We all know stories of people who inherited from the sad passing of Great Aunt Maud, bought a ramshackle property as an investment, filled it with students, grew a portfolio and have now sold them for a fortune and retired at the age of forty.
If you are thinking about following in their footsteps it may be worth tracking them down and calling them on whichever Caribbean island they now happen to live on, to tell them that they were wrong to sell their properties.
That's right, never.
The first thing to remember is that every time you sell you are eating into your profits, admittedly the costs incurred when selling a property are very small when compared to the appreciation in value, but they are costs none the less.
So what should you do to maximise the value of your property investment?
Well, astute investors will use the equity they've created in the rising property prices to borrow more and buy more.
For example:
If you were lucky enough to have bought a house for £80,000 and it is now worth £200,000, then you could borrow against the extra equity left in the house following the price rise to buy another property. If the price of this property also rises, use the equity to buy another.
Obviously, patience is required, but if you are able to continue this pattern, you will be less stretched by each purchase and will finally be able to use some of your new wealth to improve your own lifestyle without having to sell a property.
A strategy used by many investors is to embark on a programme of planned property investment at their earliest financial convenience, which is usually when the equity in their family home reaches a reasonably high level.
Then when you die, you will have a substantial inheritance to leave to your ungrateful nephews and nieces.
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