Building a successful, sustainable letting portfolio

Are you looking to invest in your future during this lockdown period? Could the current situation in the UK give you the time to expand your own property portfolio?

You may find it the perfect time to research the best way to invest your hard-earned cash. Perhaps you’ve found what you think to be the perfect property and feel it might be a great step towards creating some financial freedom and making some long-term profit?

Owning a property portfolio may bring about some great changes to your lifestyle – whether this is by earning a second income, having more time to spend with the family or even giving you a change in career.

Are you ready to take the next steps on your journey towards running a flourishing letting portfolio? Yes? Then read on.

Here are our tried and tested tactics to get you ahead:

1. Identify your goals

What are your financial aims? That’s the first thought-process anyone investing in property should go through.

Success requires forethought.

It’s essential to know and understand all your goals. Short-term, mid-term and long-term plans are the most important tools for you to have if you want to stay on track. Ask yourself honest questions and answer them in the same way, honestly. What do you want to achieve right now? Where do you see yourself in the future? – Answering these will determine the best way to build your portfolio.

Having goals and priorities in place will set you off on the right foot.

Don’t do it alone.

Our experience has taught us it’s better to be fully supported; a fantastic financial advisor is one of the keys to success – an essential investment to make your venture work out.

Ask your letting agent if they can help find someone experienced in portfolio management; they’d be more than happy to.

After this, it’s a hop, skip and jump to laying out your twelve-month, five-year and even a ten-year strategy.

Well laid-out financial plans centred around buying, selling and borrowing will give you the best chance of success.

2. Start Small

Starting small – what does this mean? Well, you’ve identified your goals, but how are you going to reach them?

Our best advice is to test the water. Don’t dive in like Tom Daley; paddle first. Find out what works for you and start small with your investments.

Setting up the foundations of your business is the key to building a lucrative portfolio. Find that first property, get that first loan and seek out the perfect first tenants.

You don’t have to do this on your own: ask your letting agent and financial advisor for their strategic advice, which will be tailored to your future goals.

Building a solid portfolio from the start will give you the basis for all your future investments.

3. Create a positive cashflow

As trusted letting agents and advisors, we know it’s so important to keep an eye on your numbers. Rental income needs to cover all outgoings and provide you with a reasonable return.

Always think about your portfolio as a business. From experience we see that landlords who manage their equity are in a better position, and their businesses thrive. Collecting and managing key data always leads to smarter future investments.

Investing in property which has a positive cashflow allows for quicker reinvestment. This often means faster growth.

If in doubt then talk to your letting agent – and budget, budget, budget!

4. Think about your yield

A focus on property yield is more valuable than fixating solely on the value of a property.

From our experience we know that to sustainably grow a portfolio, you simply have to look at how much an investment brings in over a period of time. Don’t focus on the initial pound signs on paper.

Measuring this is a key factor in success: no one wants an asset that loses money – why do you think Wall Street stock traders are so successful? The look for profit and growth, not just worth.

Apply the same principle to a letting property. If the crown jewel of your portfolio is a beautiful property in an affluent part of town, but it isn’t producing enough profit, is it worth it?

Speaking to your financial advisor will provide you with an insight into the profitability of your portfolio – don’t hesitate to ask them.

5. Don’t forget your tenants! 

Finding your perfect tenant is key to running a successful portfolio.

We recommend asking yourself, “who are my ideal tenants?” – Knowing who you want to live in your properties gives you a better idea of the properties you should be buying when you expand your portfolio.

Happy, settled tenants are more likely to stay long term and look after your property well. Knowing who the right tenants are can also minimise periods where your property sits empty.

Remember, without good tenants a buy-to-let business won’t thrive. Working with your letting agent to build a positive relationship with your tenants is an invaluable investment.

6. Do your research

Ever heard the phrase “knowledge is power”? Well, it most definitely is when it comes to sourcing a property. The more you know about the area you’re planning to invest in, the better.

Always – and we mean always(!) – do your research. Find out what types of properties are most in demand where you are, the people who are looking to rent a new home and what amenities there are locally.

Is the town full of students? Or are there more families around who want to live close to the school nearby? Research, and then explore your options to find the perfect addition to your portfolio.

Investigate rental prices too. This means you’ll be able to make an informed choice on the property you buy so you can make the most profit from rentals. Your letting agent will be able to provide invaluable advice here – make sure you ask them what will work for you.

7. Renovate to accumulate

Improving your property constantly will also increase its value. This could potentially increase your equity, making further investments more of a possibility.

Slightly neglected properties often get put on the market for a reduced rate.

This means a few simple renovations – think a lick of paint or new flooring – are financially viable.

Find and use reliable tradespeople to achieve a high-quality finish for your tenants. A good letting agent will have these to hand, saving you time and money.

Doing this will help increase your yield.

8. Remember your exit strategy

We come full circle here – your exit strategy links directly back to your original goals. Planning an exit strategy will let you clarify the final stages of your venture.

What do you want to have achieved when you’re finished?

The best possible end result should be kept in mind throughout your portfolio’s lifespan. This will help you make informed, strategic decisions that are right for you.

9. Get the best letting agent!

Your agent should always have your best interests at heart, as well as those of your property and your tenants. They should manage the day-to-day processes and offer expert, strategic advice when needed.

An agent will save you time and money. They will also support the growth of your portfolio in many different positive ways.

So, there you have it. Seven awesome tips to help you build a successful, sustainable letting portfolio.

Want to know more about starting and building a profitable letting portfolio? Then get in touch today – there has never been a better time. We can answer any burning questions you may have or just have a confidential chat about your options.

Call us on 01623 392352 or email info@smithandcoestates.co.uk

We’re always happy to help you with your property portfolio decisions and can offer our expert advice to support you, whatever your circumstances this lockdown.

Warm regards

Sara