7 considerations when creating a property portfolio

You may have dipped your toe in the water, recently become an accidental landlord or maybe you’re despairing at the poor returns on your pension.

Whatever the reason, if developing a property portfolio sounds like the right kind of wealth strategy for you, we can help.

Doing so can open a world of riches that you may have only dreamed of. However, it’s not simply a case of diving in and hoping for the best.

Like anything, the more time, care and money you invest in it, the more it can reward you.

Below are 7 pointers to developing a portfolio from scratch:

1. Treat it like a business
While you may start out thinking of this investment as a way to develop income outside of your ‘work’, the same business principles should apply here. You’re in this to make a profit after all.

So do the research, keep an eye on property trends and join a network of like-minded investors, just like you would at work. It doesn’t mean it can’t be fun, just don’t make decisions for fun – or in any other emotional way for that matter.

2. Know your limits
Before you start, you need to consider all the realities around how you can build your portfolio. This includes what you can afford and more importantly, what you can’t afford.

These days deposit rates for buy-to-lets are high (around 25%), and there are things like legal, and other fees to consider too. Plus, with tighter regulations, lenders will not lend to you unless they think you can afford it. So, remain measured and work up your portfolio over time.

3. Take it one doorstep at a time
As the saying goes, Rome wasn’t built in a day, so it follows that your portfolio won’t be either. Take your time to research and invest in one property before switching your attention to your next purchase. Time is on your side, so give it due diligence and get each purchase right.

4. Buy low and sell high
The effects of the property crash of 2008 offer a stark reminder just how prices can fluctuate. This is where doing your research on prices can come in useful.

Use the same principles as you would on the stock market and ensure that your overall portfolio is not solely based on property. It’s a spread of investments that works best, as it will give you a buffer if the property market hits a glitch.

5. Invest in your tenants
Ideally, you want good quality tenants who will pay regularly and look after your investment. So, looking after your tenants will ensure you’re not left with an empty property to fill time and time again.

One way to ensure they’re happy is to hire a property management company but ensure they will be one that matches your goals and values as a landlord.

6. Save your surplus away
Sure, whatever profit you make is yours to do with as you wish, but if you’re savvy, you’ll save at least 20% of the surplus away.

This not only provides a buffer for you when times are bad but will also compound to grow your wealth even further for reinvestment and more profits.

7. Raise the value of your portfolio
Reinvesting in your property will not only keep your tenants happy; it will also keep it at a higher end of the market.

By being willing to modernise, decorate and keep it maintained, your property will gain more value over a long period of time.

To conclude

It may seem daunting to start on the commercial property ladder but remember that everyone started somewhere. Investing in any portfolio involves a series of sensible, gradual steps, but with the right strategy, great rewards can be reached in the long term.  

Here at Platinum Property, we’re always happy to help with any part of the property process. Click below to find out more