Investing off a low income

$330/wk for $250K purchase - 6.8% yield (you may not have multiplied your initial calc by 100). Gotta be happy there, and all you need is some CG and you're moving forward.

 

Hahaha I did too yep 6.8 sounds a lot better

 

It's not necessarily a measure of the brokers ability - they can only work with what they're given.

All the positive thinking in the world isn't going to help amass a sizeable portfolio on $50k p.a

Pre-APRA days maybe....now, I can't see it happening.

These days lenders will assume it costs a single person close to $2k p.a in basic living expenses (so there goes circa $24k of your income).....and some will assign a notional rent/board expense of say $650 per month despite you not paying anything at all. Then you've got the whole "loading of debts" that Euro mentioned above and also the capping of rental yields (some will only take 6% if the property is positively geared by a lot).

The income side of things needs to be beefed up - once that occurs, servicing will enhance and you'll be able to buy multiple properties. Perhaps think of creative ways to bolster your income before you hit that servicing cap - could be a business venture (will need a couple years financials to use this income for servicing), a rich wife/husband etc

Cheers

Jamie

 

@Jamie Moore agreed about that 50k won't take far with just positive thinking. However what will take far is mental conditioning to make things happen no matter what. If JZ is resourceful and works towards what he /she wants it's possible.

What you state is a fact. However I'm of the view if people don't know the possiblities they won't be open to change anything to make it happen for themselves

 

Yeah your probably right. Definitely not delusional to the fact that the serviceability with a 50k income is very low. Don't plan on being in this position forever, only starting out.
But I'm sure if I buy right and have enough security in equity it is possible to start to grow a portfolio from now. Don't see why the bank won't lend if you have enough for them to take off you, and if they don't I'll find a bank that will. Maybe I'm naive we'll see when the time comes

 

Challenge accepted!

 

No challenge. I'm sure you can do really well. It was a response to say people can and do improve incomes. Today's income doesn't mean it will remain the same. If you are driven to get a certain outcome, you will. Regardless of the income.

 

Just be a hermit for 5 years. Saving as much as possible. Make goals on the calendar 6 months ahead of how much saving you will at a certain date if you save X amount per week.

As for investing I would go for high cash flow propertys for SA it's Elizabeth. Not sure what it is for your state. Each property will bring + cashflow allowing you to save more and buy more.

Check back in 5 years

 

Dream killers are everywhere. Particularly if your peers and workmates are on circa 50k also. 50k is not bad for a 22yo so don't be put off by that. It will get better. Continue small and multiply. Stay positive and persistent. You're on your way already.

 

It's not a challenge - and I'm not trying to crush any dreams. OP is capable of anything - as is anyone.

 

The best revenge is massive success.

 

You are only limited by your own beliefs.

We grew a very large portfolio & were on a low income for many, many years. The first thing you need to realise is that it is not a race. Building equity takes time, and if you haven't got the deposit for the next property (or the serviceability) all you have to do is wait for time to do it's magic. Of course there are new barriers that pop up from time to time....like APRA, interest rate rises etc....but waiting a while will help with this. Just be smart about what you buy. Don't go for properties with a massive negative cashflow, because cashflow is king. If you haven't got that coming in, you will max out really fast.

You've got youth on your side. Consider this....we bought our first IP, then did nothing for many years. At that stage, we didn't really consider building a portfolio. One was enough! But even if we did, there was absolutely no way that we could have gotten the finance to buy another one at that stage. Let's say you wait for ten years. Yes, that's a long time, I know, but in ten years, your one IP will have grown in value and the rents will have increased as well. Even if you are still a low income earner, the added income from the rent will bolster your income and you will have a heap of equity for a deposit (or two...or three).

Then even if you have to wait another 10 years, you'd have four properties, all growing in value, all with increased rents.....how many more can you buy now? See how it works?

If you are good at reno's, you can possibly get things moving quicker buy targeting properties that you can add value to. Either hold onto them for the added equity....or if you are confident with both your skills, and the market....flip them & move onto the next. If you can make $30k (after all expenses) in your spare time with a flip, that may be better than a part time job earning an extra $200pw. If you do a few of them a year, that could help you into the next on that you get to keep.

Remember, the 'old timers' here have been doing this for a long time now. It doesn't happen overnight, especially if you don't have a lot of money to throw into it........but that doesn't mean that you can't do it.

 

So as someone on low income, are you better off buying more high yielding properties, or just a couple with the sole aim of CG? It would be difficult trying to save week to week when youre negatively geared.

 

Can you EAT CG? Not until you sell it, you can't. I strongly believe that casflow is king, ESPECIALLY when you don't have a lot of income.

 

I couldn't agree more

 

It would really depend on your own individual goals. You can have both cashflow and capital growth you normally have to produce your own growth through renovations or just under market buying. I can safely say building a large portfolio on $50,000 a year is possible and as others have stated your income only goes up. The whole concept of negative gearing never appealed to me. I want to make money from day one!

 

Definitely looking for the best possible yield, with close proximity to a cbd. Defiantly not at the expense of capital growth cause that's where the money is long term! Unless it's a block of units purely for yields and Reno but that's a while away

 

Sure things will eventually work out, great to have that confidence from people that understand and have started from where I am though!

 

Are you still living with parents? This can help..

As can living in share house with friends splitting the rent. Having an income of only 50k you can still save a lot of money if you try hard and can still buy a lot of IPs you just have to give up luxurys for a while. No big holidays or new cars. This is what most people spend there money on at your age. I didn't and now have multiple IPs at 27. And now that I'm in a good position I am planning first overseas holiday. And have a new car

It's all about sacrificing some small things now to get big results later

 

Yeah I done all my loose spending and made costly young guys mistakes up till the start of last year. Lost my license for 14 months and moved back home closer to work and made the most of it and saved for a deposit. Was a blessing in disguise haha
Yep definitely delayed gratification, all pays off well done! We'll we have the same name so hopefully I share the same success you have in 5 years time