January 19, 2024 2:45 pm

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Nikka Sulton

Property investors grapple with a crucial decision: whether to construct a large portfolio, potentially burdened with management complexities, or opt for a smaller, more manageable approach. The limitations on purchase deposits and the ability to secure mortgage finance naturally impose a cap on the number of properties an investor can acquire. The impact of “Section 24” mortgage interest restrictions, now fully enforced, further restrains the capacity to claim tax credits for finance costs, setting an effective limit on property acquisitions, especially in personal names. However, utilizing a company structure may facilitate more extensive portfolio growth.

The landscape for property investment has shifted, making it more challenging to create and sustain a large property portfolio. While the allure of owning a vast portfolio may be a dream for many investors, questions arise about the practicality, work ethic, and business skills required to navigate the complexities and risks associated with managing numerous properties. The changing dynamics in credit availability, Loan-To-Values, lending criteria, and increased stamp duty costs contribute to the evolving challenges. Investors are increasingly recognizing the benefits of aiming for a smaller, high-quality portfolio that aligns with their risk tolerance and management capabilities.

In this context, Buy To Let remains a pragmatic avenue for property investment, often referred to as “the poor man’s private equity.” It enables investors to leverage substantial borrowing, typically up to 75%, to acquire properties with a market value well beyond their investable cash. While dreams of owning an extensive portfolio persist, the current landscape encourages a more measured and strategic approach, emphasizing the quality over quantity of properties in an investor’s portfolio.


What are your property investing goals?

Many venture into property investment with distinct goals—some aim to replace a monthly job income, while others seek a secure, long-term investment. Those focusing on replacing a £3,000 monthly job income might require 8-10 single-let properties or 3-4 multi-let properties. A straightforward approach involves dividing the target income by the number of properties, providing a clear calculation for reaching the income goal.

The challenge arises when landlords compromise on their purchase discipline, accepting rental yields below their target criteria. Ideally, property purchases should align with stated objectives, barring exceptions like properties with development potential that may not fit conventional rental criteria. Opting for low-yield properties necessitates a higher quantity of properties and more investable capital to achieve the same income target.


How much investable funds do you have?

Property acquisition necessitates capital, as lenders typically don’t cover the entire purchase price. For most landlords, the amount of investable funds naturally imposes a limit on property acquisition. To surpass this limit, the ability to raise finance becomes crucial. It becomes even more significant in this context to build a solid portfolio, showcasing to potential outside investors that you are a reliable and trustworthy investor.


How Many Properties Do You Need To Make A Living UK?

Replacing a monthly income of £3,000 can be achieved with 8-10 single-let properties or perhaps 3-4 multi-let properties. A simple approach involves dividing the target income by the number of properties, providing a clear perspective on the portfolio size required to meet income goals.

Some landlords falter by lacking discipline in their purchases, settling for rental yields that don’t align with their target criteria. The key is to adhere to specific objectives when acquiring properties, except in exceptional cases like those with development potential but unsuitable for rentals.

Opting for low-yield properties introduces the challenge of needing more properties and increased investable capital to generate the same income. This underscores the importance of strategic property selection aligned with income objectives.


How much time and energy are you prepared to commit to your property portfolio?

Building a property portfolio involves extensive steps—research, viewing, offers, mortgage applications, and legal processes. From property #1 to reaching the target portfolio size demands considerable time and effort.

For many, juggling a job, business, family, and personal interests makes creating a property rental business challenging. It requires dedication, time management, and the willingness to make personal sacrifices, such as opting for a smaller home and more modest lifestyle choices, to fuel investment growth.

In the ‘post-credit crunch era,’ these tough decisions become crucial for investors aiming to build a substantial portfolio. The commitment to navigate these challenges is integral to achieving long-term success in property investment.


Can Property Still Create Financial Independence?

You might assume that one rental property could grant you the freedom to decide whether or not to work, especially if it’s a house in multiple occupation (HMO) – more tenants, more rent. While HMOs come with additional regulations and increased costs, the potential profits can be significantly higher.

Opinions differ on the number of properties needed for financial independence; some argue one suffices, while others suggest four, three, or any chosen figure. Ultimately, it depends on your circumstances. If you own two mortgage-free properties, one of which you reside in, a single property might provide the choices you seek.

However, if your aspirations involve summers in the Maldives, winters in the Alps, and a couple of Ferraris, it will require more than just one property.




In the initial stages, landlords focus on acquiring their first properties. However, beyond this, it’s crucial to consider how much time, money, and energy one wants to invest in expanding the property portfolio.

Growing a property portfolio demands significant time and capital, so it’s essential to align your efforts with your own goals rather than following someone else’s path. Everyone is unique, and there’s no universal approach.

Above all, lay the foundation of your portfolio on solid principles. Building wealth through residential property, carefully selected, financed, and maintained, is a gradual process. It provides a relatively safe and predictable avenue for individuals to accumulate wealth over time.

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