“If you build it, he will come.” In reality, building your buy-to-let portfolio isn’t quite a Field of Dreams – our experts give you their top tips on bringing your game up and wealth on.
#1 Get it right first time
As with any business, it’s important to set some targets and focus on what you’d like to achieve. This could be a healthy yield, capital appreciation or entering the stock market.
Our top advice is to start (relatively) small, keep it simple, start local, and work with an experienced mortgage adviser to begin your journey to an extremely profitable portfolio.
It’s tough to get started, but it will get easier and you’ll become more astute at researching and making investment decisions with your mortgage adviser.
Don’t purchase a house you like; purchase a property that will increase your wealth.
#2 Maximise profit from each property purchase
Boost profits and decrease risk – buy low and sell high.
Buying at auction is a popular way to do this, but be mindful of the pitfalls, carefully research the area and ensure the property doesn’t have any structural problems.
Negotiate heavily on new purchases; you’re in a strong position with no chain behind you.
#3 The team
Develop a team and incentivise a job well done – a great team can translate into great profits.
Your team needs to consist of ‘those-in-the-know’ kind of people:
- An experienced mortgage adviser with existing successful buy-to-let client portfolios.
- An accountant to handle tax, company status, and much more.
- An agent to let the property (possibly with a maintenance agreement) who will carry out thorough checks on tenants and will ensure your properties are never vacant.
- A team of builders, plasterers, plumbers, and electricians.
Henry Knight, Director, Springtide Capital commented: “Surrounding yourself with the right team of experts is the key to portfolio success from day one. There have been a number of tax changes, which makes the services of an accountant invaluable!
“I’ve personally found University cities to be profitable; they have a strong demand for rental properties, not only for students but also for employees. Transport links also attract high-net-worth commuters – investors would be wise to look out for HS2 hotspots in the future.”
#4 Don’t be tempted
It is dangerous to take out a loan and secure it against more than one property, because your lender could force you to sell those properties to redeem the debt. Secure a loan against no more than one property if possible.
Don’t jump into a purchase without researching it properly and obtaining advice from a mortgage adviser. Properties are not always easy to move on and a bad decision could stem your success.
Keep going when times are tough. Offering low will most likely mean offering on a number of properties before you get a ‘yes’.
Keep your tenants happy to ensure a steady income stream.
#5 Money makes money
Your mortgage adviser will provide advice on how to make the most of your money, as will your accountant. The key to success is to make your money work hard for you.
This could be continual investment in new properties (expansion), making efficiencies by selling off some properties which yield less profit, or investing your money in a completely different opportunity.
We’ve been helping landlords to build their portfolios for many years, and we’d like to help you to achieve your wealth goals too. Call one of our experienced mortgage advisers on 020 3040 4400.