Different strategies for high income earners

Discussion in 'Investment Strategy' started by Kramerica12, 7th Apr, 2020.

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  1. Kramerica12

    Kramerica12 Active Member

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    Should my approach to property investing be any different if I am a high income earner from a young age? ie 150k gross at 25.
     
  2. Property Twins

    Property Twins Mortgage Brokers & Buyers Agents Business Member

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    Depends..More info needed @Kramerica12

    Do you own property already? If so - owner occupied or investment? What's the value? What's the loan?
    Alternatively, do you have savings available to build the portfolio?

    And most importantly, what draws you to property investing?
     
  3. Lindsay_W

    Lindsay_W Well-Known Member

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    What's your current 'approach'?
    Higher income allows you to borrow more money, but it doesn't help if you can't come up with the cash for deposit.
     
  4. Kramerica12

    Kramerica12 Active Member

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    Own a 2 bedroom unit as an IP. Value was 550k at the start of this year, 300k owing. Savings of around 130k currently. I have been looking to buy another investment property with my partner who is in a similar financial situation to me, but higher savings and no current property. We have pre-approval to buy a property worth $1.7m, but this will continue to grow, and I project that we could buy for $2.1m in 6 months time.

    My dad has a few investment properties, and some family friends have done very well in property. The ability to leverage, get good income and growth from property attracts me over investments such as shares. Although I'm not saying I will only invest in property. I don't want to work till 65 (yes generic I know). I want to work hard and invest hard now to set myself up very comfortably, and future children.

    I don't really have a specific approach. I've been reading a lot about property investing, listening to a lot of podcasts to learn about property investing. My question is should I do anything different to the general approach of buy and hold, looking to acquire a few good investments, focusing more on houses as they have some land and potential to manufacture growth in them. Sticking to good capital city areas. I have only been looking in Sydney so far.
     
  5. Property Twins

    Property Twins Mortgage Brokers & Buyers Agents Business Member

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    Is this for owner occupied or investment?

    I would suggest having a plan around your next purchase and the one after BEFORE you actually go do the purchasing.

    Is that 2.1mill goal finger in the air?
    What purchase price will the properties be? What rental return?
    How do you maximise the borrowing effectively?
     
  6. Jess Peletier

    Jess Peletier Mortgages, Finance & Property Strategy Aust Wide Business Member

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    Different from what, exactly?

    Everyone's strategy should be different, because everyone is in a completely different situation, with different goals and risk tolerances.

    What are your goals and risk tolerance?

    A strategy is a way to achieve a goal - but a lot of investors talk about strategy without having any idea about the goal.
     
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  7. Omnidragon

    Omnidragon Well-Known Member

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    Gear up and buy buy buy.
     
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  8. Kramerica12

    Kramerica12 Active Member

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    We are thinking of using it to buy a house that would be investment for now, but become a PPOR later. I mentioned this in this thread: Buying land for future long term PPOR more than 10 years in advance

    The 2.1m goal was the number I estimated if we saved for another 6 months or so, given we might not buy for 6 months due to the current COVID situation.

    I did some projection work which would suggest that even after buying such a property, within two years we would have saved up another 200k approximately, which could be used to buy another property purely for investment purposes.


    Mentioned this above: I don't really have a specific approach. I've been reading a lot about property investing, listening to a lot of podcasts to learn about property investing. My question is should I do anything different to the general approach of buy and hold, looking to acquire a few good investments, focusing more on houses as they have some land and potential to manufacture growth in them. Sticking to good capital city areas. I have only been looking in Sydney so far.

    Risk tolerance is high. I'm extremely confident in my job security and salary growth (unaffected by COVID for example), as is my partner. And also because we're young.

    As a general goal, not having to work till 60, owning my home and several investment properties that bring in a good amount (in the 6 figures) of income. Being able to help my children with their education and help them with their investment properties to set them up.
     
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  9. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    these are all Positives

    ta
    rolf
     
  10. Ummm

    Ummm Well-Known Member

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    You can do/get all of these from shares as well. What do you define as 'good' income and growth that will meet your goals?
     
  11. Jess Peletier

    Jess Peletier Mortgages, Finance & Property Strategy Aust Wide Business Member

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    This all boils down to your goals and timelines. No-one can tell you if it's going to get you where you need to go, if we don't know in detail where you want to go, and your borrowing capacity, and your free cashflow to contribute, and your deposit funds available and more.

    You need a clear, defined goal before you can know whether a strategy will work.

    Your other option is to buy a house and figure it out as you go...but I don't recommend that, really, because you'll never know whether you're on track or not.
     
  12. Kramerica12

    Kramerica12 Active Member

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    You can’t leverage yourself as much with shares. Not subject to margin calls, and the fact that you solely own the land, you decide. You’re not just putting your money in a business that you have no control over.

    my long term goal would be to be able to retire or semi retire in my 50s, owning a nice house in a particular suburb I have in mind, and somewhere in the 6 figures of positive cash flow. 6 figures is generic, but I’m not sure what is attainable and what I could aim for to be more specific there
     
  13. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    not actually true, just personal risk profile perceptiion


    95 % lend cash out to say 50 k

    relase 50 k

    margined to 30 %

    is double gearing to 65 k = 125 %

    If the market tanks to a margin call at that level, we are all toast

    Pls seek personal advice

    ta
    rolf
     
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  14. iloveqld

    iloveqld Well-Known Member

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    High or low will be depending on whom you ask :D
     
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  15. Kramerica12

    Kramerica12 Active Member

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    Also something I was hoping to get some advice on here. Any advice on if my income should change my strategy in terms of whether I should focus more on active property investing instead of purely passive investing?
     
  16. Jess Peletier

    Jess Peletier Mortgages, Finance & Property Strategy Aust Wide Business Member

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    Strategy should be focused on goals primarily, then tweaked if your income doesn't allow for it. :)
     
  17. New Town

    New Town Well-Known Member

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    The problem with goals and stategies is that at 25 y/o things tend to change substantially. As above I would be gearing up and buying and buying.

    Of course - don't make make silly mistakes. So know the fundamentals
     
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  18. JohnPropChat

    JohnPropChat Well-Known Member

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    High income from a desk job, sales commissions, fifo worker, two jobs? Key thing is to keep investing in your career and have consistently high income. If you have already done that, then hang around PC and read, read and read some more. Plenty of knowledge to be gained here. Good luck.
     
  19. icic

    icic Well-Known Member

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    it will depend on how much deposit you have now, how much you can save from the amount and if your job is stable. It is quite high of an income for any age so well done. But I know lots friends and colleagues on very high income achieved very little in the way of investment. It's more to do with how you use it then how big it is. Stick around the forum and invest your time to learn well will be invaluable for you at this stage.
     
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  20. Kramerica12

    Kramerica12 Active Member

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    yep agreed. I’ve set up some simple cash flow and asset projections for the next 10 years allowing for some of the life things that will come up with my partner in a few years time, including wedding expenses, potential reduced income if we only have one income for a bit. We’re on the same page and have some idea of the timeline on when these things will happen.

    Both my partner and I work in finance (she is on a similar salary to me with similar salary projection) with high job security. Yep I am trying to absorb as much as I can from this forum.


    We have a deposit of 520k (cash and equity from existing IP). We save around 80% of our income. We both still live at home, don’t spend a lot, don’t regularly go on big holidays.

    yeh I’ve seen a lot of the more senior people in my firm who earn a lot of money, who just have all their money in their expensive PPOR pretty much. They don’t invest much and instead have big houses near the beach and put all their money into their mortgage. So I don’t want to go down that route.

    Agreed. There’s a lot to learn on here
     
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