As we begin a new year, setting ambitious goals is common including how many properties you are hoping to have in your property portfolio. However, when it comes to commercial properties, the sheer number can seem overwhelming. Scrolling through social media might make you feel pressured to continuously acquire properties. Yet, the essence lies not in quantity but in aligning with your financial objectives.
Prioritising Quality Over Quantity
The truth is, there isn’t a set number of commercial properties that guarantees success. Instead, the focus should be on achieving specific financial milestones. For instance, if your goal is to generate £10,000 per month from your property portfolio, your strategy should reflect this.
Financial Planning
Your strategy should encompass:
- Acquisition Strategy: Invest in properties that align with your financial ambitions. This could mean choosing one high-rental property or several smaller units. The key is ensuring these assets contribute significantly to your monthly target.
- Debt Management: Continuously reassess your mortgages. There’s a myth that accumulating properties endlessly is the best route. Yet, unforeseen interest rate fluctuations can impact profits. To retain control, consider strategies like mortgage repayment or selling properties to clear debts strategically.
Balancing Diversification and Risk
While diversifying across multiple properties can mitigate risk, it’s crucial to manage this risk effectively. Economic fluctuations and variable interest rates can influence profitability. Therefore, instead of merely amassing properties, focus on curating a balanced portfolio.
Real-world Considerations
In scenarios where traditional pension schemes may offer limited returns, diversifying into tangible assets such as property gains appeal. The objective isn’t merely property accumulation but crafting a sustainable income stream that promises security and growth.
Emerging Trends to Monitor
- Medical Startups: With an uptick in medical startups requiring specialised spaces like labs, consider diversifying from conventional office spaces. Engage with local agents to explore potential tenants in need of such facilities.
- Grants and Incentives: Stay abreast of regional initiatives like the “vibrant Wiltshire grant.” Councils are encouraging businesses to occupy vacant retail spaces through such schemes, presenting potential opportunities.
- Regulatory Developments: Keep an eye on possible regulatory shifts, such as proposed government changes to class MA development rights. Easing such regulations could unlock substantial value in commercial spaces, rendering them more adaptable and lucrative.
Conclusion
In summary, navigating the intricate property market involves prioritising quality over sheer quantity. Clearly define your financial objectives, adopt a sustainable approach, and remain informed about evolving trends. By emphasising quality and adaptability, you’ll be better equipped to navigate the ever-changing commercial property landscape in 2024 and beyond.
PS If you would like to listen to the podcast on this topic, you can listen here and if you have missed any of 2023’s blog posts you can read them here.
