Property investors should plan for a positive cashflow in their rental income or could face repossession of their buy-to-let properties.
Property website www.publicangel.com says recent increases in interest rates and further possible hikes could push some landlords over into the red with their mortgage payments.
In the race to increase portfolios, some landlords are subsidising the rents received with their own money to meet the increasing mortgage payments.
This method of property investment promoted by some â€œproperty gurusâ€ will lead to financial ruin for many newbie investors.
Public Angelâ€™s Nilesh Gohil said: â€œIt angers me to listen to so called property gurus preaching to new investors that being out of pocket every month is a good solution to cashing in on long term capital gains in the future.
â€œEvery savvy property investor should know that, in general, property investors should plan for a positive cashflow and not rely on capital gains. Any capital gains achieved should be considered as a bonus.â€
Nilesh added: â€œPoor cashflow management by new investors will increase the number of properties going into repossession. Great news for savvy property investors.
â€œI urge investors to get the right financial advice and ensure the figures stack up. I always run my figures past my mortgage advisor and accountant to ensure I am making the right choice in my property investmentâ€.
Nilesh Gohilâ€™s, newly released book â€œJourney of a Thousand Propertiesâ€, available at “http://www.publicangel.com” www.publicangel.com, aimed at investors and first-time buyers who want to invest in property.