How to buy property when you’re on a tight budget

It’s no secret that property is a huge financial investment. It usually takes years to save your initial deposit, especially when you’re constantly making withdrawals to pay rent and other bills. However, if you’re desperate to get your foot through the property market door, having a low income doesn’t necessarily mean you can’t! The key to buying property on a modest income is being extra careful with your finances and searching for different ways to get involved in property.

Now, there could be a range of reasons why property has never really been on the cards for you. Perhaps you’re a low income earner, or buried in everyday expenses? Maybe you earn a decent salary but just can’t get enough capital together to let your investment dreams flourish. Regardless of your situation, investing in property requires focus and knowledge, not necessarily a consistent cash flow.

To begin, you need to evaluate your current financial situation. How much debt do you currently have hanging over your head? The key to investing in property on a lower income is being debt free as you need to have the largest amount of money possible to put toward your purchase and your financial future. You should also evaluate other elements of finance – what level of risk are you willing to accept? Do you currently live beyond your means? How much are you willing to sacrifice? The answers to these question will help you decide whether you are really willing to engage in property on a lower income.

If you wish to proceed, there are multiple strategies you could use to get into property without putting much money down initially. Most depend on your risk level and personal skills.

Off the plan

Buying off the plan means you will be able to buy a property before it is built. The hope in this strategy would be that the property increases in value by the time it is constructed and you would be borrowing against the new value to fund your deposit. In this strategy, you are using time to your advantage – buying a property at today’s prices and obtaining finance at tomorrow’s value.

Joint venture

If you have the knowledge and motivation but lack the resources then a joint venture is perfect for you! Use your networking skills to find someone who has the financial resources but lacks the motivation and knowledge to invest in property on their own. The key to this strategy is a trusting relationship between partners, and therefore an agreement is a vital part of this venture. Make sure everyone involved understands their role in the plan, what they’re expected to do, when, and what will happen if things don’t go quite as planned.

Utilise equity

If you’re already a home owner, you might not have realised you can pull out equity to buy an investment property. You can do this through a mortgage redraw, offset account or refinancing to obtain a lump sum or line of credit. Not only is this money relatively cheap to borrow, you may also be able to deduct the interest on your taxes.

Long settlement

Long settlement is another opportunity for low income earners to get involved in property.

One important consideration is that the property needs to be located in a strong growth area in order for this to be a feasible option. This is because you are relying on the increase in value to help fund the purchase of the property. While this can be a very risky option, it can be a way to get into the market by using the power of capital growth. You could even go as far as to add a renovation to this strategy when the market allows, helping to boost the overall value even more.

If none of these strategies match your intentions completely, you can always use a combination! There are multiple strategies you could use to get into property without putting much money down. Most depend on your appetite for risk and your personal skills. Utilising a mixture of strategies has the potential to decrease the risk involved, however, this does depend on your personal financial circumstances.  

Some of these strategies sound easy enough in theory but are not without their risks! They can be used as a great way to get into the property market if your funds are limited. For more information, consult a Peard Financial Planning advisor to help you evaluate which strategy would work best (if any) in your financial circumstances. Visit for more information.