Buying into bricks and mortar is the first thing most of us do whenever a windfall or bonus crashes into our lap - assuming we can resist Mr Ferrari.
Across London, the property market tracks City payouts, while investment bankers toss aside the Financial Times to scrutinise estate agents' particulars.
Meanwhile, in Manchester, Newcastle, Edinburgh and Glasgow, investors disillusioned with stock market falls are going 'back to basics'. Some are camping overnight outside new developments to snap up tiny one-bedroom cupboards for more than pounds 150,000. And why not? No-one does badly out of property, unless forced to sell during a cyclical low such as 1992-93.
Beware, however, that in central London rental values have lagged behind property prices. Gross rental yields stand at just 6.5% of the value of the property against 9.1% across the country. A pounds 1 million central London property will generate pounds 65,000 a year in rent. Deduct costs and you end up with nearer pounds 45,000. No wonder some London investors are looking to Edinburgh and Glasgow, where entry costs are lower and yields higher.
So, unless you find a screaming bargain in Chelsea, you're best off concentrating on chasing capital growth. The way to gear up for capital growth is to buy using a buy-to-let loan. Introduced in 1996, B2Ls have benefited bonus-brandishing bankers with ambitions in property development. They have nothing to do with your personal income, but with the property's ability to generate income and capital value. With as little as pounds 25,000, you could become an amateur property developer by gearing up with a maximum 85% mortgage and buying a one-bedroom flat for pounds 160,000. You probably won't see a penny of income until you've repaid the loan, but by that time the property could be worth a fortune.
Peter Rickenberg, who works for north London estate agent Leslie Marsh, reckons that 40% of customers on its books were rental investors: 'One client bought 65 council flats. If he makes pounds 20,000 on each, he's looking at pounds 1.3 million.'
The rule of thumb is that junk generates cash, prime delivers growth. 'You could buy junk ex-council property for pounds 100,000 and make 15% gross,' Rickenberg says. 'With base rates at 5.5%, you're making 9.5% over the market. Who needs capital appreciation with that? However, if you buy prime property in central London, you'll get 6% gross yield, but with far better growth prospects.'
To enjoy both capital-growth swings and rental roundabouts, look to up-and-coming areas for present high-yield stories with future high-growth potential. Says Rickenberg: 'If you were offered the choice between 7% gross yield in an established area, and 7% in an up-and-coming area, go for up-and-coming.'
This assumes you can tell the difference between up-and-coming and down-and-staying-put. Take Paddington, where a big development is in full swing. 'Regardless of the property market at large,' says Rickenberg, 'Paddington will catch up. There is still a lot of grot around Sussex Gardens which can be developed.'
It's important to get the right balance between area, property and price, Rickenberg advises. 'A flat could be a useless rental opportunity at pounds 150,000, but a good idea at pounds 120,000. A gleaming property could attract a corporate rent where the chance of defaulting on rent is remote, but you'll have to redecorate every three years. Whereas if you rent out a grotty flat to a DHSS tenant, time saved not redecorating will be time spent chasing rent.'
What about the property itself? For an arm's-length deal, you want a middle-market two-bedroom flat on the ground, first or second floor, within 10 minutes walk of the Tube.
Avoid mansion blocks with porters and communal heating; they carry hefty service charges. Aim for a corporate let over two to three years that generates pounds 900 a week. Avoid flats in newly built blocks: developers never show mercy in their prices.
Most of all, avoid renting out to bankers who, during the last round of bonuses, bought a Ferrari.