Looking to grow your property portfolio? Five things to consider before investing

A recent survey in Saudi Arabia, the 2022 Knight Frank Saudi Arabia Residential Survey, revealed many people are looking for a second home, as a weekend getaway, a holiday home or as an investment.

For many of us, the motivation behind building a property portfolio is the dream of building wealth and financial freedom.

And if you’re privileged enough to be among those in the market for a number of properties, then I’d like to share my tips on what can be considered before jumping in and investing.

1. One strong investment

Your first project is crucial. It has the power to ‘snowball’ if done right. If you invest well – and the numbers stack up – you can then buy into the next deal, and so on.

On the other hand, a bad first deal can leave you with unhealthy finances – preventing further investment… Start small, within an area you know well.

Of course, your first investment should be based on a clear set of goals and/or financial aims. Decide upon your overarching aim – sustainable rental income, capital appreciation, or perhaps a combination of both, for example.

By working out your (long-term) goals before making your first property purchase will help steer the direction of your property portfolio. These goals should be plotted on a realistic timeline – which will help keep you on track, motivate you and manage your expectations.

2. Right price and right time

It is easy to say and hard to implement, but buying property below market value and selling it at a higher price provides a strong return so you can re-invest into the next project and rapidly build a portfolio.

One of the best times to buy is when the market has hit the bottom and is starting to rise in value again. Buy during a market boom, and you could wait a long time for significant returns –slowing your portfolio growth.

Spend some time doing a deep market analysis – we all know property markets work on a cycle – and take advice from market analysts and the investment community. Remember, there will be volatile periods, times of investment uncertainty – and property prices can sometimes be difficult to predict. Your approach to building a viable property portfolio should be long-term.

3. Cashflow strategies

Make sure the numbers add up. Don’t take a deal because you think it is good, seek out the very best deals.

Don’t jump at an opportunity and then be surprised when it doesn’t provide the expected returns. Always buy with logic and with your head over your heart.

At different life stages, you might wish to operate differently. For those starting on the property ladder in their 20s or 30s, there are considerable wealth building opportunities and potential income streams. You’d be more likely to take on risks at this life-stage. By middle age, it’s recommended to adopt a more balanced strategy, and in later life, it makes sense to adopt a more cautious approach – such as increasing rental income over capital appreciation.

4. Educate yourself

It’s vital – as in most aspects of life – that we keep learning. Expanding your knowledge of the property sector will not only increase confidence in your investment decision-making but ensure you make the right investments. While you may employ the services of a financial advisor or an investment portfolio manager, it’s always a good idea to keep up with the trends, the terminology, and the opportunities yourself. It’s also a good idea to attend networking events and the like, to gain knowledge from your peers.

5. Expand your research 

Don’t rely solely on estate agents to bring you deals. Just because a realtor says it’s a good deal – doesn’t mean it is a good deal.

Rather, use online forums, social media and specific investment groups to engage with other deal sourcers and sellers.

Sometimes instinct can help us find a solid deal, otherwise nothing beats research, knowledge and intelligence.

Building a property portfolio is a rewarding, interesting way to generate wealth and a decent financial safety net for you and your family’s future. Approach it with a long-term plan, patience and research, and you will surely succeed.