Finance advice
Sam Saggers

5 ways to buy property on a modest income

By Sam Saggers

Having a low income does not automatically exclude you from investing in property, you simply need to be diligent with your finance and perhaps be a little bit creative as well.

Blogger: Sam Saggers, CEO, Positive Real Estate

Having a low income does not automatically exclude you from investing in property, you simply need to be diligent with your finance and perhaps be a little bit creative as well.

To begin the process, take stock of your particular situation.

● How much debt am I in? The hard truth about living on a lower income is the need to be debt free. You want to have the maximum amount of money possible to put towards your financial future.
● What level of risk am I willing to accept?
● Am I living beyond my means?
● What am I willing to sacrifice to do this?

The following strategies work well for many individuals, including those on lower incomes:

Off The Plan
Using time to your advantage, you put the power of capital growth at your disposal because you buy a property at today’s prices and obtain financing at tomorrow’s value. This means that part of perhaps even all of your deposit is recovered when you settle.

This strategy is not without its risks, however when you buy in the right growth location and allow enough time for values to increase it can be a great way to get into the property market if your funds are limited.

Joint Venture
I’ve always said I’d rather have a “little bit” of something than a “whole lot” of nothing!

A joint venture can be a fantastic way to get into the property market if done correctly. The idea is to get a financial partner who can help sponsor the purchasing costs and then you each take a share in the profits.

A vital part of every joint venture is the agreement. Everyone needs to understand their role in the plan; what they’re expected to do and by when, and what will happen when a) things don’t go as planned and b) things do go as planned!

Tap into Equity
If you’re already a homeowner you may already have money sitting around that you’ve not considered...equity.

Tap into your home’s equity and use it towards the purchase of an investment property.

You can do this through a mortgage redraw or offset account and/or refinancing to obtain a lump sum or line of credit.

Option Agreements
An option agreement works best when you have a distressed seller who has been unable to sell his property.

With an option agreement, the vendor and the buyer agree to a specified amount of money for a deposit, together with the right to purchase the property at a specific date.

The idea is to buy a property at a discount, do cosmetic improvements, sell your interest at the higher valuation amount and then pocket the difference.

Note that the buyer has the “right”, but NOT the “obligation” to purchase the property. If the buyer purchases the property, then the deposit will go towards the purchase.

Should the buyer choose to not purchase the property, the seller keeps the deposit.

Long Settlement
This is a plan similar to an off-the-plan strategy.

The property must be located in a strong growth market in order for this to be feasible because you’re betting on the increase in value to help fund the purchase of the property.

While risky, this can be a way to get into the market by using the power of capital growth.

When the market is right you can add a cosmetic renovation to this strategy to help boost value even more.

Other Strategies
Financing strategies such as vendor financing, low deposit loans and even cross-collateralising with a relative can help you get on the property ladder.
Let’s just say that for every potential problem you might face when trying to buy property on a modest income there is a possible solution to help you overcome it.

Read more: 

Why paying off your home with your salary is a waste of time

4 ways to find a bargain property

How to understand property data

How to start investing without a plan

5 things that annoy your tenants

Increasing the rent for your investment property

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About the Blogger

Sam Saggers

Sam Saggers

Sam Saggers is the CEO of Positive Real Estate, one of Australia's leading property investment and educational companies and highly sought-after buyers agencies. As a licensed real estate agent in every state of Australia, Sam's passion is assisting people to invest successfully in the Australian property market. He has personally brokered over 1,600 property deals in his fifteen-year career and has helped to educate more than 5,000 people in real estate principles through Positive Real Estate. Sam is the co-author of Think and Grow Rich In Property by Stuart Zadel and How to be in Debt for Millions and Be Happy About itand is currently in the process of writing another book on investing in property in Australia. Sam Saggers is also a keynote speaker on real estate and has recently founded the Property Wholesales Co-operative.

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  string(72) "Mortgages in a tighter lending economy and why Brisbane is a good option"
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Tune in to the latest episode of Property Showcase, the podcast with the inside track on the products and businesses that will help turbocharge your portfolio, maximise returns and make your overall investment experience seamless and stress-free!

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To hear more about these services, make sure to tune in to this episode of Property Showcase!

 Make sure you never miss an episode by subscribing to us now on iTunes!

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Son Pham is the accredited Head of Mortgages at Rethink Financing\/Rethink Investing. He has over 6 years\u2019 experience writing loans, over 12 years in the wealth management industry working for the likes of CBA, AMP and private practice and he is also a licenced financial planner (AFSL 326450). He has multiple investment properties that are cash flow positive which help pay his mortgage on his home and fund his lifestyle.<\/p>\r\n

Son is able to write all types of residential and commercial property loans.<\/p>\r\n

In this episode of Property Showcase, head of mortgages at Rethink investing Son Pham joins host Tim Neary to unpack how an investor should approach getting a mortgage in place with banks tightening down on serviceability.<\/p>\r\n

Hear from\u00a0Son\u00a0about:\u00a0<\/p>\r\n

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  • The pitfalls that he has seen people get into<\/li>\r\n
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    Whether it\u2019s building a successful property portfolio or investing in one of their Development Funds, Open Corp can help you through every stage of your investment journey. The team has 40 property specialists who collectively have been involved in over $4 billion worth of property transactions and the acquisition of more than 8000 homes and investment properties.<\/p>\r\n

    In this episode of Property Showcase, director of investment services for Open Corp Michael Beresford,\u00a0joins\u00a0editor of Real Estate, Tim Neary to share why he disagrees that the cooling market means that the best times are behind us.<\/p>\r\n

    In this episode, hear from\u00a0Michael\u00a0about:\u00a0<\/p>\r\n

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Mortgages in a tighter lending economy and why Brisbane is a good option
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Will Magee has had ambitions to enter into the Australian property market for quite some time, but it has been more than just finances holding him back.  Having been granted permanent residency just two weeks ago, Will is wasting no time and is now in the process of signing papers and finding his first investment property.

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In this episode of the Smart Property Investment Show, Will joins host Phil Tarrant to share why he is purchasing his first property in partnership with his brother, discuss the complications that can arise from such a strategy, and unpack the ongoing plan for building a joint property portfolio with his brother.

Will will also share how they approached saving for their first property, why he is taking out the mortgage in his name exclusively, and share their savings plan for the year ahead.

If you like this episode, show your support by rating us or leaving a review on iTunes (The Smart Property Investment Show) and by following Smart Property Investment on social media: FacebookTwitter and LinkedIn.

If you have any questions about what you heard today, any topics of interest you have in mind, or if you’d like to lend your voice to the show, email [email protected] for more insights!

RELATED AREAS OF INTEREST:

From property in Australia to a ski lodge in Japan
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A property investment plan years in the making
object(stdClass)#1203 (52) {
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  ["title"]=>
  string(75) "Regional Victoria showing up Melbourne in price performance, new data finds"
  ["alias"]=>
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  ["introtext"]=>
  string(139) "

Median house prices in regional Victoria outperformed that of Melbourne in the June quarter, the latest REIV figures reveal. 

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Median house prices in the regions rose 4.0 per cent to $419,500 but in Melbourne they dipped by 0.6 of a percentage point to $840,000.

The result in Melbourne was due to a 0.8 of a percentage point fall in prices achieved at auction; this was despite a lift of 2.3 per cent in private sales.

Inner Melbourne suffered due to auction prices, where median prices fell by 4.9 per cent to $1,459,000 but it was middle Melbourne that was hardest hit, with a 5.4 per cent drop to $974,500.

Outer Melbourne had a good quarter with the median rising by 0.5 of a percentage point to $681,000.

Apartment prices in regional Victoria grew by 3.7 per cent to $304,500 while the metro media was up by 0.5 of a percentage point to $604,000.

REIV President Richard Simpson said that despite fewer sales, many sectors of the market were performing well.

“2017 was a bumper year and while the trendline has flattened, despite the fall in median house prices in the June quarter, median prices are still up this calendar year for both houses and units, in Melbourne and in the regions,” Mr Simpson said. 

In particular there was been strong growth in regional centres which is probably due to the first-home buyers’ concessions said Mr Simpsons.

“The first-home buyers’ concession has been a boon for regional areas. A new entrant to the property market buying a house at the regional median will pay no stamp duty, while a first home buyer of an apartment in Melbourne at the median price would pay stamp duty of nearly $25,000,” he said.

Mr Simpson said that more prospective buyers are looking towards regional Victoria which is also having an effect in Melbourne.

“Melbourne’s outer perimeter continues to grow. Small increases in the June quarter mean that the median prices for both houses and units have risen over 10.5 per cent from a year ago.

Mr Simpson said moving forward that vendors need more realistic expectations as the highs of 2017 are now over.

“Negative chatter about the future of the sector coupled with stronger lending controls by financial institutions has created some uncertainty and vendors need to be realistic with their price expectations,” Mr Simpson said.

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Regional Victoria showing up Melbourne in price performance, new data finds

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