If you are a typical employee who is reliant on a salary to make ends meet, how do you start investing in property? Your current nine-to-five salary could allow you to pursue an optimal investment path.

The economic impact of the COVID-19 pandemic served as a wake-up call for many workers on how difficult it is to rely on a nine-to-five job for financial security. Fortunately, it is possible for a typical employee to start investing in property even during calamities such as the COVID-19 outbreak.

No one that knows that more than Lloyd Edge (pictured), director and founder of Aus Property Professionals and author of a new book titled Positively Geared, which offers practical tips on how to invest in property with just a $40,000 deposit.

How to start investing the income you have

Lloyd’s investment journey began on a teacher’s salary, where he lived in a heavily-mortgaged and negatively-geared one-bedroom apartment. After 10 years of investing in the property market, he now has an impressive portfolio consisting of 16 properties in New South Wales, Queensland, and Victoria valued at $12m with a 45% LVR.

Like most workers, his main intention in investing was to build a financially stable future for himself.

“I wanted to set up some security for the future,” he told Your Investment Property. “I knew I would have limited super and did not want to live on the pension. I also felt that I need to create security through other forms of income as I did not feel secure in the type of work I was doing.” 

As a casual teacher, however, Lloyd was not earning a particularly high income, which meant that turning to big banks for support was out of the question. Instead, he found a “good mortgage broker” who helped him get a low-doc loan from a smaller lender to save for a deposit.

Why it is the best time to invest in property

With social distancing restrictions being lifted, Lloyd believes that now is a great time for Australians to begin “focusing on recovery and diversifying income, with property investment as one of the best options.”

He expects property to continue to be among the leading forms of investment for Australians because of “current low interest rates paired with the fact that people will likely start selling properties to free up cash.”

“Considering the current climate, and the impact of COVID-19, the premise that holding down a nine-to-five job will guarantee our security or wealth, can no longer be counted on sadly,” he said.

“I urge Australians to use this time to plan for their future and mitigate themselves against future economic problems. They can achieve this by strategizing on how to create multiple streams of income, with property investment as a very viable option.”

How to overcome the initial fear

Lloyd also said that, while this endeavour may seem daunting at first, it becomes less intimidating once you gain an understanding on how property investment works.

His advice is not to “be scared to jump in,” especially if you have the benefit of a stable income. He said the key to success is getting a good deal.

“Purchase a good deal and you will create some instant equity when the markets increase again. But keep your long-term goals in mind,” he said.

“Whatever is happening with coronavirus will pass but you need to keep yourself accountable to your long-term goals and keep in mind that property is a long-term vehicle.”

Lloyd said that his experience during 2009’s global financial crisis has taught him that the current economic climate could presents some good opportunities.

“Don’t try to time the market as you can miss out on good opportunities. Time in the market is what counts,” he said.

The “property trifecta”

In his new book, Lloyd said that what sets him apart from others in the industry is an investment strategy he calls the “property trifecta.”

Built on three schemes – organic capital growth, instant equity, and positive cashflow – the strategy is designed to provide property investors a road map to success.

First, to maximise capital growth, Lloyd said that investors should always look for property in a “good growth area.” Factors to consider include government spending on infrastructure, quiet streets and cul-de-sacs, and accessibility to amenities and services such as malls, restaurants, hospitals, schools, and universities.  

Once property has been purchased, adding value is the next vital step.

“Equity is a superpower and this approach also ensures that you don’t fall for the traditional ‘buy and hold’ strategy,” Lloyd said.

Lloyd also said that the most effective way for investors to add value to land they want to develop is to build subdivisions and duplexes. Meanwhile, older properties could benefit from cosmetic renovations – such as updated floor coverings, kitchens, and bathrooms – as well as structural renovations such as knocking down walls to open a room up.

According to Lloyd, instant equity can be also be achieved by buying property under market value.

Lastly, Lloyd said that cashflow is essential to keep property investors moving forward. He said it is important to ensure that there is “a good injection of cash into your portfolio.”

He also warned that concentrating on just one aspect – capital growth for instance – can leave you “negatively geared.”

“Focus on the trifecta and you will find you can service more properties and move forward quicker,” he said.