Nathan Birch, real estate mogul and founder of Binvested, talked to VENTURE Magazine about his process and how you can become an expert too.
What initially attracted you to real estate?
I was only about 13 years old. My parents were a lot older then when you normally have a child, they were about 50 and my brothers were older, and buying houses. I was looking at the magazines and thinking “I’m going to own a house one day.” I also knew that rich people owned a lot of properties and I wanted to be rich one day, and I wanted to own lots of properties. It’s strange and a bit out of the ordinary. Kids at 13 want to read comic books, and I was into property.
What was the driving factor in convincing yourself it was time to “retire”?
I saw my parents work really hard, they worked into their late 60s. I was only 16 when my dad died of a heart attack. I didn’t want to have to work my whole life—waste my whole life working, and I saw that there were a lot of families out there richer than the one I came from. I just thought between the ages of 13 and 18, when I could legally sign a contract, that I would save and buy 10 properties by the age of 30, I could make about $2 million by then. I thought that would be a cool goal to chase.
When it came to the point of retiring, no confetti came from the ceiling. I just realised I was doing myself a disservice by working, that I could earn more money by following my passion and dreams of investing into more and more properties. At that point, my properties were making me more money than my job was. I worked two or three jobs between the age of 15 and 18 and saved up money. Another job between 17 and 18, which gave me a good savings. I ended up saving 80 per cent of my wage, which ended up being about $35-40 grand. I bought my first property at the age of 18.
I didn’t think it was possible to achieve 10 properties by the age of 30, but I was going to do whatever it took to get there. I worked two jobs between the age of 18 and 24, and I was earning good money by that point, but I knew I could make more money if I didn’t have to spend eight hours a day at a job that I hated. I made the decision to quit my job and at that point I had about $30k a year coming in from my investments, which covered general living expenses. I thought I could make an extra $50-$100k a year just by following my passion with a couple of hours of work here and there. When I freed up my diary to be able to spend more time, I noticed that my results just compounded on each other. Now my property portfolio is around 155 owned properties. My debt is very low on that, and it’s worth over $30 million.
Do you feel retired? Or does the work you’re doing still feel like work?
When I quit my job I felt like I was never going to have to work again. I went from having to wear a suit and tie with cufflinks, to just wearing thongs and having fun with life. Today with my property portfolio I’m bringing in over $2 million in rental income. I have a very strong feeling of financial independence, I’m able to live life on my terms, and I never have to do anything for money. Every decision I make, money is the last object.
It’s been an amazing journey. When I was 24 and left the workforce, I had nothing to do. All my friends had work, and I ended up spending all of my time with retirees at the pub. The reason I set up my business is really because I wanted to help other people. I had a duty and desire to share the knowledge. I made the commitment when I was younger that if I could sacrifice 10 years of my life, I’d have the rest of my life to enjoy. Younger people are usually out partying, and I realise if I gave myself 10 years to build up my portfolio, I’d have the rest of my life and never worry about money again. I could live life on my terms. From a business aspect nowadays, I do everything because I want to. My business is very unorthodox. There are a lot of people out there trying to sell their wares and just do things for a buck, but they aren’t really changing anything.
You were able to retire from a conventional job at 24, but that took a lot of sacrifice on your part. Is this specific approach something you encourage, or is it not for everyone?
One hundred per cent. There’s no right or wrong in my book. As long as you are doing what makes you happy, good on you. You only live once, and you should take pride in what you do. I think that a lot of people don’t position themselves well when they are younger, and will never be able to catch up. I recently heard someone say if you feel broke when you’re in your 30s, then there’s no catching up, because you’ve got children, a mortgage, etc.
About two weeks ago I went out and saw a mate’s nephew and he was asking how I could drive a Bentley. So we started talking, and he had the opinion of what he wanted to do: he wanted to show off to everyone, pretending to be successful, but not having the substance behind it. I said “Mate, if I was you I’d drive a $500 car, I’d sacrifice the next five to eight years of my life, and I’d commit myself to building my savings by working two jobs.” He thought this was too hard, that he couldn’t do it and that he wanted to see the results now. And I told him if he couldn’t commit to that then he couldn’t be successful. He had never had anyone talk so candidly to his face.
Your future is pretty stable, financially speaking. What led you to branch out and share your methods with Binvested?
I was driving around, lonely, looking at my properties, and I was working on a flip at the time. I started to record it and put it on YouTube. I wanted to educate people by showing them what I was doing. People started writing in to me, and the media got behind me asking all sorts of questions. At any age, there’s always an opportunity to get ahead. The sooner you take action the better. Binvested is here to help people structure their portfolio correctly so they can get to a level of personal finance they are comfortable at.
Can you talk about the importance of property to a person’s wealth portfolio?
I look at property as a commodity. Everyone needs a roof over their head. Being in Australia, Australia is a young country, so we’ve got a lot of population growth. Unlike shares in the stockmarket, where Steve Jobs could die, or a bank could go bankrupt, properties are low-risk options as long as you are buying well, and a good upside to grow.
What does the Australian property landscape look like today? What do you predict for the next six months to a year?
I’ve observed the market for the past 15 to 16 years, something I’ve taken out of that time and noticed is that there have been a lot of changes. For example, there’s been a number of governments, interest rates have been higher, unemployment, there’s been the Global Financial Crisis. I’ve seen the property market go up and down and sideways and whatnot, and I personally think that moving forward, if we’re talking about if we’re in a bubble or not, I personally think there’s still a lot of money to be made in the current market, and investors need to be adaptable to what’s happening out there. I need to adapt to what properties I buy, where I buy. At lot of people get caught up in a market where they don’t want to, and become too rigid. The market really changes every month. I’d say to be conservative in a market like Sydney, but if you have a good chance somewhere, jump on it. I don’t believe for a moment there’s a bubble or the potential for a crash.
Not all property investments pan out—do you have some advice regarding the risks? What are some of the biggest mistakes investors make?
Biggest risk I see is that people get emotional about their investing. At the end of the day, in this business, emotion will kill you, financially-speaking. When you’re buying a property for investment, you’re making a
logical move. Everyone should have a plan, I call it a map.
If I want to travel from Australia to the US, there are several changes I make along the way—I might have to catch a train, bus, ferry, plane, then a taxi. You need to have those different vehicles in your portfolio, but in property form. The end goal is financial independence, and you need a roadmap to get you there. You have to realise where you’re starting from, and need to understand how to get a good chance somewhere, jump on it. I don’t believe for a moment there’s a bubble or the potential for a crash. Not all property investments pan out—do you have some advice regarding the risks? What are some of the biggest mistakes investors make?
Biggest risk I see is that people get emotional about their investing. At the end of the day, in this business, emotion will kill you, financially-speaking. When you’re buying a property for investment, you’re making a
logical move. Everyone should have a plan, I call it a map.
If I want to travel from Australia to the US, there are several changes I make along the way—I might have to catch a train, bus, ferry, plane, then a taxi. You need to have those different vehicles in your portfolio, but in property form. The end goal is financial independence, and you need a roadmap to get you there. You have to realise where you’re starting from, and need to understand how to get from point A to point B. A lot of people go out and buy properties for the fun of it.
The three main things to make sure they are buying a property—if one of these things is not met, I wouldn’t buy a property: 1) make sure you purchase a property below market value. If you can buy a property worth $250k for $200k, you’re making $50k on it from the get-go. You minimise the risk. 2) make sure there is a good cash flow. Don’t buy properties with a negative cash flow. 3) Make sure there is a lot of room for growth. You don’t want to buy a property at the back of the bush. It might have good cash flow, and be cheap, but it will never grow enough.
What is the best financial advice you’ve been given?
It sounds a bit silly, but I haven’t really ever been given financial advice—and when I have, I haven’t taken it. When people were advising me how to invest in property, I knew if I followed that advice I would end up in the same place that person was, and that wasn’t my goal. I made a conscious decision in my life to only take the advice from someone who has already achieved what I want to achieve.
