Stacks of coins with arrows going up and down to represent interest rate fluctuation

…And a whirlwind it is indeed. The interest rates in the property market have had a negative impact on landlords, however, there are always ways in which landlords can mitigate the stresses of fluctuating interest rates. Here, we will look at how to manage your property portfolio during whirlwind interest rates. 

Stacks of coins with arrows going up and down to represent interest rate fluctuation

The Bank of England has raised interest rates from 1.25% to 1.75%, which has been the biggest rise in interest rates in 27 years. But that’s not all. Since August of 2022, interest rates have increased a further 0.5%, to 2.25%. Predictions show that the interest rates are said to rise to 6%. That’s a steep increase, we can all admit. 


Further to this, there has been an increase in buy-to-let mortgage rates, which inevitably directly impacts landlords. For homeowners who have a two or five-year fixed-rate agreement, this may not be an issue right away, however, those due to refinance will be negatively affected by this.


Costs like landlord insurance also need to be considered when thinking of investing in property to ensure that your investments are protected from external risks. Contact CIA Landlords today to find out how to best insure your properties. 


So, how do you build yourself a profitable property portfolio among these increasing rates? And if you already have a property portfolio, then how do you protect it so that it is still worth your while? 


Throughout this comprehensive guide, we will take a look at what a property portfolio is and how to manage it whilst managing all other expenses. 

A few house models scattered around

What is a property portfolio?  

A property portfolio is a collection of real estate owned by a person, a group of people or a corporation. 


To successfully own a property portfolio in the UK means to buy a handful of investment properties in order to rent them out to tenants. The result of this is to get a higher return on your investment than only having a single property. 


One important thing to consider when starting your property portfolio is to diversify your portfolio by incorporating different property types and different areas. The reasoning behind this is that if you are experiencing issues with one of your properties, you still have a few others that can generate a stream of income. 


Another advantage to owning a property portfolio is that you can start a buy-to-let business that can be turned into a full-time revenue-generating project. 

How to manage a property portfolio during whirlwind interest rates

We now know of the benefits of having a property portfolio, but how do we manage that portfolio to ensure that it is profitable and worth the investment? Here are a few top tips that will be sure to help you out. 

Make sure your finances are in order

There are ongoing costs to consider when deciding to establish a property portfolio; it comes as no surprise that money builds the foundation you need to have a successful portfolio. The property market is a lucrative one where the demand is high. Since the pandemic of 2020, the number of people investing in property has increased dramatically. 


The UK House Price Index from the Office for National Statistics shows that property prices have dropped with regard to property value since last year from £292,404 to £285,009. So, now is a great time to invest in property. 


There are also other costs to consider before taking on a project like this:


  • Stamp duty
  • Property management fee 
  • Income tax on profits
  • Maintenance expenses
  • Ground rent
  • Capital gains tax
  • The cost of a mortgage

With all of these extra costs, it is difficult not to feel overwhelmed, but that is why CIA Landlords can help you find the best quote for landlord insurance out there! 

What are your goals?

Before walking into property investment, you need to be sure about what you want to achieve with your portfolio. Do you want short-term financial gain, or do you want to secure your long-term future? Knowing what your goals are will help you decide on the type of investment strategy to take. 


For example, if you want to ensure that your retirement is sought after, investing in residential homes is the way to go because they have the highest rates of capital gain. But, if you want money to come through quicker, then investing in student housing is a good approach because they are cheaper to maintain and offer higher yields. 

Tenant types

Similarly to finding out what your goals are, you should decide on the type of tenants you allow to rent out your property. You want to make sure that people who rent out your property will be reliable and will look after their space. 


Further to this, when you understand your target tenants, you will understand what they want from a property and what you can offer them. The interests of tenants have shifted since the most recent pandemic due to people working from home more frequently, so tenants will be looking out for certain amenities when looking to rent. 

Consider hiring a property management company

Managing your own property portfolio may not be something that you want to be involved with. If this is the case, then you should consider hiring a  property management company to do the hard work for you. 


By hiring a property management company, you will not need to worry about tenant screening, ensuring your properties are kept up-to-date, or troubleshooting. The company will be the first point of contact with tenants, so you would not need to establish a relationship with them either. 


The only downside to hiring a company to handle these issues for you is that your costs will increase, but if you can afford this, it may be something worth considering. 


This option gives you the freedom to carry on with your day job and more time to research new property investment opportunities. 

Cartoon properties in a city

Think about your location

Deciding where to invest your money when it comes to property is equally as important as the strategy you decide to take. Researching which areas are profitable and worth your while will help you make the best decision for your property portfolio. 


As a property investor, you want to ensure that your properties bring you revenue so consider things such as monthly rent, the affordability of the property, the potential for growth in pricing, and the amount of profit you will receive and a young demographic for higher rental yields. 


Areas that allow you to tick off most or all of these factors are perfect to invest in. 

Start small

It is a good idea to start small if you have never invested in property before. Perfecting your investment strategy with one property first will leave you feeling confident in moving forward with your portfolio. 


You will also allow yourself to gain all of the knowledge needed before adding more to your portfolio, including the responsibilities you will have as a landlord. If something goes wrong, you will not be risking as much as if you have many properties in your portfolio from the beginning. 

Diversify your property types

Another way to ensure that your property portfolio is profitable is to be diverse in the types of properties you invest in. If you only invest in one type of property, you automatically put your portfolio at greater risk if that type of property fails to earn profit or becomes less favourable. 


If, however, you keep your property portfolio colourful and diverse, you have less of a chance of losing money. Ways in which you can diversify your portfolio is by picking property types that are different to what you already have. For example, if you have invested in student housing, you could try investing in property for bigger families. 


Another strategy that you can use to change up your portfolio is to invest in property in various different cities. 

What is your exit strategy?

You will also need to think about selling your investments and when the time is right to do so. You want to ensure that you sell your property investments at a time when you have made enough profit to be able to retire comfortably – if that is your goal. 

If you are looking to sell your portfolio, you need to understand that this won’t happen overnight and keep an eye on the property market so that you ensure that you sell at the best possible time. Investing in property is a long-term ordeal and cannot necessarily be used to save you from financial difficulty in the near future. 

Knowing when to sell your portfolio or certain properties within your portfolio is something you should think about. 

Now that you have all of the information needed to manage your property portfolio, you probably need to start thinking about the correct landlord insurance for your individual needs. 

With the best quotes available, CIA Landlords will be with you every step of the way in deciding on the best coverage.

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