Thriving on Minimum Wage

[Ergophobia]

I know most people here like to get into the detail of the numbers, but I think the concept is what is important.

there are opportunities out there for low income earners willing to give it a go, and I wish I hadnt let this stop me from getting into investing earlier.

I just spotted this on gumtree as an example

 

[Ed Barton]

Weg,
If I believed that, there wouldn't be ads like this
http://www.gumtree.com.au/s-ad/heidelberg/other-shared-accommodation/looking-for-home/1000111138
Single man offering to pay $250 week for a room
As for IF the numbers did add, it would be small change?
May be it is. Either way you look at it, the head tenant is still able to bank every dollar they bring home.If $35K less taxes is small change to you, there is definately something terribly wrong with your thinking.

Did your brother put an ad on Gumtree and wait for replies, or did he actually answer them too? How proactive someone is also makes a bit of difference.

I'm not even trying to prove that a low wage can achieve as much as a high wage earner. That is for the individuals to prove that.

I was hoping this thread would be more of a positive one.
Showing people how it can be done.
Are there sacrifices, of course.
Are there roadblocks, of course.
Is it impossible..not in the least.

The trouble is, my numbers DO add up.
Having a high paying job, is not the be all, end all.
They work in USA, Canada, and Australia.

your link is from someone wanting a flat or to share with one other, not the type of accommodation you are suggesting. property can be purchased on low income but the figures you show DO NOT add up. many posters have told you so. keep your head in the sand.

 

[locko24]

keep your head in the sand.

Are you saying it's impossible to go from a low income to being wealthy using property?

Righto...

 

[wylie]

Are you saying it's impossible to go from a low income to being wealthy using property?

Righto...

Without wanting to speak for Ed, I believe his "head in the sand" comment was that Kathryn isn't listening to those of us who are trying to tell her that nobody will rent a room for $250 when there are two dozen other rooms advertised for $130 to $170.

Plenty of people have gone from low income to being wealthy using property. Nobody is saying they cannot, but the figures Kathryn used in her earlier post just are not right. Nothing wrong with anything else suggested. It only takes a tiny spark for some people to finally "get" the "AHA!!!" moment.

 

[locko24]

Without wanting to speak for Ed, I believe his "head in the sand" comment was that Kathryn isn't listening to those of us who are trying to tell her that nobody will rent a room for $250 when there are two dozen other rooms advertised for $130 to $170.

Plenty of people have gone from low income to being wealthy using property. Nobody is saying they cannot, but the figures Kathryn used in her earlier post just are not right. Nothing wrong with anything else suggested. It only takes a tiny spark for some people to finally "get" the "AHA!!!" moment.

Fair enough.
Kathryn's numbers may not be spot on, but i think some people are arguing that on a minimum wage - well it's just too hard.
I bought my first place when i was on around 40k. Granted it was only 100k, but i bought well, added equity, and i still own it today. It just ticks over in the background making me 50-60 dollars on top of expenses each week (10% deposit).

I used this as the springboard into the rest of my houses.

Easy

 

[Ed Barton]

Without wanting to speak for Ed, I believe his "head in the sand" comment was that Kathryn isn't listening to those of us who are trying to tell her that nobody will rent a room for $250 when there are two dozen other rooms advertised for $130 to $170.

Plenty of people have gone from low income to being wealthy using property. Nobody is saying they cannot, but the figures Kathryn used in her earlier post just are not right. Nothing wrong with anything else suggested. It only takes a tiny spark for some people to finally "get" the "AHA!!!" moment.

correct Wylie.

it's tougher to buy property on a low income but certainly possible.

Kathryn's concept is ok but the numbers are way out. so as a 'head' tenant you may be able to get cheaper rent by taking the smallest room and furnishing the place but you are not going to be able to turn a profit.

 

[kathryn d]

correct Wylie.

it's tougher to buy property on a low income but certainly possible.

Kathryn's concept is ok but the numbers are way out. so as a 'head' tenant you may be able to get cheaper rent by taking the smallest room and furnishing the place but you are not going to be able to turn a profit.

Well, that is a start. At least you will agree it can be done, if the person is willing to save.
We can argue whether or not someone is willing to spend $250 for a room in a property that rents for $600 week.
Homestays come to mind, as one group.

In Canada, when I do something that is considered a bit unusual, I do a test market. Now may be the time for me to have a bit of fun.

Another way to live for free (in Australia)
There is a website where they match up seniors with young people. The seniors provide free accommodation in exchange for 10 hours a week. It could be gardening, shopping, etc. The seniors get a bit isolated, and it is really just knowing there is someone else around.

 

[hobo-jo]

Interesting thread Kathryn.

A few years back I had boarders and the numbers would have easily stacked up allowing someone to live rent free in the house.

I was paying the mortgage, but rent for the equivalent house would have been around $300 per week. As we were close to Flinders Uni we were able to get around $120-130 per week per room which included utilities. After costs we were probably clearing around $100-110 per room. The house had 3 bedrooms and a second living area which we later used as a 4th bedroom, so someone could easily have rented something similar, leased out 3 rooms and lived in the 4th room for free.

I think the biggest challenge would be finding a landlord who allowed rooms to be sublet in this way.

 

[Ed Barton]

Well, that is a start. At least you will agree it can be done, if the person is willing to save.
We can argue whether or not someone is willing to spend $250 for a room in a property that rents for $600 week.
Homestays come to mind, as one group.

In Canada, when I do something that is considered a bit unusual, I do a test market. Now may be the time for me to have a bit of fun.

Another way to live for freein Australia)
There is a website where they match up seniors with young people. The seniors provide free accommodation in exchange for 10 hours a week. It could be gardening, shopping, etc. The seniors get a bit isolated, and it is really just knowing there is someone else around.

you're the self confessed forum tight bum, you've agreed on occasions.

here's a challenge for you; next year when you return to oz....

rent a house and turn a profit on it by renting by the room, and living in one yourself (it doesn't matter if you don't live in your room, but you are not allowed to rent it out). the posters in this thread who said it can't be done will donate to the charity of you choice, even if it is the 'exploding heads for criminals' charity.

one stipulation; you are not able to reuse toilet paper.

i cap my donation at $100; i couldn't donate more than 100 bucks to a charity that advocates the death penalty; in any way, shape, or form.

 

[kathryn d]

you're the self confessed forum tight bum, you've agreed on occasions.

here's a challenge for you; next year when you return to oz....

rent a house and turn a profit on it by renting by the room, and living in one yourself (it doesn't matter if you don't live in your room, but you are not allowed to rent it out). the posters in this thread who said it can't be done will donate to the charity of you choice, even if it is the 'exploding heads for criminals' charity.

one stipulation; you are not able to reuse toilet paper.

i cap my donation at $100; i couldn't donate more than 100 bucks to a charity that advocates the death penalty; in any way, shape, or form.

yes, I am the resident tightwad here
I wish I could take you up on the challenge, but I can't.

Rob and I already live for free for 8 months while in Australia. In some ways that would have to count for something. Next year we plan on returning to housesitting, as we miss the caring for animals.

Where we are staying outside of Tennant Creek, the employees receive minimum wage, (and free accommodation and 3 meals per day)
They are a mixture of backpackers, and young people saving money (usually for travelling OS)

To do the "head tenant" you really need to live there.It would be hard enough to have a LL rent you a property, but even more difficult, if you weren't living there.

Hobo-jo,
It is great to hear that someone actually did it. The rents charged are unimportant, it is the ability to have them cover your cost, and a bonus if you make a profit.

I have enjoyed reading everyone's views.
Of course I don't agree with all of them.
Thank you

 

[pennyk]

One options for "boarders" is to have homestay students who are studying english.

There are alot fewer available these days than in the 80's, when my parents had up to 10 people living in their house (6 bedroom house, with 2x rooms that slept 2 people each), plus additional students in the houses they owned next door.

I think they were able to get $250/wk or so for single room, in their home, but that involved making all meals, doing laundry, making time for conversation after dinner, cleaning. Most were uni age, or older, but she had a couple of high school students, who paid more (but were alot more work).

Generally, they paid this rate if they only stayed for a few weeks. If they became longer term, the rate was reduced, but it still produced a significant income... although the costs of providing food etc were very high! The students in the other houses paid less and were responsible for their own laundry/ lunches etc, but still had dinner in the main house usually.

But I think it also takes a certain type of person. My mother was a superwoman. She worked outside the house, and then came home and cooked for 13-15 people every day..... and she loved it. She was very social and loved having lots of people around. My father was a very quiet, shy man, and didnt enjoy it quite so much, but it did mean that he didnt need to make conversation, so it benefitted him as well!!

Many of the homestay families preferred girls......but mum felt that boys were easier to manage, and that meant she had a fairly open "market" at that stage.

I think it was a great experience, both for the homestay students and for our family. We still keep in touch with a number of them, 20 years later.

 

[jaycee]

One options for "boarders" is to have homestay students who are studying english.

There are alot fewer available these days than in the 80's, when my parents had up to 10 people living in their house (6 bedroom house, with 2x rooms that slept 2 people each), plus additional students in the houses they owned next door.

I think they were able to get $250/wk or so for single room, in their home, but that involved making all meals, doing laundry, making time for conversation after dinner, cleaning. Most were uni age, or older, but she had a couple of high school students, who paid more (but were alot more work).

Generally, they paid this rate if they only stayed for a few weeks. If they became longer term, the rate was reduced, but it still produced a significant income... although the costs of providing food etc were very high! The students in the other houses paid less and were responsible for their own laundry/ lunches etc, but still had dinner in the main house usually.

But I think it also takes a certain type of person. My mother was a superwoman. She worked outside the house, and then came home and cooked for 13-15 people every day..... and she loved it. She was very social and loved having lots of people around. My father was a very quiet, shy man, and didnt enjoy it quite so much, but it did mean that he didnt need to make conversation, so it benefitted him as well!!

Many of the homestay families preferred girls......but mum felt that boys were easier to manage, and that meant she had a fairly open "market" at that stage.

I think it was a great experience, both for the homestay students and for our family. We still keep in touch with a number of them, 20 years later.

It's an option.. and it;'s an option that takes up time....

I fail to see how it's different to getting a job at say a bar for 8 hours and collect an extra $200 a week

Surely it's just different strokes for different folks to try & achieve the same thing - more money coming in

Now, why didn't I do just that.....

 

[kathryn d]

Thank you Penny.
It goes to show, even when working an outside job, it would be still possible to prepare the meals (if that is what someone wanted to do)
Your mum must have thought the monetary compensation was well worth it too.

As I've mentioned, this is one option.
So many more ideas are there, if you are just willing to keep an open mind.

If someone ever wanted to run a B&B in the future, this would be great trial run too.

 

[skater]

I will confess that I haven't read this whole thread, there is just way too much there for my little head today.

Anyway.....if I've got this right, the idea is to rent a home by the room while living there & paying the mortgage or rent, right?

So....in Western Sydney you can pick up a 3-4bed ex-housing department place for, lets say, $220k. I've used that figure because not everyone is Nathan. I think we can agree that someone on a low wage can get a mortgage for a purchase of this size, so long as they have a decent deposit. The market rent is around $300pw.

Now, a couple of years ago my daughter was looking for share accommodation and the going rate was around $150 per room.

Based on those facts, you could either purchase the property or take a head lease out on one. Either way, you occupy one room & rent out the other 3 (because you'd want to find a 4 bedder) and you basically get to live for free, all without charging extra to cover food or any other service you provide your tenants.

 

[kathryn d]

Update

I answered an ad.
They had a 4 bedroom and 1 bathroom house available for $365 week.
Close to Monash, in Clayton,Vic.

This is what I wrote:
I am interested in renting this property.I will be living in the house, and I would like to rent out the other bedrooms to my boarders. I would take full responsibility for the lease. No pets, smoking, or parties would be permitted.I will be providing basic furniture to the boarders, to reduce the wear and tear of furniture moving in and out of property. I am hoping after 3 years of living frugally, I will be able to save enough for a deposit for my own home. I can also provide 6 months rent upfront, if you are concerned whether I can afford the rent. I make minimum wage at my 38+ hr job per week. Thank you.

This is the reply I just received:

Hi
Can you please give me a Call on my mobile xxxxxxxxx and I wanna have a chat with you before make a decision.



My note:
No, it is not an acceptance...but is a consideration.
With the weekly rent that low, renting at $150 per room would still be making money.

 

[skater]

I answered an ad.
They had a 4 bedroom and 1 bathroom house available for $365 week.
Close to Monash, in Clayton,Vic.

This is what I wrote:
I am interested in renting this property.I will be living in the house, and I would like to rent out the other bedrooms to my boarders. I would take full responsibility for the lease. No pets, smoking, or parties would be permitted.I will be providing basic furniture to the boarders, to reduce the wear and tear of furniture moving in and out of property. I am hoping after 3 years of living frugally, I will be able to save enough for a deposit for my own home. I can also provide 6 months rent upfront, if you are concerned whether I can afford the rent. I make minimum wage at my 38+ hr job per week. Thank you.

This is the reply I just received:

Hi
Can you please give me a Call on my mobile xxxxxxxxx and I wanna have a chat with you before make a decision.



My note:
No, it is not an acceptance...but is a consideration.
With the weekly rent that low, renting at $150 per room would still be making money.

Hey Kathryn,

Read my post above this.

 

[kathryn d]

I will confess that I haven't read this whole thread, there is just way too much there for my little head today.

Anyway.....if I've got this right, the idea is to rent a home by the room while living there & paying the mortgage or rent, right?

So....in Western Sydney you can pick up a 3-4bed ex-housing department place for, lets say, $220k. I've used that figure because not everyone is Nathan. I think we can agree that someone on a low wage can get a mortgage for a purchase of this size, so long as they have a decent deposit. The market rent is around $300pw.

Now, a couple of years ago my daughter was looking for share accommodation and the going rate was around $150 per room.

Based on those facts, you could either purchase the property or take a head lease out on one. Either way, you occupy one room & rent out the other 3 (because you'd want to find a 4 bedder) and you basically get to live for free, all without charging extra to cover food or any other service you provide your tenants.

Pretty good grasp of my idea, Skater.
It is mainly for the person who is only making minimum wage and trying to save for the initial deposit. There is no family to live with, so that is not an option.There is no one to co-sign on the mortgage.
This is for the "stand alone" person who needs to be able to do it on their own.

 

[Corey Batt]

Pretty good grasp of my idea, Skater.
It is mainly for the person who is only making minimum wage and trying to save for the initial deposit. There is no family to live with, so that is not an option.There is no one to co-sign on the mortgage.
This is for the "stand alone" person who needs to be able to do it on their own.

If they've got no family, no where else to live, one would assume they are renting currently. Where do they pull the 6 months rent you offered? on a $365/week place, that's just under 10k. Then furnishing the place, bond etc.

All this effort, when it could be spent getting a job which pays beyond minimum wage...

 

[kathryn d]

If they've got no family, no where else to live, one would assume they are renting currently. Where do they pull the 6 months rent you offered? on a $365/week place, that's just under 10k. Then furnishing the place, bond etc.

All this effort, when it could be spent getting a job which pays beyond minimum wage...

They are renting a room where it is really cheap, ($120 wk) They have been saving money, but the house is being sold, so everyone must vacate.

This person now has the chance to live rent free, thus saving another $120 week.

Not sure where you buy furniture, but it is free/cheap on Gumtree many times. Op shops have good, but cheap linens and kitchen crockery.If I had a bit of time, I could furnish a 4 bedroom house for $500 or less.

OR...continue paying $120 week somewhere else.

 

[skater]

If they've got no family, no where else to live, one would assume they are renting currently. Where do they pull the 6 months rent you offered? on a $365/week place, that's just under 10k. Then furnishing the place, bond etc.

All this effort, when it could be spent getting a job which pays beyond minimum wage...

Not everyone is capable of earning a higher income. My example is real numbers in an area that is frequented by those on a low income. Welfare recipients currently rent $300 properties, so it could work. Obviously it won't be for everybody and it won't work in every area of the country.

So.....low income earners CAN rent at $300pw (Ive seen plenty that do), so that is achievable. Centrelink/DOH will even help with the initial bond application.

It could be a good leg up but first they need the knowledge that it CAN be done and the motivation to DO IT.