Starting your property portfolio
Are you considering starting your property portfolio? At Knight Knox, we have a lot of enquiries from first-time investors on how to get started with UK property investment. With this in mind, we are going to share our top tips and advice on how to start a property portfolio.
Making the decision to start a property portfolio can feel very daunting, but it is one of the most rewarding investment classes available. The UK property market has consistently over-performed in recent years with house prices rising dramatically, and the average UK monthly rent reaching over £1,000. It’s clear that now is a great time to invest in UK property.
If you like to capitalise on the success of the UK property market, follow our simple steps on how to successfully start your property portfolio.
house price growth in the year to December 2021.
Average rent pcm in the UK. (November 2021)
Predicted increase in rents throughout 2022.
1. Researching your property portfolio
Before you start a property portfolio you need to do some thorough research, so that you can clearly plan out your property investment strategy. You will need to research; what areas you would need to invest in to get the best returns, what kind of tenants you would want and how you would manage your properties – whether you manage them yourself or you enlist a management company. If you’re purchasing an off-plan property, you will need to learn about the procedures and risks that comes with buying a property before it is built to ensure that you’re in a position to make that type of investment.
If you’re abroad and you’re looking to start your portfolio in the UK, you will also need to familiarise yourself with UK taxes and legislation when it comes to buying property. Lack of research could mean that you won’t get the most out of your property portfolio, so it’s vital that you do your research properly before viewing any properties.
2. Financing your property portfolio
Getting your finances in order is a vital step when starting a property portfolio. You need to consider your budget and how you will go about financing your properties – whether you’ll need a mortgage or you’ll purchase your properties in cash. The amount of capital you’ll need to start will vary according to the type of property you have in mind and what you will use to fund the property, for example, you will have a lower entry cost if you use a mortgage compared to a cash purchase.
You will also need some kind of emergency buffer for maintenance costs, void periods and any other unforeseen situations that you will experience as a property investor.
3. Types of property to invest in
There are a wide variety of properties you can purchase to start your portfolio. What type of property you go for largely depends on what kind of tenant you want to attract, and what your budget is. Freehold houses are ideal if you want to attract families, but the entry prices are usually higher and you will have to maintain the property yourself or through an agent. If you’re looking to attract young professionals and students, then apartments will be a better option – they have a lower entry price and are managed for you, however, there are additional costs such as ground rent and maintenance fees.
As a first-time investor, it might be advisable to start your portfolio with apartments and purpose-built student accommodation, as they’re hands-off investments (meaning that they will be managed for you) and have much lower entry prices. Investments of this nature will also work for you if you’re abroad and you’re looking to build a portfolio in the UK as you don’t need to be present to manage them.
4. Buying property
Once you have done your research and have everything in place, it’s time to start building your property portfolio! While standard estate agents do have some investment properties, you will be better off buying with an agent that specialises in investment properties as they will be able to provide you with advise that is tailored to you as an investor – from explaining financial details to helping you find the right type of property and area.
If you are an overseas investor who is starting a property portfolio in the UK, and you’re concerned about viewing properties – don’t worry! Your agent or consultant will provide all the information that you will need, such as financial details, brochures, floorplans and area information. You can also request virtual viewings to see the property for yourself. If your property is off-plan, you will be provided with construction updates and images. This is a huge commitment and you need to be certain that your property will work for you, so don’t shy away from asking as many questions as possible before putting a deposit down.