Borrowing should never be over extended, aim for a maximum of 75% lending. Ensure that you can finance any borrowing throughout possible rental voids and changes in interest rates. Remember, as many first time buyers are struggling to get on the property ladder ? THEY ARE RENTING! The rental income you obtain will pay the interest on your lending.

With 25% equity and 75% lending the average return on your investment is 45% - (45% ROI is based on the average UK growth of 11.3%pa over the last 4 decades ? source ODPM)

Potentially, you can almost double your capital investment every 2 years.

Many investors will then use the increased equity in their property to fund further properties ? in that way building up a property portfolio. This is recognized as ?Gearing?.

What if you don't have 25% deposit, but you still want to take advantage of the under market value properties out there? UK off plan property investment could be the solution to your problems.

With less than a 5% deposit you can invest in many UK off plan apartments in landmark projects that are set to be complete in 2, 3 and 4 yrs time. This method may work for you, by making a low capital investment now and allowing the property market to work through its cycle. For example in 2011 when the off plan apartment comes close to completion, it will only be at that time, you will need to arrange a mortgage.

2) Diversify your portfolio

Two types of diversification: The type of property you buy and the geographical location of it.

You will need to spread your property investments around the country to achieve an annual growth figure of 11.3% (which is the average across the whole of the UK over the last 4 decades ? source ODPM). For example, in 2006, growth in London and the South East may have been around 16%, whilst in Scotland, it may have been 8%. If you had invested in properties in London and Scotland you would have achieved an average return of 12%.

?Historically, interest rates are still low?. 50% lower than in the early 90's. If you can get a good fixed rate mortgage now for 3 or 5 yrs plus, why would you not invest??

Research, research, research ? regeneration plans and new rail and metro links are good indicators of up and coming areas and capital appreciation. Great access to transport links, restaurants, bars and local facilities. Knowing the area you are buying into and considering who your ideal tenants will be. Quality locations will attract quality tenants.

Concentrate on long term demand where supply is not exceeded. For example:

CENTRAL LONDON

Prices too high? ? A 26 minute commute from Hemel Hempstead to London Euston

A 340 Million scheme is in plan to develop Hemel Hempstead's town centre. Hemel Hempstead has already seen major development over recent years and due to the town's close proximity to London, house prices soared 9% last year. The local population of this town is younger than average making it a popular place to live among young professionals with easy access into Central London.

A developer passionate about quality, quality of design and construction has led them to transform Europe's former Kodak Head Quarters into a stylish place for young professionals to buy or rent. With a constant demand for sensibly priced, high quality apartments within walking distance of the station, this development provides excellent access into central London. The redevelopment of Kodak's former European Head Quarters is set to complete in autumn 2010. A quality off plan investment apartment can be reserved off plan, with prices from ?189,000.