No matter how experienced you are as a property investor, it is good to get some sound advice from time to time. We are living in uncertain times with the Covid-19 pandemic and we will be at the end of the Brexit transition period soon.
So in this post, we will provide you with some sound advice on expanding your current property portfolio. You should scale your portfolio even in these difficult times, but you need to approach this in the right way.
The Signs are still good
The difference between the current crisis and previous recessions is that the signs are still good. Property prices are still holding and the demand for rental properties remains strong. In addition, the banks have money and strong reserves.
Essentially, the only issue at present is the lack of activity due to Covid-19 enforced lockdowns. Property prices continue to rise in spite if this, and although this may change in the early part of 2021, most experts feel that everything will gradually return to normal over the next few months.
Property investment experts predict that within 8 months to 16 months the level of transactions in the UK property market will be back to the levels we experienced prior to the coronavirus pandemic. Therefore, this is a good time to start planning the development of your property portfolio.
Be Flexible about where you Invest
If you have a buy to let portfolio then you may have to look further afield for your next projects. Some areas of the UK are performing much better than others when it comes to rental yields.
A good example of this is the Liverpool L7 postcode area. According to research from Mojo Mortgages, the average property price in this area is £95,000 and the rental yield is over 10%. Other areas with impressive rental yields are:
- BD1 Bradford – 10%
- SR1 Sunderland – 9.4%
- TS1 Middlesbrough – 8.8%
You will find other areas in the UK that have good rental yields of 7% or more including Glasgow and Aberdeen in Scotland. Do your homework here so that you choose an area that will provide the best results for you.
It makes sense to spread your risk across different investment properties. So if you experience a problem with one of your properties, the rest of your portfolio will help to limit the damage.
As for diversification ideas, you might want to consider HMO properties. You will get a higher rental yield from an HMO especially if it is located in a popular city or town that has young professionals and students looking for a place to live. We have already mentioned looking at different locations to invest in the UK and this provides good diversity as well.
Buy to Let Mortgages
Now is a good time for the expansion of your portfolio. Many lenders of buy to let mortgages have launched new products that you can take advantage of. In many cases, lenders are raising loan to value (LTV) to attract new business.
Right now you can find buy to let mortgages with an LTV as high as 75%. We recommend that you speak with your mortgage broker to see what kind of deals are available to you. Some of the mortgages offer fixed rates for up to 5 years.