There was an interesting article in The Telegraph this morning entitled “20 ways to become a property millionaire” written by Julia Flynn. Read the full article here. She made some interesting points, which Ive listed here along with my opinions on the points:
There was an interesting article in The Telegraph this morning entitled “20 ways to become a property millionaire” written by Julia Flynn. Read the full article here.
She made some interesting points, which Ive listed here along with my opinions on the points:
1.Target flats rather than houses.
I was surprised to read this one, as I have always had the opposite opinion. Flats typically have a service charge, which makes the cashflow and the yield smaller. I would disagree with this and say that houses make better buy to let investments.
This is very true. When you first start out in property investing you are very keen to move forward quickly. The fact is, it isnt a race and if you jump in and buy something you cant easily undo that. A mistake in property investing could cost you dearly. So be patient and make sure youre making the right decision based on facts and figures.
3. Dont put all your eggs in one basket
This is a good point and diversification is important. If you buy all your properties on one street youre stuffed if that area depreciates in value. Or in fact if you buy in one postal code for example. Choose your areas carefully and invest wisely.
4. Always look to add value
You should always look for the potential to add value in a property. This can make you some serious money.
5. Become Tax Efficient
This is important. You dont need to be an expert in tax, but you need to have a good accountant and understand the basics. Having a good power team around you is the key to this and an accountant is a key part of your power team.
There are many ways to keep your tax bill down, and you should take full advantage of them if you want to achieve maximum capital growth, says David Hannah of Cornerstone Tax.
“If you are married, ensure any rental income from your property portfolio is divided between you and your spouse in the most tax-efficient way. You should also maximise savings from tax-deductible items, such as furnishings.”
6. Exploit local knowledge
Lets face it, your local area is where you know the most about. You should use this knowledge to find your local bargains.
7. Start at home
This is a great idea. You will be close to the project and can make some great money out of your biggest asset.
8. Pick professional partners you can trust
I mentioned this earlier in the article. Choosing your professional power team is key. You need to work with people that you can trust and this will give you peace of mind.
9. Is there cash in your attic?
A loft extension is a great idea to add value to your property. You can also look at cellar conversions or adding a garden room.
10. Take advantage of low mortgage rates
This is definitely a great idea at the moment. However I cant stress enough that you need to not gear your portfolio too much. Make sure you stress test your property to see what mortgage you would need to pay if the interest rates rise significantly.
11. Dont turn your nose up at unfashionable suburbs
You may bag yourself a bargain by looking in a wider area that the current fashionable place to rent or to buy.
12. Think Waitrose
Its true to say that if Waitrose are investing in an area that potentially the property prices will be rising at some point.
13. Looking for young professionals as tenants
This strategy is for a multi let property filled with young professionals. This certainly is a cash cow type of property and is a great strategy. Bear in mind that youll need cash in the first instance to convert the property.
If you are pursuing a high-income investment strategy as a means of building a £1?million portfolio, the best tactic is to invest in premium-quality, low-cost shared accommodation for working professionals, says Steve Bolton of Platinum Property Partners.
14. Dont trust estate agents estimates of rental yields
Absolutely true! You need to always do your due diligence on any property deal. Make sure check out the area thoroughly and call multiple agents to get an idea of the rental yield.
15. Vive la France!
It sounds like a wonderful idea and could be just the thing. Particularly if youre buying for lifestyle. However buying abroad can be more complicated than buying at home. Make sure you know the whole process and dont get caught out by red tape.
16. Check out Property Investment Funds
Its always worth a look to see what these companies offer. But the only way to truely look after your money is to do it yourself.
17. Could Jersey be a cash cow?
The article states that the Channel Islands came close to the top of a recent report. The report was looking at Islands where property prices have remained resilient during the global economic crisis – and which offer outstanding long-term investment potential
“The next 10 years will see a growing appetite for island real estate development,” predicts Yolanda Barnes, the director of Savills World Research.
Of course the UK is also an Island, so has lots of potential!
18. Become a train spotter
The article talks about new rail links having an impact on property prices. I certainly think that any transport links will have a positive impact on property prices in that area. For example locally to us in the North West we are having a lot of new tram lines and stations. Purchasing close to new stations is a great strategy.
19. Follow trends in planning approval
Keep an eye out for approved local planning applications, urges Natalie Hall of Fyfe Mcdade. They can be found on local authorities’ websites and often give an early indication of areas with good long-term investment potential.
20. Remember the growth potential in gardens
“Our research suggests that London properties with some kind of outdoor space, such as a small patio, are worth 20 per cent more than properties without such a space,” says Nick Barnes, head of research at Chestertons.