If you’re looking to make a name for yourself in the property market, you’ll want to start thinking of the best ways to build a strong portfolio.
Having the ambition to become a business tycoon is admirable, and we encourage it, but it’s not without its fair share of planning.
Like all promising business ventures, the starting point is the most important thing to get right.
This article will explain the best ways to build a property portfolio.
Do your research
As we say, planning is everything. So, before you start looking at house prices in your local area, you’ll need to consider what sort of property portfolio you want to create.
Do you want to own multiple letting properties? Or do you want to buy property to sit on for a while until the market value gives you a healthy return?
There’s no wrong answer. It just depends on how long you’re willing to wait before you start making an income from your investment.
Either way, you’ll want to conduct market research on similar businesses in the area you want to invest in.
Suppose you’re looking to let apartments or houses. You’ll need to check how much renting rates are for similar properties, as well as consider insurance costs and what sort of tenant you want to have.
Additionally, consider looking at local buy-to-let areas to determine how much of a return you’re likely to make.
Start off small
There’s no sense in rushing the early days of your property business, but people who start their very first business can sometimes be too quick to expand.
While ambition is great, you need to lay the groundwork before turning your portfolio into a property empire.
Once you’ve decided on the type of portfolio you want, buy the first property and start managing it. Once you’ve found your feet and decided on the right structure for your business, you can consider expanding.
Be financially cautious
As we’ve mentioned, it’s best not to rush into any major decisions until the time is right. This especially rings true when your finances are involved.
Say you have some unexpected maintenance issues at one of your properties. You’ll need to make sure you have the money to cover any emergency repairs. Otherwise, you could fall behind on other costs, such as mortgage payments, landlord insurance, or any loans you may have taken out to expand your portfolio.
The same applies if a tenant decides to move out. Will you have enough money to continue paying for the upkeep until you find someone else to move in?
In these situations, it’s best to have an accountant by your side to help you keep track of your income. We’ll help monitor your cashflow and help you decide the best time to start investing in any further properties without it being a detriment to your current portfolio.
Have an end goal
Although you may just be getting started, you’ll want to have a clear direction to move in.
Are you planning on making your property business a full-time job? Or to supplement your current income? Or are you waiting to sell all your property at once and retire when the right time comes?
Whichever it is, you’ll need to have a solid exit strategy which will allow you to step away from your property business with a healthy return to fall back on.
If you’re unsure, we can provide you with business advice to help you think ahead and plan for your future.
Let’s build this together
We’ve helped countless property investors and owners stay on top of their portfolios with guidance on tax structure while providing expert business advice. If you think you could use our help, our team will be happy to talk to you.
Get in touch with us today to discuss your property portfolio.
