Photo by Dragon Property

This month, I want to talk about growing your portfolio — and what to watch out for along the way.

We’ve got several clients right now focused on quick purchases, refurbishments, and refinances, and we’ve learnt a lot through helping them — as have they! Many are coming from mentoring and training schemes, aiming to build large portfolios quickly. And while I do believe that’s achievable, you’ve got to be careful you don’t lose it all before you really get going.

The training is only one part of your property journey — the real test is applying that knowledge in the real world.

A Few Things to Consider

Profit on a deal is one thing, but it’s your cash flow that allows you to finish a refurb and move on to the next one. Here are some of the potential challenges you’ll want to think about when planning your timelines and deciding how many properties you can realistically buy in a short space of time:

Refinancing delays

You might be able to buy a property quickly, refurbish it quickly — but refinancing often takes a lot longer than expected. It can easily take three months, which means it could be six months before you get your money back out to use again.

Land Registry backlogs

Make sure you factor in Land Registry timescales, especially for first registrations. We’re seeing more and more refinances being delayed because of this.

Unexpected valuations or costs

What if the valuation comes in lower than expected? Or the refurb ends up costing more than planned? You’ll need access to extra funds quickly — and if that means borrowing more, your refinance needs to be able to cover it.

Why Your Team Matters So Much

If you’re looking to buy multiple properties, you really do need a solid team around you. Knowing you can pick up the phone to your broker or solicitor at any time — and that they’ll not only respond, but help you spot potential issues before they become real problems — is absolutely invaluable.

Here are a few real-life examples we’ve seen recently:

• One client ran out of time on their first bridging loan due to build delays. They ended up paying a £10,500 late fee, then had to re-bridge with us to avoid a second one. They’ve had so many issues with the build, they won’t see any rental income for at least six months longer than planned — and they’ve racked up some hefty finance charges in the meantime.

• Another client bought a property at auction for £269,500, but the valuation came in at £220,000. That meant a drop in the loan by £42,075. Luckily, they had family to lean on — but without that, it would have been a serious problem.

• One of our most experienced clients is buying a couple of auction properties a month. Generally, his completions are smooth, and he’s got a great team and a solid valuer. But recently, a legal restriction on one of the properties nearly made it unmortgageable. We managed to get an exception approved by the lender’s commercial director at the eleventh hour — otherwise he’d have lost over £60,000 in deposits. He’s also now facing delays refinancing several properties due to Land Registry hold-ups, which proves again how vital it is to have a broker who’ll fight your corner.

A Quick Note on Investor Funds

Lots of our clients use investor funds successfully, and it’s a brilliant tool to help grow your portfolio. But overusing them can lead to cash flow issues.

Investors are people with lives and plans of their own — they might decide to pull out, or suddenly want their money back. If that happens and you’re relying on them too heavily, you could end up with all the profit going to them and none to you — or find yourself in a bit of a “robbing Peter to pay Paul” situation.

Get to know your investors. Understand what’s important to them, and where their limits are. That relationship matters. We’re also seeing lenders look much more closely at deals involving investor finance — they want to see there’s enough equity or income from the refinance to repay what’s owed, or to cover the ongoing cost if not. It all feeds back into the bigger picture of a strong, sustainable portfolio.

I hope this has been helpful. It’s not meant to put anyone off — but I do think the reality can sometimes get blurred by social media and training programmes promising easy, passive income. And I feel really strongly that property investment isn’t that.

Treat it like the business it is — and you’ll give yourself the best shot at long-term success.

As always, feel free to get in touch here if you’d like to chat.

About the Author:

Ellie Broadhurst is a specialist mortgage broker working at Baya Financial in partnership with The HMO Roadmap. She works with HMO property investors throughout their journey, from clients starting on their first project through to experienced portfolio landlords and developers. Learn more about Ellie here.