Strategy for low income earner ?

[Bez]

Hey guys,

Im just after some opinions on this "strategy" i guess.
I earn a very low income $34,000 so I dont have a lot of options when it comes to property investing..
$150,000 is probly my limit..

Would it be worth purchasing properties in country towns which probly experience very slow growth but they are cashflow neutral ?

I currently have 1 IP which is costing me about $50-$60 a week (befor tax)
I could probly buy more of the same or better but they would be in slow growth areas..

Is it worth it ?

Thanks

 

[bailz66]

Hello Bez

Well done on having 1 property already

Have you got equity you could play with?

 

[The Y-man]

Bez,

I know this wasn't the quesiton being asked, but in your position I would consider some managed (income) funds.... perhaps to shore up the income side?

Cheers,

The Y-man

 

[Bez]

Bailz66 - Thanks, I bought the property in march this year so I havnt had a valuation done yet.. But im not counting on much growth..
Purchase price was $125,000 and my loan is currently at $109,000

The Y-man - I like the sound of anything that can increase my income, I know very little about funds tho, is there any funds you recomend I have a look into ?

Thanks guys

 

[Dis]

Would it be worth purchasing properties in country towns which probly experience very slow growth but they are cashflow neutral ?

Some of the climate change reports being churned out are quite scary. The recent one from ABARE indicated a significant drop in some crops in the coming years. There was some talk about shoring up the "viable" areas....read between the lines.

If you are picking country towns I'd be very careful on what you pick.

Also what are you trying to achieve - growth or cashflow (or both)? You will need to answer this before you can decide what you want to invest in.

 

[Bez]

Well I guess by country towns I mean small towns, 20,000 population or less...

I would like to achieve both growth and cashflow, but probly leaning more towards cashflow..

 

[bailz66]

With the income and the property you have you probably dont have a huge amount of borrowing power

So as y-man suggested perhaps something to help increase your income such as shares or managed funds is the way to go now and down the track re-assess.

 

[yo yo ma]

I know this wasn't the quesiton being asked, but in your position I would consider some managed (income) funds.... perhaps to shore up the income side?

I agree managed funds are great... Another option would be to buy into a Listed Property Trust (LPT). You can start with as little as $1k & add $250 a month (need to check the exact figures). This way you are investing in property but not directly. You have the advantage of not having the large initial outlay, plus you don't have to manage it yourself. LPT's invest in areas such as industrial, retail, hotel, offices etc. You can read a bit about them on the ASX site. They have some free seminars about LPT's you can look out for.
Steve

 

[Aaron Sice]

honestly - if your income is $34k and you already have a property then i take my hat off to you; you're doing pretty well for yourself!

secondly - your income. are you working for yourself or are you working for "the man"...? i sounds to me like someone need to learn about income generating strategies with shares, puts, calls etc.

here;s an example i traded a few weeks ago. I have $50k per position for these - but you can do the same with $500.

for the US share market, watch an "indicator" called the VIX - it's an investor fear sentiment. when fear is high, profit taking occurs and the value of puts go up and calls go down.

now, a brilliant trade popped up at me the other week on IVV - the S&P500 iShares trust. stock was trading at about $142 - right near support - but the VIX was high, RSI was on it's way up, volume was accumulating.

i bought a $145 call (gives me the right to buy the stock should it rally above $145) and paid about $5.35 per share for the option. an option covers 100 shares, so one contract is worth $535 and i bought 90 contracts for a total value of $48,150.

needless to say, 5 indicators (tech, fundamentals, RSI, volume, MACD) beat 1 indicator (VIX) and the stock rallied over the next 3 days to about $148.50.

suddenly my call option is worth the difference in prices between $148.50 and $145 (3.50 per share) + 0.01 delta for a total value when sold of about $7.35.

that's a 35%+ gain in 3 days. on my initial $48150 that equates to a shade over $65000, or a total profit of about $16,500.

it;s one of those signals you REALLY have to wait for and not look for. these things just pop out of the woodwork and you gotta jump on when you see them.

but you can see, 3 days and $16500 later, it's been a fuss free trade and the only trade i need to make for the month.

do that 12 times a year and your income will grow considerably.

but do you want income or equity out of what you are doing? equity buys further borrowing power, but no bank will lend against the kind of income generation i just described.

 

[chran]

Hi Bez,

Well done on having 1 IP already! I'm not as lucky, only have PPOR (newly bought - waiting settlement) and plan to get first IP in a couple of years (after building equity).

Like others have suggested, you might want to bump your income first via shares, career change, etc. Like others have said, it's easier to borrow with higher income.

If I were you, I'd look at career options (assuming age/ health/ location/ family is not an issue). Lenders I approached (both are banks) seem to prefer stable income (salary) to dividends (shares).

In any case your IP is already working for you so you're ahead of me in this game.

 

[Bez]

Thats awsome Blue Card!
I am working for "the man",

Am I right in thinking that to make any decent income from funds or shares im going to have to have a lot of money in them ?
So lets say I had $10,000 in a fund returning 10%, that would boost my income by $1000 a year ?

 

[The Y-man]

The Y-man - I like the sound of anything that can increase my income, I know very little about funds tho, is there any funds you recomend I have a look into ?

Thanks guys

Check out sites like funds.comsec.com.au or www.morningstar.com.au. As a starting point, perhaps look for 4-5 star funds with a good solid 3-5 year performance behind them.

Cheers,

The Y-man

 

[The Y-man]

I like the sound of anything that can increase my income..........

The other way is to increase your earned income. i.e. can you get more from your current job, can you move to a better paid one, or can you work a second job? Sometimes investing some effort into your career is not as bad as some people paint it out to be.

Cheers,

The Y-man

 

[Above Average]

Wow Bez, congratulations on having an IP on your current income. You must be very disciplined indeed!

Above Average

 

[deanthomas]

Good stuff Bez,

I'm like you also, in that I've never earned more than 32k pa but have bought 6 ip's and sold one in the last 5 years. In that time my net assets went from around 150k to 1mil. So don't let your income limit your ambitions. Yeah it's pretty tough, but it means you have to look harder for the good deals, one's with twists that other's don't see or pass over. Anyway have you considered doing a joint venture, which is a strategy I used? Are you handy enough to tackle some of your own reno work?

Regards Dean

 

[deanthomas]

honestly - if your income is $34k and you already have a property then i take my hat off to you; you're doing pretty well for yourself!

secondly - your income. are you working for yourself or are you working for "the man"...? i sounds to me like someone need to learn about income generating strategies with shares, puts, calls etc.

here;s an example i traded a few weeks ago. I have $50k per position for these - but you can do the same with $500.

for the US share market, watch an "indicator" called the VIX - it's an investor fear sentiment. when fear is high, profit taking occurs and the value of puts go up and calls go down.

now, a brilliant trade popped up at me the other week on IVV - the S&P500 iShares trust. stock was trading at about $142 - right near support - but the VIX was high, RSI was on it's way up, volume was accumulating.

i bought a $145 call (gives me the right to buy the stock should it rally above $145) and paid about $5.35 per share for the option. an option covers 100 shares, so one contract is worth $535 and i bought 90 contracts for a total value of $48,150.

needless to say, 5 indicators (tech, fundamentals, RSI, volume, MACD) beat 1 indicator (VIX) and the stock rallied over the next 3 days to about $148.50.

suddenly my call option is worth the difference in prices between $148.50 and $145 (3.50 per share) + 0.01 delta for a total value when sold of about $7.35.

that's a 35%+ gain in 3 days. on my initial $48150 that equates to a shade over $65000, or a total profit of about $16,500.

it;s one of those signals you REALLY have to wait for and not look for. these things just pop out of the woodwork and you gotta jump on when you see them.

but you can see, 3 days and $16500 later, it's been a fuss free trade and the only trade i need to make for the month.

do that 12 times a year and your income will grow considerably.

but do you want income or equity out of what you are doing? equity buys further borrowing power, but no bank will lend against the kind of income generation i just described.

Bluecard, maybe you could show me how to do this sometime?? I'll buy the coffee if that's your poison.

Cheers Dean

 

[Aaron Sice]

Thats awsome Blue Card!
I am working for "the man",

Am I right in thinking that to make any decent income from funds or shares im going to have to have a lot of money in them ?
So lets say I had $10,000 in a fund returning 10%, that would boost my income by $1000 a year ?

look, when dealing with shares, everything is a percentage, not dollar, value.

would you invest in something that gave a 30% return in 1 week? i would!
what's the difference if it's $1000 or $1mil capital? if you are low on capital then just re-invest the dividends and keep compounding your returns.

or, how about you talk to someone like Option Partners...?

they're a quality company with about 6 different funds to choose from.

high in demand as well - jump on the waiting list now.

they have funds ranging in average from 8%pa right up to 83.5%pa.

i get no referral from this - i just think they're good.

and deanthomas - i'll go a pot of tea instead. always happy to chat.

 

[WildDog]

Hey guys,

Im just after some opinions on this "strategy" i guess.
I earn a very low income $34,000 so I dont have a lot of options when it comes to property investing..
$150,000 is probly my limit..

Would it be worth purchasing properties in country towns which probly experience very slow growth but they are cashflow neutral ?

I currently have 1 IP which is costing me about $50-$60 a week (befor tax)
I could probly buy more of the same or better but they would be in slow growth areas..

Is it worth it ?

Thanks

Wow pretty amazing effort with that sort of income.. with that sort of saving and discipline you will be very rich some day
keep it up

 

[HandyAndy888]

Back to the original post, I would try to acquire more... If you can hold more properties, even though its only slow CG, its still worth it...

 

[pi2012]

honestly - if your income is $34k and you already have a property then i take my hat off to you; you're doing pretty well for yourself!

secondly - your income. are you working for yourself or are you working for "the man"...? i sounds to me like someone need to learn about income generating strategies with shares, puts, calls etc.

here;s an example i traded a few weeks ago. I have $50k per position for these - but you can do the same with $500.

for the US share market, watch an "indicator" called the VIX - it's an investor fear sentiment. when fear is high, profit taking occurs and the value of puts go up and calls go down.

now, a brilliant trade popped up at me the other week on IVV - the S&P500 iShares trust. stock was trading at about $142 - right near support - but the VIX was high, RSI was on it's way up, volume was accumulating.

i bought a $145 call (gives me the right to buy the stock should it rally above $145) and paid about $5.35 per share for the option. an option covers 100 shares, so one contract is worth $535 and i bought 90 contracts for a total value of $48,150.

needless to say, 5 indicators (tech, fundamentals, RSI, volume, MACD) beat 1 indicator (VIX) and the stock rallied over the next 3 days to about $148.50.

suddenly my call option is worth the difference in prices between $148.50 and $145 (3.50 per share) + 0.01 delta for a total value when sold of about $7.35.

that's a 35%+ gain in 3 days. on my initial $48150 that equates to a shade over $65000, or a total profit of about $16,500.

it;s one of those signals you REALLY have to wait for and not look for. these things just pop out of the woodwork and you gotta jump on when you see them.

but you can see, 3 days and $16500 later, it's been a fuss free trade and the only trade i need to make for the month.

do that 12 times a year and your income will grow considerably.

but do you want income or equity out of what you are doing? equity buys further borrowing power, but no bank will lend against the kind of income generation i just described.

uffffffff...sounds really complicated ....interesting though