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How to Build a Property Portfolio

A property portfolio is something that requires hard work, patience and plenty of time and money. If you’re thinking of starting one, it can be a very daunting process, which is why we’ve brought together the best advice for investment property and buy to rent mortgages.

Treat it as Business

The most important thing to remember when starting a property portfolio is that you need to treat it like a business. Your aim here is to make money, so it’s important that you do things like thoroughly research the housing market, the property and the area before you invest.

Buying for the business means that you should try to avoid buying a property because you love it, or because you have some kind of emotional attachment to it. Instead, you need to learn how to analyse and research the area that you’re considering investing in.

Funding Your Portfolio

While you can buy property using very little of your own money, if you’re just starting out, then this is not something that you should consider. Instead, think about what assets you have that you can borrow against, how much cash you have and how much of a risk that you want to take.

The money that you have, the easier it is to invest in property, but it also requires good timing, knowing your market and the area and understanding your goals.

Buy to let mortgages are similar to standard mortgages in that you’ll need a 25% deposit, but there are other things that the bank will take into account before they offer you a mortgage.

Don’t Forget about the Extra Costs

When you buy and sell property, there is more to it than handing over the money for the property. For instance, when you buy a property, you need to take into account things like the valuation, survey fees, stamp duty and legal costs. When you’re getting a buy to rent mortgage, the mortgage arrangement fees can be pretty hefty. When you’re selling or letting property, you need to consider costs such as estate agent fees and the EPC.

Another cost to remember is that you will have to pay income tax on the profit that you make, though many of the costs associated with managing a property are tax deductible.

Start with One

You cannot get a property portfolio by buying it all at once – it doesn’t work that way. Even if you had a ridiculous amount of money sinking that much into property all at once would be foolish. Begin with one property, and work with an experienced broker to help you get what you need.

Buy Low, Sell High

The key to building a property portfolio quickly is to buy property at a low price, and sell it or rent it for a high(er) one. There are a number of properties every month that get sold for under their market value for a variety of reasons, such as the seller needing the cash or wanting to get rid of the property because they’re moving abroad.

Try to find properties that are low in price, but are starting to rise in value. Be wary of buying properties at the height of a boom, as you may be waiting a long time before they go up in value.

Be a Good Landlord

Being a good landlord to your tenants will improve your property portfolio because it will ensure a steady cash flow. Happy tenants will stay with you longer, meaning that you reduce the chances of empty properties that don’t earn any money.

There are a number of ways that you can make sure that your tenants are happy. First, you should consider whether you would like to use a property management agency, and if you do, you need to make sure that their values align with your own. Look for one that has a good customer service record. You need one that will look after your tenants, but won’t make them feel like they can’t enjoy and live in their own home.

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