Introduction
At some point in time, we have all relied on bulk buying to make savings. While shopping for groceries, buying in bulk is the way to go. The same applies when it comes to making investments as well. Real estate investors often shy-away from buying property in bulk. This article explores why portfolio purchases can be an incredible opportunity to help scale your real estate investment business.
What is a property portfolio?
A property portfolio is a set of properties that are owned by one owner. Property portfolios can often be negotiated at a discount, since they are sold as a package and can be owned by investors or by companies that own multiple properties.
Are you thinking of buying a portfolio?
If you are thinking of buying a portfolio, here are some things to consider:
- What kind of return on investment do you want?
- What type of yield do you need to achieve?
- How much capital are you looking to deploy?
If the answer to these questions is “a lot,” then investing in an existing portfolio may be better route to growth than starting from scratch.
What to look for when you buy.
When buying portfolios, it’s important to know what you’re getting into. There are many factors that can affect the success of your investment, but these are some points to consider:
- Check the financials of each property, including rent roles and any other relevant information on their performance over time.
- Request current condition reports for each property, so that you can see exactly how they look before committing yourself to an investment.
- Look out for regulated tenancies – these are lifetime tenancies with rents substantially lower than market rates, which can’t easily be amended.
- Consider whether there are alternative exit strategies available for non-performing assets in the portfolio – either converting into a different type of unit (eg: an HMO), or perhaps selling-off.
Take note of any capital expenditures, such as renovation costs and maintenance fees for each property before calculating and making an offer.
Look into the potential for future development in these areas; if there is a lot of development going on nearby, this can significantly increase the value of the assets over time.
How do you know if they’re a good deal?
- The seller is motivated – they are more likely to be open to doing a deal
- There’s a lot of equity in the portfolio
- It’s a high-yield investment
- There are multiple exits or exit strategies
Don’t be afraid to go big!
Don’t be afraid to go big!
If you have the money and are looking for a great investment opportunity, don’t be afraid to buy a portfolio of properties. It’s true, the level of due diligence is just as high, perhaps higher than buying a single unit, but the benefits are also exponential.
Most people don’t think about buying portfolios.
Most people don’t think about buying real estate portfolios as an investment strategy.
Portfolios are a great way to scale your business quickly. If you’re looking for a way to scale your investments quickly, you should be considering how to pickup real estate portfolios.
Conclusion
Real estate is one of the best investments you can make. If you’re looking for a way to grow your wealth and protect it at the same time, then buying a portfolio of properties might be an excellent option for you. Reach out if you want a conversation around buying portfolios – we often have them available to purchase.
