Thoughts on Starting an Investment Property Portfolio

People decide to invest in property for a wide variety of reasons and there's no doubt that it is an increasingly popular option these days.

We've seen excellent growth in equity in recent years as very high buyer demand chases a generally short supply of available properties at the same time as the rental sector has boomed. It has thus become easier to envision, and plan for, good returns.

Mortgage interest rates are still at historically very low levels, adding further to the appeal of developing an investment portfolio, especially if ready cash isn't available.

And it's also very feasible to start out in a small way and build from that base. Possibilities here include buying and renovating relatively cheap properties, then turning them around for a decent profit and reinvesting in something with better return potential.

The other beauty of beginning your portfolio in a modest manner is that you will be able to learn from any mistakes made along the way. Your start in property investment is, naturally enough, the time when you'll learn the most, so committing yourself on a limited basis, in terms of what you can initially afford, will pay dividends as your portfolio expands.

Of course, sometimes a single, one-off property investment can be enough to satisfy the ambitions of some part-time investors, perhaps looking to develop a passive income stream for a wide range of goals. In that sense it's more important to get it right first time, so the other thought here is that you can never get enough good advice when you're starting out, including consulting your financial advisor(s) and, not least, seeking out the insight of an agent with good experience of what to look for in an investment property and also what represents the best potential value in the area. And why not talk to other property investors in your circle of friends, colleagues and acquaintances. Their experiences and knowledge can be invaluable.

Do your own research too, because it's often a creative vision of what a property can become that leads to more innovative, and often more lucrative, revenue generation. These days, for example, vacation homes in the right location can facilitate short term rentals that are likely to produce the highest returns. The rise of websites like Airbnb and HomeAway has taken marketing of this type of property to a more sophisticated, and indeed worldwide, level.

And while we're talking about market research, always ensure that the property you're investing in matches the needs of specific buyers and/or renters, especially in terms of size, affordability and location. As best as possible, put yourself in the mindset of the people you are targeting. In other words is your property offer going to be of appeal and does it satisfy certain critical needs? As time goes by, this kind of thought process will become automatic.

Remember also that there are great property management companies who can take over the day to day business of looking after the home in every way. They can be particularly useful if you have other calls on your time.

I hope the above thoughts give you a little insight into getting a portfolio started. No two investors have precisely the same needs and circumstances, so why not contact us today for an informal discussion of potential strategies that could match your objectives. We have huge experience in helping our clients in this way.

Dominic Nicoli