Many investing gurus believe that the only route to stable, reliable wealth is to invest in property.
When you look around at some of the most successful investors in the world, this is true.
But how do you get started if you’ve got no cash to invest? What are your options?
Borrow Against Your Home
If you own the property you live in right now, you could potentially borrow against your home. The idea here is to dip into the equity that you’ve already built up by paying off a chunk of your mortgage and then using that as collateral to borrow more money.
For banks, borrowing against your property makes intuitive sense. After all, when you first bought your property, you borrowed the full amount, minus whatever deposit you paid.
If you bought your house a decade ago, the chances are that it has gone up in value, allowing you to borrow more than you did initially. Often you can get together enough cash to buy a small flat or terraced home that you can then rent out for profit.
Remember, not all mortgage lenders will allow you to borrow for a second home, and most that do will want to see stellar credit history.
Rent Out Rooms In Your Home
Here’s another idea to invest in property: rent out rooms in your home.
Current tax rules state that you’re allowed to rent out parts of your home to lodgers tax-free for the first £7,500 that you earn in any given year.
You can then use this money either as income, or to fund the deposit on your next property.
Finding lodgers is easy. Websites like spareroom.co.uk can help.
If you don’t want full-time lodgers and would prefer short-term lettings, then sign up for Airbnb. Homeowners can set the times of year that they want to welcome guests, giving flexibility. What’s more, many property owners find that they can charge high prices, especially if they live near tourist hotspots.
Invest Along With Friends And Relatives
You might not have a lot of cash knocking around in the bank, but your friends and relatives might. You could all invest in the deposit together, sharing the ownership and mortgage repayments. You might not get a large share, but it is a good way in.
If you have no money for the deposit right now, you could take out a small loan to fund it. Doing this is risky, though, as it will increase your debt-to-income ratio, something that banks consider when deciding on whether to grant a mortgage.
Buy A Property ETF
You don’t have to have £20,000 sitting around in an account somewhere to invest in property. You can buy a share of property in the form of an ETF.
ETFs or exchange-traded funds, usually track a pool of commercial and residential properties. You buy the ETF through your favourite investing app and then the company that manages it assigns you a share of ownership of all the properties in its portfolio. You’re then free to buy and sell in tiny increments.
Forget £20,000. With ETFs, you can start with £20.