As a landlord, this is an interesting question to contemplate, whatever stage you are at in terms of your portfolio growth. Whether you have just one property or several, it is good to think about what you are aiming to achieve.
When you first set out on the path of becoming a landlord, the prospect is an exciting one. To start with, your intention may be to buy just a couple of properties in order to supplement your financial retirement plans. When you start to see the rewards of these first few come in (provided that you have set them up in the right way), then it can be tempting to build on this further.
You learn as you go and if your intention is to build your portfolio, then you will most likely refine and hone your skills as you go in order to improve your results. However, it is important to take into account the implications of doing so. Think about how it will impact your day-to-day life. How will you cope with the extra demands on your time, your finances and your energy? Whatever your circumstances, it is vital to build up a good team to help you to build and manage your properties.
Sometime along the journey, you must think about just how big you want your business to grow. With growth comes more opportunity, yet also more complexity and responsibility. If you are to take your business growth seriously, then you will need to have thought about your eventual longer-term plan well ahead of the game. This will affect how you structure your business going forward.
Here are some important factors you will need to take into consideration as you go:
Start with the end in mind - what is your ideal end financial goal?
When you first set out on the path of becoming a landlord, the prospect is an exciting one. To start with, your intention may be to buy just a couple of properties in order to supplement your financial retirement plans. When you start to see the rewards of these first few come in (provided that you have set them up in the right way), then it can be tempting to build on this further.
You learn as you go and if your intention is to build your portfolio, then you will most likely refine and hone your skills as you go in order to improve your results. However, it is important to take into account the implications of doing so. Think about how it will impact your day-to-day life. How will you cope with the extra demands on your time, your finances and your energy? Whatever your circumstances, it is vital to build up a good team to help you to build and manage your properties.
Sometime along the journey, you must think about just how big you want your business to grow. With growth comes more opportunity, yet also more complexity and responsibility. If you are to take your business growth seriously, then you will need to have thought about your eventual longer-term plan well ahead of the game. This will affect how you structure your business going forward.
Here are some important factors you will need to take into consideration as you go:
Start with the end in mind - what is your ideal end financial goal?- What is the best structure for your business going forward?
- Think about quality over quantity (you may not need as many properties as you think to create a good income)
- Cash flow versus capital gain
- Maximising cash flow may be more beneficial than owning a larger number of properties
- Will you pay down any mortgages you take out to reduce LTV and increase cash flow as you go?
- Consider the logistical implications of building your business as they can have an impact on your family and career
- Maintaining a larger number of properties could be more costly and more 'hassle factor'
- How many properties do you need in order to achieve your goals?
- Run your property business through a separate bank account
- Create different 'pots' (i.e. bank accounts) for your gross rent to be split between - for example, 10% for management, 10% for maintenance, 20% for tax, 10% to reinvest, etc