A Guide to Growing your Property Portfolio

October 26, 2020 12:05 pm

Property is a great investment and for those looking to use their property investments as a source of income building a property portfolio should be a priority.

Another step to ensuring the success of securing regular income from property is by diversifying your property portfolio. Our blog gives you key insights on the benefits of growing your property portfolio.


What is a Property Portfolio?

A property portfolio is a record of each property you have invested in - Commercial Properties, Residential Properties, HMOs (House of Multiple Occupancy), Serviced Accommodation etc.

We have found, in our experience, investing in residential properties are most popular for those looking to build their portfolio.

A factor contributing to this preference is the availability of investment opportunities and the variety of strategies in comparison to commercial investments.


Getting Started

Starting your investment journey is incredibly exciting, however, you must be patient and ready to commit to it.

It will take time to build an impressive property portfolio, but once you have done so each following experience becomes easier.


1. Objectives

Why are you looking to invest in property? Consider your overall objective.

Are you looking to increase your capital - invest and eventually sell for a greater sum? Or are you looking to invest and become a landlord - earning a monthly income?

This will allow you to set smaller, stepped goals.

These will help you choose the right properties to invest in and the right strategies to follow in order to meet your goals.


2. Budgeting

Follow your budget. While you may be keen to get started, ensure you only invest in properties within your budget otherwise you will over stretch and potentially risk your success. As we said before, be patient.


3. Test

Starting with one property at a time will allow you to effectively analyse which strategies best suit you, your budget and your portfolio. This analysis will limit your future risks.


4. Research

Research is vitally important when investing to ensure you are choosing the right property. There are a number of key considerations to make:

- Location

Location is crucial. You’re looking for a property located in an area with potential growth and improvement opportunities - up and coming towns and cities.

Is the property located around good transport links? Are shops and leisure centres easily accessible from the property? Are there schools located nearby?

The answers to these questions will determine which types of tenants your property will attract.

- Tenants

As mentioned, your property’s location will contribute to the type of tenants your property will appeal to.

Different types of tenants look for different things when choosing where to live. Families will consider the surrounding schools and the distance they have to travel.

Meanwhile, elderly people may opt for a home close to shopping centres to make their journeys easier.

Similarly, students also consider their surroundings by choosing accommodation which is located near their college/university, nightlife, while price point will also play a role in their decision.

- Profit

Your budget needs to cover more than the purchase price of the property. Your budget is there as a safety net, it's there to cover maintenance costs, repairs and legal fees etc.

After these costs, will you be making a profit?

5. Plan

Of course, we start a venture with the hope of turning it into a success, however, it is important to stay mindful of the potential risks - prepare.

By having a plan in place you create foundations for potential mishaps. Consider the worst:
- What if your property lies empty for a period at any time?
- What if your tenants don’t pay in time...or at all?
- What is your overall plan? Do you plan on committing to property full-time or do you plan to sell up eventually? If so, this is an eventuality you need to consider and have a plan in place for as this will influence your purchases and strategies.


Diversify your Portfolio

Markets often fluctuate in different directions at different times, market values change, people’s preferences shift - as the saying goes “don’t put all of your eggs in one basket.” By diversifying your portfolio you limit your risks - adding an extra layer of security.

By having multiple properties in your portfolio that adhere to different strategies you can almost guarantee a continuous monthly income.


Choosing your Property



The real money comes from properties that are below market value, these are gold mine investments. Below market value properties often need work to revamp them into the modern day, however, this work pays off.

Renovating these properties increases opportunity to increase the end value of the property. An important consideration to make, however, is whether your renovation ideas will fit the market, will they be worthwhile in such a property?

This being said, don’t let these considerations over power your imagination. It is crucial that you allow your imagination to run its adventure, allowing you to visualise each property’s potential.


Example:

We have found a great Buy-to-Let deal to make a fantastic edition to one of our investors’ portfolios.


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Our investor paid £30K for this property and after renovation will experience a potential end value of £53K.

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This property is expected to net our investor £244.00 per month - a great side income.




Conclusion

Property investment is a great source of income, be it full-time or as a side gig. There are a number of avenues to go down in the property industry to build your property portfolio, be it, adding commercial properties or residential properties.

Let’s be honest, there are even extensive opportunities by sticking to residential properties alone. It is, however, important to ensure your property portfolio is diverse - this will guarantee continuous revenue streams as markets fluctuate, areas build and supply and demand goes through growth and dips.

When starting out or adding to your existing portfolio keeping your objectives in mind is critical. By focusing on your objectives you enable yourself to clearly envision your path and how each property addition will get you to the end of that path.

Reaching your objectives will take time, patience, planning and money. There are a few costs in property that add up, therefore, keeping your budget at the forefront of any of your plans is essential.

Don’t dive straight in, take your time and trust the process. Begin with one property and master it before moving on. This will grow your understanding and experience, making you stronger when it comes to your next investment.

Keep a level head and do your research before committing to a deal. There are many factors which contribute to the attractiveness and profitability of a property. Ensure each of these adhere to your plans before saying yes.

Have a plan. Now you are set to head into the property investment market you have to consider where you want this venture to take you. Creating a plan of how you are going to get there and potentially, how you are going to finish is crucial.

After making these considerations and outline your path, plan and objectives, you’re better equipped to build your property portfolio.

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