Back in 1984, I said to this woman ‘The property you’re buying now for about $18,000 in 20 years time is going to be worth 4 to 6 times more and that’s based on historical information. Okay, back to 1066, actually.’ She exploded and said, ‘Kevin Young, how can the average man possibly afford 6 times $18,000? $108,000?’ And I had no way of answering then except to say, ‘Well, that’s what’s historically happened.’
Well, I sat down and wondered how better do I justify the fact that property is a safe investment? And, of course, looking at this chart you can see when the property was at $18,000, the wages were lower. When properties went up – went up a lot in the next 20 years – people weren’t still earning their $84 a week wage. They were earning a lot more.
So, there’s 2 things working in our favor when we look at property. Wages keep going up and if you flash forward across to 2033, you won’t be earning $1300 a week, you’d be earning $3000 a week. There’d be 2 equal incomes coming in, that household would have $6000 a week coming in to it. That’s why the average property near 500k is going to be worth 4 times as much, at least 2 million.
That’s why it’s such a great investment. That’s why it’s a safe investment. Wages are going up, people can afford to pay this sort of money on $6000 a week coming in to the household. That’s $300,000 a year. In the year, what you normally put aside for rent is a third of your income, that’s $100,000. On a $2,000,000 investment, a 5% return is normal, that’s $100,000. So, the numbers stack up. Wages can afford to pay the $2,000,000.
The other thing that makes it stack up is the fact on upgrading any more land close to the inner city. More and more, it’s getting harder and harder and people are paying more and more for inner city sites to build on. So, that’s another cost pressure that guarantees you’re going to get that return.
Start looking at this chart. There’s a lot in it for you. Tag away, digest it, and stick with the Property Club. This is your retirement plan. It’s a safe retirement plan that you can control. You haven’t got to worry about all those taxes. Everyone worries about politicians changing [inaudible 02:35]. This is one that you can control.
First, we now think down through the club, you be owning this property. Month after month after month the bins will be going up. The values will be going up. It’s a safe, happy retirement.