Creating a Property Portfolio as a Business

by Startacus Admin

Considering developing a property portfolio as a business? You’ll need to create a structured strategy - these basic tips will help you do just that

We’ve all turned on the TV to find a property programme  creating the illusion that building a property portfolio is relatively easy, but in truth, it appears to be a lot harder than first imagined. It’s not as easy as buying a house and then renting it out. Choosing to have a property portfolio is a business in itself and therefore, it needs to be run as one, because without a structured strategy you may struggle to succeed. 

What is a Property Portfolio?

Firstly, let's take it right back to basics and look at what a property portfolio is. Simply, a property portfolio is a collection of property investments owned by an individual, a group of people or a company. These properties are purchased as buy to let investments with the aim of generating subsequent return on investment. The time it takes to build up a portfolio can vary depending on your experience in the industry and the amount of money you have available to invest. 

Make Sure You Are Financially Ready

To begin investing it is important to have a substantial budget behind you to ensure you are financially secure. However, with the availability of buy to let mortgages you can buy your first investment property with a slightly lower budget. If a buy to let mortgage is the route you are heading down, don’t forget to factor in the mortgage repayments when planning your budget. Buying property in cheaper areas will also help to keep your budget on track, leading to higher returns. 

Do Your Research

Research is vital if you are to join the road to success. Spend time looking at the current buy to let housing market, studying the different cities, postcodes and regions that will offer you the highest returns. As well as looking at the best value investment be sure to factor in the population of the area. Is there a high demand for rental properties? Choosing a city such as Manchester could see your property in demand as it has a high population of students and young professionals. 

Factoring in what people are looking for when renting or buying a property is also a key stage in your market research. A recent survey by Hammonds found that over 60% of people were put off by mould and damp and that 57% were put off by any signs of a pest infestation. The survey also found that on the upside, people were drawn towards properties with outdoor space, with almost half (45%) saying they would pay more for a garden.

With more of the population working from home, a space in the house that can be turned into an office is more in demand than ever before. 

Think About Long Term Goals

You have assessed your finances and done your market research, but have you drawn out a long-term strategy? Knowing the direction you want the business to go in will help with questions such as, how to do want to manage the property: do you want to be more hands on or more hands off? Being a hands-on investor means factoring in the process of finding tenants, dealing with any enquiries and issues, and managing your property listings. If you choose to be hands-off, hiring a management company will eat into your budget but it will also save you time.  

 

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Published on: 30th October 2020