Staying motivated on a low income?

[jaycee]

Funny, this reminds me fo the people making it harder thread, with deewha the being the one who decides from now on never to discuss this again / limit discussion on the subject due to the negative reactions which are out of context, just like "normal" property invetors get from their non investing family/friends....

 

[AndrewT]

Thanks Kim!

Rob's story is a great example of motivational stories. I read through all the posts on that thread and it's interesting to track how people have made their way up the IP ladder. It also helps you remember different strategies and advice for when we become big property investors

I found it really helpful to develop a spreadsheet that listed everything about our income and expenses. It has really allowed us to step back and look at what money is going where. The worst feeling is when you look at your bank account and say "gee, I thought I had more then that". At least this helps control our spending and now we have a weekly buffer. So we KNOW we will save $300 a week, we have $150 buffer which can be used for miscellaneous things for a just incase and if for that week we stay on budget - we save $450

 

[DeeHwa]

Do you make all the repayments on your $300 K mortgage? Just curious if mum and dad help lol

Where are you currently living if you are leasing out your ppor?

haha....my rental income + salary goes towards that. Parents don't help anymore.

Live with parents in Fitzroy. Will continue to do so until I get married.

 

[Mazda]

I have NEVER bagged those less fortunate than myself. I challenge you to find anything I have posted that is remotely suggestive of this. Yes, I bag the suburbs and the rationale, but not the financial circumstances of the poster.

Rather than put myself through the pain of re-reading your posts, I will not accept that challenge and withdraw the allegation that you bag individuals.

I second wobblycarly's statement. Have first-hand experience of being called a list of names. Also of having seen forummers' ancestors and suburb choices looked down upon.

...

To be on-topic... I have a full-time job and an average income. Can't really afford to cough out the funds for a property now + 5% LMI (even more so when the half-decent properties are all on auction).

So I signed up for a 2-bed apartment OTP that gives me 2 years to save every dollar and dodge 5% LMI.

Perhaps it is not the way you guys might have done things (and I admit I still have heaps to learn from the experts), but the maths work out reasonably okay for me.

 

[DeeHwa]

I second wobblycarly's statement. Have first-hand experience of being called a list of names. Also of having seen forummers' ancestors and suburb choices looked down upon.

...

To be on-topic... I have a full-time job and an average income. Can't really afford to cough out the funds for a property now + 5% LMI (even more so when the half-decent properties are all on auction).

So I signed up for a 2-bed apartment OTP that gives me 2 years to save every dollar and dodge 5% LMI.

Perhaps it is not the way you guys might have done things (and I admit I still have heaps to learn from the experts), but the maths work out reasonably okay for me.

Ah, good old Mazda! Yes, but I was bagging the 'rationale' not the financial circumstances if anything.

Anyways, funny that you bought OTP so that you could dodge the LMI. You don't need me to tell you that is indeed very wacky.

OTP is definitely not me, but I respect the choices one makes. In fact, my best friend signed up OTP for a 2 bedder apartment on A'beckett St, Melbourne (Dynasty living development) last weekend. His reasoning was that he wanted to live smack bang in the CBD, new and planned to move out (from his parent's house) in 2 years time. Those are the type of reasons which I can understand. Dodging LMI, stamp duty savings etc...those kind of things are hard to comprehend.

 

[Mazda]

Ah, good old Mazda! Yes, but I was bagging the 'rationale' not the financial circumstances if anything.

Oh, you were criticising their ancestors too, and well as calling people names. That was definitely not related to rationale.

Dodging LMI, stamp duty savings etc...those kind of things are hard to comprehend.

Really? I am sorry to hear that you can't comprehend.

 

[jaycee]

Ah, good old Mazda! Yes, but I was bagging the 'rationale' not the financial circumstances if anything.

Anyways, funny that you bought OTP so that you could dodge the LMI. You don't need me to tell you that is indeed very wacky.

OTP is definitely not me, but I respect the choices one makes. In fact, my best friend signed up OTP for a 2 bedder apartment on A'beckett St, Melbourne (Dynasty living development) last weekend. His reasoning was that he wanted to live smack bang in the CBD, new and planned to move out (from his parent's house) in 2 years time. Those are the type of reasons which I can understand. Dodging LMI, stamp duty savings etc...those kind of things are hard to comprehend.

Foot in the door ?

 

[DeeHwa]

Foot in the door ?

Obviously you guys enjoy these little perks way too much, haha. Still can't believe you think it is a 'sound investment' just because you can dodge LMI, get stamp duty savings.

You guys probably thought FHOG was the greatest invention ever. Clowny~ness

 

[jaycee]

Obviously you guys enjoy these little perks way too much, haha. Still can't believe you think it is a 'sound investment' just because you can dodge LMI, get stamp duty savings.

You guys probably thought FHOG was the greatest invention ever. Clowny~ness

Bit cocky there buddy with the name calling and categorising people.

I don't think I know much at all, I enjoy discussion and learning along the way from it though, so my foot in the door comment was trying to keep the discussion going. Hard when people put you down though.

 

[josko]

Back to the thread:

Hey Andrew,

you can still do it and I have clients that are doing it. The right property with the right rental income.

Keep setting those goals and plan where you want to be in 12 months time.

Once you write your plan, write down ways and ideas of how you are going to get there.

Start implementing your plans and start with the easiest idea. Keep moving forward with your objectives in mind and you WILL get there.

Regards JO

 

[DeeHwa]

Bit cocky there buddy with the name calling and categorising people.

I don't think I know much at all, I enjoy discussion and learning along the way from it though, so my foot in the door comment was trying to keep the discussion going. Hard when people put you down though.

If you said the motivation for buying was for capital growth, yields or cashflow then I would be fine with that. However, Mazda made no mention of this, and implied that the motivation for investing is because of dodging LMI and your so called 'foot in the door'. These, I believe, are not the right reasons to invest and hence why I think it is 'wacky'.

It has nothing to do with being cocky my friend. My intention was not to put anyone down, just keeping it real unlike some people who just agrees because they want to be nice.

Let me ask you jaycee, would you go and buy ANYTHING, just to get your own 'foot in the door'?

 

[Deltaberry]

Ah, good old Mazda! Yes, but I was bagging the 'rationale' not the financial circumstances if anything.

Anyways, funny that you bought OTP so that you could dodge the LMI. You don't need me to tell you that is indeed very wacky.

OTP is definitely not me, but I respect the choices one makes. In fact, my best friend signed up OTP for a 2 bedder apartment on A'beckett St, Melbourne (Dynasty living development) last weekend. His reasoning was that he wanted to live smack bang in the CBD, new and planned to move out (from his parent's house) in 2 years time. Those are the type of reasons which I can understand. Dodging LMI, stamp duty savings etc...those kind of things are hard to comprehend.

I was reading that thread about 'what advice would you give yourself if you went back 10 years.'

One of the poster said don't invest in something just becuase of all the 'crap' (that's the word he used) about tax savings and depreciation.

 

[RumpledElf]

If you said the motivation for buying was for capital growth, yields or cashflow then I would be fine with that. However, Mazda made no mention of this, and implied that the motivation for investing is because of dodging LMI and your so called 'foot in the door'. These, I believe, are not the right reasons to invest and hence why I think it is 'wacky'.

They're not reasons to invest per se, they are reasons to invest in OTP. If you're really on the edge to get a loan and those savings get you over the line, it can make the difference between choosing OTP or an established house/unit. Us low income folks can be quite creative in thinking of ways to save money but still get to the same end.

I want an IP in the city myself one day but I'm aiming at an old '60s ugly but solid unit that needs cosmetic renovations rather than something new, and there are plenty of those in the area I'm interested in. The savings there is simply low entry cost because those unit blocks are a hideous eyesore in an otherwise blue-chip suburb I'm sure you'd approve of

 

[Luv2Travel]

It has nothing to do with being cocky my friend. My intention was not to put anyone down, just keeping it real unlike some people who just agrees because they want to be nice.

Are you really in a position to talk about keeping things real? You lack experience and don't really live in the 'real world' i.e. the world most people live in where they have to struggle and support themselves. You have been given a huge hand out by your parents and live at home, so don't understand the reality of real life living costs such as rent/mortgage, bills etc. whilst keeping in the back of your mind what you'd do if your income suddenly ended. Don't get me wrong, I think it's great and you're very lucky to be able to receive that support but don't judge people's investment decisions. Most are not in your position and make investment decisions based on their circumstances. The topic of this thread is how to get ahead on a low income, so I don't really think you have any business advising in this area.

 

[DeeHwa]

Are you really in a position to talk about keeping things real? You lack experience and don't really live in the 'real world' i.e. the world most people live in where they have to struggle and support themselves. You have been given a huge hand out by your parents and live at home, so don't understand the reality of real life living costs such as rent/mortgage, bills etc. whilst keeping in the back of your mind what you'd do if your income suddenly ended. Don't get me wrong, I think it's great and you're very lucky to be able to receive that support but don't judge people's investment decisions. Most are not in your position and make investment decisions based on their circumstances. The thread of this topic is how to get ahead on a low income, so I don't really think you have any business advising in this area.

And what makes you to judge that my opinion is unwarranted? I have provided my preferences on how to invest on low income, namely, run down units/flats in the $300-400K bracket (which is probably where the bulk of OTP starts at). It is definitely serviceable on a low income, so the idea of you thinking I am going off track is wrong. I have never bagged OTP if you know how to read properly, only the ‘wacky’ rationale behind such an investment.

How do you know I lack experience? Because I am only 24? Because I only own one property and required parents help? I am sure there are a lot of people on SS who are younger and/or own zero properties (and provide advice), yet I don’t see you commenting on them. Let me tell you that my parents have been in the property investment game for years and I have developed much of my knowledge from that. I work in the property and construction industry and without saying, have a double degree in relation to it (property & construction/commerce). I have the combination of being able to reap my parent’s knowledge + own an investment property + degree in the field + working in the industry + circling myself with friends, relatives and people who invest and know heaps about property and you call this a ‘lack of experience’. Of course, I don’t admit I know everything, far from it, but I wouldn’t be surprised if I know a heck of a lot more than you do (or ever will).

I know what struggle is like mate. Its personal so won’t elaborate here.

Just because I live at home doesn’t mean I don’t know what real life living costs are. In fact, I would argue that I know MORE about them than someone that actually moved out. It is because I know and appreciate what the costs are (or roughly) that I know it is a better idea to stay at home and not waste money on unnecessary things like ‘rent’ just because you want to be ‘independent’.

Btw, I have every right to give advice in this area. I am personally on a low income (2nd year grad). Maybe you are the one that doesn’t have the right (take it as a compliment, as I am suggesting you are on a high income).

 

[skater]

DeeHwa, as Biggles said, you have won the genetic lottery and just don't realise what a big thing it is that your parents have done for you. I really hope you appreciate it.

As for what was said in regards to Mazda and Jaycee, you may never realise just how hard it is to get started with no help from parents and a low income. Getting a "foot-in-the-door" IS a valid investment strategy, and one that many on a low income must do in order to get started, as they say, a rising tide floats all boats.

On a low income you look for opportunities that those on larger incomes may not be on the lookout for. It could be cheap regional properties, it could be high yeild, it could be renovators, or it could be off the plan.

Personally I am not a fan of off the plan purchases, however they can make a substantial gain in a rising market if they are priced appropriately. It can give someone the opportunity to secure a property while they save like mad for the deposit. Of course, there are great risks involved in this, so you should do your due dilligence to make sure you cover yourself and reduce as many risks as possible.

 

[skater]

I have provided my preferences on how to invest on low income, namely, run down units/flats in the $300-400K bracket (which is probably where the bulk of OTP starts at).

According to the NAB, using the criterior of having no other loans outstanding, being single with $1000 per month living costs and an interest rate of 6.49%, the most you can borrow on an average income of $50k is $329500. If you are on a low income of $40k, using the same information as above, the most you can get is $253500, and this drops to $169200 at $30k.

http://www.nab.com.au/wps/wcm/conne...3/?campaignID=MXM&WT.mc_id=MXM&WT.mc_ev=click

Based on this, those units you describe will be out of the price range for singles on a truely low income, and could be a bit of a squeeze for someone on an average income.

 

[RumpledElf]

If you've never lived on a low income, you'll never understand. We're juggling the bills and cutting back on groceries at the moment to maximise what we can save just to get in before this house competition ends and our DA expires - which today resulted in us running out of petrol because we were avoiding putting it on credit before payday. Something these stay-at-homes would likely never have experienced. Must say its the first time I've done it since student times too

And that loan calculator says we can lend $125k which is nice, we only want $100k. Maybe we should be speaking to NAB

Oh wait. That kind of money wouldn't get us a $300k unit, would it ...

Mind you we've managed to sink around $20k into these three houses in the last year and 'only' have $160k increased equity to show for it so we're not exactly your average low income earners. The truly low income folks don't seem to do that kind of thing.

 

[skater]

The truly low income folks don't seem to do that kind of thing.

That is why you won't STAY a low income earner.

 

[Lil Skater]

IMO i don't think the income determines more than what you can buy.

I'd be quite happy on my income if i was enjoying it, therefore staying motivated.

At the moment i'm struggling to even save $50 a week! It's sending me absolutely mad, and it's not because i'm spending what i earn on things i don;t need, it's because my expenses are "high" for my income. At the moment my expenses add up to about $520 a week, so a lot for my wage.

I'd love to be able to save even $100 a week, i simply can't afford it. I'm really looking forward to a pay rise though, because i can't even afford to buy myself a 1 bed unit in my area!