With the current state of the world – from the coronavirus pandemic to the Brexit transition – it might be tempting to be cautious with investment, but for those who are willing to take a risk, now is a good time to expand your portfolio. Here are tips from our financial expert to help you manage your property portfolio.
This article does not constitute advice. Professional advice should be taken prior to acting on any part of it. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.
In spite of uncertainty, the market is pretty steady right now and the pandemic has barely affected property prices – in some cases they are better than expected. Experts predict the market and the level of transactions will gradually return to normal over the next eight to sixteen months.
If you’re an investor looking to get back into the market and scale your portfolio, here are a few hints and tips to help make the right choices.
Location, location, location
The optimal investment area is one that ticks all the boxes: major employers in the area, high demand for rental property, and good rental yields. City centres and surrounding areas are great options. If your priority is profit, be open to investing in different locations and it can be rewarding.
If you’re open to new areas, the regions outside London typically produce higher profits, particularly in the Midlands and the North.
Diversifying your portfolio
As the old saying goes, “Don’t put all your eggs in one basket.” Having a variety of investment types – even different kinds within each asset class – is the smart thing to do. If one asset underperforms, the performance of your other ones should minimise damage to your portfolio.
Consider branching out to different property types like high rental yield HMOs or semi-commercial properties.
Mortgages
Many major buy-to-let lenders have introduced new products with increased LTV on BTL remortgaging products. You can find two, three, and five-year fixed rates on the market so there’s a variety of deals that could work for you.
Invest through a limited company
Because buy-to-let investing is not as profitable as it used to be, many landlords are opting to manage their property portfolios through a limited company. It has helped many investors regain profitability, but is it right for everyone?
Obviously, the way you run your business will need to change because when a limited company owns properties, they also own the profits. This means that you will most likely have to pay income tax on any money you are paid by your limited company.
The key difference is that limited companies don’t pay income tax, as an individual would, they pay corporation tax, which is lower. As a precaution, limited companies need to keep detailed records of all of their accounts covering all income and expenditure. Therefore all purchases that you make through the company must have a demonstrable benefit to the business.
Work with a professional
Even veteran investors need guidance, so work with your financial adviser to scale your portfolio to produce the returns you want.
If you’re comfortable taking risks with your investments to reap big rewards then it can be an excellent time to invest. Speak to a professional who can help you secure the right mortgage deal for you and incorporate your investment portfolio plans into your overall investment strategy.
Want to expand your property portfolio?
Mortgages | Buy to Let | Property | Mortgage Planning |
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