Becoming a landlord

When people think of property investment, usually the first thing they think of is becoming a landlord, and taking rent from a tenant. This is by far the most basic way to make money from real estate, and in the long term simply renting out a house and putting the rent into the mortgage will pay off the house faster than if you were living in it yourself and paying minimum payments.

However, on a low income you won't be able to afford an expensive house, or perhaps you won't be able to afford one at all. If you can't afford one at all, consider sharing your house (rented or owned) instead to get some extra income.

And of course if you're going to become a landlord, make sure you keep some money in a buffer for emergencies, like a hot water service breaking. On a low income you are less able to deal with sudden outflows of money and you will need a buffer to deal with them when (not if) they come up.

But the best way to be able to become a landlord on a low income is to buy a property that pays for itself from day one, or at least very soon after you buy it. Properties that pay for themselves instead of requiring you to pay some money out of pocket every week to keep them are called neutrally geared properties and as someone on a low income, it is in your own best interests to buy such properties, as you won't be able to afford them otherwise. Properties that pay more in rent than you spend on expenses are called positively geared properties and are even better if you are on a low income, as they will bring in extra money for you.

Continue reading more about ways to make a rental property positively geared.