8 steps to becoming a property millionaire
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Investing in property can be a profitable venture if done correctly. Follow these tips and you will soon be well on your way to building a property empire.
1. Choose flats over houses
Most successful investors will tell you that flats generate a better return than houses.
If your budget can stretch that far, go for a 2 bedroom, 2 bathroom flat. The greater flexibility will make the property attractive to a wider range of tenants so it’s less likely to lie empty.
2. Be patient
Make sure that you weigh up the pros and cons of an investment before you commit. Always remember that property is a long term investment. If you want to make money from it, you need to be prepared to be in it for the long haul. Don’t put yourself in a position where you’re forced to sell quickly because you over extended yourself financially.
3. Look for ways to add value
One of the best ways to make money out of a property is to add value to it. Renovating bathrooms and kitchens, for instance, will ensure you get a better return when renting the property out and make you more money when you’re ready to sell.
4. Become tax-efficient
You will never become a property millionaire if you pay the taxman more than you absolutely have to. Speak to a tax advisor on the best entities for buying a property and how you can save tax on your rental income.
5. Don’t put all your eggs in one basket
If you were investing in stocks and shares, any financial advisor worth his salt would advise you to diversify your portfolio so that the risk is spread. The same would be true for property investments. Spread your property portfolio across different properties in different areas to minimise your risk.
6. Exploit local knowledge
There is little point in trying to spot a property bargain hundreds of kilometres away. You’re not an expert on the area and are not likely to be able to judge whether the location, price etc. are good or not. A bargain will be much easier to spot in your own backyard. It will also be much easier to keep an eye on your tenants if you live nearby.
7. Find professional partners you can trust
Unless you’re part accountant, part lawyer and part DIY expert you’re going to need professional help in building up your property portfolio. Finding dependable builders, lawyers and accountants is not just key to maximising your profits, but will offer you peace of mind during a complex process.
8. Don’t turn your nose up at unfashionable suburbs
You don’t have to pay a premium for a property in a fashionable area in order to make a decent return. A property in an unfashionable suburb will often give you a return that is as good, if not better than a more “happening” one.
Author: Tahir Desai