Single and ready to mingle…in real estate.
The “most romantic month of the year” can bring up some unwanted feelings if you find yourself still looking for Mr. or Mrs. Right. And if you’ve been dreaming of homeownership, the reality of a single income can really add insult to injury.
But while owning a home and investing in real estate might be easier when there are 2 cheques hitting the bank, it is absolutely possible to set a successful table for 1. Let’s talk about it!
Let's face it; the road to homeownership is riddled with obstacles for everyone - but perhaps especially for single individuals facing the mountain alone. And typically, the most significant challenge often boils down to finances. Without a dual income to rely on, it can be tough to meet the financial and credit requirements of purchasing a home or investing in a property. But that's where careful planning and making the right choices along the way are key!
If you’ve got homeownership on your vision board this year, it’s high time to stop waiting to find the perfect someone and start designing a plan for how you are going to achieve it - and we can help.
Hands down, the best thing you can do if you are thinking about diving into the market on your own is to have a thorough and specific understanding of the financial landscape you are facing.
Having ballpark knowledge of your credit history and general income expectations is one thing. But having an intimate knowledge of your current finances and future goals and the steps (and risks) you are willing to take to get there is integral. This is where working with a mortgage professional from the very beginning is key. We can help you understand exactly what you will need to save and how you will have to prepare to make your dream purchase. This way you can start to build a plan with those numbers as a realistic goal.
Next, it is important to manage debt. Carrying some debt is not a mortgage application deal breaker. However, when it comes to calculating your debt ratios (how much of your monthly household income goes toward debt obligations), having a debt load can prove to be even more of a burden to approval when yours is the only income to be calculated.
Paying down high-interest balances and keeping them down before shifting focus to your down payment savings will help ease your mind now and prevent a headache when it comes time to apply for your mortgage.
Then comes what most everyone considers the hardest part - down payment savings. While saving for a sizeable down payment on a single income can be difficult, it doesn’t have to be impossible. Start by setting a clear savings goal based on realistic expectations from the outset. Then, as you pay down debts and increase cash flow, getting into the habit of consistently and reliably contributing to savings each month will set you on the right track.
But simply saving what is left after paying all your bills each month isn’t your only option. If you have some cash flow available now or even some savings, you might consider subverting tradition even further than simply buying a home on your own. Instead, you could start multiplying your savings even faster by investing in real estate before buying your own home.
How is that possible? Here are just a few offbeat methods to get started!
Rent-to-Own
You might consider a rent-to-own option if you're not yet eligible for traditional financing. This arrangement allows you to rent a property, with a portion of your rent payment going toward your ownership stake in the home over time. Then, when the owner is prepared to sell, you have the option of purchasing the home, having already built up a portion of equity!
Partnership Purchasing
Pairing up with a friend to purchase a property allows you to combine resources and credit history to create a more robust mortgage application. This can give you access to more opportunities and allow you both to start growing your wealth via equity and appreciation. If you invest together now and earn equity and rental income as the property appreciates in value, you may be able to sell in a few short years for a profit that would allow you to invest in your own perfect home.
House Hacking
House hacking involves buying a multi-unit property and living in one unit while renting out the others. Having a reliable rental income can offset high mortgage costs, allowing you to afford larger and more diverse properties earlier. Is it your dream to live with roommates for the long term? Likely not. But if you can make the sacrifice for a few years, the wealth you could accumulate could be your ticket to your perfect home.
Embrace Your Independence
As a single individual, your journey toward homeownership may present some unique challenges, but it's also filled with unique opportunities. The path might not be linear, but with the right strategy, determination, and guidance, you can pave your way to owning your dream home!
Let's break free from societal pressures this February and focus on creating your path to homeownership and financial stability the way you want to. Your journey is unique, and your success is within reach, no matter your relationship status.
Connect with our team to talk about how you can make your real estate dreams become reality, one step at a time, and pave the way for a future that's truly yours. By starting small and keeping your eye on the prize, you can build a strong foundation on your path to homeownership!
