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  4. 6 tips for investing on a small income

1. To begin with, exercise patience. It will take time to build up your nest egg. It can be done with persistent, sustained effort. Remember that investing is a long-term strategy – no matter what size your income.

2. Establish a pattern of saving weekly. Whether it’s $25, $50 or $500, consistently put money into an interest bearing savings account.
Lenders will want to see that you’re a steady saver.

3. Start small by buying an investment well within your budget. However, don’t buy ONLY because you can afford it. You’ve got to have a strategy first. In other words, what are you going to do with the property?

4. Combine resources with other investors – preferably investors who have experience with both property investing and joint venture schemes – and buy through a joint venture.
The following factors should be part of the agreement:

● A sinking fund to cover vacancies, repairs and strata fees.

● Who is responsible for what.

● How insurances, taxes and depreciation will be managed.

● How long the property will be held and what will be done with it, including percentages of ownership.

● What to do if someone wants to leave the JV agreement.

● How it will be managed – property manager or one of the partners.

5. If you currently own a home, you can tap into your equity to obtain the capital you need to buy an investment property.
As cash flow will be a concern, don’t opt for negatively geared properties. Find something that will be cash flow positive from the start – before taxes.

6. Unless you are able to put 20 per cent down you may be required to pay LMI (lender’s mortgage insurance), which can significantly add to your repayment costs. There are exceptions to this rule, so be sure to discuss them with your credit adviser. However, even under exceptional circumstances, such as the lending policy that applies to medical professionals, for example, the closer to a 20% deposit that you can save, the cheaper the headline interest rate and it's associated establishment costs. 

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