Tips for starting and building your Buy to Let property portfolio

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Many budding first-time investors have the money, but don’t know where to start when considering property investment.

By following these basic tips, you can identify the most attractive Buy to Lets that fit in accordingly with your goals and aims.

Decide your ambitions

Before making any kind of investment, you need to know what you want to get out of it. Do you want to build an extensive property portfolio focused on long term gains? Or would you rather buy property in order to sell on for capital growth?

There are a variety of property sectors including residential, commercial and student investments. They all fulfil different goals, for example, student property is best for sustainable rental returns, but residential property is superior in terms of capital growth. Know which is best according to your budget and proceed from there.

Know which investments to avoid

Alarm bells go off for experienced investors when they come across a deal that should be avoided. Green investors usually don’t have this same mindset due to a lack of experience and some get their fingers burnt as a result.

Do your due diligence on each and every investment you make. Check out who the developers are and if they have a proven track record of delivering projects on time. Similar background checks should be undertaken for those that progress your sale for you i.e. solicitors, mortgage brokers, lenders etc.

Only once you are satisfied with all of this should you invest your money. Property investment is a massive expense for most people and the last thing you want is for your sale to be held up by greed or incompetence from a party you didn’t do your due diligence on.

Make an investment plan

Once you know your investment goals, you need to devise an investment plan. You may have a sizeable cash deposit but are unsure of where to put it or how much to spend on one particular property.

My advice would be to start off with a low risk, low cash investment that allows a first-time investor to dip their toe in the markets so to speak. This gives you a flavor of what to expect in the BTL markets and earn a decent income along the way. Once you own a few of these types of investments, you may then choose to look into higher risk investments that require a larger deposit.

Even then, only do so if you are willing to accept the risk of losing the money you put into them!

Diversify your portfolio

All property investments carry some form of risk, but you can take steps to minimize this by investing in a variety of different property sectors. Any one type of property can fluctuate in terms of pricing- for example, huge office space take ups may lead to a boom for properties in the commercial sector. Simultaneously, a government measure or political news may lead to a blip for properties in the residential sector. By diversifying, you are able to profit even when market conditions harm one aspect of your property portfolio.

It can help you smooth out the returns while still achieving growth and reduce the overall risk in your portfolio.

Hands on or hands free?

Being a property investor/landlord can either be a full-time job or as hands-off as you like. In our experience, most people don’t have the time effort or means to take on all the responsibilities that being a landlord comes with.

If you want to be hands-on and enjoy making investment decisions, make sure you are able to be fully committed to the running and managing of your properties. Finding a good tenant, maintenance and repair issues and void periods are just a few of the responsibilities involved.

If you don’t have the time or inclination to be hands-on – or if you only have a small amount of money to invest – then a popular choice is to find an experienced and established managing company to handle everything. For those who have busy lives involving family and work, this is the preferred option. Many people see the necessary managing fees as a small price to pay for earning a good income whilst being able to enjoy their lives unhindered by property.

Check the extra charges

When investing in a property, you are going to have to pay a variety of extra fees alongside the actual purchase price of your Buy to Let. These may include-

  • Service charge and ground rent (for a leasehold property)
  • Lettings and management fees
  • Solicitors fees
  • Mortgage broker costs
  • Stamp duty
  • Mortgage repayments

Ask any firm to explain all their charges so you know what you will pay, before committing your money.

While higher charges can sometimes mean better quality, always ask yourself if what you’re being charged is reasonable and if you can get similar quality and pay less elsewhere.

For more information about our latest investment opportunities, click on the Investments tab on our homepage. Alternatively, give us a call on 0208 445 6542 or email us at info@tarquinjones.com for more details.

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