Given the likely impact of the COVID-19 pandemic, a broader downturn in the property market is likely to occur over the coming year. One of the many implications of this is that it will become easier for investors to take those initial steps in building a portfolio. Despite the widespread panic, the public demand for housing hasn’t gone anywhere, and the private rental sector is likely to continue to steadily grow for the foreseeable future.
As such, a property portfolio can represent a substantial return on the initial investment. But how can investors build a portfolio, and get the best from it? Let’s take a closer look.
What do you want?
The first question that would-be property entrepreneurs should ask is what they’re looking to achieve by investing. Is it a growth in capital, or a steady, regular income from buy-to-let? The good news is that most investments will yield a little bit of both, making them resistant to changes in market conditions (or the sort we’re likely to experience). But making the decision as to which one you favour will help to inform your investment decisions in the future.
If you’re just getting started in property, it’s reasonable to assume that you won’t have all the answers. Learn as much as you can about the industry, and try to get some experience dealing with every part of a transaction up-close. If you’d rather outsource to people who know exactly what they’re doing, you can look at some of the wealth managers London has to offer.
Look for Bargains
When you’re making your first investments, you won’t have very much cash to play with. As such, you’ll want to go in with low offers. With market conditions fluctuating at present, people are less willing to part with large amounts to move out – and that means prices will sag. As ever, those that panic stand to lose out, while those that remain calm will be able to pick up the considerable slack.
That isn’t to say, however, that you should be overly eager to part with your money. It is a buyer’s market, so don’t hesitate to go in with a lower offer than the asking price.
On top of your financial concerns, you’ll find it difficult to oversee and manage multiple properties simultaneously, especially if you don’t yet have the skills necessary to deal with them.
To begin with, it’s worth considering things like proximity. A property that’s near to where you live and work will be easier to keep track of on a daily basis than one on the far side of town, or on the far side of the country. Once you’ve built up a trusted network of third-party letting agents, you can outsource this work, and start to cast your net a little wider.
Have a Way Out
At some point in your life, you may want to cash in on the capital you’ve accrued, and sail off into the sunset. Doing this isn’t always straightforward, and sometimes it can take years to find the right buyers. For this reason, it’s important to start planning how you’re going to leave, years before you actually do so.