Get Rich using Jenman Method

An alternative approach to wealth creation - from Jenman .. and should be available for viewing directly from his website shortly.


Real Estate

IMAGINE BACKING a horse in the Melbourne Cup. It runs last, but you still win.

Well, I can’t tell you the winner of the Melbourne Cup (although I hope, as an omen for the farmers, that Rain Gauge does well), but I can tell you how to back a winner in the real estate stakes. Even if your property drops in value, you still win.

This is no gimmick, there is no catch and, unlike shonky seminar gurus who line their pockets by placing their grubby hands in yours, there is no charge. It is a proven method that has worked for me for 25 years. I rarely mention it publicly; not because I don’t want to share it, but because I fear most people won’t believe it. It’s too simple. Generally, people don’t trust simplicity. They think real estate is complicated. This is a big mistake. Real estate does not have to be complicated.

Also, this method does take time. You won’t get rich quick, but you will get rich. And, as stated, you win even if the property goes down in value. It’s about as safe as real estate can ever be. In fact, I have never heard of anyone getting into trouble with it. With any investment you should always consider risk before you consider return. And what better method than one with no risk and a great return even if the property drops in value?

In a nutshell, here’s how it works. Buy a property using a PRINCIPAL and interest loan. Make sure the rent covers the payments on the loan and the cost of maintaining the property. As the rent increases, pay it all back into the loan. Your only cash outlay, therefore, will be your purchase costs and the initial amount of your deposit which should be as low as possible to make sure the rental income covers the loan payments and the costs. In short, your deposit (and your purchase costs) is your ONLY cash investment. Once you have the property and you have paid the deposit and acquired the loan, you let the property pay itself off. It should take about 15 years. Too long? Well, if you don’t do it how old will you be in 15 years? The same as if you do it. Therefore you may as well do it.

Here is an example of how it works. But first, beware of that old trap, “If it’s so simple, why isn’t everyone doing it?” I don’t know why everyone is not doing it. All I know is that I have done it and have always recommended it to my friends. And we have all done very well from it. So can you.

The example: Buy a home for $100,000. Pay a deposit of $20,000. Borrow $80,000. The costs of the loan (and all the expenses) are covered by the rent. Therefore, each month, you pay nothing. As the loan is a principal and interest loan, eventually the property is paid off. Let’s say this takes 15 years. And let’s say the property drops in value. From the $100,000 you paid for it, it drops to $80,000. If you sell it, how much cash do you have? $80,000. And how much cash did you put in? $20,000. Therefore you have made $60,000 profit. Yes, read it again, more slowly if you like. Try and fault it. You can’t. It works. Oh sure, you may have some questions, such as: Where can you find a property for $100,000 these days? Plenty of places. In fact, there are properties for sale for as little as $50,000 which show a return of close to ten per cent.

The price and the location is not the main point of this method. The main point is that all you have to do is pay a deposit which is big enough (or small enough) so that your rental income covers your repayments and your expenses. The figures work at any price and in any area. The challenge is to keep the amount of the deposit small and to make sure that the rent covers the expenses. Sure, you have to be careful that you don’t have high on-going maintenance costs and that you don’t have a high vacancy factor. And yes, you have legal costs on purchase; but all this can be factored into your sums. If the sums don’t work, don’t buy. But if they do work, then buy as many properties as you can pay deposits. You can start with one and then, later, when you have saved enough for another deposit, you can buy another property. And so on. How many? Well, it depends on how much is enough for you.

There is a philosophical principle called ‘The Doctrine of Enough’. What this doctrine says is that we know, in most things, what is our limit, when we have ‘got enough’. When we eat a meal, we know when we’ve had enough. When we fill our cars with petrol, the pump clicks off when the tank is full. But in our financial lives, very few of us work out what is enough. I suggest you do it. You’ll probably be pleasantly surprised that you don’t need dozens of homes. Just your own home (fully paid, for peace of mind’s sake) and half a dozen investment properties will make sure most people are rich enough. That’s the Doctrine of Enough.

Oh, there is one thing I haven’t told you with this method. It has NEVER worked as planned. It has always shown me to be an over-cautious, ultra-conservative real-estate-pussy-cat who is hardly prepared to take ANY risks, least of all with negative gearing or borrowing on a family home.
With more courage I could have made more money. But I would never have been happy. I would have worried too much. I just can’t be happy with big debt and big payments that are not comfortably covered so that if the worst happens (such as my investment dropping in value) I would be in danger.

And so I have always planned for the worst and hoped for the best. The worst has never happened. You see, all the properties that my friends and I have bought with this method have NEVER dropped in value. Instead they have doubled and trebled in value, often in far less than 15 years. Ah well, even the best laid plans seldom work out as planned.

At least picking real estate winners is a safer bet than the Melbourne Cup.
Hi Waverlybay,
No argument from me with your logic & i have a property in Bendigo which is just over a year old & already has shown capital growth. Sometimes the simple strategies are sometimes the best.

A point worth remembering is that you still have to pay out of pocket tax expenses, as this method requires you to plough all of the rent back into P & I loan.

Regards Tony.
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I guess this all depends on your risk profile... and on the market.

By avoiding the method suggested by Jenman, I've doubled my property portfolio in thelast twelve months. My three properties as of twelve months ago gave me sufficient equity to buy two more properties, each of which would fit into Jenman's criteria. They would pay for interest & cap repayment.

But I would not have bought either if I had followed Jenman's advice.

I've taken a risk in doing so. I don't know where the market will go. I've already lost out (in England) by buying incorrectly, at the wrong time (despite renovating).

But, following advice from Jan Somers, people in this forum, and other gurus, I feel quietly confident that I have done the right thing. And that I will end up far better off as a result of having done so.

Mr Jenman obviously has some other forms of income (books, franchises etc) which will help him when it comes time to retire.

But I don't have those avenues, soI have to do the best I can with other avenues.
Hi WB,

Sounds good in theory but the whole thing hinges on positive cashflow. Its hard enough finding a property with neutral or positive cashflow on an I/O loan, but cashflow positive on a P&I loan? With a small (Im reading this as 5-10%) deposit? With still some chance of decent capital growth? (Where most investors believe long-term gains are made)

Jenman is right about one thing, this is certainly one of the most conservative approaches I have seen. There is also the opportunity cost. Every dollar that goes to pay off the principal is a dollar not being utilised to leverage into more property. The example he uses cites a $60,000 profit over 15 years. This is money that could have been used as deposits on other properties along the way.

Also, how many properties could be accumulated this way? If you are placing $20,000 deposit on a property, and never redrawing the equity from that property to fund subsequent deposits (as you are attempting to "pay off the loan"), where does the deposit for your next property come from? Do you have to save the money for each future deposit from after-tax earnings?

Just some thoughts,


What do others think?
You have to understand where this is coming from. Look at the media - there is nothing but doom and gloom for the real estate market ! Auction clearance rates dropping, housing construction approvals dropping - after a "boom", this is exactly what the media wants - something it can sensationalise and sell copy with.

So, now that the public are being fed the line about no more capital growth - so don't buy highly negatively geared property with less than 5% yield... how else are people going to sell houses ?

Well, positive cashflow will be the next big thing - at least until people get bored with it all. This is simply Jenman's way of letting people know that it's okay to keep buying property.

You also have to remember that 90% (or whatever the figure is) of property investors will only ever own one property - those people haven't been in a position to buy up until now - and are too scared to now with all the negativity in the press.

So - give them a forumula which is "guaranteed" to work. If your expectations are low enough that is !
An interesting approach and certainly conservative. If the strategy is to use zero capital growth then you are likely to get a fairly high yeild and at current interest rates you could pay P&I. If you set up the loan in an offset account and put all tax depreciation benefits into the account then you would build up another deposit and kill the first loan very quickly.
It all depends on your concept of time as to weather it is a quick enough method, but it will certainly work. It is very close to the approach we use but has not worked as planned because of capital growth (vbg).

I don't agree with the $60k profit as through this method this is just simply forced savings and worse you payed a $80k loan to obtain the $60k so no matter what you have lost $20k over time.

Having said that I agree that the probability of that scenario is low as long as you keep the property through the next cycle and ones through a cycle you are laughing.

Until recently I only ever used I&P loans and this worked well for my particular circumstances. As a result of this strategy I have a multi million dollar portfolio with a debt ratio of only 30%.

Now I know that this is not what a lot of people on this forum would agree with but as I mentioned before it suits my particular circumstances. More to the point I can at any point in time live solely of my rental income and live well.

Well done Handyandy...

Good to hear when forumites have done well. And, very happy that you are posting regularly, seems we can all learn from you :)

I read Jenman's 'theory' and yes, it is very conservative. It will probably suit the 55yo never_invested_before type person.

This is why we pick holes in it, we, forumites, are by nature open to listening to alternate theories and methods.

I have been rather vocal at times about my thoughts on the Jenman 'System', and this article seems to prove that he really believes people to be stupid and unable to be taught.

There are a few interesting bits in his article:
The main point is that all you have to do is pay a deposit which is big enough (or small enough) so that your rental income covers your repayments and your expenses. The figures work at any price and in any area.

So, does this mean that I don't have to buy well, or even buy at the "close to ten percent' he mentions, I just have to pump more initial funding in to get the property to the return % I want?

Hmmm, see, and with all the smart ppl here, we never thought of that!! ;)

Anyway, it was interesting, thanks for posting it WB!

asy :D
I can see where Jenman's logic comes from- as others have already mentioned, his strategy relies heavily on positively cashflowed properties for it to work. Usually such properties are lower priced, in country towns and not as likely to achieve the capital growth that is as likely with capital cities like Sydney. This isn't to say it can't be done, as people on this forum have demonstrated otherwise. But it's not easy!

But all those $20K deposits wouldn't be so easy to save up (I am basing my assumptions here on a $100K property that can only achieve an 80% lend) in such a short period, as well as the purchase costs.
Jenman also refers to the "challenge" of keeping the deposits low and the rents high- but surely it is the lenders and the rental market who will decide this. If the market becomes flooded with rentals and vacancy rates are high, then rents will fall. None of us can really predict what rents will do, particularly in country towns. At worst, he could end up with properties that are costing him money out of pocket and fall in value. At best, though, he could acquire cg and increased rents.

I like some of Jenman's ideas. I think what he has done for the real estate industry itself deserves credit. He has exposed shonky practices and got consumers thinking more about the whole process involved in buying and selling real estate.

In the end, however, it is each to their own, as not all of us are conservative nor are all of us high risk takers. Those who wish to maximise their dollar by utilizing IO loans and acquiring more property are just as right as those who pay down their debt with P & I loans, like Jenman and Bell. There is no one "golden strategy" that will work for everyone and that is why we are all here after all, constructively discussing various methods.

A terrific forum for tossing around ideas, seeking opinions from those more experienced and admiring the handiwork of those investors who have "made it". Well done everyone for your contributions :)
Asy said about the Jenman system:

"he really believes people to be stupid and unable to be taught"

I also believe that the majority of people fall into this category! Especially in this area. They continue to fail and not change their methods but blame some outside agency for their problems. With what I have seen of this system it would be suited to a hugh amount of people out there. Yes forced savings, but how many of them really would save at all if not for something along these lines. This is probably just not the place for this type of strategy as most of those on here have a very good grasp of property investment (I hope to have a good grasp on iy myself one day :))
Originally posted by Jamie [/i

Every dollar that goes to pay off the principal is a dollar not being utilised to leverage into more property. The example he uses cites a $60,000 profit over 15 years. This is money that could have been used as deposits on other properties along the way.

Just some thoughts,


What do others think? [/B]

Hi Jamie,

Good point but if you're reducing your loan capital with positive cashflow funds the loan will be reducing without any after tax income from your own pocket. You can then still use the equity built up in your IP and use it as a security collateral deposit on your subsequent Ip purchases.

Hope this helps
The Jenman method seems to be simply a more conservative approach to that of Jan Somers'. As such I applaud it !

It was the obvious simplicity of Jan's approach which convinced me thoroughly to plunge into IP territory and this incredible forum. However it sometimes puzzles me how different many of the regular posters' opinions are from Jan's. i.e. wrapping and flipping is all the rage, Rich dad, etc ...

All these are wonderful for those that can afford the price of education; time & money, then the experience but for most people just buying 1 or 2 IP will keep them flat out, when combined with their work, family and social life.

Then there's the comment about Jenman's method being "forced savings", true, but with the capital gain effect which Jan trumphs. It is so easy and probably more than 80% of Americans, Australians, etc who are some of the worst savers in the world could benefit hugely from this kind of subtle wealth creation.

How long would it take to save for each deposit ? Well I don't know, but I'm sure that after seeing their tiny portfolio growing slowly people would them be motivated to save voluntarily too. In fact this method could lead people to flipping and other IP methods once they actually see that "everyone can do it".

I feel that if we believe that Real Estate is the best way to grow wealth them promoting this kind of method would be one of the best things we could do for the industry. There would be no dismal failures to give poor PR, as I'm sure we will see in the not to distant future from many who have jumped on the wagon over the past year or so, using not so conservative approaches.

I myself have been awakened to the power of Jan Somers' method after seeing my prior PPOR which is now a rental becoming a going concern. So I've studied from books and this wonderful forum, bought another IP and plan to buy and develop more too.

I am not as conservative as Jenman but can't understand why people would want to attack the method. Would those same people attack Jan's method, which is fairly conservative too ? I wonder ? Perhaps they should just say it's not for me but I would teach it to a very conservative friend as a way for them to dip their toes into the refreshing and awesome sea of real estate. Later they may willingly swim into the deeper and more beautiful waters.
Hi There

Hi Waverley

I quite like the sound of this method also and we after reading Anita Bell's books thought it sounded good. Just as is Ian & Jan Somers books also.
We are only starting out now own our own home ($230,00) approx and own everything else. Well the visa is maxed due to an overseas holiday but will be cleared by Christmas.
Our unlearned thoughts at present are having possibly a mixture of both Anita & Jan's portfolios.
I am hoping to buy a holiday home in Bali in the next 5 years also as I eventually want to spend a lot of time there 6 months each country.
I am 47 my husband is 33yo. We are both ambitious and both earn nearly $1900 a week each.
Any more info on this I would appreciate, books, sites etc ???


$20K deposit, assume neutral cash flow. Sell after 15 years for $80K, nett profit $60K (let's ignore purchasing and sale costs).

The $20K did not magically appear from nowhere, either you probably had it "working for you" (eg. shares or term deposit or even sitting in an offset account). There was an "opportunity cost".

To put this into perspective, I could have let my $20K sit in an offset account connected to my home loan and I would have been earning 6.5% per annum ("a penny saved is a penny earned").

A 6.5% return takes my $20K to $51,436 after 15 years.

Sure, $60K would be a "profit", but not a great one. Roughly 7.55% compounding yearly.

Allowing for buying an selling expenses I don't these "deal" would be any better than sticking $20K in your home's offset account.

I guess this may be Jenman's way of "disarming" people into showing how even a "bad" property investment is still good.

But in some ways the illustration is too draconian.

Does anyone know of any area that would be worth 20% less today than it was 15 years ago, notwithstanding catastrophic issues like Toxic Waste Dumps and the like?

I moved to Cranbourne VIC in 1976 with my parents and lived there till early 90's. There was basically nothing there in the early days. I would say today's prices are probably 4-6 times higher than 1976, depending on the area and house condition.

So I wonder if Jenmans "illustration" is too pessimistic for his own good.
Hi Kevin

In my time I have purchased 2 properties where the price I payed was less than the vendors purchase price.

In both these cases the property was not held through a boom as we are experiencing right now.

The first one was purchase by the vendor 4 years ago having been newly built I bought this property 1 year ago for $255k which was $5k less than they payed. If the vendor had simply held on for another 6 months then they would have been able to sell the same property for $320 - 350k.

The second property was purchase by the vendor for $80k in '92 this area suffered a real down turn (Sydney suburb) and I purchased it for $65k about 3 years ago, 12% rent return. Todays value $130- 145k.

What this reinforces for me is that property is a longer term strategy, it will have flat times, but these times are made up for when the property finally moves. So as long as you understand the cycles and can afford to hold until the wave washes over you then you will make massive capital growth.

Your point re Cranebourne is the exact same issue '76 affective doubling in '79 then again in '87 -88 and now. So $1 to $2 - $2 - $4 then $4 - $8 give or take. This then means that your purchase in '76 is now worth at the extreme 8 time the starting price.

Regarding your other point of making $60k this is just money that you payed into a mortgage so you are only getting your own money back less the $20k you started with. A big fat loss.

Neil Jenman Seminar


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That's all anyone need to say. Enough said about Neil Jenman adn the Jenman System. I'm not a fan of the publicity seeking machine...

Just go to his Australia tour semianr and listen to him. But look at the table on stage... and you'll find the on stage props are modified to make him look taller... (Misleading and deceptive?)