For example, a house which in good condition would sell for £200,000 might be on the market at £150,000 in an unimproved state, but the cost of the works and the improvements to get it back to a £200,000 condition might be only £30,000. The worse the problem seems to be, the more the price is likely to be discounted disproportionately to the cost involved. Then there are properties which require ‘work’, ranging from cosmetic tarting up to major structural repairs. There are many possible reasons why someone might want to sell in a hurry and will accept a lower price. Most of these techniques involve seeking a ‘distressed’ seller or a ‘don’t wanter ’ owner often someone who is in a hurry to move, or going through a divorce, or someone who just needs their money out fast. There are many ways of achieving a bargain at below market value, and many of these techniques have been discussed in detail in this and other publications, including, of course, buying at auction. Let it out at a rent that covers all costs.Let’s have a look at these now under the following headings: But is it realistic? And is realistic in this current market when prices are flatlining, or only increasing slowly?Īctually, I think it is, but there are a few practical issues which need further thought and attention, if the investor is to stay on track. And it seems relatively easy to implement. Congratulations! By following this plan, you are now officially off the 9 to 5 treadmill. In year seven, repeat the process by re-financing property number two, and so on until year eleven, when you will refinance property number one again. The extra finance charges will be covered by the rent, which he speculates should also have risen over the five years. So, the investor should now re-mortgage, releasing the increased equity which he can pocket tax-free. Indeed, Robert, in this and other books he has written, strongly recommends that you never sell your property investments, and I concur. So, does he now recommend selling and taking your profit? No, instead he recommends that you re- finance. In his example, Robert Allen assumes a 10% per annum growth rate (which isn’t going to happen any time soon). By year six, assuming past trends continue, property number one should have substantially increased in value, and with it your equity (the difference between what the property is worth and what you owe by way of a mortgage). Next, repeat the process annually for at least the next four years until you have a minimum of five properties.Preferably take your time and, if you can, look for a bargain you can pick up substantially below market value. First, buy a property that you can let out at a high enough rent to cover your costs.Does this sound too good to be true? Well, actually, it probably is, although there are some aspects that require a closer look and some careful thought. Robert Allen, author and self-made property millionaire, in his excellent book Nothing Down for the 1990’s, suggests an interesting plan by which we can all retire early and live off a plentiful supply of untaxed income. Buying To Let: Expert Landlords’ Letting Experience & Instruction