The party is in full swing. The food and drink is ready, someone has already turned the music up a little and the guests have arrived. Little huddles are forming and the discussions are getting livelier but it's not Linda's messy divorce or the colourful couple with the interesting lodger at No 24 we're chatting about. It's buy-to-let cottages, multi-storey townhouses and the bijou semi you've just snapped up at auction. Yes, property hour has begun.
The talk is feisty as we boomtime cats swap stories about our latest deals and discoveries, with scarcely a thought for stocks and shares as they struggle to shake off a jaded past, or the latest Isas, Tessas and Peps that often appear more force-fed than fruitful.
The figures are even more telling than the fantasy. In the first six months of 2003, just over 75,000 new buy-to-let mortgages were taken out and more than 150,000 are forecast for the year as a whole, says the Council of Mortgage Lenders. This is 20,000 more than 2002 when just over 130,000 were raised.
Around two-thirds of the UK's small landlords use loans instead of cash to invest, says FPD Savills' research department, and while some prefer to hold on to their first purchase and not re-invest, others like to build portfolios of five or more.
Like any sportsman or woman who plays for fun or money, there are two types of investor - the amateur and the professional. If you rent out one or two houses to prop up your pension or boost your day-job you are a part-time investor or amateur. If, however, property is your day job you are one of the professionals.
Anyone who likes cricket will have read about the pre-war batting feats of W G Grace and Sir Jack Hobbs and those Gentlemen versus Players matches at Lords - the part-time and unpaid against the full-time and paid. Well, the first few tentative months of buy-to-let were a little like that - with groups of the laid-back and cavalier, who were buying more in hope than expectation pitted against the serious-minded money-men. It was the Dabblers versus the Dealmakers.
"Some rather green amateurs bought a place they liked the look of and decorated it in a few favourite colours without really thinking about it. They then got teething problems, couldn't rent it out and had to sell up," says Judienne Wood, director of Bradford and Bingley Lettings Agents. This year, says B&B, the number of buy-to-letters who drop out has fallen by almost 20 per cent. "People have got cuter and more investment-minded. They are doing their homework and finding tenants," says Wood.
If you ask an investment analyst to tell you the difference between amateurs and professionals, he will say the former are passive investors who use property for long-term stability and capital growth, while the latter are non-passive investors who use it for day-to-day income and profit.
Interestingly, a survey by the brokers Mortgages for Business shows half of the UK's estimated 1.5 million buy-to-let properties are owned by professionals. Researchers who polled 1,500 investors with more than 5,000 properties found professional investors own almost 80 per cent of all the North and North-west's buy-to-let properties, at an average of 37 units apiece, says the survey.
In London and the South-east, where property prices are highest, amateurs outnumber professionals by almost three to one. Seventy-six per cent of London's investment stock is owned by those who invest part-time and 61 per cent in the South-east.
The average portfolio is 2.4 units - coincidentally exactly the same number as the ideal UK family - though we're talking properties here, not children. David Whittaker, managing director of Mortgages for Business, says most amateur investors are "City boys such as brokers and traders who get a bonus and, instead of buying a new car or skiing holiday in Verbier, opt for a buy-to-let, and lawyers and accountants in their early thirties and forties who have seen their pension portfolios suffer or been frightened off stocks and shares and use property to invest for the future."
Whittaker says: "Investors can buy more cheaply and get higher annual yields in the North, whereas those who buy in London and the South-east get better capital growth and a lower average yield, so they tend to keep a close eye on their figures and re-sell a property or two if necessary to maintain their cashflow."
Golden handshakes are also a popular route into the buy-to-let business. "When a trader or stockbroker with a few properties gets a big pay-off, he often abandons his career, amasses numerous houses and flats and becomes a professional landlord," says Whittaker.
But it was the "snowball effect" that persuaded Chris Stace to swap jobs and turn professional. Stace, who bought his first investment flat 18 months ago, now has 20 buy-to-lets ranging from a one-bed flat to a five-bed house in the Thanet area of north Kent. "After 15 years of spreadsheets, forecasts, estimates and commuting, I looked at the buy-to-let market and saw its potential, so I did a business plan and decided to gamble and go full-time," he says.
Stace, who is 34 and married, aims to build a portfolio of 50 and has just clinched his first commercial deal - a fish restaurant he is converting into a wine bar/restaurant. "The advantage of commercial property is long leases and resistance to market fluctuations. Crucially, I also have a very good tenant with an impressive track record to run it." Stace is negotiating three more commercial deals and hopes to increase his investment portfolio to 30 in the next 12 months.
The Joseph Rowntree Foundation's 'Private landlords and buy-to-let' can be ordered for £10 (plus £2 p&p) from 01904 615905. You can read a free summary at www.jrf.org.ukReuse content