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Despite reports that buy-to-let purchases are on the decline in comparison to last year, there are still landlords looking to expand their rental property portfolio to cater for a growing rental market.
However, expanding a property portfolio requires a great deal of planning, research and consideration to ensure you’re making a sound investment. From property diversification and investment budgets through to location and experience, this article will share essential insights for landlords looking to build a thriving property empire.
Draw on your experience
Whether you’re a landlord for one property or several, over time you will have naturally accrued experience, both good and bad. Before adding to your property credentials, it’s vital to take the time to review the successes and failures of your time as a landlord. Think about the various challenges you’ve faced and overcome, which types of property or rental arrangements suited you best and what you would do differently with new investments.
Reflecting on previous experiences will help you to make a more informed decision on the type of property, rental area and target demographic you believe will deliver the most worthwhile return on your investment.
Nail down investment budgets
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It goes without saying that the most important aspect of expanding your property empire will be securing the capital to invest. Firstly, you need to establish how you’re going to fund the expansion, as well as what you can realistically afford. This should allow for monthly loan repayments, building maintenance and any renovation costs, if applicable.
Whether you’re planning on purchasing it outright, applying for a buy-to-let mortgage or seeking joint investors, always make sure the financial aspects are nailed down well in advance.
Keep up-to-date with market changes
The buy-to-let market is currently going through a series of changes with regards to taxes, interest rates and lending restrictions, so it’s important to have a sound understanding of the buy-to-let marketplace and how that may affect your plans for property expansion.
From increased stamp duty and reductions in tax deductible mortgage interest to more stringent applications for ‘portfolio landlords’, being aware of what’s applicable to you should help you avoid any unexpected expenses.
Property rentals should be influenced by an assured standard of utensils and facilities, and as a landlord it’s your responsibility to provide this – as the old saying goes, quality over quantity!
When looking to expand your property portfolio, it’s best to ensure you’re able to invest in high-quality fittings to guarantee a problem-free experience for landlord and tenant alike. Ensure everything from the boiler to the bathroom taps are in good working order before making any property investment.
Research key locations
Location is everything when it comes to buying property and, if you’re expanding your rental property lineup, you’ll want to give this aspect plenty of thought. Finding the right property in the right location requires in-depth research if you want to maximise your return on investment in the short and long term.
When considering locations, think about the future prospects of the area, as well as its current appeal. You want a guaranteed tenancy with the highest possible rental profit margin, so make sure to factor in things like transport links, amenities, the current demographic, any planned developments and anything else that would make the property more attractive to renters.
Account for property management
Adding properties to your portfolio involves weighing up not only the financial implications, but also the time management elements. With more properties to oversee, it’s possible for some landlords to become stretched trying to manage more locations and tenants. For this reason, it can be beneficial to seek assistance from a property management company who can deal with tenants, take care of the day-to-day maintenance and, in some cases, find new tenants. Naturally, this service comes with a fee – but for peace of mind that everything’s taken care of, it could be money well spent.
Consider property diversification
For some landlords, expanding their portfolio is about diversifying the types of property they own – and it’s often a natural progression. Stepping up from smaller properties to larger ones, or even branching out into commercial property, can be a great way to increase rental income and profits. But it’s important to understand the differences in the types of property you take on beforehand, and carry out thorough research into the unique demands of each property type in terms of upkeep.
It’s clear there are still some fantastic opportunities in the buy-to-let market for landlords looking to grow their property empire and, with these essential insights. you’ll have all the information you need to find a successful investment to add to your property portfolio.