The experts at Belvoir reveal their top tips for creating a successful property portfolio…
“Whether you have two rental properties or 20 it’s vital that you plan and prepare adequately in order to manage your portfolio effectively,” says owner of Belvoir Bury St Edmunds Patsy Day.
“You should always have a plan of action and it’s important that you know in advance what the purpose of your portfolio is and what you want it to achieve.
“Think long-term. How many properties are you looking to add? What will the timescales be? And how will you manage the portfolio as it grows?
“Be organised too. Having your finances in place will help you act swiftly when new opportunities arise and having your solicitor and surveyor on stand-by means you won’t be wasting valuable time finding the right people and getting quotes once you have secured a property.
“Think about timings for new investments also. Summer, for instance, can be incredibly competitive and certainly locally to our office we find that property prices tend to drop around Christmas time.
“So, when you’re creating your portfolio, or extending it, know the ‘what, where, when’ and think ahead to get ahead…”
Know your exits
As part of your long-term portfolio planning you should also ‘know your exits’ says General Manager of Belvoir Peterborough and Belvoir Cambridge Emma Falco.
“Creating an exit plan from the outset is vital,” she says. “Broadly speaking there are three main reasons why people invest in a buy-to-let property: as a pension pot, financial freedom or to pass a property on to a child. Before you even create your portfolio you need to establish what your long-term goals are in order to ensure you’re purchasing the right properties to help you achieve them.
“Once your portfolio is in place it is important that you review this with regards to your exit strategy at regular intervals,” she continues. “Carefully assess how each property is performing and if one is not operating in line with the rest this may change your exit strategy or bring it forward.
“Always have a clear exit goal in mind (whether that be rental return, capital growth or both) and constantly review and reassess your portfolio to ensure you’re on track.”
Sources and resources
Investors with multiple properties can often benefit from ‘portfolio power’…
“Owning multiple properties can be advantageous in many ways,” says Emma. “It can give you financial flexibility for buying further properties, plus it can be useful when negotiating rates and building relationships with contractors and suppliers.
“Using the same tradesmen across your portfolio, for example, will often enable you to negotiate a better rate for repeat business. Also, as you will have experience of their previous work, you’ll be confident they will do an efficient job with little chance of unexpected costs. Likewise, this also applies to gas safety engineers and other suppliers and contractors that you will need to use regularly throughout your investment period.
“Consistency in terms of interiors and appliances throughout your portfolio can be beneficial too,” she continues. “If you stick to the same kitchens, bathrooms, carpets and white goods etc across all your properties you’ll be able to estimate costs with ease and work out whether additional properties will be good investments even before you’ve bought them.”
When considering extending your portfolio further the help of a property management agent can be invaluable.
“Through our deep understanding of the market we can help investors who are looking to add additional properties to their growing portfolio,” says Patsy.
“After completing a lengthy discussion with the investor about their budget and needs, we can then match these up with available properties in order to help maximise the overall portfolio’s investment potential.
“We are able to recommend where to buy, what property-types will best suit their needs and what tenant-types the properties are likely to attract. We are also able to advise about yields and potential for capital growth, plus rentability and the likelihood of potential ‘voids’ during the period of time in which they want to invest.
“As well as researching the market on behalf of our landlords, we can also view properties for them too and give feedback on how well they are likely to fit in with their current portfolio – this is especially useful if you don’t live in the area as in today’s buoyant market investors have to move very quickly.
“After the viewing we can then advise about the likely rent, the amount of time it’s likely to take to achieve that rent, and what cosmetic and legislative work will need to be carried out to get the property ready for the rental market. We can also price up any works and arrange for them to be completed.
“In short, we’re thinking ‘smart’ on behalf of the investor so their money can be spent wisely and effectively across their portfolio.”
“Once purchased, a property management agent can continue to look after the portfolio for you and ensure each of the tenancies runs smoothly,” continues Patsy. “We can collect rent, chase late payments, carry out regular inspections to make sure the properties are being cared for and renew rental agreements to ensure certainty of income.
“We can also manage routine maintenance issues and emergency or reactive repairs, plus ensure work is completed to the appropriate standard and cost effectively.
“In addition, a property management agent can regularly review rents to ensure the portfolio keeps pace with the market, plus we can obtain frequent property valuations in order to ensure that capital growth is delivering.
“Putting your portfolio in the hands of a good letting agent will ensure consistent management across all of your properties and help maximise your collective portfolio’s full potential.”
Article Courtesy of: Belvoir Lettings