Whether you’re new to the property investment business or you already own several properties, you need to know how to build your property portfolio in a sustainable way.
With years of experience helping property investor clients manage and grow their finances, we’re well-placed to share our expertise on successful property investment. From researching the housing market and diversifying your portfolio to securing the funding necessary to meet your goals, here are a few of our top tips.
Top tips for growing your property portfolio
1. Start small and stay informed
You may have big dreams of running a thriving property empire, but it’s important to set realistic goals. While there’s nothing wrong with aiming for the stars, you’ll need to start off small and stay informed if you want your business to be a success.
If you’re at the start of your property investment journey, we’d recommend limiting yourself to one or two properties at first. Once you have experience as an investor, you’ll be better placed to make well-informed decisions that reduce risk and move your business forward.
Conducting research into the property market can also make it easier to set achievable targets and budgets and stick to them. The more you know about the potential risks, opportunities and challenges you could face, the better.
2. Diversify your portfolio
Don’t limit yourself to investing in one kind of property or properties in one location. While property investment is generally considered a safe option, no investment comes entirely without risk.
Diversifying your portfolio can help you mitigate these risks. If the housing market worsens in a particular location, for example, having properties in another part of the country can reduce the impact on your business and personal finances.
3. Reinvest and secure finance
Think about how you want to fund your property investment goals. Growing a real estate portfolio isn’t cheap, so you’ll need to consider different funding options.
Once your properties rise in value and you start generating a decent income from from, why not reinvest that money back into your business? Using your profits to purchase additional properties can help you grow your portfolio in a sustainable way.
In many cases, however, you may need to raise finance externally.
There are many different ways to secure external funding, from business bank loans to angel investors. The best route to take will vary depending on your unique circumstances, so we’d recommend reaching out to a financial expert to help you make the right decision.
Lenders and investors alike will want to see how you intend to make a profit, so we’d recommend putting a business plan together to assure them that they will get a good return on their investment.
4. Look after your existing properties
As your property portfolio grows over time, remember to keep maintaining your existing properties. Properties usually rise in value over time, and you can increase that value further by investing time and money into them.
Looking after your investments can also be a tax-efficient move. Repairs and maintenance are often tax-deductible, so you can minimise your tax bill while ensuring that your properties are in good condition. Check out our previous article on allowable landlord expenses for more detail on this subject.
5. Optimise your tax position
The more money you’re able to save on tax, the easier it will be to expand your portfolio in a sustainable way. A tax expert can help optimise your tax position by maximising your expense claims, making the most of different allowances and reliefs, and working out the most tax-efficient structure for your property investment business.
Work with accountants for property investors
At Nicholas Peters, we’re specialists in supporting property business owners like yourself. Our property investment accountants can support you with all your business needs, whether you need help managing your finances, drawing up a business plan, or simply offering practical advice.
It’s our job to make your property investment journey as stress-free and profitable as possible. Get in touch with us today to find out more.