Building a Property Investment Portfolio
When building your property investment portfolio, it is necessary to develop a strategy, and a clear aim as to what you are striving for. There are two areas to consider. One is capital growth and the other is creating an income. One individual investment should complement another. A broad base of properties will cover different aspects of the market and will provide different opportunities as the market changes.
Changing economic conditions, bad tenants and rising interest rates will reduce your income, so you will need a plan to cover every eventuality. You should build a property portfolio with a long-term outlook. Moreover, be prepared to change strategy as conditions dictate.
If you take a long-term view of achieving capital growth then you will obviously be looking for bargains, or properties at auction. You will obviously need to be in a position to pay cash for the best deal.
If an income through property rental is more of interest then you will need to choose your location wisely. Proximity to business, commerce and industry will provide the best opportunities to rent out your property. You may well have to pay the market price for a suitable property in good condition. If you consider a lower priced property that requires work, then consider the time taken and the loss of income in putting the property in order.
When considering what to buy. It is important that the area is good and the property be in good condition. Otherwise, when it comes time to sell, you may be stuck with a dog. You do not personally have to like the property but always take a commercial outlook, and not a personal one.
If you are able to build a portfolio of properties close to where you live then this obviously allows you to monitor your investments and collect rents. This is not a requirement of investing though and should be at the lower end of your checklist. The quality of choice and location must always take priority.
Once your investment strategy is clear, in investing for income or capital gain. Try to prioritize your search in an area of high employment and affluence. These areas tend to be less hit by an economic downturn, and are usually the first to recover anyway. Seek the services of a professional property consultant where possible. The cost will be more than offset by having a better-balanced property investment portfolio based on professional advice.