite well just by accident because I bought them in a good location. But at the time, I didn’t really know what I was doing. But I think when I did start to have success with some of my properties and what I’ve got into sort of property developing and stuff like that. That really inspired me to be able to do more.
But one of the really big things that I found that is really important is to really have a goal and know what you want to aim for. That’s where I always recommend to people, you have a goal about what is your financial independence, what does it mean or what are your lifestyle choices because if you’ve got a goal and whether that’s to create financial independence for yourself or whether you want to look after your family, whether you want to get to the stage where — you got yourself a partner and your partner maybe, you’re going to have them at home rather than you both working and stuff. That’s financial independence to some people.
Whatever you’re aiming for, if you keep really focused on that, then you know, that helps shift your mind to be really focused towards that. You know, one of the things that I sometimes found a bit difficult was, obviously, when I was working at the school and there were other teachers around that weren’t doing any investing. And they sort of kept telling me that you should never have any success with investing. It’s dangerous and what if the property market crashes and all this. So there’s all this negative stuff around you.
You actually got to see through that noise because for me, that is just noise. When people are always going to be able to say negative things and that’s what they want to believe. You just gotta see through that and just have a positive mindset, which is something that I’ve always had. And just have a goal in mind and a set of strategy on how to get to those goals.
[0:10:41.9] KR: Yeah, I think you said a lot there. And a couple of things that stuck out to me — one, is you’re right, I mean, most people are negative in their day-to-day, negative outlook. I think it’s easy to be negative and kind of just say things are bad and complain all the time. It’s much more difficult to be positive, right? And just see the bright side of things. And I think it can be tough for all of us in real estate.
Being surrounded by folks who don’t really understand what you’re doing or why you would want to do that, talk about the perception of safety of the nine to five, right? A lot of people buy into that and that’s fine for them but it’s just difficult being surrounded by that and being told and questioned on what you’re doing all the time. I think that’s the importance, like we’re talking, about getting around like minded people, getting around people that are doing the same things.
Whether it’s going to a meetup or it’s just engaging with people online, there’s great Facebook groups now, things like that or even listening to podcasts like this and hearing people that have done what you want to do.
[0:11:48.0] LE: That’s exactly right and all of those things you mentioned are really important. And even listening to podcasts. And the great people you’ve had on this show and many other podcasts that I listen to. But even dating back years, I mean, take America for example, there’s been some great and inspiring people such as Earl Nightingale, who I still listen to —his podcasts and stuff. Because I find what he says is very inspiring and he makes a lot of sense. And even those sort of things inspire but you're right, if you get around like-minded people and then you sort of feed off each other.
That’s what you want to do. Because you need to be in a situation with people who are trying to do the same thing that you do. One thing that I think is really important is if you’re going to get advice or seek out a mentor, you should be trying to do that form people have actually done what you're trying to do.
Get around other people of achieved financial independence. For example, I always say also that if you are the smartest person in the room then you’re in the wrong room. You know, it’s really important that you are there and you're trying to learn and you really want to be surrounding yourself with some really smart people that you can actually learn from and everything like that. Because that can be really inspiring because I find that 95% of the people in the world are going to have sort of the same result as each other.
People tend to follow each other like sheep and people are, you know, like you refer to that perceived security of the nine to five job. Most people think like that. You don’t want to be apart of that 95%. You want to be part of the 5% of people that are trying for greater things because yeah, those people who have created wealth and created lifestyle choices, they’re not the people who work your nine to five job because you can’t really create wealth like that.
And even if you got a very high-paying job, there’s still a limit to how much a job pays. But if you're building a property portfolio then that’s really limitless because the growth in properties, if you are buying the right properties in the right locations — and the amount of cash flow you can get, yeah, that can keep growing as you keep building it. And there’s no limit on that. You're much more than just having a job and I think that’s a mindset that people don’t actually realize.
[0:13:59.6] KR: Yeah, I completely agree with you and I think the other cool thing is that it doesn’t have to be one or the other, right? I mean I know a lot of people that love their job. You know maybe they’re, I don’t know doctors and lawyers, you know professional services folks. I know people that are consultants that love what they do but they recognize that that can’t be — you can’t only have a single source of income, right? So that you start investing outside of that.
They start investing passively. And they start creating multiple streams of income that give you that security and that peace of mind that we talked about before. And ultimately, it gives them the ability, like you said, lifestyle choices. So you have the ability to make that decision so if you do begin to lose the passion, like you talked about, you have the choice. And you don’t have to feel like you’re stuck, right? So I think having that mindset seemed beyond like you said, what 95% of people do. And exploring additional streams of income to build out that portfolio and that security I think is extremely important for folks to understand.
[0:15:02.6] LE: Absolutely and you have really hit the nail on the head there. Because, you know, when you are referred to, you know that is really about lifestyle choices. So you know if you’re a doctor or a lawyer or you know you could be a teacher or a nurse — it doesn’t really matter because people. You know, we need all of those people in society and people love what they’re doing. So I am not at all saying people should quit their job. But it is about having those lifestyle choices.
What it essentially means, that, you know for, example, if you are a 30-year old nurse and you love your job now, you know by the time you are 50, you may not love it as much. Or you might want to have a sort of a choice to work part-time. Or you might be, then you know, maybe looking out to kids or grandkids, all sorts of things. And it just gives you the choice that maybe instead of working five days a week, you can work three days a week. And you’ve got income coming from your investments that will help cover the rest of that time.
So it is just giving you that yeah, those lifestyle choices. It doesn’t mean anybody needs to go and quit their jobs or whatever. And obviously, people need jobs to be able to fund. You know, if they are going to borrow money from banks to buy properties and stuff, they actually need to have jobs anyway — to start the ball rolling. So certainly, not saying everyone quit their job but I am a big believer in creating lots of choices . And like you said, creating several sources of income.
Because if something does happen to your full-time job, what you really want to have is a cash flow positive portfolio that’s passive income. So then you still have that income coming in even if you — something happens to your job.
[0:16:27.4] KR: Yeah I think that is a great perspective and like you said, having the forethought and identifying your goals and keeping your eye on the prize, if you will, to set up and establish that now — for understanding that your passions or your lifestyle choices may change over the next 20 years. So having that flexibility, right? And as people start to invest and you brought something up to me called the ‘property trifecta’ and I think that is an important point for people to understand. So why don’t you walk us through that?
[0:16:56.9] LE: Okay, so the property trifecta is something that I do that most people, certainly over here, don’t. Generally what people do is they’ve either find a property that has good growth potential, so basically you buy a property. And over the long-term, it is going to grow in value. But those sort of properties generally don’t have a lot of rent. So they are probably going to be negative cash flow, not positive cash flow.
Or they may go to various cities, where they can actually get better cash flow but not as good as growth on the properties. What I aim for is actually both. So you are actually going to get capital growth on your properties and you are going to get good rental on your properties as well. So that is two of them, the third one is actually what I call ‘instant equity.’ And that is actually where you are manufacturing growth. And this is one of the things that actually really kick-started my portfolio that allowed me to start working towards financial freedom.
Now to build instant equity, that’s through manufacturing growth in say a property development or a subdivision. So you actually you’re getting your block of land or your property and you are doing something with it. That creates an extra block on it or something that is actually going to add some value or you might have a house that you’re gonna do a renovation too, which increases the value. That is adding equity to it straight away without waiting for the market to move.
So when I look for properties, I’m always looking for that trifecta, which is the instant equity, the capital growth potential, and also the cash flow potential. Because you need that. The aim of the game is obviously to have that passive income so you always want to have good cash flow coming out of each property.
[0:18:35.8] KR: I think that is great and that is something that specially that they are adding value piece, I think is critical as something I look for I am investing. Making sure that there is — you are not just relying on the market, right? Making sure that you are able to do what I would call ‘force appreciation’ and make sure that there is that control, right? Because otherwise you are relying on the market and you are relying on external forces that begin to control your destiny. So yeah, I appreciate that trifecta.
So talk to us a little bit more about your portfolio. How has your from how you started to where you are now, how has it developed and evolved and what are you focusing on nowadays.
[0:19:15.3] LE: Okay, so when I first started, I was essentially just sort of buying properties, which are pretty much in Sydney to start with. And actually well-located but not with any particular strategy. And on most of the units or townhouses, that kind of stuff. But they didn’t have really good cash flow on them. Also because I had just started buying after the Sydney 2000 Olympics, which we had here in Sydney, we had a good property boom leading up to that. And the market started to decline.
You know the worst time to really be buying properties is when the market is actually in decline and you should be buying sort of a rising market. Because I didn’t know that when I first started investing. So it all comes down to education and making sure you’re buying in the right place at the right time. So, you know, a little few mistakes at the start. But as I got going, I really started to get into particularly, as you say, forcing that equity, manufacturing equity.
I remember the thing that really was my ‘aha’ moment, which really kick-started me was when I built my first duplex. And when I had it subdivided and then got it re-valued, the amount of additional equity I’d created there — which just essentially means the difference in what it was worth to what it was now worth after I subdivided it. I had — the profit was actually twice as much from that one project as what I was earning the whole year as a teacher at the time.
And then I thought, “I am onto something here,” because I had just done this development project on the side. And I had made quite a lot of — I think I had made a $141,000 profit on that particular property. That was my first attempt at development and that was twice as much as what I was earning as a teacher at the time. So, you know, from there it really kick-started itself and I just need to then start to repeat the process and everything like that.
So you know, since then, I have been very much to doing, you know, small development projects like that. Duplexes and things. And other ways of manufacturing equity too, which includes subdivisions of blocks. Sometimes selling off vacant land. Once I’ve created the subdivision. Sometimes renovations. And also mixing it up across different cities and different — buying something in capital cities some sort of in the country across different states in Australia.
So very nice, diversifying it but always having that focus on how each property sets me up for the next property. So that is something that is very important, that I always understand nowadays. When I am buying a property. What sort of result I am aiming for? And then what are we actually going to use that improved profit that improved equity for? You know in my next property and so on. And I’ve been able to use a lot of the equity I’ve created from my investments to pay off some of the homes that we have lived in, in the past as well. So I’ve been able to reduce a lot of debt on the homes that we’ve lived in by using the business to do that.
[0:22:03.5] KR: Oh that is very cool. So now you are focused primarily on development and developing. It sounds like smaller multi-family is that right?
[0:22:11.6] LE: Yeah, absolutely yeah. So it is essentially duplexes, triplexes, essentially here, two, three maybe four if you are doing a fourplex. So it is just small multi-family type units as you call them here.
[0:22:25.5] KR: Very cool. So Lloyd it has been great having you on and fantastic conversation. I love hearing your journey. We have a section on the show, the last section called ‘Keys to Success’ and I want to get your thoughts on a few items. The first is, as we have a lot of the listeners on the show who are our passive investors, meaning they are folks that are looking to invest with others that have the experience and the time. And want to go out and find the properties and push that appreciation or manufacturing that equity like we talked about. What is the most important question that someone that is looking to make an investment can ask?
[0:23:02.3] LE: I think you really need to really understand why you’re investing. That is the number one thing is what you are trying to achieve out of that. So there is no point just, like for me, the investment is just a vehicle itself. So where you’re buying property or whether you are doing shares or something else, that is just a vehicle. So it is really immaterial as the actual investment itself. That is a vehicle on how you are going to get this.
So you need to understand what the goal is. Now whether your goal is, through one investment, whether that is to create some income or some equity to pay us some other debt or over the long term it was for that financial independence. You really have to have in place an understanding of what you are trying to achieve and then probably get some advice on where that property is the best thing to achieve that or whether you want to go in the stock market. Or whether you want to do a mixture of both and things like that because they are all just investment vehicles. So you really need to have an understanding of what you are trying to achieve and how that is going to help you.
[0:24:00.7] KR: Yeah, I think that is a fantastic key to success and I love how it all keeps coming back to goals and strategy, right? It all comes back to understanding what your goals are, what you want to achieve, and then working on a strategy on how to get there and staying true to that. So I appreciate that consistency. What books should everyone read?
[0:24:18.6] LE: I think people should read my book, Positively Geared, because that is something I just released. It is available through Amazon and a few other places but I think Amazon world-wide is good. That one I put out there basically just to really get my message out there. Just to show people a bit of my world, pretty much my whole story but to sort of inspire people that if I can do it, so can other people. And it is not just a property investing book.
But it is really a journey on how I get to where I started from to where I am now and there is lots of case studies in there and information in there so that should be a pretty enjoyable read. Apart from that, there is some other books that I think I’d recommend people to read and one of the ones that I really enjoyed, which I’ve read a few times is Rich Dad Poor Dad by Robert Kiyosaki and probably some of these other books too like the CashFlow Quadrant and things like that. So I think those books are very worthwhile reading as well.
[0:25:19.1] KR: Great and then last and then not the least, what is your number one key to success?
[0:25:23.8] LE: My number one key to success is passion. Just have belief in yourself and have passion.
[0:25:28.9] KR: I love that.
[0:25:29.7] LE: So you’re not going to achieve anything unless you are actually passionate about it. And if you are passionate about it, and you can find a way to get there, then you can pretty much achieve anything you want.
[0:25:38.8] KR: Yeah, I love that. I think you have to have passion to push through the tough times right? And where does the passion come from? The passion comes from understanding why you’re doing it, right? So it goes back again and the goals and your strategy, you got to understand your ‘why’. That is a thing that’s going to give you that passion to be able to push through when times are hard and things don’t go the way you want, right?
[0:25:59.5] LE: Yeah, you do have to understand your why. I actually have a whole chapter about that in my book and that’s why it is really important. And I say, “Know your why,” because you really do need to understand that. Because, like anything, you know investing — and I’ve made my mistakes along the way and sometimes things don’t go so well and sometimes you know the market doesn’t go so well or we have a pandemic and we are worried about things and whatever.
But you need to look at the bigger picture, you know whatever happens now or in six months’ time, is it relevant to what’s going to happen in your life in 10 years’ time, if you stick to your goals. So you really need to have belief and just look at that long-term goal and try to keep yourself accountable and not get off track and stuff like that.
[0:26:36.5] KR: Yeah, really powerful stuff Lloyd and so how can folks get a hold of you and reach out if they want to learn more?
[0:26:44.0] LE: Yeah, so probably just jump on my website, which is aus propertyprofessionals.com.au and then send me an email as well, which is [email protected] and you know if they get a hold of my book there is details in the back of the book as well. So I’d be happy to chat with anyone and give anyone any sort of advice that they might like.
[0:27:03.9] KR: That’s great and the book is Positively Geared and it is available on Amazon, right?
[0:27:08.3] LE: Absolutely.
[0:27:08.8] KR: Awesome, thank you Lloyd so much today, it’s been a fantastic conversation. And I look forward to staying in touch and hearing as you continue to grow.
[0:27:17.2] LE: All right, thanks again. Thanks very much, cheers.
[0:27:19.0] KR: Have a good one.
[END OF INTERVIEW]
[0:27:19.7] KR: Thanks for listening to another great episode or Ritter on Real Estate. Hit the subscribe button to make sure you don’t miss out on the content that will make you a better investor. Also, visit kenritter.com for articles, videos and tools curated just for passive investors. Until next time, this is Ken Ritter on Ritter on Real Estate. Now go out and invest like a pro.