Building a Property Portfolio in London

Are you a part-time investor with a couple of buy to let properties and wondering how to expand your property portfolio? Or are you wondering how you can build a property portfolio from nothing? 

Maybe it’s your ultimate dream to make enough from property to be able to give up your day job? 

Landlords investing in properties in South London can achieve significant profits from renting out properties in highly sought after areas such as Barking and Redbridge. Building a profitable property portfolio requires planning and a strong strategy, so read on for guidance on the key factors to consider: 

Why Build A Property Portfolio? 

There are many reasons why investors decide to develop a property portfolio, including to generate a steady passive income stream and to prepare for a comfortable retirement. When considering what type of investment to opt for, property offers a lower risk investment compared to the less predictable investments such as stocks and shares. 

Even if the property market takes a dip, over time it will generally recover. For example, average London house prices dropped significantly in 2009 but have since shown a steady incline. The average London house price was £263,000 in April 2009 and in just over 16 years it has increased by £290,000 to £553,000 (based on landregistry.data.gov data from November 2025). You should still check the latest market trends, especially if you are looking to achieve a return on investment over a shorter time period. 

As a long-term investment strategy, the capital growth achieved by building a property portfolio is hard to compete with unless you are prepared to take a bigger risk. Shares and equities are regarded as a higher risk as the markets are more volatile. 

How To Build A Property Portfolio 

As you might imagine, building a property portfolio takes time. It’s certainly not something that happens overnight – at least not for the majority of us who don’t exactly have a spare million pounds sitting around. 

It’s possible to start a property portfolio of several or even a handful of investment properties within a couple of years but the majority of property investors take far longer than that learning to build a property portfolio with enough properties to give them a similar income to that of a full-time job. 
 
Here is a quick run-down on the process of developing a property portfolio: 

1 Decide On A Strategy 

Are you looking for cash flow or would you rather accumulate capital? If it’s the former, then you may want to consider how to build a buy to let portfolio. 

If it’s capital then a property investment portfolio where you flip property or undertake a series of refurb properties may be the best property strategy for you. Most property investors adopt a combination of both strategies and you will need to consider whether your investment goals are to deliver short term or long term results. 

2 Do Market Research 

The more you understand the property market, the more likely you are to succeed. There is a lot more involved in property investment than simply buying a property and finding a tenant, so you should do your research and put in the necessary work. 

These are some of the steps we recommend: 

Consult local estate agents 

Before you dive into the unknown, you should get in touch with a local estate agent and explain your plans. If you intend to use an estate agent for managing your lettings or finding your tenants, a local agency will be keen to work with you and their local market expertise will be of great value. Building relationships with agents will help ensure you are informed when suitable properties are coming onto the market, and they will also be able to give you a better understanding of the investment hotspots in the area that are in high demand. 

Consult a financial adviser 

With any type of investment, there are tax obligations and other financial implications to be aware of. Professional advice from a financial adviser will ensure that you are aware of how your property investment will affect your overall finances. For example, your income tax will be affected, and you may also be liable for Capital Gains Tax (CGT) when you sell property. 

Evaluate amenities and transport links 

When you are researching the best areas to buy a rental property, you should consider the key priorities for tenants when they are choosing a home. Good transport links, access to local amenities and the quality of nearby schools will increase the level of demand for your property and help command a higher rental income. 

Analyse property portals 

Do thorough analysis of local house prices and rental prices using property portals such as Zoopla and Rightmove. This will give you a better understanding of how much the properties are selling for and what rental yield will be realistic. Analysing these portals will also provide you with information such as how quickly properties are staying on the market for. If properties are staying on the market for a while, the seller may accept a lower offer. 

Research rental yields 

As well as using the property portals to research rental yields, you can ask the local estate agents for their projected rental prices for specific properties. Once you have an estimated rental income, you divide the income by the property value and multiple by 100 to calculate the rental yield. Generally, a rental yield of 5-6% is considered to be good. 

Join investment communities 

There are lots of online investment communities you can join to ask questions and connect with more experienced investors. You can find them on social media sites like Facebook and some property investor networks hold events you can attend. 

Decide on a sector or diversify 

Many investors choose to diversify their property portfolio, as this can help ensure a steady cashflow if one sector is not performing as well. For example, you could invest in student housing and HMO properties. 

Want to become a more informed landlord? Take a look at managing a property portfolio once it’s built, and consider buy-to-let mortgages for first-time buyers.

3 Choose Your Market 

Once you’ve decided on your strategy the next thing to plan is who your market is. If you’re going for a buy to let strategy, for instance, then decide if you want young professionals, families or students. 

What you decide will affect where you look for properties when building a property portfolio, and what property types you need. Families will want to be near good schools and have a garden, young professionals will want to be in the centre of town and near entertainment venues. Students will want to be within walking or cycling distance of their university or college. A single family may be more likely to stay in the property for a longer period than students. 

If you have expertise in a specific property market, then it is better to focus on this market to leverage your experience and knowledge. Learning about a new market will take time and a lot of effort, so if you don’t have the luxury of spending time to learn about the market, it is better to choose a market you have the most experience in. 

4 Decide How Much To Be Involved 

Do you have the time and inclination to look after the property yourself – or will you pay a letting agency to carry out references checks, go over the itinerary etc? Many part-time property investors do use a letting agency if they’re working full-time themselves. The majority of letting agencies charge between 10 to 14% of the rental income. 

Whether you are looking to manage a group of buy-to-lets or you are choosing to buy property to refurb and flip, there is a great deal of work involved. If you have a full-time job or other time commitments, the better option will be to arrange for an estate agent to manage the letting or use a project manager for your property refurbishments. 

To decide how much involvement you wish to have, ask yourself the following questions: 

• How much time can I dedicate to property management? 
• Do I have the knowledge & skills to manage property effectively? 
• Am I comfortable handling tenant issues & conflicts directly? 
• Can I handle the administrative tasks associated with property management? 
• How close am I to my rental properties, and do I intend to stay near them? 
• What’s my budget for property management services (if any)? 
• Do I understand the legal responsibilities of being a landlord? 
• Am I prepared to handle maintenance and repair issues promptly (or have the funds to do so)? 
• How will I handle marketing and finding new tenants? 

5 Buying Your Properties 

There are several different ways to buy properties, including options that will enable you to find properties at lower than the market value. One of the ways that investors are able to make a good capital gain is to purchase the properties at values lower than the properties sold through estate agents. 

These are some of the options for buying properties: 

Traditional agents 

Buying your property through a traditional agent means that you can use their expertise and knowledge of the local market if they recommend a property when it comes onto the market. Buying these types of properties is more straightforward and if you are new to property investment, this will generally be the easiest option. There will usually be a higher purchase price when buying through estate agents compared to the options below. 

Auction houses 

If you want to try and find a property bargain, auction houses are the ideal place to purchase property at a lower price than you would usually find on the open market. However, buying through an auction house can be more complicated and you will need to learn the processes involved. Auction houses are often used by more experience property investors who have an in-depth understanding of the property market and can identify whether a property will require a lot of work doing before it is ready to move tenants in or to sell on. 

Specialist agents selling below market property 

Another option for purchasing your property is to use a specialist agent who sell below market value property, including derelict houses and properties in need of significant renovation. With these types of houses, investors usually have connections in the construction trade who will work on the properties or have knowledge themselves about how much the renovations are likely to cost before putting in an offer. 

6 Watch Your Cashflow 

Make sure you have enough rental income to cover all ongoing expenses on your property. There should also be enough to put into a repairs fund. That’s because if there are void periods where you’re getting no rental income you might find yourself seriously short of cash. 

These are the costs you will need to factor into your calculations: 

Mortgage Payments 

If you need to take out a mortgage for the property, there will be monthly mortgage payments to cover. Landlords are no longer able to deduct mortgage expenses from rental income but receive a tax credit instead, which is based on 20% of the mortgage interest payments. Current interest rates should be taken into consideration when you are deciding whether now is the right time to buy rental properties. If you are exploring other financing options, you will need to factor these costs into your financial projections. 

Renovation and maintenance 

Any renovations that are required when you buy the property, and any ongoing maintenance costs should be accounted for. On average, maintenance costs for rental properties are around 1-1.5% of the property value each year. However, if you buy an older property that is in poor condition, the renovation and maintenance costs could be much higher than this. 

Insurance 

Landlords require insurance that covers buildings insurance, and some landlords will choose additional cover for legal expenses and unpaid rent. Depending on the levels of cover and type of property, insurance will cost between £10 to £100 per month. 

Void Periods 

If the insurance doesn’t cover voids, then landlords are advised to put a pot aside to cover potential void periods. This is when there are no tenants in the property, either while you are still finding tenants or when there is a gap between a tenant moving out and the next one moving in, where you will not receive rental income. A good guide would be to have one month’s rent put aside to cover void periods. 

Property Management Fees 

Landlords who choose to use the full property management services of a letting agent or property management company will also pay around 10-15% of the monthly rental income. 

Legal and Professional Fees 

There will also be legal and professional fees involved for buying property, including solicitor fees and conveyancing. If you choose to use an accountant to complete your tax returns, their professional fees will be around £200 to £500 per year. 

Emergency Fund 

In addition to maintenance and renovation and void period funds, there may be emergency costs that arise. For example, if a boiler needs to be replaced, there would be a (very significant) unexpected cost to cover. 

Tax Liabilities 

Landlords need to pay income tax on rental income and there may be capital gains tax on capital growth when they sell properties and stamp duty tax when buying property. Stamp duty is charged at the current rates, plus a 5% surcharge for second properties and multiple properties. 

Want to become a more informed landlord? Read up on what build-to-rent is and extending a leasehold.

7. Pay Attention To Tenants 

Your tenants are an important part of your property strategy so treat them well. Attend to repairs within a reasonable timescale and give them nothing to complain about. 

On the contrary. That way, if your nice to tenants they’re more likely to stay on, lessening the chance of void periods and reduce admin and marketing costs for new tenants. 

The selection of your tenants is also key to ensuring a stable, steady rental income. A thorough vetting process and being able to attract reliable, good calibre tenants will help to ensure you do not face problems such as missed rental payments, property repairs and the potential costs of evicting bad tenants. 

8. Build The Business Slowly 

When you’re caught by the property investing bug it can be easy to get carried away and buy property that perhaps you should have considered more carefully. This is especially the case if you’re buying from auction houses. 

Also, the more properties you have, the more your debt grows. One bad property decision – or even bad luck – can mean losing not just that one property but others too because you need liquidity. 

9. Create An Exit Strategy 

You need something to work towards in your property journey. And that’s where an exit strategy comes in. Decide, for instance, when – and if – you’re going to retire from building your property portfolio. 

Knowing when you plan on selling up can also help with your overall strategy as it shows you how much income you will need on an annual or 10-yearly basis etc, to retire at a certain age and feel comfortable. Then again, perhaps you don’t want to sell up but keep on a couple of buy to let investments to boost your pension with rental income. 

Building A Property Portfolio FAQs 

Get In Touch 

If you’re thinking of letting out a property or are keen to find out how you can start building a property portfolio then get in touch with the team here at Sandra Davidson. We provide a Guaranteed Rent scheme as well as HMO management in areas including Stratford, East Ham and Tower Hamlets. 

Looking for a stress-free lettings solution? Then explore our guaranteed rent services in Barking, Dagenham, East Ham, Havering, Basildon & beyond.