Tips For Growing a Property Portfolio Fast
For many property investors and BTL landlords, the dream of building wealth and financial freedom is often the driver behind building a property portfolio.
While starting in property is relatively easy, many investors struggle to make the jump from 1 or 2 properties to 10, or 20+ and find the growth of their portfolio to be slow and stressful.
But, it doesn’t have to be that way. This article will provide some of the key tips to scale your portfolio fast.
1. Start with one strong investment
How you start your portfolio can strongly determine the future growth and success.
When you’re starting out in property, the first-project is everything and has the power to have a snowball effect if the deal is right. If done correctly and the numbers stack up, you can then buy into the next deal, and so forth.
Contrastingly, the wrong first deal can leave you with a negative experience and even worse, an unhealthy financial situation that prevents you from investing in any further projects.
Many experienced investors describe their first property investment as their hardest one, with the following ones significantly easier.
While you may want to grow fast, it’s important to walk before you can run in order to build a solid foundation for your future portfolio. It’s wise to start small and within a local area that you know inside-out.
2. Always buy at the right price and the right time
The key to any successful investment is to buy at the right price. Buying property below market value and selling it at a higher price is a way of providing a strong return so that you can re-invest into your next project and rapidly build your portfolio.
Properties are often being sold for less than they’re worth, particularly if the sellers’ circumstances have changed and they are in need of a quick sale. The key is to make low offers and negotiate with the seller.
Additionally, buying properties that have a positive cash flow or provide you with profit, gives you the leverage and equity to invest in your next property.
Timing is also crucial and buying property at the right time in the property cycle means you’re more likely to buy at the right price and get the best return. A good time to buy is when the market has hit rock bottom and is starting to rise in value again. Buying when the market is booming could mean you’re waiting a long time see a significant return – which means you slow down the speed of growing your portfolio.
3. Develop a cashflow strategy
Investors that do not have a cashflow strategy often also lack an investment criteria and simply take deals that they think are good, rather than going for the very best deals.
The desire to grow a portfolio quickly means many investors jump at an opportunity to purchase property that doesn’t turn out to provide the returns they’d expected.
Before purchasing a property, you need to establish a cashflow strategy and make sure the numbers add up. Always buy with logic and head over heart.
4. Get educated
With the right education, investors can understand what the right deal is and what due diligence is needed to make the deal a success. This includes understanding the different methods of marketing, how to finance deals, understanding the finance process, and how to overall manage the project.
Whether you invest in a mentor or attend regular property training events, it’s vital you keep expanding your knowledge and learn as much as possible about the industry – even if you’ve already started your portfolio. Like anything, you learn with experience, but when you’re making decisions that cost significant amount of money, the more you know, the better.
5. Expand your marketing
You can’t rely solely on estate agents to bring you deals. Just because an estate agent says it’s a good deal – doesn’t mean it’s a good deal.
Instead, use social media and niche groups to engage with other deal sourcers and motivated sellers. Providing the deals meet the criteria you’re looking for, you can potentially cherry pick your deals and find the right one to suit you.
6. Leverage your power team
In order to grow a profitable portfolio fast, you need to accept that you simply cannot do it all and that you need a power team to help you along the way.
Using great solicitors, mortgage brokers, builders, tax advisors, surveyors and other required experts will means you can put your trust in the people that know their field inside-out to help you scale, rather than wasting time trying to learn every aspect.
A big mistake that first-time investors make is that they focus too much on the details, when they could be actively looking for the next perfect deal to scale their property business.
7. Work closely with your finance broker
The finance broker you use is imperative to the success of your project as well as the speed at which you grow. An experienced broker will be able to get the right finance in place and often within a tight deadline.
Bridging finance is a widely-used finance solution for investors that need cash quick, allowing you to purchase property fast and spontaneously, break a property chain or carry out the required work on a property. For many investors, particularly first-time investors, bridging is an essential way to start or scale a property portfolio, before re-financing onto a buy-to-let mortgage.