Investing in property is a long-term strategy to protect and grow your hard-earned cash. Property is long recognised as an important strategy to guard against inflation eating away at your purchasing power. Indeed, as the newly released CPI data from the United States shows, price inflation is currently at the highest level seen since February 1982. With that in mind, let’s consider how investors can use a smart strategy when starting a property portfolio to help secure and grow their wealth.

Be clear about your goals

First and foremost, you need to know what you want to accomplish while developing your portfolio. Are you hoping to profit from long-term property price increases? Or perhaps you are looking to generate extra money by renting out your property? You may even be motivated by wanting to give up your job and use the rental income to live on.

It’s probable that you’ll be aiming for a mixture of various factors. These questions may assist you in determining what type of property you want to buy and which is best suited to your objectives. Even though renting to a large number of tenants is more time-consuming, would you choose to do so to maximise your income?

Having a clear idea of the path you want to pursue when it comes to creating your portfolio might help you avoid costly mistakes in the long run.

Do plenty of research so you are not going in blind

To get started, you’ll need to figure out what sort of property you want to invest in and what kind of portfolio you want to establish. The kind of property you choose will be influenced by the type of tenants you want to attract, such as students, families, or singles. This can enable you to choose the appropriate property in the right location with the highest probability of reaching your objectives.

To get an idea of how much money you’ll make each year, you’ll need to look at the rental yields of the properties and locations you’ve chosen. For example, once you have an idea of how much the property and the mortgage costs will be, you can work out how much rent you will need to charge to meet interest payments and expected profits.

In terms of “doing your research,” here are some basic steps you can take:

1. Find out about current market conditions and trends by speaking with an estate agent; you can also find some useful information online. For example, what kinds of features are tenants looking for these days? Smart technologies like smart meters and smart thermostats are ones that are growing in popularity; and so is extra space for an office to work from home.
2. Find out where the best current locations are to invest in and which areas are up-and-coming. This will maximise your chances of achieving a good return on your investment.
3. Be clear about your target tenants and the type of property they will want to rent, as well as the type of amenities they will want nearby.
4. Look around at the prices being charged for rent in certain areas, which will give you an indication of how well the rental market is doing. Currently, UK rental increases have reached nearly £1,000 on average as post-lockdown tenants return to the cities.
5. Look into joining various landlord community groups where you can gain invaluable knowledge from the experience of others that have been property investing for a long time.

Start off with one property and grow from there

It’s not a good idea for new investors to start building a big portfolio of property investments all at once. Starting small and steadily expanding your property holdings is the ideal strategy for building a diversified portfolio of real estate investments. This will give you time to learn and gain experience, as well as increase your circle of contacts that are necessary for running your investment.

Your first investment must be given a lot of thought as it will set the stage for later investing. For example, are you going to purchase a property close to where you live so that you can run everything on your own, like the maintenance and repair work, or are you thinking of investing further afield and hiring a property management company to help run it for you? If you decide to go that way, learn about the costs and figure them into your calculations.

One type of property investment worth considering is off-plan investing. Investors can typically purchase off-plan properties at a discounted price since they are purchasing them before they have been built.

Think about how you are going to make an offer

In order to maximise your return on investment (ROI) as a property investor, you’ll want to get the best deal possible. As a result, while looking at properties to buy, having some sort of plan in place, such as a price range you’re willing to spend, can be beneficial in guiding you.

Making an offer will depend on how much time you have. By offering the full asking price, you will be able to get things done more swiftly. If you’re not in a rush, on the other hand, you may be able to obtain a good deal by offering less than the asking amount. However, it also depends on the current market conditions and how fast properties are selling. Depending on whether you’re in a buyer’s or seller’s market, your strategy may change.

In a buyer’s market, there will be less competition, so you may be able to offer a lower price than the asking price.

There will be greater competition in the seller’s market, so you’ll need to move quickly and be prepared to spend a little more than you had anticipated.

You’ll also need to take into account the seller’s situation when devising a plan-are they part of a chain? Do they have a pressing desire (or need) to be on the move? You may be able to glean this from speaking with their agent.

Buying a home “below market value” (BMV) is another option to get a good deal on a house that requires a lot of repairs but has strong financial potential. These kinds of assets are frequently available at public auction. The ideal properties when taking this route are ones that don’t have major structural issues but mainly “cosmetic” ones.

Keep a close eye on your finances

Treat your property investments like a business and therefore quickly adopt a business mindset. Like with any successful business, be sure to keep a close eye on your finances and constantly remind yourself of what you are trying to achieve.

Make certain that all of your outgoings (such as mortgage, insurance, and maintenance costs, etc.) are covered by your rental income.Is your ROI good?

Another thing to keep in mind is having a certain amount of slack in case things get difficult. Examples could be if you had a period of time with a tenant because the last one moved out (you can insure against this); have you got reserve funds and time to quickly deal with an emergency like a leaky roof?

As with any business, keeping a close eye and control of your finances is key to success in property investing. Moreover, if you have a good handle on your finances, you will be able to accurately judge when you are ready to invest in your next property and grow your portfolio.

Target your tenants carefully and keep them happy

Choosing the best tenants for your newly purchased property is critical if you want to establish a profitable portfolio of real estate investments. Start by doing the necessary reference checks to review their history. Meet with them in person and have a chat with them to get a feel for the type of tenant they will likely be. Encourage them to ask questions that may indicate whether they will take care of your property.

Finding the “best” tenants means they’ll be more inclined to remain and treat the property as if it were their own. As a result, you’ll be able to limit the amount of time your home is unoccupied and generating no money.

Once you have done all the necessary checks and feel confident you have the right tenants for you, and once they have moved into your property, it’s time to focus on keeping them happy. Think of them as customers for your business. Developing and maintaining a good relationship is a good idea to help the smooth running of your investment.

For example, give plenty of contact details so they can easily reach you, and be sure to respond quickly to repairs and maintenance requests. If you intend to visit the property, make sure you give plenty of notice to the tenant and that it’s OK to do so at your desired date and time.

By keeping a close eye on your finances, selecting the best tenant, and keeping them happy, you stand the best chance of success in your first property investment, which will set you up nicely for future growth in your portfolio.