How to Create A Profitable Property Portfolio in 2010

In this day and age, anyone can become a property investor, however it is still vital that you equip yourself with the strategies and tools to make buy-to-let investment a profitable asset before you go and invest in a property.

Many landlords in 2009 believed that buying a property and finding a tenant was enough to generate a positive cash flow month on month. Unfortunately for them, property investment isn’t that simple…

To make a sizeable positive cash flow (in excess of £500+ a month) you need to have a firm grasp of how the property market works, what it entails and what insights you need to make a profit.

Below is exactly how you can gain this knowledge and end 2010 with a profitable property portfolio.

What Is Buy-To-Let?

There are a lot of misconceptions regarding the property market, the first being the type of properties you can invest in. Residential, commercial, land, holiday lettings, development… each of these property routes can provide you with a monthly cash flow if you invest.

The second (and largest) misconception, is how you invest in these properties.

During the boom of 2007, property investment was considered to consist of solely of the buying, renovating and selling of property, and proved to be highly profitable. Yet the easiest and surest way to make money from property – no matter the economic climate - is buy-to-let.

In the simplest terms, buy to let investment involves: ‘buying property with the intention of letting it out to a tenant.’ It's a simple and straight forward way to generate income from a property, and if done right will incur limited renovation costs.

Creating A Property Portfolio

The key to becoming a successful property investor is to ensure that you keep to following key points:

Research – use property portals, letting agents and newspapers to learn about your chosen investment. Take the time to research where are the best rental yields, tenancy demands and buy to let mortgage deals before constructing a list of around about 100 properties.

Does The Property Produce A Positive Cash Flow – the phrase ‘positive cash flow’ is determined by the size of the profits your make after your properties mortgage payments have been deducted. To calculate this profit you can use an online mortgage repayment calculator. If any of the properties on your list produce a positive cash flow of less than £300 a month, remove it.

Is There A Tenancy Demand – The good thing about buy to let properties is that your tenants monthly payments should cover the monthly mortgage AND generate a month on month profit for the investor. However, if your property remains empty for a long period of time and it will be YOU who is footing the bill. It is for this reason it is important that you ensure that your property has got a strong tenancy demand, before you invest. If they haven’t remove them from the list.

Buy To Let Deals – at this point if you are not an experienced property investor you should think about  seeking out the help of a broker. They can help you negotiate further discounts of 10%-30% off the property price (essentially covering the cost of your deposit), and can also ensure that you only receive access to the best buy to let mortgage deals. 85% LTV B-2-L Mortgage, 100% LTP Bridging Mortgage… all of them.

Assured Short Hold Tenancy Agreement – When constructing a tenancy agreement it is important that all your rights are protected. For this reason, investing in a solicitor may be a worthwhile as they will be able to ensure that your tenancy agreement does not contain any clauses which will prevent you raising rents or ending a tenancy before an expected date.

In The Future

Making the decision to invest in property is only the first step. To ensure you achieve a profitable 2010, it is important that you invest in multiple properties and build a credible property portfolio.

If you have cash spare to invest in property, then building a property portfolio quickly and efficiently will be easy.

However, if you haven’t got the cash to raise a deposit, then there are other techniques you can use to get your foot on the property ladder.

By attending a property course for example, you can gain the tools, the strategies and the technique to effectively use No Deposit Down, No Money Down or All Money Back and invest in property without putting down a single penny.

Comments (1)

donata said:

	... Excellent article on how to create a property portfolio. Article is also very well written and reader friendly. Great illustrations! Thanks for sharing. 5*****
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February 08, 2010
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