Everything you need to know about building a property portfolio

Look for a good return

When starting or adding to a rental portfolio its always important to look at the return on your investment, we always advise that you aim for 5.5% return on residential and a minimum of 8% on commercial property.

Building a successful investment portfolio is no easy task. If you are thinking about investing in the property market, then we have a checklist of things you should be considering. Some of the items on this checklist may sound overly simplistic, but they are vital rules that deserve reiterations. Too many new investors walk in blind and not fully armed with knowledge and this is the reason their investments fail.

As you read through our tips, remember that the application of this advice will vary depending on each situation. It is always best to speak to a financial advisor and an estate agent you trust to get their expert opinion before you make any big decisions.  

Strategize your endgame

You need to know exactly why you are investing and what you expect out of your investment. Otherwise, you are going to be like a rudderless ship at sea—no direction and no purpose.

You need to decide if you’re looking for capital appreciation, capital preservation, income, or speculation. An investment portfolio that aims to achieve capital appreciation will look much different than an income portfolio, for example, and they will perform differently over time.

If you are not clear about your goals, you could become disappointed in your returns. Again, this is time to sit down with a financial advisor and a trusted estate agent and get some very solid advice.

Minimize turnover

Buying a house is not a short-term project. If you’re looking to invest in property then you need to be prepared to have your money tied up for a while. There are fees involved in buying a house, and costs of selling. You need to make sure you are in a financial situation to buy a house and sit on it.

You might need to spend money renovating the property, you may need to find tenants, all of this will mean a period of time with no income coming in, and mortgage payments that don’t let up.

Take advice from an estate agent about properties for sale in areas that have a high demand for rentals, this will help to minimise the time that your property is empty and save on costs.

If you’re looking to build a solid property portfolio, then invest in properties you can easily manage and maintain over time. Ideally you want to be adding new properties to your portfolio and not removing old ones.

Minimize costs

A good way of doing this would be to take advantage of the current stamp duty holiday. Now is a great time to be adding to your portfolio.

Also ensure that any renovations you do on a property is worth the cost. If you’re going to put in new carpets, or a new bathroom, make sure you will see an increase in rental returns before you commit.

Never overpay for a property

Price is paramount-there is no getting around it. When investing in property it is essential to make sure you do not overspend. It can be extremely easy to become emotionally attached to a property, as this is something you have had to work hard to buy.

Make sure you stay detached, take good advice and invest with your head not your heart. We recommend you set yourself a clear budget, with a well researched idea of what return on your invested you can expect and stick to it.

Take advantage of tax-efficient accounts

Having a successful property portfolio starts the day you get smart with your money. There are schemes available that help buyers and investors maximise their money and really make it work for them

This means you need to do your research, either solo, or ideally with a financial advisor. Sit down with them and work out which help to buy schemes or ISAs will work best for you.

Diversify

Another classic saying offers some investment wisdom on this issue: "don't put all your eggs in one basket." Nor should you put all your money in a single investment. This applies to property in the same way.

Make sure you have a balanced range of properties that will work towards your long-term goals for your investment portfolio.

Buy with your heart, but more importantly buy with your head. A property may not suit your lifestyle, but this is not important as the property is an investment. The garden may not suit your needs but will usually suit the rental market. Talk to us, when looking as we can help guide you to the right purchase.

If you have any questions about creating a property portfolio then give GSS Property a call today and let’s start talking about how you can build a strong property portfolio.

You can reach us through our website www.gssproperty.com or on the phone 01837 54504.