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While some people who choose to invest in property would rather purchase just one buy to let investment, many others choose the option of starting a property portfolio. There can be many benefits to property portfolios compared to owning just one investment, such as access to multiple streams of income. To succeed, however, you need to create a successful property portfolio strategy. If you’re serious about buy to let and want to find out how to build a property portfolio, take a look at these following tips in our ultimate guide.

What is a property portfolio?

Building a property portfolio in the UK means to purchase a number of buy to let investment opportunities with the aim of generating a significant return on investment – more so than with just one property.

How long to build a property portfolio?

The time it takes to build a property portfolio can differ. If you have a good knowledge of the property market and have created a solid strategy, it’s possible to build a property portfolio in one or two years. However, this depends on your mindset and the amount of money you have available to buy properties with.

Buy To Let Rental Yields Guide

Think about long term goals

Property investment is a serious venture that shouldn’t be rushed into. Before you begin building a property portfolio in the UK, you should take some time to think about your ultimate goal.

Capital growth or rental returns? 

Once you’ve established the reason behind making an investment, you’ll have a clear idea of the steps you need to take and the qualities you should look for in your selection. For instance, you might decide that your main focus is for capital growth returns, and so finding a property with high growth prospects is ideal. Alternatively, your main focus for UK property investing could be rental returns, in which case you should find an opportunity that comes with high rental yields. Of course, the most successful investments will factor in both capital growth and rental yields, so it’s always a good idea to look for a property that meets both these requirements.

Hands-on or hands-off?

You should also think about whether you want to be more hands-on or hands-off with your investment portfolio. Many people who look for a property portfolio for sale will want to take on landlord responsibilities such as finding and dealing with tenants, whereas some investors prefer to leave these things down to a property management company. Enlisting a property management company will mean more outgoings, but is often crucial if you don’t personally have the time to meet the demands of managing properties yourself.

Buy To Let Rental Yields

Do your research

Like any investment, one of the most important steps in finding out how to build a property portfolio is to do some market research. Spend time researching the UK buy to let market to discover the best cities, regions and postcodes for property investment.

Look at yields

Rental yields are the percentage figure that dictates the level of rental returns you’ll get from your investment. One of the number one rules on how to build a buy to let portfolio is to look for the best rate of return, and certain areas of the UK will have different yields to offer. Areas with the highest yields in the UK are those in the North, such as Manchester and Liverpool. Here, yields can reach heights of 14 per cent in certain postcodes, so it’s definitely worth factoring this research into your property portfolio strategy.

Consider house price growth

In order to know how to build a rental property empire, one of the most important tips for property investors is to be clued up on the growth prospects for each of your investments. This way, if your buy to let property dramatically increases in value, you’ll benefit from a huge return on investment when you choose to sell. Again, the market value of properties in the North of England has seen a lot of growth over recent years, with predictions for future increases. In the north-west, property prices are expected to increase by 18.1 per cent by 2022.

Pay attention to the population

The population trends of a city can dictate levels of demand. If an area has a high population of young people or students, for example, your rental property is more likely to be in high demand, meaning you’ll experience fewer void periods and rental costs will rise. Manchester is a perfect example of a city where the population has benefitted its rental market. Manchester is home to a large number of students and young professionals, and has seen rental cost growth of 5.76 per cent in recent years.

Keep track of your finances

Starting a property portfolio is a business in itself, so don’t forget to treat it like one by monitoring your finances as part of your business plan. Keep an eye on any incomings and outgoings, factoring in costs for things like repair and maintenance, and make sure that you’re making enough money to cover mortgage repayments and other possible costs. Your property portfolio will never expand if you don’t keep on top of money management, so this is a key piece of advice on how to grow a real estate portfolio.

UK Property Search

Make it diverse

The best investment strategies look at creating property portfolios that include a number of different investments. By investing in just one type of property, you’re limiting your potential and making yourself more susceptible to failure. Say your portfolio was filled with multiple student properties in the city centre of one city – if the market slowed in this area or the city experienced a lull in university applicants, your entire property portfolio would suffer. If you’re serious about learning how to grow a property portfolio, diversification is one of the key elements to consider.

Invest in both residential and student properties

Rather than simply sticking to one type of property which attracts a certain type of tenant, you should invest in both student and residential property types. Both these investment types are known to be extremely successful and come with varying costs which makes them perfect for a diverse portfolio. For instance, if you’re wondering how to build a property portfolio with 50k , student accommodation is a good place to start as this tends to be a particularly affordable asset.

Spread your investments across top-performing areas

While you’ll likely have a good idea of the area you want to invest in, you shouldn’t put all your eggs in one basket by investing solely in this location. Instead, narrow your research down to 3 or 4 of the UK’s best-performing buy to let cities, and then hunt for a varied mix of investments in these areas. One property portfolio example could be a portfolio that consists of an investment in each of the top-performing rental yield postcodes in the UK.

Establish an exit strategy

One of the most important aspects of building a property portfolio, and property investment in general, is to have an exit strategy. An exit strategy looks at the end result of each investment, considering what to do when it comes to selling your property. Your goals will tie into this, as if you’re investing as a way to build an attractive retirement fund, you’ll want to generate as much rental income as you can before selling at the right time. By researching market trends and considering property price predictions, you can get a sense of the best time to sell your investment property for optimum gain.

If you’re looking to find the perfect options for your property portfolio for sale, and want to put your knowledge on how to build a buy to let portfolio into practice, get in touch today. We have a range of opportunities available in Liverpool and Manchester that are perfect for building a diverse portfolio.

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