While some investors are happy with one property, others look to build their investment portfolio as quickly as possible. Here’s how to know when the time is right to add to your property portfolio.
Buying your first investment property is an exciting step, but it doesn’t take long for some investors to get hooked, and start thinking about adding more properties to their portfolio. Building a lucrative investment portfolio isn’t without its challenges, but it is possible when you have the right approach.
Here’s how to know when you should start increasing your portfolio and what to look for.
Strong Performance Of Your First Property
Before you add to your portfolio, you should have a solid foundation from your first property to set your future portfolio up for financial success. In some cases, this might mean waiting another six to 12 months before buying a second property. By waiting for the value of your first property to increase significantly, you can have more equity, a larger deposit and more buying power for your next move.
If you haven’t purchased your first property yet, this also serves as a good reminder to think long-term about growth potential if you plan to add more properties within the coming few years.
If you’re not sure about your property’s performance and what it means for future purchases, the Taylors team of specialists is here to help.
Be Interested In Investing And Know Your Investment Strategy
Building a successful portfolio takes time, money and passion, so you have to be interested in investing for the best chance of success. Read as much information as you can about the market, attend investor events and commit to learning as much as possible so you can make smart decisions about your portfolio.
Knowing what you’re working towards is also key, as different goals might require different investment strategies. First, determine what your lifestyle and financial goals are, then make an investment plan that work towards achieving them. Being well-researched on which properties are best for your investment goals means you can act quickly and confidently when the right property comes along.
Having this plan in place will also help you avoid making purchases based on emotion or convenience, so you can make smart decisions and get the greatest possible return.
Which Properties Will Add Value To Your Investment Portfolio?
Once the timing is right to add to your portfolio, you then need to consider the type of property that will add the most value. Buying your second or third property is similar to buying your first in many ways, in that you’ll need to investigate the best area to buy the property and find out what capital growth is like in your desired suburb. To identify suburbs with strong growth potential, look for:
- Areas that have doubled in the past 10 years.
- Suburbs with great amenities, like access to public transport, good schools and convenient shopping. These lifestyle factors are always popular with future tenants and buyers.
- Up-and-coming areas with predicted growth or planned infrastructure that will be sought after. In the Eastern Suburbs, this might include suburbs close to the new light rail, such as Randwick, Centennial Park and Kensington.
Many investors choose to focus on high capital growth and positively geared properties, as negative gearing can put you in a less desirable financial position for your portfolio moving forward. Above all, choose your properties strategically based on their performance instead of the sheer number of properties you have.
Find A Team Of Property Experts To Help You
Property experts can be invaluable in advising on portfolio growth, so it’s worth enlisting the services of trusted financial advisors, experienced property investment accountants, mortgage brokers and buyer agents.
A Client Relationship Specialist is also a key part of this support team, as they have the market knowledge and skill to manage your portfolio. The Taylors team focuses on pro-activity to ensure you’re always getting the best possible service and advice.
For more advice on building your investment portfolio, read our Investor Guide to Building A Property Portfolio or contact your Client Relationship Specialist.