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7 STEPS TO WEALTH

8TH EDITION

THE VITAL DIFFERENCE BETWEEN PROPERTY & REAL ESTATE




















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“John presents an honest, time-tested strategy to wealth accumulation that every Australian should know about.”

Michael Baragwanath, Financial Planner

“I followed 7 Steps since 1998. My wife and I acquired 6 properties, sold 3 to fund our family home and now we’ve purchased our 4th investment property.”

Jason McCartney, Former AFL Player

“I started 7 Steps in my 50s. 20 years on, I sold just 1 of my 10 properties and made a $280 000 profit from a $47 000 deposit! Thanks to 7 Steps my retirement is secured.”

Margaret Seedsman, Former Mayor

7 Steps works. We weren’t property people when we got started, but we learned how to build a portfolio for our retirement.”

David and Dada Bailey, Engineer, Retired

“When I first read 7 Steps I didn’t believe I could acquire multiple properties. I now have 13 properties and regret I didn’t start sooner.”

Craig Chu, Banker

“7 Steps gives us a choice when to retire as opposed to 65 or 67 years of age.”

Margaret Wachnik, Business Owner

“To me, attitude is everything in life. 7 Steps gave me the right tools and attitude to help secure our future.”

Wayne Dyson, Corporate Coach

“As a leadership coach, I help people bridge the gap from where they are to where they want to be. Thanks to 7 Steps, I’ve learnt how to do that for my own retirement.”

Toni Courtney, Leadership Coach

“An insightful book delving into some investment property principles which all property investors should be aware of. The book offers some powerful insights into John’s personal story and is a fantastic read for everyone embarking on their own property wealth accumulation journey.”

David Shaw, Accountant

To my beautiful, amazing family; Maggie, Prema, Alex and Kane; and Ron and Suwanti Farmer; and our family of teachers and social workers at Toogoolawa Schools. We are all teachers. Some teachers explain. Some teachers complain. Some teachers inspire.

ACKNOWLEDGEMENTS

I first want to thank three Australian property billionaires, who are friends and colleagues I’ve known for a very long time, for providing their endorsement and taking the time to pick apart this thesis. It’s rare for any Australian billionaire to endorse anyone as they are often very private people, but Bob, Nev and Maha all recognised the dire problem we face with growing welfare and inertia concerning how baby boomers are retiring.

Also thanks to my beautiful daughter, Alexandra, for painstakingly assisting with updating research and recommendations in this eighth edition. In the same vein, thanks to Nathan ‘BG’ Bowtell (Baby Giraffe), and Darren Marinovich and Brittani Pickering for all your help with logistics and data. Also, a huge thank you to Claire Louise Wright, wherever you are in this amazing world: thanks for all the foundations in earlier editions of 7 Steps to Wealth, which remain as building blocks today.

Finally, to the many thousands — or now tens of thousands — of 7 Steps practitioners who have followed me for more than 20 years and stand as testimony of this book as the best way to safely build wealth, reduce tax and ensure they retire comfortably without relying on the government: congratulations to you.

Albert Einstein said there are two ways to live your life: one is as though nothing is a miracle. The other is as though everything is a miracle. I believe in miracles and I give thanks and eternal gratitude.

Land is the foundation of all wealth.

PREFACE

This is not just a book about how to build wealth by investing in real estate. It’s a book about how you can build wealth by investing in real estate.

There’s a big difference. The words ‘property investment’ probably conjure up visions of serious guys in serious suits talking about things like ‘negative gearing’, ‘leverage’ and ‘equity positions’. And for most people, that’s a major turnoff. Perhaps that’s why property investment is one of the best-kept secrets of the financial world.

I’m going to let you in on a few well-kept secrets in this book — and I’m going to try and do it in easy-speak language so that anyone can pick it up and read it. I figure, if Stephen Hawking can write a popular book based on Einstein’s theory of relativity, then somebody ought to be able to do the same for real estate investment! I’d like to give you something you can relate to and, more importantly, use without constantly tripping over a load of jargon and statistics.

The books on wealth creation that are full of jargon and statistics (and there are a few of them about) are often written by academics who may have gathered a wealth of theoretical knowledge, but haven’t actually — personally — created any wealth. I’d have to say, I’m pretty much the opposite.

However, Einstein himself said, ‘Everything should be made as simple as possible, but not any simpler’. Good rule. So you will find numbers, charts and technical terms in this book, but they are there to clarify key concepts — not to prove that I can use statistics and big words. We’ll also cover a fair bit of information, but this isn’t one of those ‘everything you never particularly wanted to know about economics’ books. I’m simply going to tell you about the most effective way I know to build wealth.

By the time you finish reading this book, you will have a pretty clear idea of how to maximise your assets, reduce your tax bill, ask the right questions and see through some of the so-called experts in the field. And, perhaps most importantly, you’ll know that you can build wealth.

The principles set out in this book aren’t new. I’ve been using them for myself, and for clients, for many years — and they work. They’ve given us financial freedom, security and a great lifestyle for ourselves and our families. And that’s just one part of what building wealth is about. For me, it’s also about the potential to make a difference in the world: an opportunity to be all I can be. I think of it as a journey to discover purpose. Welcome to the adventure.

FOREWORD

As I write this foreword in early 2018 Australia is experiencing its highest sustained population growth and lowest interest rates in history. If ever there was a time for you to invest in property it is now, so if you’ve picked up this book really looking to learn how to safely and profitably invest in property, good timing.

If you’ve already read one of the seven earlier editions of this book and picked it up again I would also encourage you to read this version. You will notice new case studies of actual property investors, updated census data and fine-tuning of location criteria due to accelerated migration, foreign students and growth in healthcare as baby boomers retire. All these factors directly affect how we invest in real estate.

The 2016 census polarised a few important numbers for those of us who study property trends: Australia’s population growth is at a record number, averaging 367 900 per annum over the past 10 years. We struggle to build 180 000 houses a year; 25 per cent of all homes are occupied by one person; and the average household population is fairly stable at 2.6, with 72.9 per cent of Australians living in a detached house. It’s a fallacy that we are all living in apartments in the city. But what is polarising is that the main four capitals are attracting 78 per cent of the population growth and 87 per cent of the job growth.

The next big revolution will be AV (automated vehicles), which will completely change how we live. I make a point of studying this each year with the Urban Land Institute and have been considering the ramifications within my location criteria.

We are halfway through a property cycle. Different markets cycle at different times. After the first edition of this book, I started a group called Custodian, which acts like a buyers co-operative. We bought 416 properties for our clients in Sydney between 2011 and 2015 with an average price of $484 432, being house and land within 30 to 50 kilometres of Sydney’s CBD and — most importantly, as you will glean from this book — we paid an average of $598 per square metre, and today the land is worth an average of $1313 per square metre. Our clients have made well over $100 million in five years. In the same time, the median house price has risen 85 per cent and apartments 73 per cent.

What’s the most important advice I could give you? Well it’s age old and comes from Confucius himself: ‘Happiness comes from acquiring knowledge and putting it into practice’.

This book will give you all the knowledge you need. It’s up to you to put it into practice. If you do, you will enter the realm of less than 1 per cent of all Australians. That’s right: while 8 per cent of all Australians invest in property, less than 1 per cent do it properly, as you will learn in this book.

John L. Fitzgerald
Melbourne, January 2018