How to Become A Property Millionaire

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By RPM Central Valley

Are you planning on buying your first rental property in the Central Valley? If so, you’re making a smart choice.

The first key to success with owning rental property is hiring a property management company to outsource the management of your rental property so you don’t have to manage it yourself.

At RPM Central Valley we offer you professional property management that will cover all phases of management including rent collection, customer service, marketing and more.

In this article we will share with you tips on how you can become a property millionaire by investing in real estate.

Tips for Becoming A Property Millionaire

Focus on growth

It is possible to make a decent monthly income from rental yields, particularly if you’re letting a property to multiple people on a room by room basis (known as House of Multiple Occupation or HMO). However, historically the bulk of gains from property have come from capital growth, so you need to position your portfolio to have the best chance of growth.

If you invest in an area that has 1% higher growth than every other area you’ll end up much further ahead than you would if you went for a property with, say an extra £100 in rental income each month. Over the long term that 1% growth every year will make a huge impact on your wealth.

Get your timing right

In order to capitalize on the property market, you need to understand market cycles and buy at the right time. The best time to buy is straight after the crash – so when the market bounces back you get massive growth. On the other hand, if you buy at the peak it’s going to destroy your wealth and can take years for prices to get back up there.

At the moment we’re in the middle of the cycle, so it’s not the best or the worst time. But different cities move at slightly different speeds so it’s important to understand the market you’re buying in.

Identify the hotspots

It may seem like the easiest option to buy an investment property around the corner from where you live but if house prices aren’t on the up, it’s probably not the best move financially. You should be looking for investment hotspots. Transport is a good place to start.

If an area experiences a huge increase in house prices, you can bet transport links have something to do with it. New tube lines, rail routes or tram stops are guaranteed to boost house prices because they make an area so much more desirable for commuters. Stay ahead of the game by studying transport plans, so you know where there is potential for growth in an area and get in early.

Go against the crowd

You’re not going to make big money from property unless you’re willing to be brave and go against the crowd. When everyone else is worrying, that’s the time to get involved – and when everyone is excited about property you should be nervous. The current climate is ideal. Many landlords are exiting the market as a result of changes to tax relief and an increase in Stamp Duty for second homes which means there is plenty of opportunity for snapping up a bargain.

Recycle your cash

Recycling your cash can give you control over how fast your portfolio grows, regardless of what the market is doing. The strategy is simple; you’re just pulling funds out of a deal to use again by refinancing. Let’s take a look at an example. Say you buy a property for £100,000, putting down a £25,000 deposit and taking out a mortgage with lender A for £75,000. Later, you get the property revalued at £133,500 allowing you to take out a new 75% LTV mortgage with lender B which works out as a loan of £100,000. You then pay the original £75,000 back to lender A and take your initial £25,000 and put it back in the bank to use again, allowing you to build your portfolio faster than you would if you had to keep saving for a new deposit.

There are two ways to do this – one is to buy below market value. It’s easier said than done, yes, but it’s possible. Alternatively, you can add value. And remember refurbs and renovations aren’t the only way to do this, you could extend the lease, solve a structural problem or even a legal problem to bump up the price.

Finally, don’t expect it to be easy. Successful property investment takes hard work and you need to approach it just as you would a new business. Get it right, however, and its unbeatable long-term investment.

Get Property Management in The Central Valley

For property management in the Central Valley contact RPM today by calling us at (209) 572-2222 or click here to connect with us online.