So you’ve purchased your first property in a company and used up all your savings to put down 25%. What’s next, how do I build my portfolio?
Whilst this should not be considered as investment advice, here are our five top tips to help you on your journey to grow your property portfolio
Family and friends
The easiest way to drum up the next deposit is to ask people you know, you can legitimately draw up a loan agreement and pay them a commercial amount of interest as a return on their investment. Possibly up to 7% which is a lot higher than any bank savings account.
Remortgage your own home
Utilising equity in your own home is a cheap form of borrowing and this lump sum drawdown can be introduced into your property investment company to use for the next deposit or property purchase.
Personal loan / credit cards
Interest rates on loans are the lowest they have ever been. Assuming you have the credit availability then this may be another avenue to assist with injecting funds into your property investment company.
Refinancing existing property
Property prices have greatly increased in the last 36 months, any fixed term mortgage expiring now could be used as an opportunity to draw down on the extra equity in the rental property. Note mortgage affordability calculations are often driven by the rental income generated by the property, regular uplifts in rental agreements will ensure you maximise your loan to value lending opportunity.
Utilising cash reserves & selling assets
Assuming you have set enough aside for unexpected repairs and corporation tax liabilities, surplus funds should be building up on a monthly basis from your property company.
Consider selling personal assets such as a motor vehicle to generate lump sum funds to inject into your company. A monthly car lease would be an alternative which may save you on other overheads such as fuel and road tax when converting to an EV.
About the author
Pete Edwards is a director of Warr & Co Chartered Accountants. As an avid property investor he has over twenty years of experience in all aspects of property taxation and owning and managing a portfolio of residential and commercial property.