7 Signs The Health Of Your Portfolio Is Going Backwards

Whether you are a long-time portfolio landlord or simply considering taking the plunge and purchasing your first investment unit, it’s important to routinely review the health of your portfolio. After all, as the economy and property market change, so will your portfolio – tenant’s budgets will change, their needs will evolve, and the market will respond to demand accordingly. In this piece, we’ll be running you through the seven main signs to look out for that indicate the potential downturn of your portfolio, so that you can spot the signs early and seek advice from an asset manager as soon as possible to get back on track.

Sign One: Lack of interest in your units

Simply put, you won’t make a yield on a property that nobody wants to live in! If some of your units are not gathering any interest on the property market and are taking a long time to secure tenants for, this could be extremely detrimental to your portfolio. However, this may not necessarily be a sign of overall portfolio stagnation – this could signal a weak market, poor marketing or an incorrect listing price. Review each of these possibilities with your letting agent or asset manager as quickly as possible to see if you can boost the appeal of your worst performing units.

Sign Two: Too many short-term tenancies with void periods

A void period is a lapse in time where your property goes uninhabited, thereby leaving you with no rental income and potentially leaving you in a deficit. This can happen if a tenant moves out earlier than anticipated, or your unit does not gather sufficient interest quickly enough when listed. Although the occasional void period is to be expected, having too many across your portfolio or too many in succession for one property could indicate a broader problem and result in a decline in the health of your portfolio. Some of these potential causes of void periods can be mitigated, for example by slightly reducing your rent or refurbishing outdated aspects of your unit. However, if there are problems with the neighbourhood in which your unit sits, such as noise or crime, this may be a more difficult challenge that may only be fixed by the offloading of your asset and investing your capital elsewhere.

Sign Three: No movement

Sometimes, property portfolios do not evolve in the manner you initially hoped – many landlords begin their property journey with the hope of financial freedom and sustainable growth which can be challenging if you’re seeing slow and unstable trends. As such, some portfolios reach a point of stagnation wherein landlords find themselves stuck, not making enough profit to evolve their portfolio or improve existing units, and unable to reach their portfolio goals. Such stagnation can be offputting for landlords, with many choosing to offload their entire portfolio if they see no future for their collection of properties. If this is the case, Centrick advises a thorough review of your assets with an asset manager, who will be able to pinpoint areas of improvement to get your property journey back on track and make recommendations on how to improve the health of your portfolio.

Sign Four: You’re not making much money

With the economy fluctuating thanks to the cost of living crisis, inflation, and a possible recession in Britain, many people are beginning to feel the pinch. Although property is deemed one of the more reliable asset classes through financial tumult, it can undeniably be impacted by the economic climate, which can result in some landlords taking a financial hit. This may be due to void periods, missed rents from struggling tenants, or your portfolio income simply not going as far as it used to. Implementing a rent guarantee, or ensuring that you only sign long-term tenancies, can help to prepare your portfolio for financial difficulties. It’s also important to remember that property should be considered a long-term investment and over 10-15 years you will experience changes in the market. There will likely be periods of slow and fast growth in any portfolio, in both rental and sales prices, so before you take drastic action and offload all of your assets be sure to identify the reason your income is unsatisfactory and whether this is likely to change positively in future.

Sign Five: You can’t handle your portfolio anymore

If you have too many properties to handle, and not enough time or personnel to handle them, this can result in your property portfolio being submerged into a state of decline. This is where property managers can be helpful, especially if you are struggling to single-handedly deal with rent chasing, maintenance issues, accounts and other tenancy arrangements. Having someone manage your portfolio on your behalf can ease the stress your portfolio has on your life, allowing you to spend your time on the things that matter to you without sacrificing the health of your portfolio.

Sign Six: You aren’t making enough to expand your portfolio

If you want to push your portfolio forward by purchasing new units, but aren’t recouping funds quickly enough to do this at a rate that suits you, this may indicate that your portfolio is underperforming. For many portfolio landlords, this can be discouraging, especially if you have clear aims as to what goals you wish your portfolio to reach in the coming years, with many investors aiming for financial freedom through their portfolio. This may be a result of weak portfolio diversification, wherein you own too many of the same type of properties in terms of unit type or location: if this kind of property wanes in popularity and demand for it reduces, your entire portfolio will undoubtedly suffer. Having a diverse portfolio of properties will help you mitigate this possibility, encouraging you to stay ‘in the green’ so that you can leverage your assets and continue to expand your offerings.

Sign Seven: Your units are becoming outdated and unpopular

Some of your units may be unable to keep up with the demands of modern tenants and new-build technologies, making them unappealing on the market and expensive to maintain. What’s more, with investment flooding into towns and cities, it makes sense that certain neighbourhoods will become increasingly popular, leaving some communities behind. If one or some of your units are located in these less desirable neighbourhoods, or is becoming outdated, this could contribute to some portfolio disruption. You may be able to combat this by playing on affordability compared to more popular markets or making changes to your unit to make sure it stands out for renters. It is also important for you to discuss the future rental projections and regional investment of the neighbourhood in question with your agent prior to purchasing additional units.

Ready to get the health of your portfolio back on track?

Centrick’s Asset Management team has been helping bolster our client’s portfolios for years, resulting in profitable portfolios and sustainable long-term growth that fits your lifestyle. By reviewing your portfolio, growth and goals, our team can provide transformative guidance for portfolios of all sizes – get in touch with our team below for further information: