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Property Investment: one sizeable property or several smaller ones

Property Investment: one sizeable property or several smaller ones

Author: Pranil Maharaj
Date: 2019-06-28

Buy-to-let investors often ask if it is wiser to invest in a single upmarket property or various smaller ones. It is imperative to examine the priorities thoroughly. Is rental income or capital growth the main objective Properties in the mid to high value bracket often have a high capital appreciation rate, but this is not always the case.

At times one substantial investment may be the right answer. In other circumstances a more diversified portfolio would better suit the investor's needs.

A higher end property produces greater rental income as well as increased capital growth if the unit has been prudently chosen in an area with robust growth.

It may be preferable, however, to spread the risk over multiple smaller units. If one tenant defaults, the others will continue to meet their rental commitments. Careful consideration should also be given to buying several units in one block or the same area, thus reducing the benefits of real diversification. It is important to bear in mind that multiple properties result in proportionally increased management efforts and maintenance costs.

Astute investors ensure genuine diversification, warranting that their properties are in diverse areas across a broad price range.

Investors should analyse the markets and identify the most active areas, as well as the most likely up and coming areas. A knowledgeable and qualified estate agent will be able to assist and advise where the best opportunities are in the current market conditions.