How to Build a Property Empire: Starting Your Property Portfolio
Ask any property investor what they’re looking to achieve and they’ll tell you the same thing: own more property. Starting a property portfolio needn’t be a huge challenge, it’s all a matter of proper research and investing within your means.
What follows is an excerpt from our Next Level Investment Guide: How to Build a Property Empire. Download the full guide today.
Don’t be afraid to start your property empire like any other investment. It’s all a matter of preparation. Building a portfolio will largely be dictated by both your current finances and your financial goals. If you’re looking for long-term returns that can be used as a retirement fund, for example, you’ll work in a different way to those looking for short-term gains.
In terms of research, concentrate on three key areas: Location, Past Performance and Demand.
Choosing Your Investment Location
Location will always be a major part of your research and should be continued throughout – especially if you’re looking to have 5+ properties. Pick out several potential areas that are showing good growth, have excellent amenities or demonstrate exceptional potential for the future.
That last point is particularly important as emerging locations mesh well with long-term strategies, allowing you to take advantage of natural market growth. This is the bread and butter of any portfolio investment.
In terms of amenities, you’ll want to consider transport links such as nearby train stations or restaurants and bars that appeal to tenants looking for a certain lifestyle. Similarly, having well-known or large scale business nearby can attract workers that will need somewhere to live – which is where your investment can come in handy.
So, to recap, you’re looking for areas that are either established investment destinations or have the potential to become an investment hotspot. Having a mix of both is perfectly viable as this is just another form of diversification that can help you mitigate risk and build success.
If you’re looking for the next top location, we have a number of resources available including our 2021 Market Forecast which details top areas for metrics such as yields, capital growth and upcoming investment. Alternatively, consider using sites such as Hometrack or other common research portals.
Identifying Past Performance
Past Performance is fairly self-explanatory. Looking at how your chosen locations have performed in the past is a great way of making informed decisions going forward. Identifying a winning track record doesn’t just apply to your location, it applies to your developer as well. You want to ensure you’re working with a reputable company, especially in challenging markets such as those we’re facing at the time of writing.
Investing for Tenant Demand
Finally, demand. It’s easy to get so wrapped up in the excitement of choosing your next city or your next development that you forget the most important part – the tenant. One of the biggest challenges property portfolios can face is void periods, especially if multiple occur at once.
Choosing a locale that has plenty of tenant demand means you can maintain consistent rental returns. Once you have a tenant in place, working hard for them in the first place can mean you dodge void periods further down the line. As you’re performing your research, you should also be thinking about your chosen strategy. Many investors will adopt a traditional single-let BTL investment but there’s plenty of different property types and demographics you could be working alongside. Here’s a breakdown of the most common investor strategies that you should be considering.