A New Year often fills many of us with a desire to make changes to improve an area of our lives. For the property investors among you, reappraising your portfolio could be the perfect way to make a change to effect a positive change to your lifestyle.
Depending on how many investment properties your have in your portfolio, this may seem like a big task to take on. However, with the right knowledge, advice and/or help, you could discover that your portfolio is performing even better than you thought. Or, you may realise the time has come to reduce your commitments and reap the rewards of years of risk taking and hard work.
We share three steps to hep you reappraise your property portfolio for 2019.
Discover the up-to-date value of your properties
If you want to know exactly how well your property investments are performing, you need to know how much they are worth. There are some options to gain that up-to-date valuation.
Among them are using website calculators that draw on various data sources, to give an estimate of how much your property, or properties are worth. This is actually a pretty good option and while you couldn’t go to a mortgage lender with that as proof of its value, it does give you a good ball-park idea of how much you could advertise your property for sale, in the current market.
Another option is to speak with a mortgage advisor who can arrange a professional valuation of one or all of your properties. If you’re not planning to take out a new mortgage, then this service might come with a fee. However, you will gain an exact and reliable valuation.
Or, you could simply do your own research and look at what price similar properties in your area are being advertised for sale at. This isn’t the most reliable way to gain a valuation, but it does give you a broad idea, which in some cases is enough for your needs.
What is the return on your properties?
This is something that will require a little more time as there are various costs to consider, not just the basic rental income and running costs. Tax changes mean your liabilities are changing and you should also calculate your return based on Government plans for Buy-to-Let related taxes.
Along with the incoming Bill which will mean you can no longer charge tenants for a variety of admin and contract renewals, the level of mortgage interest payments you can offset against your tax is being phased out and will fall to 20% by 2020-21.
To get a complete picture of the annual return you gain on your property investment, you should also consider any capital gains on its value. Add in any reliable forecasts you can find and calculate it as an average annual percentage rate – it’s advisable to be on the conservative side – which you can add onto the actual return based on rental income and other associated costs.
Once you have this figure, you will have a better understanding of just how valuable or not your property portfolio is. It will also be a reliable figure to use as a comparison for those among you who are thinking about selling up and investing in a different asset class.
Remember why you began your portfolio
Unless you wrote it down, this isn’t always easy to do, particularly if you started off as an accidental landlord, or if you’ve been investing in property for many years. However, for many of you, it should be possible to remember why you thought property investment was the right option and what you initially wanted to achieve from it.
If you still enjoy the challenge of building your portfolio and are making a success of it, with the returns to show for it, then great – it could well be time to add to it again.
However, there are likely those of you for whom its all a bit too much hard work, regulations and tax changes are getting too much to handle and eating into your returns more than you’re happy with. A change of direction in your property investment career, a reduction in your portfolio or exiting the market all together are three possible future paths for you.
Whatever result your property portfolio reappraisal brings, there should be a way to make the changes you feel would work for you. But if you’re unsure, it could be worthwhile seeking professional advice about where to go from here.
The future is uncertain and only you can know what you’re comfortable with, with regards to your portfolio. And if a change is required, you should make it with confidence that it’s the right change for you.