What Salary do you need

Hi Brunowa,

With positively geared property this shouldn't be too much of a problem becuase the rent received should cover the expenses.

I can see how with negatively geared property this would start to become a problem. However with negatively geared property close to the city and in prime locations, this is more likely to go up in value faster than the regional areas (subject to some debate) and hence give you a faster increase in your equity. But the downside is that you won't be able to afford more properties.

You need to show serviceibility with your loans and with postive cashflow its easier to do so.

Also borrowing greater than 80% and incurring LMI isn't as bad as it sounds hence reduing the amount you will need to pay upfront.

Hope this makes sense,

My tip would be to start as early as possible… and i mean EARLY. If I had my time again I would have rocked up to the bank on my 18th birthday asking for as much as I could get.

As it turned out, I bought my first place at 21, and now have 3 properties, with about $600k of equity.

In fairness to your theory, I do get paid more than the average 26 y.o, but the equity I have has mainly come from having been in the cycle for the last 5 years, not because i've paid heaps off the loans.

You also made the point that "…during this time your lifestyle is sacrificed due to the solid savings/repayments you have to undertake" – To that i'd just like to say…THIS IS THE WHOLE POINT! Sorry for yelling, but I am fairly big on the delayed gratification thing (at least to begin with) – Live with parents for longer, dont buy expensive cars, work during tafe/uni rather than getting study allowance, save your A$$ off to get that deposit – It will be worth it.

Buy something at less cost. If it is an investment you do not have to live in it
You could buy in a cheaper area and pay it down to a point where expenses = income
This is the hard solid savings part.
Live with parents for longer, dont buy expensive depreciating cars, work during tafe / uni rather than getting study allowance, save your AR$# off to get that deposit – It will be worth it in the long run.
What really kills is trying to pay off a huge mortgage. A smaller mortgage can be paid off really quickly and then the property doesn't cost you to keep owning and renting it out.
As an example
http://www.realestate.com.au/cgi-bin/rsearch?a=o&id=105643754&f=20&p=10&t=res&ty=&fmt=&header=&cc=&c=60385599&s=vic&snf=rbs&tm=1267005338
Costs $75,000
So you need stamp duty costs of $2000 plus 7500 for deposit plus $1300 probably for LMI plus $1200 for legal costs.
So $12,000 you need to save up (some cars cost more than this !, some people owe this on their credit cards)
Loan of 67,500 repay over twenty years of at 10% interest rate is $150 a week
Now unfortunately you need to have a job or proof of income to convince the bank to lend to you $67,500
Now put a tenant in it
at say 3% yield is $43 a week
hang on this earns $120 a week in the ad thats 8% yield
lets say 40 a week for expenses thats $80 a week
So now you need $70 a week to make the repayment
Lets say you decide to take your lunch to work with you hey there's $70
Lets Pay an extra $70 a week towards the loan.In 229 repayments (4 and a half years) you have a property that costs you nothing to own when rented based on 10% interest rate.
In seven years at this rate of repayment its paid off.

Lets Pay an extra $140 a week (so total out of pocket $210 a week) towards the loan.In 140 repayments (2.6 years) you have a property that costs you nothing to own when rented based on 10% interest rate.
In six years at this rate of repayment its paid off.

Interest rates are not at 10% but it is a good figure to allow for interest rate increases.

The point is you have to start somewhere and how good would it be to have a property paid off worth at least 75,000 that you can then borrow against for the next investment property.

HI i bought my first proeprty at 23 when I was still living at home and in conjunction with my twin brother. Unfortunately that property and another house were casualties of my divorce. I am now 41 and had to start again after the divorce. Now in the past three years I have bought my PPOR, three iPs and looking for another one. I have bought cashflow positive properties in large rural areas that have been tenanted from day one (except one that took three weeks to tenant) They have never been vacant. i have three children, i support them myself with no financial or other support from their father. I earn $55k a year.

My car is ten years old, we go camping for holidays or travel back to the Blue M ountains to visit friends that we used to live near. My children do not go with out, i don't feel like I miss out, and any sacrifice is worth it to be able to build a secure financial future.

I am planning to travel to the UK in 14 months to visit my brother who has moved there for the next three years.

I don't drink or smoke so that is a huge saving.

If you are serious about taking care of your financial future there are many opportunities to get started, you don't have to earn a huge amount of money, just have your money work harder and smarter for you.

good luck

Sonya

Sonya, your story reminds me a lot of my mother, only her security came from share investments and wisdom. I lacked for nothing and never even imagined that we might not be well off.

Skip forward 20 years and she is comfortable, debt free and enjoying herself. I'm well educated, with my own family and in a great job.

Your children's successes will be a huge payoff for you in the future, and they will appreciate your sacrifices.

Tom

That's an interesting anecdote there from sonyasal. One thing I've noticed here is the number of young people starting early and making a success of it – I wish I had half your wisdom at your age. I'm 39 and just bought my first and only property and its my PPOR. In retrospect I  went down a path that was clearly marked 'wrong way go back'. That path was what was preached to me – get an education and get a job, don't invest or take risks.  Ironically the safe route was the biggest gamble and risk I took,  one that has unfortunately led to years of mediocrity.  

Ryan

Are you using the wrap technique? That's pretty amazing how you do it on low income and no down payment, I can't think of how else it is possible.

Cheers

You definately have to keep your head on straight. I see a lot of developers just going for it. There is a difference between a positive mental attitude and ignoring reality. However, those lines seem to get skewed at times. I watched developer after developer get into waterfront condo developments at the END of the boom in my state. All of the condo developments that I appraised then are in workout now. ALL OF THEM! Yikes! Pay attention to the trends. If you see one particular concept increasing in frequency, your likely too late.

I say learn what you can and become an equity partner. Use other peoples money if you can. Invest first in some information that will get you pointed in the right direction. That's my advise.

Tom Siegel

Hi All,

I have currently been looking for an investment property and found some apartments in the city (Melb). I too are in the 30% income tax bracket and only have around $50K left on our mortgage (current residence) with my partner (Equity about $60K). The apartment can be bought for just under $300K with the rent basically paying off the loan even with a int rate @ 9%. If I did principal&Interest loan we would need to pay $75 per week. It has a gurantee rent of $480 p/week as its with a serviced apartment company (oaks/Quest) you know the ones, which will be rented out till 2014/2017 with 5X5 and 2.5% increase pa.
Does this sound like a good investment or is it too good to be true? We want to try and boost our portfolio but also wanted to go overseas next year as a little reward for paying off our Primary residence and still cover the apartment investment which seems doable….

Any thoughts would be great for this newcomer….

Thanks