9 Tips To Scale Your Property Portfolio
When done well, investing in property can provide lucrative returns. In order to go from being a beginner landlord to a property investor with a large profitable portfolio, there are many things you need to consider.
Before you scale, it’s vital you gain experience within the industry. Starting small is the best way to learn and if you fail, at least you’re failing on a fairly small scale rather than a large one. You need to walk before you can run and have a good understanding of the property industry before taking big steps.
If you’re confident you’ve got what it takes and you’re ready to take the next step in your property business, here are some tips to help you scale…
1. Define a clear strategy
Some investors invest for cash flow, while some invest for an increase in the value of the property (capital gains). However, by diversifying your investments it is possible to benefit from both strategies.
Either way, it’s important to have a clear strategy, rather than investing in different types of property purely for the sake of diversification. Your strategy should be clear but allow for alterations and refinements along the way should your circumstances or the market change.
2. Increase the value of your properties
You can increase both the rental income and the value of your properties by doing minor or major renovations. Additionally, properties that need work are generally the properties that are sold at a discounted rate. By purchasing these properties and carrying out work to increase their value, you are increasing the rental income as well as your equity which can then be used to buy more property.
3. Diversify your portfolio
The reason investors diversify their property portfolio is to mitigate risk exposure. Spreading your investment across a broad spectrum is how investors balance risk and reward in their portfolio. The property market is always changing, and if unforeseen issues arise (such as COVID-19) that have significant effects on the industry, having a diverse portfolio means you can navigate your way through difficult times and still make money.
You should consider diversifying your portfolio by investing in different property strategies, e.g, BTL, HMO, developing, flipping, as well as commercial and residential property types. You could also try investing in different locations where there are different opportunities available.
4. Leverage finance
In order to scale and scale fast, you’ll need access to the best finance solutions. Joint ventures and partnerships mean you can benefit from utilising someone else’s experience, connections and cash.
Additionally, harnessing the right property finance can allow you to grow in a way that wouldn’t have been possible (or would have taken a lot longer) had you relied on your own funds.
The right type of finance can catapult your property business and a specialist finance broker such as Ramsay & White will be able to advise on a range of options, some less conventional than others, to help you scale your portfolio.
5. Play to your strengths
It is crucial to establish what your strengths and weaknesses are. Having a variety of investment types might not be for everyone, and if you’re particularly good at investing in Single Lets but find HMOs too stressful, you may be better sticking to what you know and scaling your investments in Single Lets.
Without risk, there is no reward, but the key is to take calculated risks by understanding your strengths and weaknesses as well as the market and the opportunities available to you.
6. Build strong relationships
Relationships are the core of any business. When it comes to property, you need to build a power team of reliable people that will help make your projects a success. From tradespeople, estate agents, finance brokers, project managers, deal sourcers, the list goes on. Everyone involved should be trustworthy and aware of your goal to help you achieve it.
7. Get systems and processes in place
In order for any business to scale, the correct systems and processes need to be in place. Systems and processes serve as the essential building blocks to grow a property portfolio. If there is a clear order and system in place for tasks to be carried out, you can complete the deal, move onto the next one quickly and keep scaling.
8. Set up the right company structure
Ensuring your business is set up in the most tax-efficient way will allow you to generate the most profit from your portfolio. The right company structure depends on your investment strategy and this can be the difference between a profitable investment and a poor one. Consult a specialist Property Tax Adviser to make sure you’re maximising your returns.
9. Maximise time using deal sourcers
While deal sourcers will charge a fee, time costs money and a great deal sourcer is worth every penny. Deal sourcers will go above and beyond to find the best investment opportunity that meets your desired goals, so you don’t have to waste time searching the market. This is particularly useful if you want to invest in an area you are not familiar with and do not have time to search for and view properties. Deal sourcers can help you invest in more property in a shorter space of time than you could do on your own.
Do you need help to get your property business to the next level?