‘Portfolio landlord’ is a term used a lot, but how many properties equals a portfolio? And, what is the most effective way to for landlords to manage so many homes at once? Read on to learn more...
Our recent landlord research* found that 14% of landlords participating in the survey owned one property, 47% owned between two and five properties, 23% owned between six and ten, and 18% owned 11 or more.
This figure changed slightly for London-based landlords with 17% owning one property, 39% owning two to four, 30% owning five to 10, 9% owning 11 to 19, and 5% owning 20 or more. The largest property portfolios were found in this part of the country.
The most common reasons cited for buying more property include an increase in income/returns, expanding a portfolio, and future planning.
The mean total market value of a portfolio was £1,349,000, and this provided a gross annual rental income of £62,000.
A general accepted definition of a portfolio landlord is a person who owns four or more properties.
So, based on the government survey above, this means up to 86% of landlords could be considered as owning a portfolio.
There is no official limit on how many properties you can own.
However, if you require finance to purchase these properties, some lenders may have their own restrictions to carefully consider the risk, affordability, and certainty of repayments being made.
At Aldermore, we do things a little differently. With us, there are no limits on the number of properties a landlord can hold overall.
Owning multiple properties can be a lot for one person. There are only so many hours in the day, after all. To make things a little easier, here are our top tips for managing a property portfolio:
While you may be highly knowledgeable and skilled, delegation is the key to a successful and expanding portfolio. For example, you could enlist the services of an accountant to do your taxes, a handyman for regular maintenance and repairs of your rental properties, and an estate agent to market and fill your empty properties.
This will cost money, but you’ll be able to rest assured these duties are diligently being carried out by professionals and concentrate on other things.
Some agencies will even offer a full-service, meaning they’ll take multiple jobs off your hands for a fee.
Implementing systems and processes makes delegating work easier and ensures every instance is managed the same way. Organisation is key and this will help keep all your files and records in one place.
You can do this simply by writing out and sharing how you would do things in a standard operating procedure (SOP) or by investing in property management software which will allow you to automate rather than outsource. Whichever you prefer, fail to prepare and you can prepare to fail.
While the highest bid often wins, it is important to screen your tenants before signing any contracts. Screening checks will look at the potential tenant’s background, including criminal and financial factors, to highlight any potentially troublesome tenants.
With a good tenant in place, the whole process should be smoother and will generally make managing the property easier. This is especially true when expanding your property portfolio. Afterall, more homes mean more tenants, so it helps knowing that all of them are respectful and diligent.
Landlord and tenant law is fast changing, so it’s important to keep up-to-date to ensure you don’t fall foul of any of the latest developments.
There are many excellent landlord organisations that share regular newsletter updates and forums where you can discuss all things property. Check out the National Residential Landlords Association (NRLA), one of the biggest, to get started.
As we mentioned earlier, we make managing property portfolios easier for landlords by offering the ability to combine finances for multiple properties.
If you need to refinance, we can put multiple properties of the same security type on one application (up to 30 properties or the value of £5m) which means one combined loan-to-value (LTV), one stress rate, and one direct debit each month. All of this means less paperwork!
We specialise in lending buy to let mortgages for larger, more established portfolio landlords. So, whether you or your limited company are looking to expand, you’re safe in our hands.
To learn more about our buy to let products and how we can help you, get in touch today.
Subject to status. If you fail to keep up with payments on your mortgage a ‘receiver of rent’ may be appointed and/or your rental property may be repossessed.