Building Your Property Portfolio for Sale Safely and Quickly

A property portfolio is exactly what it sounds like – a collection of different property assets held and managed together to achieve an investor’s financial goals. That being said, there are generally two types of property investors in the world: Those that invest in a single buy-to-let property and are pretty content with it; and those that have a property portfolio.

Building Your Property Portfolio for Sale Safely and Quickly

It’s not enough to own multiple properties, though. There’s a right way to do it to ensure that you reap all the benefits that come with having multiple streams of income, access to more equity, and getting you one step closer to achieving total financial freedom in the process.

If you dream of becoming a wealthy property mogul or having a strong retirement nest egg, building a solid investment portfolio is the way to do it. This article takes an in-depth look at how to build a property portfolio for sale from scratch.

Building a Property Portfolio for Sale – Understand How Property Investment Works

To become truly successful in property investment, the first step involves learning everything there is to know about every aspect of the property market. You can’t be lazy about it either. There are certain skills you need to hone to build a property portfolio that’s guaranteed to generate wealth in the long run.

For instance, you need to be able to do the necessary due diligence on a property and the location it’s in, to determine whether or not it’s a viable investment. You also need to understand the economic drivers of property growth and the current outlook for the housing market in a particular locale.

You need to know how to find lucrative property investment opportunities and be able to analyse them and narrow down to the assets that will yield the highest profits. You need to become familiar with property terms like rate of return, cash on cash return, return on equity, and many more; otherwise, you’ll be pretty much in over your head.

The point of all this is – you need to understand how the property market operates and be able to make a smart and informed investment decision based on nothing but cold hard facts. Think – “What would Jeff Bezos do?”

Create a Property Business Plan

Remember, you’re creating a property portfolio for sale meaning, at some point, you’ll want to sell all the different income-generating properties you have, at a go. You want any savvy property investor to take one look at it and decide they must have it.

You, therefore, need to be very intentional about the kind of properties you buy, to ensure that they deliver the maximum ROI when you eventually decide to cash in on them. The best way to do this would be to establish a property business plan to keep you on the right track every step of the way. It should address three major aspects:

1. Your Investment Goals

What’s your objective in building a property portfolio? Are you looking to become an active investor, or do you simply want to have a guaranteed source of passive income?

Is long-term capital growth more important to you than short-term rental income, or would you much rather cash in on rental yields without having to wait several years to reap the benefits of your investment? How many properties are you looking to acquire to achieve financial freedom?

The answers to all these questions need to be clear and concise. Investment goals need to be SMART – Specific, Measurable, Achievable, Realistic, and Timely. The last attribute is especially important when it comes to selling your property portfolio when property prices are at an all-time high. That’s when all the magic happens.

2. A Financial Plan

The next thing you need to figure out is how you’ll finance your property purchases. There are several options available to investors some of which include approaching private money lenders, using your savings as a down payment towards a mortgage loan, or getting a hard money loan secured by your real property.

You also need to factor in the monthly maintenance costs, operating expenses, and refurbishing costs. Ensure that your financial goals are clear and that your property investments can rise to the occasion.

3. An Investment Strategy

Finally, you need to define an investment strategy that will propel you towards reaching your financial goals. This involves detailing how your property investment will make you money.

Some popular investment strategies you might want to consider include the fix-and-flip, buy-and-hold, buy-to-let, and HMOs. Understanding how each of these strategies work will help you craft a clear path and build a property portfolio safely and quickly.

Buy Your First Piece of Property

Buy Your First Piece of Property

Once you’ve sufficiently armed yourself with all the property information you need to understand the inner workings of the property market, and you now have a solid business plan in place, the next logical step is to buy your first investment property.

The successful performance of your first property holds the key to unlocking bigger investment opportunities later. Start small and pick a property in a prime location. Factor in all the costs that come with owning an investment property to ensure that the ROI can adequately cover them.

Make sure you make use of property analytics tools to calculate cash flow, rental income, cash on cash return, etc. to reveal whether or not it’s a worthwhile investment. Use those tools for future acquisitions as well.

Add More Properties to Your Portfolio and Diversify

Finally, you can start adding more properties to your portfolio. This will involve using cash from your initial property to acquire the next one.

There are several methods you can use to do this:

  • Snowball method – This involves taking your entire cash flow from your rental income and using it to acquire more rental property
  • BRRRR strategy – This stands for Buy-Refurb-Rent-Refinance-Repeat. It essentially means buying a property at below-market-value, fixing it up, and then renting it out. This allows you to build up equity over time, which you can then use to refinance the property and get back your original capital. This is what you would use to buy a second property

Ensure that you diversify your portfolio by investing in different locations, different asset classes, and in Property Investment Trusts (REITs). That way, you spread the risk when the property market fluctuates.

One Step Closer to Financial Freedom

Building a property portfolio for sale is not only a great path towards achieving financial freedom. It’s also a foolproof method of building wealth. Use the tips in this guide to get you started on building your buy-to-let empire.

Meanwhile, check out our blog to learn everything you need to know about making money from property.

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