3 Investing Essentials - #2 Affordability

The 2nd essential factor to your investing is Affordability. Making sure the property that you are buying is not going to be a drain on your pocket. We are working with a Lunch Money budget after all.

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Transcription

Hi, I'm Phil Anderson from LifeCorp, the home of street smart property investors. For many years, they've been calling me the "Lunch Money Property Millionaire," which, I gotta admit, at times, has been a little bit embarrassing. But mostly, it's been something I've been incredibly proud of. You see, I've got great pride in helping novice mum and dad investors understand that property investing doesn't have to be incredibly painful on your pocket. In fact, at the moment, I believe that most property investors around Australia have the ability to buy fantastic investment properties in fantastic areas, using as little as $20 a week or much less. Now, this has always become a bit of a controversial thing- how is this possible? And I've gotta admit, there's no magic wand here. You do need to get some advice, you need to check your accountant if this would work for you. But today, I'm gonna show you how this can work for most property investors, and how many people can buy properties around Australia using this affordable buying system. Let me show you how it works.

To understand how this works, I'd like to first give you the example of how we must pay for our family homes. Most people don't realize that when they buy a family home, it is actually the hardest and most expensive house that we're ever going to have to pay off ourselves. The reasons why that is so expensive, the reason why it's so painful, is because every cent, all your repayments, your rates, insurances, everything, needs to come out of your take home income, your after-tax income. So your family home is always gonna be incredibly tough on your pocket. And what makes it even more tough for most families is they buy the most house they can possibly afford, maybe even more house than they can afford. But that is one big issue in the Australian property market already- people buying houses that are very hard to service because it all comes out of your take-home income.

Now, on top of that, when most investors buy, they don't understand how to do this. So, most investors, when they buy, they actually put more pressure on their take home income, eat into a little bit of their tax, maybe have some tax benefits, get some of the benefits of negative gearing. But the reality is, it's mostly a negative experience. Many people will add an investment property here and justify the fact that it's gonna cost them $200 a week to service. And for me, I think this is totally unnecessary. You've gotta realize that as soon as you add this property, it's gonna squeeze down even more of your take-home income, potentially taking away all of your lifestyle and the ability for you to have a lifestyle on the weekend, to take the kids to the movie or whatever.

The reality is, you've gotta protect this. I believe you've gotta keep this down. And the best way to do that is to get your accountant and the people around you to give you advice to help you buy the right properties, because the reality is, you don't do it backwards. You don't buy a property and hope that it's gonna look a certain way, buy a property and then figure out what the numbers look like. Know what the numbers need to be before you select properties to actually fit the model for you. Most people that do it the other way around, that know what price points are properties, what the yields need to be, what the depreciation schedule needs to be, a whole range of factors, can actually position properties that sit into their portfolios, putting very little impact on their pockets here. This is the lunch money model. This is the model that people that follow my system are doing. And they're doing very successfully, so long as they've got tax that they're paying, so long as they're in a situation where they can qualify for the loans, all of the normal stuff. No magic wands.

But if you're gonna buy properties, please, use your tax money more effectively. Make sure that you put yourself in a situation where you do a tax variation, get that tax money put back in your pay each week, you don't have to wait til the end of the year to get it back. Get it back so you can service these properties and only need to use very little of your net wages, as far as what you're using out of your pocket. And with the way interest rates are today, $20 a week is definitely enough. $20 a week is a fantastic budget to buy in great areas around Australia, fantastic markets, good-quality properties. It should include your rates, your insurances, every single cost. And $20 a week should be a maximum budget. And I'm proving this. We've got hundreds of people following this system and doing it very, very successfully. Also keep in mind that there are new laws that could be explored for you that may allow you to buy a property in your Superfund as well. That is definitely something you've gotta get some advice on. But the reality is, all of these things are available to you without using your net wage. You must check it out.

Affordable property investing is one of the key foundations, one of the key elements to being a successful property investor in the Australian property market today. I believe there are actually three key elements. I believe number one is all about timing. You've gotta make timing work for you. Number two is all about affordability, and there's some really key elements to making your properties affordable. And number three is all about safety. I think they're the big ones- timing, affordability, and safety. I'm really passionate about those three key elements. In fact, I've put together a chart for you- an infographic that's available below. If you click on the link below, it's a free gift from me to you that'll just map out a bit more of that detail, showing you the three key elements that I believe are necessary to have safe and effective property investing in the Australian market today.

So, thank you for giving me a little bit of time. Don't forget, when you buy a property- and your family home's gonna be expensive, so you need to take into account the fact that this is gonna be tough on your pocket. When you buy an investment property, make sure you keep it affordable. Let the numbers do the talking. I truly believe, if you can't buy a property with your lunch money, don't buy it.

Comments

  1. Mark Bristow says:

    Many Thanks

    Mark

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