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How to Expand Your Property Portfolio

By Parmdeep Vadesha

Republish: EasyPublish™ Published: 24Sep2008 Word count: 557 Viewed: 197 time(s) Get Free Content For Your Site

UK property investments have been producing wealth for property investors for many years now. According to the Housing Statistics Briefing, English Partnerships, UK property prices increased by 410% between 1986 and 2006. The rise has been driven by population growth, rising number of households, increasing migration, sustained economic boom and demand from global investors. These explain why property investors have always been keen on building a property portfolio.

The value of a property portfolio

For many sophisticated property investors, expanding their property portfolio is considered a wise option when properties can be picked up cheaply. And despite recent rate increases, property investors' confidence in their portfolio still remains as strong as ever.

A Paragon Mortgages survey of property investors revealed that 50% of the respondents think that the value of their portfolio will rise. This is because landlords anticipate an increase in the value of their existing portfolio over the medium to long term.

Why expand your property portfolio

There are numerous benefits to growing your portfolio. The chief one is that you will be better diversified so that costs incurred in sorting out one problem property can be absorbed by the profits from the others. In other words you'll be spreading your risks across several various properties that are efficiently being rented out. While the value of your property increases, your tenants are paying your mortgage obligations.

How to expand your property portfolio

If you've had your buy to let property or properties for a few years, you'll have already learned the basic rules. You already know how to acquire new tenants and how to maintain the quality of your property. Your rental income is covering your expenses and your mortgage dues. More importantly, the value of your property will have risen.

So now your next move is to expand your property portfolio. Here are two ways to achieve it:

* Re-mortgaging. If you presently are the owner of a property that has had time to appreciate in value since you got your first mortgage, there's a good chance that the equity is sufficient enough to allow you to obtain the money needed to expand your portfolio. Taking out a buy to let remortgage on one or more of your properties will allow you to gain access to cash based on the value of your property and use the capital to fund the purchase of additional properties. Since you're using debt to fund your growth you won't have to pay income tax or capital gains tax as you would do if you sold properties to fund growth.

* Interest-only buy to let mortgages. This type of mortgage is typically suitable in a slower moving property market. With an interest-only buy to let mortgage, you will only be paying off the interest every month rather than the capital. The benefit of an interest-only buy to let mortgage is that your monthly payments are kept to a minimum. If you opt for this sort of mortgage all throughout the length of the loan, you'd only be left with the initial capital to repay at the end of the loan term.

There isn't any magic trick involved in growing your portfolio property. By using time-tested strategies of expanding a property portfolio, you will be on your way to building the property empire you've been aspiring for.

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