How to build a successful property portfolio

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portfolio

Property investment is one of the most popular investment methods, allowing people to make attractive returns from both rental returns and capital growth. With the right outlook, attitude, and preparation, investing in property can be a lucrative and successful venture, especially if you decide to purchase multiple buy to let properties.

Setting out to create a property portfolio can be a daunting process, and you might be questioning where to begin. If you’re looking to build a diverse and profitable portfolio, check out these tips on how to get started.  

Start by identifying your goals

What are your long-term goals and what’s your motive for investing? The reasoning behind a desire to invest in property will dictate the type of investment you make. For instance, if you’re more focused on generating monthly income through rental returns, you should seek out an investment opportunity with a high rental yield. Or, if you want to use your investments as a way to generate wealth later in life, capital appreciation should be your main focus.

Another thing to consider is whether or not you want to make a hands-on or hands-off investment. This means whether you want to take on the responsibilities of a landlord or hire a property management company to do this for you. The latter will cost you more in expenses but may be worthwhile if you want to build a large and varied portfolio which you don’t think you’ll have the time to manage yourself.

Make it diverse

You’ve likely heard of the term diversification when it comes to investing, and diversifying your property portfolio is a key factor to keep in mind. If you’re buying a range of investment properties, you wouldn’t want them to all be exactly the same. If they were, you’d be more susceptible to failure if the location of your investment’s housing market goes downhill.

The phrase ‘not putting all your eggs in one basket’ applies to this, as purchasing opportunities that vary by location, property type, and cost, will help you spread the risk more evenly. This doesn’t mean you should be sloppy with the investments you make, however. You should still concentrate on purchasing the right properties in the right locations, such as Liverpool and Manchester. These cities have been at the top of the list for UK property investments in recent years and show signs of growing even further in years to come.

Everything from house price growth to capital appreciation is thriving in these two cities, making these locations a good place to start when building your portfolio. Investing in a Liverpool student property and a Manchester residential property with RW Invest is a good way to begin diversifying your investments.

Establish an exit strategy

Once you have thought about the investments you’re going to make and the type of investor you aim to be, you need to think about the end result. An exit strategy is something an investor puts in place, which is a plan on what to do if they sell their properties later in life. This includes deciding on the best time to sell, and how they’re going to approach the situation. Think about whether you want a retirement income or if you plan to liquidise your investments. Doing so will help give you better clarity, allowing you to make more sensible decisions throughout your investment journey.

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