Once the title of lord was reserved for the most elite in society, aristocracy with large estates where peasant tenants coughed up shillings to pay their dues to help fund high society lavish luxuries - self-portraits, exotic spices and a strange obsession with the ultimate signal of wealth, a pineapple.
Fast forward a couple of hundred years and well, you can get pineapples from Aldi, but are we heading back there?
In fact, are we already there?
Sure, they may have swapped the top hats and canes for Rodd & Gunn shirts and boat shoes - but the only real difference I see today is you don't have to be born into aristocracy to be a landlord.
Let me be clear though, coming from a very wealthy family who already has plenty of wealth to gift to you helps.
Like, really helps.
Or to be born at a time where house to income multipliers were far more palatable for the everyday Aussie.
That helps too.
But, alas, if you - like me, didn't win the intergenerational wealth family lottery and are not staring down the barrel of inheriting acres of land, or a groundskeeper named Giles, can we actually build our own property portfolio in these trying, cost of living times?
The honest answer is maybe. But it will be hard.
You only have to look online to see wildly divisive comments on this topic, like Mike, who lived with his parents until he was 36, never shouted a round and didn't ever go on holidays, so if he can do it, you can do it too. Thanks Mike.
At a time where it is undoubtably difficult to get on the 'lord' ladder as it were, unless you have a gigantic income, have a large lump of cash fall from the sky, or you buy in a part of Australia that has somehow abated the property price surge of the last several decades, you're more than likely going to need to get comfortable with one concept, negative gearing.
Negative gearing is when the costs of owning an investment property (like mortgage interest, maintenance, and other expenses) are higher than the income you're making from rent. This creates a loss, which can then be offset against your taxable income.
Now your Accountant or high-income earning friends will tell you this is a brilliant strategy.
And for some, it is.
And yes, it provides tax benefits.
But ultimately you need to have enough cash to be able to handle, what is effectively a giant black hole in your budget.
And sure, this is only part of the equation because whilst the expenses for your 'manor' may be costing you more than you are generating, the underlying value of your estate (which may only be 500 square meters, but roll with me on this), is increasing in value.
And thus you are happy to dig into your surplus income to play the long game of long-term wealth creation.
Now if you look at it without your tax-deduction-loving rose tinted glasses on, you might say "why would I want anything that costs me more than it makes me? "
It limits my ability to use that money to do other things, like diversify my assets or take a holiday, or commission a portrait of myself for the entranceway.
But with house prices continuing to grow, Core Logic's latest data showed a slight increase of 0.9% nationally for the quarter, for most property investors there may be no alternative.
No doubt there are still some properties that are positively geared, but they aren't the majority.
And for many what they offer on one hand, by way of larger amounts of rental income, they may take with the other by having lower levels of annualised growth.
Many investors are choosing to suck up the out-of-pocket costs in the hope that growth prevails.
The problem with this strategy is there is a clear end point.
You couldn't rinse and repeat this over and over again, because your income would be exhausted paying the deficit.
I like to think of income as water in a glass, and every bill and 'tap' you make is taking a sip from your glass. If you have multiple properties that are negatively geared, at some point there is no water left.
If you've ever been thirsty with no water in sight, you will understand how quickly things can turn into a panic.
If interest rates increased, or vacancy risk would see you in financial strife fast, then you should consider looking for a property that has a lower price point (and thus, lower debt) to give you some more wiggle room.
The biggest risk to weigh up is that you use a large amount of your disposable income to fund the gap for a property that doesn't grow in value.
And whilst that might seem farcical in these sky-high property price times, it's a real risk.
In the 12 months to October 2024, we saw a national average increase to house prices of 6%, sounds ok.
But if you bought in Regional NT it's a different story, with a decline of -5.7%.
Same for Melbourne which saw, on average, a -1.9% decline and Hobart which saw a value drop of -1.2% for the same period.
And whilst this may be no concern to you if you have the long game in mind, it can feel heavy and burdensome for investors who are funding the gap and seeing property values dwindle in the area they purchased in.
So, is purchasing a negatively geared property a positive?
The honest and only true answer is who knows?
There is nobody alive that can tell you exactly what is in store for you and if it is a good move or not.
Which is frustrating and upsetting, many frazzled would-be investors stare at me with tired, frustrated eyes and say, 'tell me what to do.'
But I can't.
What I would say to you is make sure you have a large pool of surplus income before you consider it, think about your other goals that may impact your income, like starting or adding to your family.
Are you only at the beginning of your income earning curve, meaning you will likely be earning far more in the future that can help plug this gap?
If you can't or don't want the burden of a negatively geared property, what alternative investment options could you consider?
Have you tried living like you have the debt to see if you can handle it without spiraling?
Could you buy with someone else to reduce the burden (which honestly has a whole heap of different considerations for you to work through)?
Do you have good, quality Income Protection so you have money coming in if you couldn't work?
Could you choose a property that is positively geared first and use that as your steppingstone to buy another property that is negatively geared but has more growth potential?
Our negative gearing rules work incredibly well for wealthy, high-income earning investors.
But for the everyday person it can be a dangerous (and sadly increasingly unavoidable) reality for those wanting to become a landlord...
But you can get tinned pineapple now for about $1.50, so there is that!
