Any Low Income Earners with a Property Portfolio?

Would love to hear people stories on low incomes building a property portfolio?

What strategies have you implemented and what have you overcome throughout the journey

 

I was when I started. Was on 27k when I was 21 and bought my first. Never really went above 70k through my IT support and property management jobs yet went on to buy several more over the subsequent 10-15 years. My advice would be to remain realistic on both your resources and abilities. Look at cheaper areas, do some labour work yourself (or engage friends or family), work on improving your income capacity with over time / better qualifications / 2nd job / start biz. Whatever it takes.

Obviously owning a nice business now the focus and strategy has changed a bit. You won't be a low earner forever. It shouldn't prevent you from getting into the game in some fashion.

Some people who have done quite well out of property are sometimes put on a pedestal but its quite an easy game if you have the money to pour into it. Some people just don't.

 

Good thread to read for this topic- Investing off a low income

And as suggested by See Change-https://www.somersoft.com/threads/how-we-bought-20-ips-in-5yrs.8756/

What's your deifintion of 'low income'?

 

<$120k individual or $100k household

 

The biggest tip I can give from a finance perspective is to use strategies that allow you to keep your debt level low . For eg, split, build on the back and sell the front to reduce debt. Kep the new one with high depreciation. Or sell the vacant land and use the funds t reduce debt on the front.

The biggest hurdle is the ability to keep borrowing, so using strategies like that will allow you to keep going far longer than buy and hold which will likely max you out at 2 or so, depending on what your income and family situation looks like.

 

Check out Brenda on somersoft forum . Did very nicely on low income , but it comes down to starting at a time when you can buy reasonable returning properties in cheap areas which are about to go up in price .

Recent changes in banking will make it harder , and longer .

Cliff

 

Let say....Up to $35,000 per annum.

 

I was on $36pw brought a 3 flat property
Double my income to $73pw
ps my boss was on $50pw and his boss $75pw

 

Hi

What decade was this?

 

Lending landscape has changed A LOT so this has had a major impact, even on above average to high income earners with a few IPs already.

The simplified version is this: I used to have 9 lenders on my panel that did OFI (other financials institutions) debt at actual repayments. Now there is one, ole mate Liberty who have thier place but its limited.

This means each loan (not just the first one) is more than likely calculated at P&I (if first one is IO for 5 years) over 25 years, which kills serviceability as its done at between 7-8% in 95% of cases. Previous to APRA / ASIC you could piggyback each deal with different lenders who use OFI payments at actual, which in rough terms under the new tougher regime means you have to earn an extra 45k per annum to borrow another $1 million.

In regards to someone on 35k with no debts and living in a share house paying $150 rent per week there max borrowing capacity including $300 / week rent would allow them to purchase 1 x IP with a purchase price circa 300k with a 10% deposit. That would be it unless as @Jess Peletier said they employ value add strategies which may be difficult but not impossible at that price point.

 

1970's

 

The new mortgage servicing rules suck.

You got to think a lot harder now to build a portfolio. The good ol' days are gone for us sheet kickers on low bucks.

Might as well grab the remote and watch some property show....hope there's an answer there.

 

1 Marry someone on a higher income.

2 Use an inheritance for the deposit.

 

Yep. Anyone wanting to build a decent portfolio of 5 or more mid teir (500k purchase prices) will need to be on 200k+ combined income with little to no consumer debt and a modest lifstyle.

 

Rent of just $150 a week in a share house? That's pretty cheap in Melbourne these days!

How much are you allowing for bills and expenses on top of that?

 

This thread reminds me of my wifes cousin i met last week. She's on $100k + a year, no kids and lives pay cheque to pay cheque. Struggling to save for a house at the moment she reckons.

I've since learnt it's not how much you make but how you use it.

 

I was going on a Perth rate which is on the conservative end.

$1800 / month as per most banks min for a single person.

 

It's not how much you earn, but how much you spend.

 

I have always heard: "It's not what you make, it's what you do with it".

I agree.