The most successful and dedicated investors can see an incredible financial return, but if you are new to the industry, it is important that you have a clear understanding of what it takes to build a successful portfolio; including the amount of time you will need to commit and the level of budget that will be required for the initial purchase and upkeep. You will also need to decide who will oversee the day-to-day management of your properties.
Do your research
Remember that the primary goal of investing in property is to generate a profit. One mistake that plenty of inexperienced property investors make is buying a property with their heart, rather than their head. A successful investment may not be somewhere you desire to live yourself, but is in high demand from potential tenants.
We have all heard the term ‘location, location, location’, and it has never been truer than when investing in property. It is essential to have a detailed understanding of the area in which you plan to invest – particularly the potential downfalls. Start by focusing on one or two areas of the country and get to know them inside and out before extending your reach.
Keep your options open
A little research may reveal that your initial idea for investment needs some tweaking. For example, a one bedroom city centre flat located above a restaurant may not seem the most desirable investment to some, but this sort of property will generally give you a lower purchase price. The rents may be slightly lower too, but not proportionately so, which can lead to higher yields.
Think about the diversity of your portfolio too. There is a range of investment options; from commercial to residential properties, student lets to HMOs. Consider the capital gains and realised returns that each one has the potential to deliver, and the benefits of spreading your risk with a variety of investments – sinking all of your funds into one property can be costly if it sits empty, especially if it’s a commercial facility.
If you require third-party funding to support a property purchase, plump for loans with low interest rates and make sure that you stress test your investment to safeguard your portfolio should interest rates rise and ensure efficient streams of cash flow.
Use the right agents
Once a property is purchased and ready to let, you can save yourself a lot of time and money by employing the correct professionals to manage your affairs. From an accountant who will ensure that the structure of your financial investments covers you against things like loss of mortgage relief, to reliable tradesmen who can fix any issues quickly, keeping your properties habitable and your tenants safe around the clock.
For many landlords, the onus is on them to manage their property portfolio privately – resided to the belief that paying a professional property management company to handle things would be expensive and more hassle than it’s worth. But a reputable letting agent will be able to offer services such as sourcing tenant references and credit checks, overseeing inventories and inspections, collecting rent, and reducing void periods. They can also keep track of warranties and works so you don’t make purchases unnecessarily, for example, replacing the boiler every two years.
In reality, taking on this responsibility personally can end up costing much more money in the long run. The ability to leave the management of existing properties in the hands of a professional portfolio manager will take the pressure off, allowing a landlord to go in search of prospective new properties, or focus on other roles.
Ogilvy and Sneyd provide a bespoke residential property management and lettings service for property investors, buy-to-let investors, and property landlords based over the midlands. It has the ability to manage portfolios over a spread area including Staffordshire, Derbyshire, Nottinghamshire and Lincolnshire. For advice on your portfolio, call our Staffordshire branch on 01538 360245, or our Nottingham ( Sandiacre, Stapleford and Long Eaton) branch on 0115 7528399.