As a company we have guided many clients in the process of building successful property portfolios. A portfolio is just a name for a bag of properties that you own, right? WRONG.
MY DEFINITION: A portfolio is a group of properties under the same ownership linked by a common goal or objective.
From this definition there are a few ‘so whats’:
Deliberate Vs Accidental
Many people accidentally end up with a random group of properties that they own & call it a portfolio. There is no common goal or objective & it is therefore unified by nothing – which makes it counterproductive & a headache. Having a portfolio is a decision & therefore is a deliberate process.
Random vs Calculated
You must have defined criteria for your portfolio that goes beyond just cheap! Buying stuff randomly based on individual analysis will result in very little unity & cohesion. Deliberate, even if slower, development of a portfolio truly unified will be far far more valuable in the longer term.
Portfolios within Portfolios
As portfolio growth continues & life ebbs and flows, the aims & objectives may change. You may need, as I have, to have portfolios within portfolios. I.e. shorter term high yield properties in less desirable locations to assist with covering school fees – duration 10 years, then sell.
End State
I bang on about end state based decisions, but it is vital to start something with an end in mind – why do it & for what? Make sure it will deliver the aims & be realistic & goals modest if it means guaranteeing success!
Agree or disagree?