How to Build A Property Portfolio (Including A Five Year Plan)

Learn how to effectively plan for portfolio investment and how to build a property portfolio with our complete guide, including a five year plan for starting an investment portfolio.

How to Build a Property Portfolio

Building a property portfolio is a rewarding experience that can provide long-term wealth, flexibility and something to pass down as a legacy.

An investment portfolio typically contains a number of different investment vehicles such as property, stocks, shares or other miscellaneous assets that can deliver passive income or grow in value.

If done correctly, building a property portfolio simply requires proper planning and due diligence, starting slowly and building upwards in a sustainable, effective way.

Below we share some tips on how you can start building a property portfolio, from researching to setting up your financial goals in the right way.

1. Set Your Investment Portfolio Goals

Building a property portfolio starts with your investment goals. Do you want your asset to benefit from property price growth over the long-term or supplement your current earnings with passive rental income?

Setting these goals early is important as it’ll help you make the right decisions going forward. Having a clear end goal in mind can also help you create smaller milestones around your property portfolio.

Once you understand the route you want to take when building an investment portfolio, you’ll be in a better position to avoid seeing potentially expensive challenges further down the line.

2. Research Your Property Portfolio

Once you have an investment portfolio strategy in mind, you’ll need to start performing thorough research.

One of the most important things to consider is finding the right property in the right location. This approach will put you on the right track to achieving financial goals.

Some of the top methods of researching when you’re looking to build a property portfolio include:

  • Researching the best places to invest in the UK so you can where you can find the best returns
  • Using location investment guides to learn more about a potential investment location
  • Speak to a local letting agent or estate agent about the state of the rental market they’re based in
  • Join a property investment community that may be able to provide practical experience or knowledge
  • Think about the type of tenant you want to attract and what amenities are important to them
  • Consider researching urban regeneration hotspots that could demonstrate growth potential going forward

If you’re looking to get a clear overview of what your investment could look like, we have a free investment calculator that can do all of the hard work for you.


Want to know more how to build a property portfolio? Download the ‘How to Build Your Empire’ guide today and discover everything you need to know about starting an investment portfolio in the new year. In this guide you’ll find:

  • A five-year plan for building a property portfolio
  • An exclusive interview with a portfolio investor
  • Tips for laying the foundations of an investment portfolio
  • How to start a property portfolio with no money
Download Guide

3. Start Your Property Portfolio With One Property

It’s important that when you build a property portfolio, you scale efficiently and sustainably.

If you’re creating an investment portfolio with multiple properties straight away, you expose yourself to much more risk and financially, it can be challenging.

Choosing your first property investment is a big decision and distance may impact your choice. Are you going to run it yourself or seek help from a third party such as a property manager or letting agent? If so, these are all costs that need to be factored in.

Likewise, do you know the area? If you know the area has potential but don’t know it yourself, you’ll need to consider the time it takes to research and the knowledge that requires.

Starting small and seeking the help of a trusted partner that understands the market just makes investment sense.

Related: How to Work Out Your Rental Income

4. Stay On Top Of Your Investment Portfolio Finances

The key to maintaining a property portfolio is staying on top of your cashflow.

This is especially important if you’re relying on rental income to cover mortgage payments or other costs that could arise such as emergency repairs or maintenance.

Many portfolio investors find it useful to create a separate pot to manage void periods, using some of their rental income to cover issues such as repairs. While this might reduce your profit in the short-term, it protects you in the long-term.

Key questions to ask include:

  • Am I getting the rental returns or rental yields that I need to maintain this investment portfolio?
  • Would you be able to financially cope if a tenant suddenly moved out or if the property experienced damage?
  • Have you considered all of the extras that come with a property portfolio such as taxes, insurance or third-party payments?

Once you have this in mind and covered, you’re ready to start scaling your property portfolio in a more effective manner.

Related: How Much Will Your Investment Property Be Worth in Five Years?

5. Focus On Your Tenants

The cornerstone of any investment is the tenant. Making sure that you find the right tenant and then looking after them is one of the most important things you can do once you’ve found the ideal property investment.

Finding the right tenant is a matter of understanding the demographics you’re looking to target and performing the necessary due diligence – whether that’s working with third parties or performing pre-tenancy interviews.

Once you have a tenant in place, make sure that you’re regularly communicating with them to meet their needs. A happy tenant is providing rental returns and stopping you from experiencing void periods that can quickly lead to issues when multiplied over a larger property portfolio.

6. Scale Your Property Portfolio With Caution

Building a property portfolio is typically best done with caution as changing property markets and the wider economy can have a huge impact on your bottom line.

For example, if property prices drop, it may seem bad for the portfolio but it could be a good time to invest in your next property, especially if growth is predicted to push prices back up.

At the same time, this approach can help you choose the right property financing options for your current investment position, which can change rapidly if your lifestyle changes in any way.

This can help you decide on the right buy-to-let mortgage for your investment.

Related: Why Buy Quality Rental Property in the First Place?

7. Always Review Your Goals And Have An Exit Strategy

A successful property portfolio investor never loses sight of their ultimate goal but is flexible enough to adapt their portfolio as the rental market changes.

This is where setting smaller milestones can help. Having more ‘bite-sized’ wins keeps momentum and morale high, driving you towards an ultimate end goal such as early retirement or financial freedom.

At the same time, having an exit strategy is important in case you need to sell. Property is inherently a long-term strategy and requires time to maximise returns but if the eventuality arrives, it’s good to be prepared.

Read our Portfolio Investment FAQs

How to start investing in property? Plus Icon

For those that want to know how to start investing in property, the most successful investments often start with a clear financial plan.

By understanding your investment goals, you’ll be able to determine which asset is best for reaching your objectives and how it can be scaled.

More specifically, this could be an asset that offers higher short-term returns or a property built for a longer holding pattern.

Once you understand this, you can start deciding on locations, property sizes and tenant demographics you might want to target.

Finally, you’ll then be able to explore finance options and partners that you can work with.

Why invest in UK property? Plus Icon

UK property is recognised as one of the most appealing investment assets across the world. In comparison to other markets, the UK property market is not only resilient, but it can offer consistent short- and long-term returns.

While rental income can usually cover the monthly payments of the property and then some, this asset also grows over time. UK property prices have been on an upward trajectory for the best part of 10 years, with the average property price now 65% higher than it was 10 years ago.

How much is a deposit for buy-to-let property? Plus Icon

Deposits for buy-to-let property can vary, but 25% of the property’s value is usually the industry standard.

That said, deposits can range from 20%-40% depending on an individual’s circumstance and product.

While cash investors will be able to cover the entire cost of the property or land, those who plan on getting a buy-to-let mortgage for the remainder of this amount will generally need at least 20% of the entire cost to secure the property.

Is buy-to-let a good investment? Plus Icon

If you were to measure how ‘good’ a buy-to-let investment is based on its past performance, this asset would probably come out on top. However, different assets will suit some more than others based on their financial goals.

If you’re looking for a resilient asset that can offer a passive income as well as the opportunity for capital growth, buy-to-let property could be the best asset for you.

With 8.9% price growth in the UK on the horizon, along with 15.9% increases in rents by 2027, forecasts suggest that buy-to-let property could be the route to financial freedom for many investors.

Is buy-to-let worth it?

When it comes to investing there’s generally no ‘one size fits all’ approach and buy-to-let property will suit some investors more than others.

However, for those who are looking for a long-term investment asset with a track record of competitive growth and more price increases on the horizon, buy-to-let is often the best option.

Buy-to-let is a flexible investment assets and can offer diversification across a wider portfolio. It’s historically one of the most stable assets and is much less exposed to external factors, plus it’s a physical asset, which makes it appealing with certain investors.

The answer to ‘is it worth it?’ depends entirely on how you use it. If you use it as a long-term asset, it’s proven to be a potentially lucrative investment vehicle that can be scaled effectively.

How does buy-to-let work? Plus Icon

Buy-to-let is fairly self-explanatory – it involves purchasing a property with the intention of letting it to a tenant for a monthly fee.

Owning a buy-to-let property comes with a wealth of responsibilities, some of which are compulsory and some depend on how much of an active investor you are.

Being a landlord, you will be responsible for maintaining your rental property, unless you choose to go with a property management company.

Similarly, you’ll be required to find your own tenants and market the property yourself, unless you work alongside a letting company.


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