All Topics / Help Needed! / What Salary do you need

Viewing 20 posts - 1 through 20 (of 22 total)
  • Profile photo of brunowabrunowa
    Join Date: 2008
    Post Count: 27

    What Salary do you really need to be able to sustain property investing?

    I'm talking about making property investing a significant part of your life. On salaries less than $100,000 it can be very hard to build up a portfolio of 3-4+ properties, especially if you have a large mortgage against your PPOR.

    It comes down to saving… you really need to save a lot of money – putting it into your PPOR first and waiting until you have enough equity to take out an 80% loan on your 1st investment property. This can take years. Meanwhile, during this time your lifestyle is sacrificed due to the solid savings/repayments you have to undertake.

    This cycle would then repeat… obviously if there is a booming economy then this could help in terms of capital gains and equity appreciation but there is not always going to be one.

    Building up a large enough and serious investing portfolio is obviously a tough gig, and to me it seems directed towards those that have a much higher income than others and can keep cash flow happening through their daily income and not sacrifice their lifestyles too much.

    Any thoughts? Would love you to prove me wrong.

    Profile photo of Simon PlummerSimon Plummer
    Join Date: 2010
    Post Count: 44

    It definately makes it a lot easier having a high income. No doubt about it. But I guess you just need to have a positive attitude and persevere with your investing. I net less than $40k/year so obviously the rate I acquire property is going to be much slower than those who earn triple my salary.

    Everyone has to start somewhere…

    Profile photo of shivaskoshivasko
    Join Date: 2009
    Post Count: 33

    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,

    Profile photo of howardcmhowardcm
    Join Date: 2008
    Post Count: 65

    I gross around $55k as a 22 year old

    Brought my first IP 12 months ago for $340,000
    Reno for around $5000
    Val is now $425,000
    Now has $40,000 odd avail equity
    Have saved $15,000 during that time
    Rent is about Nuetral

    Now I repeat :)

    Profile photo of YoungInvestorYoungInvestor
    Join Date: 2003
    Post Count: 377

    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.

    Profile photo of SashSash
    Join Date: 2010
    Post Count: 91

    I am an as fresh as they come with PI and feel hesitant to put my opinion in but I love the concept and spend hours each day researching, thinking about ideas for new investments and/or how I can further my portfolio.
    I bought a large block in New Norfolk (out of Hobart), a house in Central Frankston (VIC) that I'm subdividing and intend on building which make my portfolio +cf , My salary is only $46k gross. All in the last 6 months since my 21st bday.

    People have to think outside the box. If you cant do it on your salary, think of another style of PI, team up with someone or a few.

    I have plenty of ideas but can only take one at a time.

    Profile photo of ducksterduckster
    Join Date: 2004
    Post Count: 1,674

    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
    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.

    Profile photo of JpcashflowJpcashflow
    Join Date: 2007
    Post Count: 575

    I agree with YI.
    A bit of hard work, dedication and most important sacrafice is the key to sucess.
    i bought my first IP at 21 when i was only earning 38k a year. At 25 i have three properties in total, two properties which are IP's and another property which i live in. I just sold one of my IP and made a nice profit after capital gains. As of today my loan of where i live has decreased from 245k to 150k and soon it will be only 90k.
    So work hard and you will be ok but one thing i like to say is this. You can read and read and get advice about everything but the best way to learn is to JUST DO IT!!!!

    Jpcashflow | JP Financial Group
    Email Me | Phone Me

    Your first port of call in finance :)

    Profile photo of sonyasalsonyasal
    Join Date: 2008
    Post Count: 421

    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


    Profile photo of TerrywTerryw
    Join Date: 2001
    Post Count: 16,213

    As a guide you can get roughly 5 to 6 times your annual income in borrowing capacity.

    Over time rents will rise and wages will rise (but so will prices!) and this should help you get into a few more.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide)

    Profile photo of TomHTomH
    Join Date: 2010
    Post Count: 4

    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.


    Profile photo of sonyasalsonyasal
    Join Date: 2008
    Post Count: 421

    thanks for the message of support Tom, i sometimes wonder whether I am treading the right path. But i have tried forex trading with some success then the proverbial hit the fan with the GFC and shares make no sense to me at all. So i will continue doing what i am doing and look forward to a debt free life sooner rather than later.

    My children and I play the cashflow for kids game and my youngest (7) beats me EVERY time!!! She has beaten me from the age of 6!! hopefully she will carry this knowledge and understanding into her adulthood. I will be encouraging my children to buy property as soon as they can.



    Profile photo of SurrealistSurrealist
    Join Date: 2010
    Post Count: 30

    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.  

    Profile photo of Ryan McLeanRyan McLean
    Join Date: 2010
    Post Count: 547

    I am proving you wrong. Me and my wife earn a combined income of $40k and are buying 2 properties this month with no money down. Better yet they are positive cashflow.

    We use vendor financing to fund our properties and while this limits the properties we can invest in, it also maximizes our investing as we never have to save a deposit. If you have an investment strategy then you can work ways around the high income/work like a dog and save routine so many investors think they HAVE to do.

    Ryan McLean | On Property
    Email Me

    Profile photo of SurrealistSurrealist
    Join Date: 2010
    Post Count: 30


    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.


    Profile photo of benc10benc10
    Join Date: 2009
    Post Count: 13

    I agree with the people that say it takes time if your on a lower income, purchase only what you can comfortably afford you don't have to love the property because your not living in it but make it a win-win.
    Even 1 property per year for 10 years if thats all you can afford is great you'll have 10 properties in your portfolio and the 1st couple of properties will surely be positivily geared.
    Patients and hard work and as steve says success come from doing things differently so think outside the square when it comes to lending, get a partner. vendor finance, super funds.

    Hope this helps

    Profile photo of Tom SiegelTom Siegel
    Join Date: 2010
    Post Count: 9

    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

    Profile photo of GrantH_1974GrantH_1974
    Join Date: 2004
    Post Count: 190

    You can probably find a property (or share for that matter) that is affordable no matter what your level of income. But you also need to make sure you are buying a quality asset to give you the best chance of getting long term returns. Just holding assets doesn't necessarily mean you are increasing your wealth.


    Profile photo of tedstar1tedstar1
    Join Date: 2010
    Post Count: 6

    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….


    Profile photo of Anthony.AounAnthony.Aoun
    Join Date: 2010
    Post Count: 27

    hello brunowa,

    well it is not about proving you wrong. we may just have other perspectives.

    The income you have is ample to build your portfolio. To levergae your currnet position into multiple properties does not necessarily mean hard sacrifices BUT does require a disciplined stratgey.

    So, my perspective is YES; you make enough to…. 'sustain property investing'


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