Property prices surpass last years values.

Apparently, average property prices in the UK are now higher than they were 12 months ago to the day!

Amazingly, the fall suffered since October 2008 has more than been wiped out with the rises in the last 6 months or so. There are a few commentators who are fearing that this trend may reverse again soon as more properties come on to the market - as potential sellers take comfort from the recent surge. the commentators logic is that this will lead to the market being flooded and prices falling again

Only time will tell, but, for me. we can only judge things on reality - and at the time of writing these words - the market is rising.

Only yesterday I was speaking to a lady whom I mentored around 3 years go. She has now stopped buying properties. She hasn't stopped because she has lost confidence - or for any other fearful reason. Simply , she has enough houses 'collected' and is now at the 'patience' stage of her plan.

She explained that her portfolio is worth £2 million pounds. this doesn't mean she is worth £2 million - she has £1.4 million in loans - meaning that her portfolio currently stands her at around 600k gross wealth (not a bad figure of created wealthin 3 years!).

Her waiting plan makes total sense. As she explained to me.........

'Lets assume property prices increase just 4% per year (around just 0.3% per MONTH) on average each year for the next 5 years. This would mean the portfolio would be worth almost £2.5 million then - just by doing nothing more than maintaining matters. This would mean an equity gain of almost half a million pounds in 5 years.'

This would be on top of the current equity of the portfolio of £600,000!

The portfolio would be worth £2.5 million - loans would still be £1.4 million - giving the total £1.1 million equity figure!

This is based on annual rises of 4% only. Typically in the last 50 years, average annual house price inflation (HPI) is 7%.

This lady is being cautious about matters and only working on a 4% increase.

For the record, if there was 7% average HPI over the next 5 years - then the portfolio would be worth £2.8 million - an extra £300,000 compared to the 4% example - just for being a bit more lucky with house price inflation.

The beauty of this example is that it is a case-study of someone who has not acted particularly remarkable. The lady in question has 15 properties - acquired over 3 years. this is averaging 5 properties annually - or one every 10 weeks or so. This is achiebvable, in my experience, by anyone who is committed to doing the same.

She has achieved, through 'phase one' of her plan, her initial goal - which was to acquire (below market value obviously - rule number one!) £2 million worth of residential property.

She is now in 'phase two'- which is the waiting phase.

I imagine phase three is going to be the fun part for her!

Once more, to reiterate, if you consistently buy your properties significantly below true market value every time - then display patience and wait - you are virtually guarantee your desired success.