Building a Property Investment Portfolio on a Low Income

September 3rd, 2013

Property investors Bianca and Matthew share their success story on how they built their property investment portfolio on low incomes.

The couple each earned $40,000 a year from their full-time jobs. In 1995, with $9,000 in savings, they bought their first home for $60,000 in Devonport, Tasmania. Earning only $400 a week and with interest rates of 13%, they decided to pay off the mortgage quickly to save on interest payments.

In 2000, the couple finished paying off their first house and bought land for $39,000 in Spreyton. In 2002, they sold their home for $86,000. Instead of selling the $39,000 land for $170,000, they built an investment property. In 2011, the property was valued at $430,000.

The couple then joined a real estate agency for guidance. They had no bad debt and with $25,000 in savings, they bought another investment property. They used their home’s equity for the deposit. After attending free property investment and mentoring nights, they signed up with a coach and released their home’s equity to buy more properties.

In 2013, the couple bought and rented out a unit to boost their income and fund their next property in Westbrook near Toowoomba. They chose it because there’s high demand in the area. There’s also value in buying properties in regional areas, as they offer quick growth that will allow the couple to release more equity to purchase their next property through an SMSF.

Overall, good budgeting and having a buffer of $15,000-$20,000 is the first step to affording property. It’s important to take investing seriously and be prepared to live with debt. It’s also essential to learn about property investment and other people’s experiences.

Source: http://www.yourinvestmentpropertymag.com.au/article/how-we-built-our-portfolio-on-incomes-of-just-40k-176984.aspx