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How to become a buy-to-let millionaire

The general election is still up in the air, but one issue affecting home owners has already been decided.

From this month (April), following reforms announced by George Osborne, pensioners will be able to release large sums of capital previously tied up in annuities.

Some of them will blow the money on round-the-world cruises. Others may soon be seen driving down the Kings Road in a new Porsche. But a fair few, experts predict, are likely to dip their toes into the buy-to-let market.

How can they best make their cash work for them? Play your cards right and you can become a property millionaire in ten years or less with £200,000 starting capital. Play them wrong…

We get a lot of high-end buyers interested in acquiring buy-to-let properties across south west London and take pride in finding them homes that make sound investments. Here are some of our top tips:

  1. “Don’t purchase a buy-to-let property unless you can imagine living in it yourself,” says James Bailey, chief executive of Henry & James. The best guarantee of findings tenants with whom you will be able to build a good relationship, is a shared taste in property.
  2. Think flats rather than houses. You will have a bigger choice of tenants – young professionals, ideally – and they will be easier to sell at short notice if you need to.
  3. Buy in an area you know. It is only through familiarity with an area, that you will be able to identify the best streets and properties on offer at bargain prices.
  4. Good transport links are vital. You cannot anticipate the commuting needs of your tenants, so cover all the bases by buying a property within easy reach of Tube lines, mainline stations etc. Listen out for news of new train lines that will be opening in the future. Always try to get in early before prices start to rise.
  5. Spread your bets, as with other investment portfolios. Despite the extra hassle, it is generally better to have three smaller properties, than one big one.
  6. Become tax-efficient. It sounds obvious, but many people try to muddle through, when it may be simple to employ a good accountant. Get professional advice.
  7. It is key to stay up-to-date with changes in the law. “There is to be a new prescribed form of a termination notice for tenancies, which will need to be used when serving notice upon a tenant,” explains Mo Hakim, partner at Child & Child (020 7201 1870;  “This is likely to set out tenant’s rights, the time limits and their ability to complain about the condition of the property. This change is one of a vast array of proposed amendments and changes to the law surrounding tenancies. And although it is not yet clear when these will all come into force, early indications are it would be after the General Election.”
  8. Find ways to add value. A second bathroom or loft extension, could add 20 per cent to the value of a property before the first tenant has come through the door.
  9. “If you are buying a flat, first floor is best,” adds James Bailey. The ceilings are generally the highest and, when your tenants go away on holiday, they will know their flat is safer than if it was on the ground floor.
  10. Think community. It goes without saying that you should only invest in areas that are safe and secure, particularly at night. But if you can invest in an area with a genuine community feel, it will be easier to find people who are prepared to rent your property. Location, location, location, has never been more important.