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First-time buyers may not have the credit history or the financial green light, especially if they already have debt or require debt review, to purchase their first home. This can be rather frustrating when you consider that renting is often more expensive than purchasing, and at the end of your lease, you’ve poured large sums of money into your living space and still own no assets.
1. Guarantor Mortgage
With the right income, purchasing shouldn’t as be as difficult if you apply for a guarantor mortgage, in which case a parent or other well-established family member is able to sign surety on your behalf, meaning that should you default on your payments, they will stand in and cover your repayments. The criteria for being a guarantor should be considered, such as the need for the potential guarantor to own assets to the value of your requested loan amount and have a good credit score. Luckily, plenty of information is available if you’re considering this route; for example, a broker like Trussle can answer questions such as ‘who does guarantor mortgages?’ in their various mortgage guides.
2. Get Into the Rental Market
If you purchase a house with multiple bedrooms close to a university or college, you have the potential to cover your entire mortgage – and still have money left over – if you rent out your bedrooms to students. This clever trick is sometimes called House Hacking, and once you have made your purchase through a mortgage provider or a private lender, it allows you to live on the property you are renting out. Once that mortgage is paid, you own a property which leaves you free to purchase the next one using your rental income. From here, you can put money away and diversify that investment in a number of ways, growing your wealth. In a matter of a few years, less than a decade, you could own multiple properties.
3. Purchase REITs
Real-estate investment trusts sound complicated, and they can be, but they can also be a very easy way to enter the property industry. For one, they allow you to invest in property without having to purchase any property or commit to long-term contributions. Purchasing REITs is similar to investing in mutual funds. You can invest money in office spaces, retail properties, hotels, and other income-generating properties. The dividends are high, and you are able to choose whether you want to pocket your returns or reinvest and grow them further.
4. Renovate and Sell for Profit
Many first-time buyers choose to purchase a ‘fixer-upper’ as their first home because they can potentially walk away with a beautiful house for next to nothing – provided they are geared for some manual labor. If you are looking for a way to buy a house and sell it for profit – which enables you to buy a better house – you could renovate and resell. Often, houses with rich backstories have become dilapidated inside despite the structure still remaining solid. The work needed can be anything from just a paint job and resealing, to retiling and ripping outdated ceilings. If you are able to do the work with minimal hired help from contractors, you stand in good stead to make a hefty profit when you resell.
The Property Market is for Everyone
You don’t need to be well established in life to enter the property market – just ensure you are able to pay consistently, even if it’s a small amount. Once you invest cleverly and start to see the payoffs, you will never have to deal with a landlord again. On the contrary, you can become the landlord!