6 Ways to Cut Down on Costs When Investing in a Property Portfolio
- 11 Aug 2022
If you’re looking to invest in a property portfolio, whether it’s just for the fun of it or as a way to make some extra cash, the best advice we can offer is that you plan ahead. There are all sorts of ways you can cut down on costs when investing in a property portfolio, and this blog post will provide you with some ways to reduce said costs.
1) Invest in the Right Property
The first tip is to make sure you’re investing in the right property. Sometimes, people are attracted to investing in larger and more lavish properties because of the favourable value the market is showing. However, in many cases, these bigger and better properties will cost you much more money than smaller ones.
Usually,investors tend to pay far more for bigger and better properties because they think it’s a safer bet, which can be the case – but not always. Still, if you don’t want to lose out on a good investment opportunity because of overpaying for something that isn’t worth it, be careful about how much house you buy.
2) Look for Alternative LetModels
The second tip is to look for alternative let models, such as blocks of flats. While you may think these are too expensive when you’re looking at them on paper, they could be cheaper than you realise – including in the long run. What’s more, funding for this optioncan be arranged through a broker for MUFB mortgages.
Overall, the benefits of going down this avenue of investment include lower administrative and management costs, higher rentyields and reduced risk from void periods since missing rent can be covered by otherrented units.
3) Weigh the Pros and Cons of Renovation
The next tip involves weighing up the pros and cons of renovation. Before you buy a property, make sure you understand what it will cost to renovate it. While renovations are great because they can help you increase your profit margin after the sale, they are not always a wise investment decision.
For example, some refurbishments might cause you to stop seeing an income from renting out the property for some time. If you intend to renovate a property, it’s best to ensure that there will be an income within six months or less after the sale so that your investment remains profitable.
Furthermore, it’s also worth noting whether you are in a rising or falling market. It can be easy to mistake a house price increase due to the work you have done rather than the fact it would have risen anyway.
4) Know Your Target Market
You also have to know your target market. In many cases, investors tend to buy a property and start renting it out without doing much research. This can be a mistake because each market has its own rules that you have to follow to get the most profit from the property and avoid having to pay for those costly upkeep expenses.
For example, some markets might be very competitive and have a lot of options for tenants, which means you have to fight hard for good tenants who are willing to pay your rent on time every single month. On the other hand, other markets might not be very competitive and will require no work on your part because people are lining up to move in.
5) Learn the Trades
Next, you should learn trades. Learning certain trades is vital because if something breaks when you’re renting out a property, you’ll be able to fix it yourself and save a lot of money.
Once you are more established as a landlord, you may not wish to complete the work yourself. However, you will still know what is involved in the fixing process andbe able to effectively manage tradespeople and the necessary work.
6) Know About Your Neighbourhood’sHistory and Check Local Economic Indicators
Finally, you need tobe aware of the history of your neighbourhood as well as the local economic indicators. If you’re investing in a property in aplacethat has experienced significant growth, you should be prepared to pay more for that particular property.
On the other hand, if you’re investing in a rundown area with no future prospects, it might not be worth spending so much money on it.
If you want to invest in a property portfolio for the most profit possible, start by looking at some of the tips outlined above. By making sure you buy the right property in the right market, and of course, in the right area, allwithout overpaying for renovations,you should be able to grow your portfolio without spending too much money.