There are a good number of property millionaires around and many of them started with a modest portfolio before going on to create a property empire worth millions.
You only have to view Russells lettings for details of the sort of properties that are attracting good tenants and a regular rental income from your property portfolio combined with capital growth, are two of the key components to becoming wealthy.
Finding the right formula
Simply acquiring property alone will not provide you path to millionaire status. It might over time allow you to make some profits if you are lucky or simply profit from a rising market, but to become a property millionaire requires a more targeted strategy.
One of the first decisions to make when considering how to build your portfolio, is whether you should try to buy flats or apartments, or maybe you want to go for larger family homes in leafy suburbs.
The general consensus of opinion is that if you are treating your property investing as a pure business proposition and what to find a way to generate as much income and profit as possible in the shortest space of time, then flats are likely to be a better call than houses.
Many investors who have put their financial resources into flats, would more than likely confirm that this has allowed them the opportunity to generate a decent return and build a portfolio more quickly.
In an ideal world, a two-bedroom flat with two bathrooms, will give you great flexibility and allow you to maximize your profits from rental income. Always think about what the prospective tenant would be looking for over what you might be happy to take if it was you moving in, which it isn’t.
Always be prepared to wait
Property markets tend to heat up and cool down over time and the trick to creating wealth from property, is to be prepared to play a waiting game and demonstrate a good level of patience when it is needed.
When the market is smoking hot, it can be all too easy to think that you need to snap up a new property, even off-plan, before the development gets sold, rather than feel that you are missing out on some buying opportunities.
New-build developments are very tempting for property investors as they tick a lot of boxes in terms of low-maintenance and desirability. What you don’t want to do is dive in and commit to a purchase before you have had a chance to check out the demand for rentals in the area, how much you might be able to generate in rent, and what the long term prospects for values are.
You might miss out on the odd opportunity if you hesitate too long in a strong market, but it is often far better to play the long game and get your timing for buy and selling just right, in order to make the most money.
It is far too easy to end up in a bit of mess with your tax affairs and this can be costly, if you don’t plan ahead and take good advice from the beginning.
The point to remember is that you will be seriously hampering your chances of becoming a property millionaire if you end up paying more to the taxman than is necessary. Tax planning is critical and your aim should be to build a property portfolio in the most tax-efficient way possible.
This means making the most of your marital status and using all the available allowances. So make sure you get to know a professional adviser who will ultimately provide you with tax advice that saves you far more money than they cost in fees.
Remember that behind many property millionaires, there is a very good tax adviser or accountant, who is helping them to preserve and build their wealth in the best way possible.
Build a professional team
Another successful strategy that you will find repeated often amongst wealthy property owners, is their ability to build a professional team around them.
This not only means getting sound tax and financial advice, it also means finding people who can help you achieve your aims and solve problems that you encounter.
Finding a good architect, builder and plumber, who will fill the gaps in your knowledge and skills, allows you to approach building projects with the confidence that you have a professional team to fulfil your requirements.
Shannon Rees has been in the buy-to-let property market for several years. She enjoys writing on the topic of property buying and selling for personal finance and investment blogs mostly.