How to manage a large portfolio of real estate properties

Many people now consider property investment as their long-term pension scheme. The idea is to acquire rental properties, build up rental income, pay down debt and eventually be left with a buy to let portfolio of appreciating assets. There are obviously a number of issues to take into consideration when looking to manage rental properties.

Location, location, location

It is fair to say that the Internet has opened up not only national but also international property markets to investors. It is now as easy to get information on rental properties in Manchester as it is for properties in New York. However, if you’re looking to build up a portfolio of buy to let assets it may be worthwhile considering acquiring properties in the same area/nearby locations. This may be a number of buy to let properties in a new apartment block or individual rental properties. Building up a portfolio in the same vicinity will certainly assist with property management and tenant communication – not to mention travel time!

Taking on assistance

While there is nothing wrong in being frugal and controlling costs, there does come a point when it is counter-productive. Many people believe that if you have a portfolio of five or more buy to let assets then it may well be time to look at hiring a personal assistant or even a modern day virtual assistant. They can help with everyday issues such as property checks, certificate updates, repair and maintenance as well as tenancy agreements. In many ways they should be seen as a stepping stone between self-management and appointing a property management company.

Your accountant is your friend

When looking at buy to let properties, issues such as rental rates, eviction notices, cost offsets and tax charges can be a legal minefield. Therefore, it is worth looking into appointing an accountant when you start on your property investment journey to ensure that everything is in order from a legal and a tax perspective. You will find that the vast majority of accountants literally pay for themselves with advice on tax efficiency, investment finance and allowable deductions. It would be better to describe an accountant as an investment in your business as opposed to a cost.

Finance and refinancing

While there is no need to be afraid of debt, it is actually a vital element of long-term growth, it does need to be managed and monitored. As you build your rental portfolio you will need to keep tight control of income, outgoings and be alert to any chances to refinance debt on a more preferential basis. As your portfolio grows, and your relationship with mortgage providers expands there may be opportunities to trim your finance costs. Any savings on the debt/finance side will feed directly into your bottom line and increase your net income.

Property management companies

It is only when a property portfolio begins to grow, that many investors start to appreciate the time taken on not only major issues but also relatively minor matters. There will come a time when it is more efficient to appoint a property management company to look after your affairs and ensure that everything is in order. As with the appointment of an accountant, the use of property management companies in the correct environment should be seen as a long-term investment as opposed to a cost. They will have knowledge right across the board, contacts in the maintenance industry, insurance sector and financial markets and will also be able to offer guidance on legal issues – as well as managing your properties on a day-to-day basis. The regulatory/legal framework surrounding rental properties continues to expand, creating more potential for errors and oversights, which can ultimately be very costly. Focus on your skills and bring in third parties to cover areas in which you are lacking expertise/experience.

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