When it comes to investment property portfolios, they don’t simply expand overnight. You need to think strategically and craft a long term plan.

When it comes to growing your investment property portfolio, it can be difficult to take the plunge. However, you can’t let fear hold you back and lull you into a sense of inaction. That being said, you also need to think strategically and craft a long term plan as investment portfolios don’t just expand or multiply overnight. Below we have discussed 3 major areas to consider when growing your investment property portfolio:

Plan from the Beginning

This one sounds obvious, but it’s actually a mistake that a lot of investors make, simply because many people don’t actually think of themselves as being property investors at the beginning. Whether they’ve bought a second house as a holiday home or perhaps have bought a new house with their partner but held onto their previous house, some people just fall into investing. However, if you have any intention of using your property as an investment, you need to think like an investor from the very beginning. 

This means that any property you buy should have the potential for growth. For example, you shouldn’t buy a property just because it’s close to your place of work, it should be in an ‘up and coming’ area where the demand for property or rentals will increase.

Opt for a Positively Geared Investment Property

The first property that you buy should ideally be positively geared. Negatively geared properties can be a worthwhile investment for various other reasons but if your main aim is to expand your portfolio, then a positively geared property is the way forward. Particularly if it has the potential for capital gain within the first 1-2 years. The money that you gain from this property can be put towards the next addition to your investment portfolio and will also give you better chances for attaining another loan.

If you buy a negatively geared property then you’re committing to extra expenditure which is coming out of your earnings, meaning you have less excess money and less capacity for borrowing money for further investments. This is a difficult cycle to get out of once you’re in it. 

Boost the Value of your Properties

When your long-term goal is the growth of your investment property portfolio, you shouldn’t simply be thinking in terms of positive cash flow but you also need to be reinvesting into your properties. Direct some of your cash flow back into your current property or properties in the form of renovations, both major and minor- sometimes just a coat of paint or new flooring can make a huge difference to the value of your property. 

In doing this, you will either increase your rental income or boost the value of your property (or perhaps even both) and in turn, you will either have more cash flow or a larger borrowing capacity that can be put to use in further investments. 

At Heimat, we are property management specialists who know how to take care of both your investment and your tenants. We build relationships with our investors based on equality, honest communication and peace of mind. To learn more about having your investment property managed by Heimat, get in touch with us today!