There are many important decisions involved when building a property portfolio. Through making the right choices you can ensure that you are getting the most out of your investments, which will enable you to increase the number of properties that you own.
Being aware of the risks involved with property investment is important when deciding on a strategy. Through extensive research into the topic of investment you can lower the chances of making a mistake and ensure that you are prepared for any unexpected issues which may arise. Talk to other people who have invested in property, attend relevant seminars and read expert articles to ensure that you are fully informed regarding all the necessary matters.
Your First Property
Starting your property portfolio can be a daunting time due to the amount of time and money involved. It is vital to keep in mind that property investment is a steep learning curve and it is unlikely that you will make the perfect choice when selecting your first property. It makes sense to start your portfolio with a small property so that any issues are easier and less costly, to resolve. You can then increase the size of your chosen properties as you gain knowledge and experience. As your portfolio grows it is also possible to utilise the equity in existing properties to purchase other properties, one such option being the utilisation of bridging finance / short term finance.
Your properties must be in desirable locations in order for them to be a good investment; houses which are close to amenities such as schools, public transport links and shops are always highly sought-after. You may also find it advantageous to purchase properties near to where you live, as this will allow you to keep an eye on your target market.
However, it is worth noting that growing your property portfolio across a number of locations can be an effective long term strategy, therefore if one area has a bad year you have other properties to fall back on.
To keep your properties in the best condition it is important to choose tenants who will look after their accommodation and pay the rent on time. If you decide to use a lettings agent they will be able to assess potential tenants on your behalf.
If you can settle on your ideal resident early on, you will be better equipped to decorate and furnish your property accordingly which will increase the likelihood of them making a long term commitment to the property. For instance, if you are hoping to attract young professionals to your property you must ensure that it is fitted with modern decor. A committed tenant is also more likely to pay the rent on time and look after their surroundings.
Although a lettings agent will take a percentage of the rent you earn, they will take the hassle out of renting your properties. There are two different services that lettings agents offer which you may choose to use depending on how involved you would like to be in the letting process. If you are just looking for assistance in the initial stages of renting your property, a ‘let only’ service would be ideal for your situation. As part of this service an agent would advertise your property, find and interview tenants and take the deposit and the first month’s rent. A ‘full-management’ service would see the agent taking care of the rent and property maintenance for the duration of the tenancy.
Article Courtesy of:
Richard Scull is Head of Underwriting with Affirmative Finance, a Manchester based bridging finance lender. Affirmative Finance offer bridging loan options to property developers, financial intermediaries, and individuals when they require funds to complete their projects.