Next Level Investing
For some individuals, property investment is a one-off – a first home or a smaller, second property. For others, property investment is a much more involved process, a long-term strategy involving several properties in various locations, either way its never too soon to think about your financial planning.
Whatever stage you’re at in life, investing is a vital consideration for securing your financial future. For investors that have already started their investment journey, developing a property portfolio is a great way of creating passive income and taking your investments to the next level.
Why Should You Start Financial Planning?
Robust planning is vital at every stage of the investment cycle but never more so than when scaling a portfolio. Property portfolios can come in all shapes and sizes, making it important to decide on your strategy early on. Some investors find success with a particular niche demographic, such as students or professional sharers and decide to stick with that niche. However, it can prove equally lucrative to opt for a more diverse portfolio.
Either way, it’s important to maintain your due diligence and good practice: know and understand the location, understand your target tenant and set guidelines on budgeting.
Any portfolio will come with increased responsibilities and greater workload, making it important that you manage the duties or gain the help of external support. Research the cost implications of working with a property manager or letting agent and factor this into your final strategy.
Before you start thinking about expansion, consider locking in place a strong funding scheme. Many investors who have benefitted from growth in the value of their existing properties generally look to remortgage, releasing equity to fund their next investments.
Remortgaging for Investment
Remortgaging can deliver significant financial benefits, allowing you to release some of the equity tied up in your property alongside securing a lower interest rate and reduced monthly repayments. Depending on the amount of equity, this can be viewed as preferable to taking out a loan, not least because having other outstanding debts may reduce your chances of being accepted for a buy-to-let mortgage on any new property.
Regardless of how you plan to fund your expansion, keeping a track of your finances is vital and can make the difference between a successful investment and a failure. Costs can fluctuate in the early days of scaling and will quickly spiral out of control, making it important to have a clear view of how your portfolio is performing overall.
Ultimately, building a successful portfolio is about good timing as much as it’s about planning and market knowledge. Successful investors will have a strong handle on current and future prospects for tenant demand, researching locations and projects of property price growth to inform their decisions.
It’s also incredibly important to build a relationship with your lenders. By having access to credit you can scale much more efficiently and take more opportunities, investing more and building a portfolio that works for you.
As investors will likely testify, there are always circumstances that will challenge your strategy but the ability to be agile with your investment decisions will put you in good stead. Flexible planning is vital and helps mitigate the impact that life events have on your long-term situation.
If you’re looking to take your investing to the next level, the best thing you can do is perform the necessary financial planning. Complete your due diligence, complete the research and get your affairs in order – it will save time, money and effort further down the line.
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