How to manage a property portfolio
Considering investing in real estate? Find out how to manage a property portfolio.
If you look at the statistics, it’s easy to see how real estate has become such a lucrative asset class for investors. After all, the average house price in the UK increased by 43 times between 1971 and 2013 – from a paltry £5,632 to £245,319.
This has also made it increasingly difficult for younger people to buy their first homes, with the number of 25 to 34-year olds renting privately nearly doubling over the last 10 years. As a result, the demand for buy-to-let investments has increased during this time, encouraging some landlords to build an entire portfolio of properties.
However, managing a large portfolio of properties can be challenging. So here are a few tips that will help you on your way.
Try to diversify as your portfolio builds
When adding properties to your portfolio, there’s a temptation to operate solely within geographical regions that are local, familiar and accessible.
However, diversification is crucial to every successful investment portfolio, and real estate is no exception to this rule. So as well as purchasing real estate in a variety of locations, you should also consider varying the types of property that you invest in.
This will spread your capital across an array of real estate assets, safeguarding you against the declining value of a specific region or property class.
Try to tailor your strategy in line with economic and market trends, so that you can diversify your investments in a way that increases profitability.
Outsource the management of properties
If you own a diverse property portfolio that delivers returns, you may want to invest at least some of these gains into managing your properties effectively.
This is particularly important if you own properties across the length and breadth of the UK, as it’s logistically impossible to manage these and meet the needs of private tenants by yourself.
With this in mind, you should consider outsourcing this responsibility to a reputable property management firm. For a monthly fee, these outlets will take care of thorny issues such as building maintenance and communicating with tenants, while also collecting rental payments on your behalf.
This prevents your property portfolio from becoming unmanageable as it grows, while the initial expense pales in comparison with the potential returns.
Work closely with a skilled legal team
Even with the support of an experienced property management firm, there’s always a risk that you could find yourself trapped in an ongoing legal dispute with tenants. This could relate to a number of issues, from residential lease disputes to rent arrears or the condition of a particular property.
Whatever the reason, you’ll need to work closely with a skilled firm throughout your journey as a private landlord – from the procurement of properties to the settlement of any disputes that unfold along the way.
Firms such as DWF Law are particularly helpful, as they offer advice across an array of property issues pertaining to both residential and commercial real estate ownership.
This can prove worth its weight in gold, particularly as you look to create a profitable property portfolio that provides a sustainable source of income.
Photo by Breno Assis