Want to add to your property portfolio in 2023 to expand on your current investments? We’ve already established that 2023 is an exceptional time to start expanding on your investment portfolio, but there is far more detail to consider before making the leap towards your next investment. Where do you invest? How do you know you’re ready for your next investment? And when is the best moment to take the plunge and add to your roster of properties?
Many believe there is no such thing as the perfect time to invest and in many ways this is true. However, when it comes to reaping the rewards of your carefully curated property portfolio, it is best to add to a portfolio sooner rather than later. After all, property prices are on an upward trajectory, and may not be cheaper than they are now. What’s more, the sooner you invest, the faster you can start to recoup your initial investment, benefit from exceptional yields, and set aside funds for your next property purchase should you wish to keep expanding. This can be a better strategy than just sitting on your funds, especially with current inflation rates: investing in a reliable asset now sets you on track for long-term financial stability and growth, and can help you achieve financial freedom sooner rather than later.
Before you start to search for the next property to add to your portfolio, it is important that you review the state of your current investments, as this will directly inform your next property-related decision.
Firstly, you should build a long-term plan of how many properties you wish to add to your portfolio and the speed at which you wish to invest in them. Will you want to invest steadily at one property every two years? Or are you on the search for higher volumes more quickly? This will help you set targets for both the long and short term, and keep you focused on achieving your investment goals rather than being overly reactive to market conditions or sporadically investing in properties.
When reviewing your options, it may also be worth considering equity release via remortgaging your existing properties, thereby giving you access to funds tied up in your investment property, and leveraging the growth you’ve already achieved to expand your portfolio faster. However, these options are not without risk, and it is important that you do your due diligence and consult a financial advisor before making a commitment.
Although property investment is hailed as a remarkably stable form of long-term investment and provides financial security for portfolio landlords, sometimes it is best to hold out on investing to carefully consider your options. Perhaps your current investments are not performing and have fallen into a state of disrepair. If so, it may be more beneficial for your long-term property plan to invest into your existing properties. With new rental reforms coming into action such as the Decent Homes Standard and mandatory EPC ratings of C for rental units, it is advised that landlords prioritise ensuring that they are compliant with these new regulations prior to investing in additional units.
Alternatively, if you believe that your existing properties are under-performing, do not fit with your long-term property goals, and require too much work, it may be worth offloading some of your lower performing assets. This will allow you to channel these funds into more desirable investments that can provide higher yields and growth.
It is vital not to be reactive when buying or selling property assets. Instead, investors should be measured and levelheaded, even when market conditions change. It is tempting to try and get ahead of the curve when the latest property market projections are released, or when interest rates are increased, with many investors wanting to act as soon as possible to avoid unnecessary disruption to the health of their portfolio. However, this can be counterintuitive, with reactive decision making oftentimes leading to poor choices.
If you have equity to release or funds available then as long as you’re committed to a long-term strategy, it’s worth investing even in less favourable periods. Rising mortgage rates, unfavourable property outlooks and rumours of declining house prices will likely have a far less significant impact on your portfolio than you’d assume over an extended period, especially if you have a diversified selection of properties. By the same measure, don’t just invest in a property for the sake of it. Be mindful of your broader property goals and carefully consider whether that bargain property you’ve found on Rightmove will genuinely add value to your portfolio.
Timing your investment may be important but finding properties in the best locations is equally as impactful to the success of your investment. After all, you could purchase a property at the perfect time, at a fantastic price, but simply cannot expect tenants to want to live in a dilapidated neighbourhood that lacks opportunities and redevelopment. It is therefore important to search for neighbourhoods that have a bright future – look for signs of government investment, new transport links, job opportunities, exceptional educational facilities, and a fantastic reputation. Each of these factors will influence tenant demand and increase your chances of finding a tenant quickly, securing long-term leases without void periods, and justifying high-yielding rent.
This is also why portfolio diversification is important as a means of safeguarding your investments. If one community falls out of favour and becomes undesirable to renters, it is important that you have other high-yielding units to fall back on.
With changing market conditions, new rental regulations and increasing mortgage rates, we understand that navigating the buy-to-let market can be challenging. At Centrick, we’re to help you build and sustain a successful investment portfolio and take the stress out of property portfolio growth. We’ve curated all of our knowledge into our Earn At Home hub to provide you with the necessary guidance to boost your portfolio health and guide you towards making the best investment decisions. Looking for more tailored guidance? Fill out the form below and a member of our team will be in touch soon.
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