Latest / The Follio Property Podcast / If You Don’t Have a Plan for 2026, You've Already Lost (Warning)

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If You Don’t Have a Plan for 2026, You've Already Lost (Warning) · The Follio Property Podcast

• 0:00
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• 0:56
  Times are tough for investors. The banking regulator is cracking down on risky loans. Interest rates up is the most likely direction they'll go. And where the latest boom now appears to be ending.
• 1:07
  the markets have done the heavy lifting. That's not gonna work forever. Didn't work for the decade prior to that. What's the strategy? It's planning. And if you don't have a plan, you're investing in the dark. What's the analogy where you feel like if a ship didn't have a guide, it'll end up like miles apart? If you don't have a plan in place, you're gonna end up countries apart. Cause for a lot of people, it's the inability to take action which has cost them a lot of money in this market. They just get busy, you got kids, school coming up, and all of a sudden you've missed out on 40 to 50% of the market because you were just too busy.
• 1:35
  What is your strategy in 2026? The priority for me this year is to wipe off the debt completely. If you don't do it now, you won't do it. You're listening to the Folio Property Podcast. I'm Rhys Bettle and I'm here each week with my co-host Lachlan Delahunty. It's been a big start to the year 2026. Off the back of last week's episode, Lachlan, I thought we'd delve further into investment strategies for 2026. We spoke a lot about
• 2:02
  The markets. Markets. Predictions. Predictions. We briefly touched on some of the strategy a bit at the end and I think let's kickstart it and really delve into what strategies you're doing. Personally. Yep. Personally. What strategies are some of our audience doing if we can throw it out to them as well? Yeah. And what are some types of strategies you should be, you know, generically employing in 2026? Yeah.
• 2:25
  Yeah, and every year is going to be different, right? So first off, please, our community that we're speaking with, put in the comments your strategy for 2026. We'd love to hear what you've got planned. If you haven't thought about it already, it's a great time to do that. I think this is the time of year where you should be having a bit of a health check, where you're not so busy with the day-to-day grind of life.
• 2:45
  to actually check in on it. We were speaking off air, Rhys. Both of us checked in on this. I was on a plane 12 hours and I went through all my numbers. It was a bit of a shock because I hadn't done it for six months and it's amazing what can change in such a short period of time. And yourself, you said you did a budget you hadn't done for a while as well. I hadn't done it while. My wife was putting a bit of pressure on to do it and I was probably neglecting it. And once you start to do it, you're like, it is important to have that health check. And I think the reason why this episode is super important in 2026 is –
• 3:13
  A lot of our listeners or viewers would have been riding some serious highs over the last couple of years with some of their portfolio that they've got as well. Which is fantastic, right? We want to celebrate that. It's been a really good run and that's what we want to see from our clients. We want to see them do well and give them that financial freedom. But it's also important that we don't get carried away, get too excited because as I've said on previous episodes, everyone's an expert at a period of time in cycles.
• 3:38
  How can you de-risk it? It's checking in. It's planning. And if you're not planning, if you don't have a plan, you're just investing in the dark. Yep. Our strategies, although probably different ends, are going to be slightly similar due to our age and maybe some of the risks that we've taken on. But what other strategies are there? So like what strategies would- For 2026. 2026, correct. They're reviewing. They're either going to be in a debt reduction phase where you actually want to, like myself, we'll talk about that.
• 4:06
  You could be in a full accumulation phase where you're at that phase where you want to continue to grow your portfolio aggressively. You may go through a phase where you're still in that rent-vesting phase and you want to expand on that. The upgrading phase we spoke about, it's okay, well, I have been on that rent-vesting stage, but I'm sick of getting pushed around.
• 4:25
  Not having a place to call home, right? We're talking about the Australian dream is owning your own home. So yeah, that place where it's like, okay, I've done a lot of the heavy lifting. Now I just want to buy a home and not carry too much debt onto my prime place of residence. So that's a really good one. Might be later in your journey, Reece, where you're looking for more for cash flow. You've had to realize over the break that you're 55 and you don't want to work till you're 70. How can I get myself in a position by the time I'm 60 that I don't need to work? Okay, what strategies are we going to put into place?
• 4:50
  So there's quite a few, like if we reel them off, there's 10 to 12 strategies that we commonly see with our investor group.
• 4:58
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• 5:27
  Okay. In terms of strategy, like you've mentioned there six or seven probably actually. There's a fair amount there. What's the importance of having one? And like we mentioned, now's a really good time to review this year and depending on what your circumstances are and make action with it. How important is it doing a review of a strategy and how important is the strategy?
• 5:48
  Like I said, if you don't have a plan in place, how do you keep yourself accountable? And what's the analogy where you feel like if a ship didn't have a guide, it'll end up like miles apart? What's that analogy? Do you know it? I don't know, but keep it in.
• 6:00
  Like, you know the analogy? It's like if the ship didn't have a f***ing map, you'd end up, like, two degrees off. You'd end up in a different location. Yeah. I'll take your word for it. Like, do you want to get it? No, say it. Like, I've been keeping it in. So, like, what's that analogy? If, like, the ship didn't have a course to be directed on and it was two degrees off, you're going to end up...
• 6:18
  countries apart. And the same is different with your portfolio. If you actually don't have a plan from where you want to get to, you've got no control over it. It's purely down to chance. And fortunately for Australia over the last five years, chance has been okay. You've backed a couple of good horses, but the markets have done the heavy lifting. That's not going to work forever. Didn't work for the decade prior to that. Yeah.
• 6:38
  So what's to say it's going to work for the next decade? So having a plan, having a strategy is so important. It's not to say that that won't change. My strategy's changed probably three or four times in the last five years alone, marginally, but things change. You might, all of a sudden, family becomes really important or upgrading becomes really important. Right.
• 6:55
  or having exposure to debt. Over the break, I had a realization when I did my review that, wow, my debt to income is far too high than what I feel comfortable with the life commitments I've got coming up. So you can have those reflection points, and that will change throughout time. There's periods of time where you want to be more aggressive, and there's periods of time when you want to be less aggressive. So it really depends on that individual.
• 7:16
  So it's important to check in on your numbers and see where your debt to income is, what your cash buffer and your LVR and your exposure to various markets. It's not until you sit back when you're not distracted. And I looked at it and did a full review and it took pretty much the entire 12-hour flight to go through it all and it was pretty eye-opening.
• 7:32
  Yeah. You mentioned that as well. Everyone's going to have different life circumstances. It has to be taken into account. 100%. And we were just having a chat on the way here and my wife's been telling me about a budget for the last four or five months while we've been doing a renovation on a house that we're not living in.
• 7:48
  And once I started looking at the figures, it just felt like there was no point until we'd moved in and we could start to the budget side. Don't put your hand in the sand because you know it wasn't going to be good. Yeah. But you can't plan if you don't have the facts. And it's not always going to be what you want to see. And that's fine. Correct. But then we were having a chat and you said, look, there is going to be periods of your life where you will have to, you know, you know, that period for the next six months. Okay, you're going to have to dig into some savings. But you know it's short term as long as you action your plan once your, you know, your circumstances change.
• 8:15
  Yeah, like I said to you during that same conversation, I've taken on credit card debt to get me through very small periods of time where I've had to be well and truly overexposed. But the other option was if I didn't do that, I'd have to force sell a property that I didn't want to. It doesn't mean you're going to take on that amount of debt forever. It's not part of your long-term strategy. You'll go through different periods where you're either too exposed or you go through periods where you're like, okay, I've been a bit lazy now. I'm underexposed. My money's sitting in the bank doing nothing.
• 8:41
  Now I've just been lazy. So it's just important to – and you don't know that until you check in on it. And I say to most people, I should be checking on it every quarter. If you're not doing it every six months, it's not good enough, which I put myself in that category. And at the very least, just marketing the diary, first week of January, every year, let's have a look at my position. Because for a lot of people, it's the inability to take action which has cost them a lot of money in this market. They've been wanting to do something for four or five years. They just get busy. They've got kids, which I get. They've got three kids.
• 9:10
  It's school coming up, school holidays, it's crazy. Work was crazy during the year. There's always, there's no time. There's no time. And all of a sudden you've missed out on 40% to 50% of the market because you're just too busy. You don't want to see people in that situation.
• 9:23
  And that's the key thing. You need to know your numbers or regularly review your numbers because when I went through this process as well, there was things I forgot I even had that obviously were a debt that I would eventually have to pay back. So I think it's definitely knowing your numbers and doing regular reviews. What was that? It was a credit card in the UK.
• 9:43
  That will get you. A decently sized credit card too. Yeah, right. Financial literature, Reece 101. Okay, we've spoken on strategies and there's a lot of different strategies there. I'm not going to go into what each strategy because that would be a two-hour episode. Let's talk about yourself. We haven't really spoken about yourself on the nine months I've been doing the podcast, but it would be good to delve in. What is your strategy in 2026? You mentioned you had a bit of a review on a long flight. You may be probably overexposed with some debt. What's the strategy and where are you at at the moment?
• 10:13
  Yeah, look, I've openly talked, I've pushed my portfolio pretty hard in the last five years, really, and particularly probably in the last two years to the point where reviewing the numbers over that break, like I said, that 12-hour flight, I sat down with the numbers, debt to incomes between 8% and 9%, which is closing in on sort of double-digit numbers between eight to nine times my debt to income, which is a pretty frightening statistic and probably got away from me a little bit. Cash buffer, which I talk about a lot on the show, and that's the ability to sort of
• 10:39
  weather, any storms, so it's got to be above 10%. For the first time ever, it sort of slipped just below that. It was sort of closer to nine. And so you look at it, and for me, life's changing. I recently engaged, as we discussed, off air, and the next phase of life is looking very different. So for me, it's priority for me this year is to wipe off the debt completely on my primary place of residence.
• 11:02
  I've been kicking that can down the road because I've been expanding the portfolio and saying, look, I'll get to that. I'll get to that. I will divest at some point. Now's not the time because the markets are running. For me, 2026 is to implement the debt reduction strategies we talk a lot about on the show. It's like how do you pay your mortgage off in six years?
• 11:20
  If I wipe it off this year, I purchased that or upgraded to that property in 2023. And hopefully, the plan is to wipe that debt off in 2026. So I'd be actually able to wipe off my prime place of residence debt in three years using the strategy that we implement with our clients, which would be not to say it's going to be done, but that's the aim for 2026. And that will give me a lot of peace in mind when going to that next phase of accumulation. Like I said, you go through different ways of going hard accumulation. This year for me is going to be slightly geared towards debt reduction.
• 11:49
  And then I can then clear the air, be really, really comfortable that I've always got my home to fall back on. Give you peace of mind. Give your partner or your wife that peace of mind as well. And then you're back on the horse with that accumulation phase with your investment portfolio.
• 12:04
  And how do you know which assets are the assets you should be looking to offload in 2026? Good question, yeah. Like you've got a, we've spoken off air, you've got a portfolio. Nothing crazy though. It's not a ridiculous one like you hear some of these investors out there. It's another $60, $70 million portfolio. But you do have a substantial amount of properties. How do you know which ones are the ones you should be looking to capitalise and take off some of those gains?
• 12:29
  Yeah, everything we do as a business, everything I do personally, Rhys, is all about risk mitigation. So what assets do I think, if there was a stagnation or there was a calling event of some description, which one would be the hardest to sell? It's counterproductive for what a lot of people think. Most people just look at what's done the most growth and what's done the least, and I'll hold on, I'll sell the thing that's done the most, or they'll sell the thing that they've owned for the longest period of time and keep the thing they only bought two years ago. Yeah.
• 12:58
  try to take all recency bias out of the equation. It's hard for me because I'm selling one that I bought 12 months ago, so I'll get the capital gains exemption. It was a really good deal at the time, and it's going to perform extremely well, but I only bought it 12 months ago. I've had things in my portfolio that I've held for six or seven years. For most people, they're like, I'll hold that one the longest, and this one's probably the least performing in comparison to some of the others. But it's going to be the hardest to sell. It was a good deal, but we knew it was that villa unit style of market.
• 13:27
  that in a market would be in my portfolio, which is typically established houses, is going to be more difficult to sell, right? So that's how I approach what I'm going to divest. Why is that? Is that due to strata or? Yeah, exactly. So when the market's running hot like it is now, the blinkers are on for a lot of investors or own occupiers to look past any potential defects, any potential
• 13:48
  restrictions with the property. But when the market cools, what happens? You see a lot of properties come on the market, supply outweighs demand. So people become extremely picky. So strata becomes a real problem to sell. Not always. There's different types of strata, but straight away, anything that could be an if, but, or maybe, be that strata, anything that could be remotely close to a main road or close to commercial, anything that's not
• 14:12
  Now starting to age poorly, so it might have been built in the 80s, starting to get quite a bit of maintenance that's needed. That's enough for a buyer in a soft market to go, you know what? Let's just hold off. We'll find something else. So those sorts of things, anything that requires significant renovation, albeit maybe super blue chip, anything that might require serious renovation, do I do the works and activate that now, which I said I was doing with the Leaderville property.
• 14:35
  trying to maximize, but the key is still to maximize the exit value. So do all those things, you know, put lipstick on the pig, all those sorts of things to maximize your exit. I'm not going to not do that. But getting, if I'm going to divest, and we don't like selling, we spoke about a bit on the podcast, but if I'm going to sell, I take all recency buyers out of the equation. Obviously see how it impacts me from a financial point of view when you look at how much is it costing to hold this property on a yearly basis. The numbers are important, but most importantly,
• 15:05
  If in the unlikely event there is a stagnation or a global event, what is going to be the hardest asset to sell? And I start with that. That's my yardstick. And it often goes against the grain because, like I said, I'm selling something I bought 12 months ago, which I'd never do, but it's going to be the hardest to sell in a soft market. So I'm going to get that off the books. That's going to clear a little bit of debt. And there's another two that may follow shortly after. Yeah. And that whole strategy, as you mentioned, is to pay off your mortgage. Exactly. To have that principal pay step free.
• 15:34
  Yep. I upgraded in 2023, took on an extremely large mortgage for my prime place of residence, well above the three times when we talk about debt to income. We like prime place of residence to be less than three. This was more than three. And the goal was to pay it off for five years. And if the market's performed better than we anticipated. So by the end of this year, hopefully I've been able to achieve that in just over three years.
• 15:55
  So your health check for 2026 then, where do you want to see yourself in terms of debt-to-income cash buffers? You mentioned where you're at and how it probably got away from you towards the back end of 2025. Where do you see yourself? I've set myself goals. So to get my debt-to-income well below six, ideally closer to five, I don't think I'm going to be the type of person that's ever going to be below that. Pay off my polymorphous residence, so then debt-to-income on that is zero.
• 16:25
  It sounds significant, but that's a huge part of this equation. I really want to de-risk my portfolio. So that's a huge part of that. And just across the board, increase my rental income. So I was looking at the deficit. So negative gearing has formed part of my strategy for the last six years. That cash burn has been significant and it's been, from a tax point of view, very beneficial. Yeah.
• 16:48
  but increase the rental returns across the entire portfolio. And if I can do that by 5% or 10%, it's going to make a massive difference to the end of this year when I look at my repayments on an annual basis. Okay. Yeah, so when you're looking at your property portfolio and you're doing an appraisal or review, what are the things that you're looking at?
• 17:07
  Yeah, so there's those really important indicators that we talk about all the time, right? Your debt to incomes, your cash buffers, those sorts of things. But there's also just knowing your numbers. Do you know how much land tax you pay a year? No. Probably not. Exactly. So going in on that, what did you budget for? What did you forecast? And if you haven't done it, well, this is when you start. Throw in a number into your spreadsheet so you know what your numbers are. Don't go in blind. Everyone should know their
• 17:30
  What were the council rates? What was the true cost of outgoings for the property or your investment property for the year, or multiple investment properties? So just getting checking on that. And then where can I remove some costs? Is it having a conversation with my property, managed to sharpen up their fees? Is it increasing rents? If you increase rents across your portfolio by 20 or 30%, all of a sudden your cash burn could be significantly less or could be in the positive. So you're starting to make money on your portfolio.
• 17:57
  And just on that one, so you'd like to think, I've had good property managers, really good ones, and I've had some absolute shocking property managers. You'd like to think they're proactive in terms of coming to you saying market values this, let's increase. You're mentioning there rent seems like a really effective way of increasing that.
• 18:16
  the revenue coming through, what sort of things should people be looking at to understand? Is it undervalued or where's the mindset? No one will care more about your portfolio than you. So don't assume that someone else is doing that. Assume the opposite.
• 18:32
  The likelihood is your property manager is doing the right thing and is out there chasing extra dollars, but assume they're not. You just want to be across it. And this is the time of year to do it. Go out there and get three other appraisals, see where it stands and see if they increase. But it's also, you may not be investing in 2026 and that's completely fine, but if you're
• 18:49
  If a cosmetic renovation on one of my investment properties, so if I look at my portfolio, for instance, I'll likely sell two, but I'll be updating at least one, if not two, to increase the rents. So it's where can I put in cosmetic works to increase the rent by an extra $100, $200, $300 a week because I'm trying to reduce my cash burn. So it's looking at those things as well. Okay, if I'm going to hold this portfolio longer term-
• 19:09
  By spending $30,000 now to get an extra $150 a week for the next 10 years, okay, that makes a lot of sense. If it's not going to stay in my portfolio long term, well, should I just hold that money and not spend it? So they're the conversations you're having with yourself or your advisor about maximizing your portfolio.
• 19:27
  And a lot of those strategies, though, where you were speaking about rates earlier, I've got no idea what my council rates are. I'm not budgeting for that at all. We would know electricity billies. Yeah. Exactly. So these – but have it in there and put a prediction forward for the year. Like I said, it's like a good business. Everyone does their budgets. Do one on your portfolio. Yeah.
• 19:47
  It's so important to know your numbers, not to put your head in the sand. And there's going to be things in there where it's a little bit uncomfortable. That's great because it starts to probe your thinking as we go into the year. And if you don't do it now, you won't do it. So kickstart 2026 in the right way. And it's not to chase this FOMO train. Just before you do that and read the back of the paper and the market's done record growth and you're like, oh my God, I've got to get in. And my best friend's just made another $100,000 in three months on another property. Before you get sucked in all that, know your numbers.
• 20:16
  That was a really good deep dive into what you're doing, I guess, in 2026 and what are some of the strategies that you're implementing. What's the biggest risk mitigation strategies that someone can implement in 2026? Start with your portfolio review. Look at it currently. Do some forecasting, some budgeting if you haven't done that in previous years and see where you're either over or underexposed. So knowing your numbers is number one.
• 20:40
  And then risk mitigation, if there is any speculative assets in the portfolio, it could be the time to potentially upgrade those. It could be potentially taking some money off the table to consolidate some debt. It could be, you know, you've underutilized your portfolio. It's a time to potentially upgrade. I'm just going to end on what's opportunities. It's going to be the last thing I ask.
• 21:00
  To risk mitigate, it's knowing your numbers, it's doing your plan and starting to improve the quality of your portfolio. And I think that's really, really important as we go into these periods of time where we've gone through five years of pretty strong growth nationally is what do you want the portfolio to look like at the top of the cycle?
• 21:18
  What I want my portfolio to look like, Rhys, is no debt in the prime place of residence. My portfolio only includes A-grade blue chip stock. So what does that mean? It's divesting anything that could be or would be.
• 21:33
  difficult to sell in different times when the market doesn't look as attractive as it does now. And that could be regionals, lifestyles, strata, compromised asset, main roads, those sorts of things. So if you're looking at de-risking, that's what I would be having those conversations with myself or my advisor around what should I be keeping or including or buying in my portfolio.
• 21:55
  Did you know Sam's Club isn't a store? It's actually a club with cool finds and like a whole community. It's a club. Of course, Jason. It's in the name. Sam's Club. Oh, yeah. Come join us. Sam's Club. Where do you see the opportunities in 2026?
• 22:14
  In those areas, upgrading your assets, asset quality in your portfolio can and needs to improve in 2026. And that's your opportunity to do it. There may be some assets in there that you've bought on speculation. Like I said, some of the assets that I bought, they're just good opportunities and the market was clear that different market segments were going to perform out of character, like the first-owned buyer market that was purely built around this government grant. So when you see those opportunities, absolutely, we want to capitalize on them.
• 22:42
  But is that going to be sustainable long term? Most likely not. So it's trying to reset your portfolio and upgrade the asset quality in your portfolio. I think that's the biggest opportunity in 2026. Excellent. We spoke about six or seven strategies at the beginning of the episode before we did a bit of a deep dive into what your circumstances are. If anyone has one of those strategies that they're implementing in 2026, let us know in the comments because, like I said, there's six or seven. That could be a two-hour podcast.
• 23:09
  Everyone's going to have a different strategy. I want to know what your strategy is. And let's discuss. Let's review it, see what people are saying. As viewers, can you put in your comment, what's your plan for 2026? And can you tell me, have you done yourself a review? I'd be interested to know how many listeners and actually check in on their portfolio to know their numbers. So A, have you done a review? And if so, what's your plan in 2026? I'd love to know. So would I. You've been listening to the Folio Property Podcasts.
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