Build a property portfolio with just £50,000: The how-to guide

It is obvious to all investors that there are clearly issues with attempting to build a property portfolio with £50,000, says Haaris Ahmed, founder of property crowdfunding platform UOWN. “When buying an investment property the average amount required for a mortgage is 25%, and using the average for UK houses prices, this equates to £60,000 across the country or well over £100,000 in London.”
In other words, that isn’t a portfolio of investments, but one investment and a pretty static one at that and with no further diversification for your £50,000. As Haaris goes on to point out, the Mortgage Advice Bureau statistics show that the average buy-to-let deposit had also hit £100,000 and given the extra regulatory and tax impediments that have been thrown in the way of that sector of late by the government, it makes that lack of diversification also prone to political interference. So how do you build a property portfolio?Even if you search for cheaper properties – if such a thing exists – you would still likely be using your £50,000 on a handful of properties – and you have to remember, the properties you may be choosing at the lower end of the market might well be cheap for a reason.

“Even if you intend to find that almost mythical ‘doer-upper’, it will still cost you to turn it around or ‘flip’ it,” says Haaris. “As a strategy, it is it fairly high-risk, time-consuming, and it requires a level of expertise.”

How do you build a property portfolio: So, what are the options?

So does that mean the end of your property portfolio dreams at the £50,000 level? Well, no. There are options out there and perhaps the most intriguing is property crowdfunding. “Property crowdfunding should appeal to any investor (even with £100 to invest) that wishes to create a sustainable and diverse investment portfolio,” says Andrew Gardiner, founder and chief executive at property crowdfunding site Property Moose.

“Primarily, our clients see the value of real-estate as part of a balanced investment portfolio but may not have the inclination or capital to participate in the property investment market directly,” he adds. “Even for individuals that have the capital to invest in their own property assets, managing properties is hard work, and property crowdfunding may be a way of removing the hassle from property investment.”

Haaris agrees and points out that a diverse portfolio reduces the risk factor when it comes to rental voids. “If your money is spread across four properties your income stream is far more predictable,” he points out.

“Usually building a portfolio would take months of careful due diligence, securing mortgages, completing the contracts, and finding tenants. With property crowdfunding, you can build a portfolio with a few clicks and you can be earning rental income within minutes.”

And with many of the headaches of being a landlord stripped out, it means that investors also avoid the property management issues that can bedevil anyone considering the buy-to-let route.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.