Tenants in one of our IP's have given notice that they will vacate towards the end of October. The agent held the first inspection last weekend and we received four applications. When the agent emailed me with her thoughts on the best application, I was surprised at how low the prospective tenant's family income was. The prospective tenants have offered to pay 6 months in advance, which means they have either been given a gift, or can save some money. Their figures and reference from previous pm and current employers check out..... I started to think further about the figures and came to the conclusion that while the tenants could afford to service a home loan, the barrier to entry is probably saving up a deposit. I then thought a little further about investors starting their journey into IP's or other asset classes for that matter. What type of surplus do prospective investors require from their income to begin investing? How realistic is it to have a surplus - a couple of kids with regular sporting, music activities, school fees/expenses, annual holiday etc would probably wipe out any extra cash a family may have. I also think lifestyle expectations today are a lot higher than they were when I was a kid.... In case you are wondering the prospective tenant's figures were as follows: 1) Primary income earner: $50,000 p/a 2) Secondary income earner: $20,000 p/a 2) 2 yr old child They take home $1200 wk. Rent will be $350 per week. In terms of borrowing capacity - use of a bank calculator which is probably incorrect - brokers feel free to fill in further info that I may have incorrect of have missed. 1) Borrowing Capacity ($330,000) 2) Can afford a prop of approx $400,000 3) Need 20% deposit and 5% for costs: $100,000 4) Repayments: $20,930 p/a. The rent is about $18200 p/a.... As it is owner occupied they may be able to go to 90%?? (Meaning they need 15% - or $60,000 deposit) I am not sure of what the new APRA rules mean in the context of a PPOR. I'd be interested to hear your thoughts regarding families on low income with kids managing to put $ aside in today's climate to invest in property or other assets?