The careful management of a property portfolio can help improve its profitability. This can be achieved through portfolio expansion, improving rental yields, or increasing capital growth.
Regular reviews of property portfolios are an important element of portfolio management. A regular review of overheads can help identify cost-saving options. The portfolio should be regularly assessed from a profit and loss perspective. Such assessments may identify growth opportunities as well as any less profitable properties or those continually requiring a high level of maintenance.
Reviewing the portfolio can also help identify any refurbishment or major improvement opportunities that may add value and help it achieve a greater rental yield.
Once an investor has a small portfolio and positive financial position, they may be able to raise additional funds to help expand. This enables investors to diversify and spread their investments in different areas and different property classes, such as residential or commercial.
As a property portfolio expands, diversification can help minimise risk. Spreading the investment across different markets and locations can safeguard against fluctuations in property values.
Refinancing can help investors find preferential interest rates, extend or shorten the loan term, or release equity.
Within a property portfolio, profitable properties will return money on the investment at different rates. The profits from some properties could be transferred to others, to optimise the loan to value (LTV) ratios. Lenders often charge lower interest rates to borrowers when they own a higher share in the property.
There will often be arrangement fees associated with refinancing options, and loans may have terms and conditions that mean refinancing can only be arranged after a specified period has passed.
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