How to buy property as a low income earner

You might think that only people on a higher salary have a real chance of becoming a property investor and buying property, especially in Sydney where property prices are amongst the highest in Australia. However, those on a lower income can still invest in property – they just need to be smarter about it.

Of course, it’s going to be tough getting there, but the rewards of owning property and being one step closer to a more comfortable retirement is well worth it.

So, if you are a low income earner, but want the security of owning your very own property and to improve your financial position, what can you do to get there? Here are our top 6 tips to buy property as a low income earner.

Top 6 tips to buy property as a low income earner


1. Educate yourself

The first thing you should be doing is educating yourself on the property market as much as possible. Find out everything you can about buying property, what key words mean and look at past property cycles to get an idea of how prices go up and go down in a market. There is plenty of good information online as well as in property investing books to take advantage of. Things to educate yourself about include:
  • Capital growth
  • Supply and demand
  • Suburb hotspots
  • Tax incentives such as negative gearing and depreciation
  • Mortgage types
  • Rental income
  • The difference between assets and liabilities
  • Property investment strategies
Whilst you’re doing this, you can get an idea of the type of property you want to buy, whether it’s something off the plan, a new townhouse or even a house and land package. You should also consider where to invest in property, whether this is in the state you currently live in or interstate.

2. Save as much as you can

As you are buying a property on a very strict budget you need to be realistic with your expectations. This means that as a low income earner there’s no point in buying a property that costs $800,000 if you are earning around $50,000 a year, as this will put you at a greater financial risk, plus the likelihood of being approved a loan by a lender is very low. You need to start off small and move on from there. Remember, a property is just a vehicle to get you from A to B and to start building you wealth.

To get an idea of what you could afford to buy, it’s best to speak to a Mortgage Broker and also look at what you have already saved and what you can continue to save in the future. If you have any bad debt such as car loans, then it’s important to pay these off as soon as possible, to reduce any risk and allow lenders to look more favourable upon you when you do seek a loan.

You’ll need to discipline yourself and save every cent possible, to get you to your deposit quicker. This means that you might have to forget that holiday abroad this year and instead of buying your lunches, make them. Also, are you paying too much for your electricity, gas, internet or phone contract? Now might be a great time to switch suppliers or renegotiate, to save yourself some extra cash each month. Look for a higher savings account to put your savings into and try to stick to a budget each month. Of course, you want to still enjoy life, so you can reward yourself by going out for coffee now and again, but try to eliminate the big costs first.

You might also be due a pay rise, or perhaps there’s some part time work you can do for the short term to get you to that deposit faster. Remember it’s not forever, and a short term sacrifice is for the long term gain.

3. Time the market right

To take advantage of capital growth and property prices you may want to time your property purchase to the market conditions. Ideally you want to be buying property at the bottom of the market or within a rising market, whilst the best time to sell is at the top of the cycle when the market is booming. However, it is important to remember that buying property should be for the long term of at least 10 years, so it doesn’t really matter when you buy, as property prices tend to double every decade. Ideally though, as a low income earner and for any buyer for that matter, it’s easier and more affordable to buy in a market that has yet to boom as you won’t face price surges and a more competitive market. This might mean you will have to consider purchasing interstate, so bear that in mind.

4. Consider off the plan

As a low income earner, you want to take advantage of the lowest entry prices and one great way to do that is to buy property off the plan. The earlier you get in, the more affordable the property and you only require a 10 per cent deposit. As settlement tends to be more than a year to two years away, this gives you additional time to save up a larger deposit, or to pay off any debts or save up for a rainy day. Sometimes, depending when you buy, developers may be giving away incentives such as free stamp duty or an upgrade of appliances, so it pays to get in early and know what you want.

5. Speak to a Property Consultant

Rather than buy a property on your own, it’s far easier to speak to a Property Consultant such as iBuyNew and use their expert advice to buy property. They will have access to the latest data and market research, allowing them to pinpoint exactly the best areas where you can buy a property and what properties suit your budget. At iBuyNew, we have the largest range of off the plan properties in Australia, with over 190 developments to choose from. Finding the right property on your own can be pretty stressful and daunting, but we take the stress out of buying property and can do all the hard work for you.

6. Take the plunge

Finally, it’s time to take the plunge! Now that you are educated in the property market, have saved up a 10 per cent deposit and have an idea of what you can buy, it’s time to take the plunge and actually buy the property. The longer you leave it, the harder and more expensive it becomes to get on the property ladder so it’s in your favour to do this as soon as possible. As long as you buy in a good location, within your budget, then it’s likely your property investment will do well, and allow you to buy property number two much sooner.

To find out more about how you can buy property as a low income earner and how you can get there much sooner, make sure you speak to a Property Consultant. Our expert Property Consultants at iBuyNew can help you formulate a plan to get you to your deposit goal sooner and highlight which suburbs and property types you should be considering for your first investment.

Call us on 1300 123 463 and discover how you buy property as a low income earner today.
Published on 9th of February 2017 by Marty Stanowich
Marty Stanowich
Marty Stanowich

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