Hi all,
I would like to start investing in property with the aim of creating a retirement income to compliment my super. About 15 years from now.
I have, I think a good amount of equity in my primary residence. About 400K. The thing is I have no residual income to service an investment property! I live a very basic lifestyle, no frills and no debts.
With no surplus income is investing in property a pipe dream?
If not, then how do I go about it?
How have others dealt with this scenario?
PJ
Bit of a pipe dream i am afraid. Without an income how could you repay a loan?
Maybe you could get a job for a short time, get a loan and then resign and hope you can keep the property rented.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Hi property jockey, may be worth discussing with your super financial planner about accessing your super to invest in property, that could act as income and may be tax free to purchase the investment property along with the rental income you will be getting. It will depend also on your age.
Good luckHi guys,
Let me clarify, I am employed, I just do not have residual income.
After bills, family and health there is only enough left to put aside for those little emergencies we all seem to get. Just a few thousand a year tucked away.
It seems a pure positively geared property is an intermittent rarity rather than the norm. Which leaves negative gearing.
With no residual income that is going to be pointless.
I keep hearing these stories about people building million dollar portfolios with only an average salary. All within a 10 year time frame and on a single person income with little or no equity to start with!!
How is that done??
PJ
Even though you may be spending all your income it may still be possible to qualify for the banks loan servicing so it may be possible to purchase something if you have equity. You would just need to borrow a bit extra for emergencies or any shortfalls.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Hi PJ
It's hard to comment without further details. If you share the following basics details we can provide advice.
What's your income?
What are your current liabilities – mortgage repayments, credit cards, personal loans, ect.It's quite possible to invest with an average income.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
might be stating the obvious here.. but if retirement is still 15 years away, can you not try move into a higher paid job? study, certs, courses etc what it takes to get a higher paid position. The move cashflow you have to work with the faster you will reach your goals..
Hi guys,
Thanks for the feedback.
I have no debts. No credit card, no personal loans nothing. Other than a small mortgage of under 50K on my primary residence which, based on the sale price of houses around me, should be worth about 500K maybe more.
My income is 65K/year gross (total combined income). I don't know about you but the cost of living is sky rocketing and is quickly eating any residual income I can skrimp and save for and I am a very frugal person.
I am not sure I can manage working a second job. My hours now leave me exhausted. The further study is an option (which will cost thousands) to help increase my income.
How much residual are we talking about to start investing in a sustainable growing portfolio?
Knowing how much I need to generate will give me a target.
PJ
Proprerty Jockey, Why dont you sell your house and buy in an an areas where you can get good houses in the $ 50- 150,000 price range, and plenty of jobs. Then have $400,000 for investing or starting a buisness. You would probably find you could earn more money too if you needed to or wanted to work.
On an income of $65k, you could service a loan of around $300,000. When you add rental income then you could go much higher.
I can't see why you can't stay where you are and buy a property for investing. Even if you are spending the lot (and that sounds like you have high expenses to me) you should be able to proceed.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
This is what my wife and I did recently:
1. Refinaced our current home, it's valued by the bank at $530k and we owe $170k on it
2. engaged a buyers advocate to find a decent property for us
3. bought said property with an interest only loan
4. IP is serviced by an offsett account, which all our wages go into, plus rental income
5. skimp and save. take lunch to work instead of buying it everyday
6. win!Hi propertyjockey ,
I see you got more potential than me.
I got 2 jobs ( gross about 60K) and still renting, but I have 2 properties.I think you can easily get a loan and buy some properties.
good luck : )
Hi Property Jockey
Might I suggest you simply wander in to your local bank and have a chat about refinancing in order to buy an investment property.
As TerryW has suggested, you may qualify for a few hundred Ks of extra loans. Borrowing the limit to what the bank may offer is probably not a good idea, but yoinking $50 K or $100 K and using this for a deposit on an IP might be worth exploring.
Do some sums – if you buy an IP, what is the likely rent ? How far will this rental income go towards paying the interest on the loan you take out to buy it ?
Are you prepared to pay the difference between the rent and the loan repayment ? (ie negative gearing.)
Are you prepared to not eat takeaway food every week in order to meet this gap ? Can you give up beer / red wine for a year or two or three while the finances are a little stretched ? Can you bring lunch to work everyday rather than buying it ?
Can you borrow, say, $50 K more than you need, and slowly use this to drip feed into the other repayments to cover this gap between rental income and loan repayments for a few years while the rents catch up with the repayments ?
If yes, then go for it.
If no, then perhaps Terry W's original comment might be correct…..
It is surprisingly easy to buy an IP with a full time job and some equity as you appear to have !!!
Good luck !!
Thanks,
BDM.
raresaturn wrote:This is what my wife and I did recently:1. Refinaced our current home, it's valued by the bank at $530k and we owe $170k on it
2. engaged a buyers advocate to find a decent property for us
3. bought said property with an interest only loan
4. IP is serviced by an offsett account, which all our wages go into, plus rental income
5. skimp and save. take lunch to work instead of buying it everyday
6. win!nice one man good work
Hi Guys,
How much cash should I have at hand? 40 – 50K?
How should I use this cash?
PJ
I think it is possible propertyjockey. We have what we consider a negatively geared property (although after tax it isn’t) it costs us $18/wk once all costs are considered: insurance, management fees (it is 1000kms away), rates, water rates and factoring in 4wks a year of no tenants. Many may consider that positively geared! Sure interest rates are set to rise in the next 12 mths I am sure but $18 isn’t a lot. As others have said, there is often a bit of fat in the budget that could still be trimmed.
We never buy lunch out
Take away is a rarity
We gave up alcohol for a year to save (now its clean skins!)
Many clothes are bought from op shops
Libraries instead of buying books
There’s no state of the art technology at our house
We have recently undertaken the challenge of reducing our grocery shopping by $50/wk netting us $2600/yrI think property investing is accessible to anyone, it depends on the degree of sacrifice you are willing to endure.
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