Having a property portfolio in the UK is an amazing thing to add to your reputation and future, and it most definitely changes your life for better things to come in.
Like all things we stake a claim on, there’s a risk and reward aspect involved, but keeping yourself well informed will ensure you end up drawing the longer end of the stick.
Understanding your goals will guide you towards the right decisions. Ask yourself if you are investing for cash flow or for future appreciation. Think about the returns are you aiming at.
You need to have the drive and ambition to really build out your property portfolio to make sure your investments are on track.
You are going to need to know how to source property deals in the market. If you want to get into the thick of it and purchase right away, that can be a great way to start. All the experts know that the profit is in the buying.
Let’s say you buy a house and it costs £100,000 and you negotiate that down to £75,000. Way to go maestro! Right at the deal stage your equity is already at a 25% profit. If you crack such a good deal, you can sell that deal easily in the market. If you sell this deal off for a fee to companies or individual buyers, you can charge a £5000 fee on it. The more equity in the deal, the higher the fees which you can charge.
As you keep doing this, that’s so many more deals which you can source, and the higher your income will be.
Proceed Carefully with Investments
If you’re just starting out, seek out deals locally and make lots of low offers to see the response you get. Then as you understand the market and your equity rates, then you can start charging more. You may have to wait for the right time to sell, but as always, patience is a key component to cashing out at the right time.
P&A Property Sourcing offers personalised support and assistance. We’ve built a team of trusted professionals that will assist you with all things needed in relation to your investment portfolio.
It can be tempting to buy a property that is sort of run down and cheaper, and then sprucing it up before putting it back on the market, which definitely increases its value in the process.
However if it’s your first time investing, it’s best to avoid properties that need significant repairs since the property will be vacant for a long while and that may end up costing you more over time. Picking properties that need minimal work will make budgeting easier and you can start renting out sooner too.
Fact of the matter is redevelopment is a popular way to swiftly grow a portfolio. Yhe process involves the purchase of either an older commercial/residential property, re-modelling it, then selling it off for a profit.
Redevelopment offers a lot of advantages. The opportunities are numerous and can help to keep costs down, if you’re familiar with the redevelopment process.
Pro Tip – Make sure to calculate your profit margins beforehand.
Identify your Demographic –
Map out who will be occupying your space. Knowing in advance who will be renting from you will offer up greater insight while buying new properties. Office, retail, industrial, residential. You have to consider all the options out there for you.
P&A has actively been helping people make profitable incomes on property for the last +10 years. Our team is on the up and up in the property scene with the best network in town, and we’ll guide you every step of the way. In case of bad tenants, we also handle evictions and legalities for you. So get in touch and we’ll work out the right investments for you.
Residential – People always need a place to live so residential is always up and coming.
Offices – An office space is designed for companies to lease.
Retail Rentals – Some premises may be customised to suit a specific business.
Industrial Warehouses – Industrial premises continue to be in high demand, which is good for capital growth when you sell.
Understand Taxes and Hidden Costs
Any rent you receive is classified as income, and it is essential to understand how taxes work before you proceed with a property portfolio. You will have to pay taxes yearly. Most commonly, taxes are due the year after the income was earned.
These are some things you have to keep in mind.
- Title and Escrow Fees
- Mortgage Interest
- Property Tax
- Leasing commissions
- Property management fees
- Premiums on your Insurance
- Routine Repairs and Maintenance
- Office and travel expense
- Legal and Accounting fees
Have your Offer on Stand-By
As a property investor, you’re on the lookout for the best value for money goldmines, so you can maximise your return on investment.
If you want to get things done quickly, you may want to offer slightly above the asking price, but if you’re not in a rush, you could strike a bargain by offering below the asking price.
Rent to Rent/R2SA
Investing into this fantastic business model can create a consistent cash flow from property and help you achieve freedom from the regular 9 – 5 job.
This is an option that is sure to work. Say you rent out a property for £500 every month, then you split it up into rooms, or using the rent to serviced accommodation business model convert that space into a serviced apartment or perhaps an HMO(house for multiple occupants) then you let it out for an income of say a £1000 pounds per month
You re-let the space and there you have it, you’ve made £500 profit on the top.
Choose Tenants Wisely and Take Care of Them
If you have good tenants for your property, they’re more likely to stay longer and treat the property as their own. This will reduce the time your property is empty as well as your maintenance and repairs costs.
Plan Ahead of Time
Successful buy-to-let investing requires the ability to think ahead. Scratch out an annual, 5-year, and 10-year strategy with financial plans that incorporate buying, selling, and perhaps even borrowing to give yourself the best chance of success!