Hi guys, I would like to start investing soon. I'm on a smaller wage (80k) so I need to think carefully and minimise risk. I'm currently saving 25k pa after tax. I have no debts at all. I'm on track to have 25 k in the can by about June, and 35k by the end of the year. I reckon at 35k I'll be able to get my first IP. My question is maybe it is worth waiting a bit longer? Say mid 2017 so I can buy the first IP and have a 15k buffer? Would you guys go in as soon as you can? Or wait for the buffer first? I've got a team and will be getting pro advice next month. But really wanted to put my situation to the hive mind first. Maybe you guys have better ideas of what to do with that 25k pa?
80k isn't small, all of my IPs were bought with incomes ranging from 27k to 71k at time of purchase. Different now that I'm a business owner obviously, but don't let your income hold you back. It won't if you make investment a priority.
The amount of money you have to 'spend' isn’t really that important imo. What’s most important is that you use the deposit you have to buy the best deal you can, in the best area you can afford with the best chance of CG. Perhaps something you can add value to in the future. Obviously having more money will give you more options, but if you find a deal that is really good, i wouldn’t hesitate to buy it (finance permitting). With regards to waiting for a buffer..well its ideal to have a buffer of course and always advised. But the thing with buffers is they become a lot more important when you have a host of properties. With 6 properties and no buffer, then a few issues can really strap your cash flow, But with 1 ip, its easier to get some money for small maintenance issues if need be in the interim period as you save that buffer slowly. Just my 1.5 cents.
I've met multiple people on PC who's amassed a huge portfolio on that income or lesser. Definitely possible, maybe harder with all APRA stuff.
Plan it out well. At a high level - lenders look at 2 things; deposit and servicing/borrowing capacity. Ensure you use the right lender at the right time. There are a lot of things to consider particularly a lender with a flexible cash out policy. Try and go for a high LVR so you have more deposit and savings to use for subsequent purchases. This is easier said than done but still very much achievable.
I bought my first property on a yearly income of 28K and saved about 40K at that time. In terms of a BUFFER: I strongly recommend that you have a buffer in place... but this can be done after the purchase of a investment property. Speak to your broker, and develop a plan that suits your needs.
Keep a close eye on the market and if a deal comes up and you have the deposit saved but you don't have a buffer, I would still buy it. Save for a buffer whilst you're waiting on settlement and thereafter.
