How to review your Property Portfolio

The beauty of property is that nothing happens for large stretches of time – meaning that when there are no tenant issues and you’re not refinancing, you can forget you own it and dedicate your time to other things.

But once per year, it’s a good idea to conduct a formal portfolio review – allowing you to spot opportunities, celebrate progress, and set plans for the year ahead. Many investors like to do this over Christmas to align it with their goal-setting for the new year – so if that’s what you plan to do, feel free to steal our process…

Update your property values

Look at local comparables to come to your best estimate of what each property in your portfolio would be worth if you sold it today.

In a very real sense the value doesn’t matter until you sell, but it’s still useful to track progress and know what your overall loan-to-value is.

This is always an exercise in judgement, and it’s tempting to pick the most appealing plausible number to make yourself feel good – but try to follow a consistent (documented) process every year to keep yourself honest.

Review your rents

Repeat the process for rents, and identify any properties where you might be priced below the market rent. If you intend to increase the rent when the fixed term of a tenancy ends, it might be a good idea to start this conversation early so the tenant is prepared – both financially and mentally.

Review your mortgages

Do you have any mortgage deals coming to an end within the next year? Will this affect your cashflow if the new rate is likely to be higher, or present an opportunity to refinance and release equity?

Either way, it’s best to be prepared – and speak to your broker early, because applications take time so you’ll want to start long before your current deal expires.

Calculate your true ROIs

For any property you’ll have a rental return in mind when you buy it, but it’s purely based off estimated costs. Once you own it you can calculate your true ROI, because you’ll know exactly how much rent you’ve collected and which costs you’ve incurred over the past year.

Single-year ROIs can be misleading, because you can have a mercifully quiet year or incur a large one-off expense that skews your numbers. It’s still worth calculating annually though, so you can spot trends over time. This feeds into…

Identify poor performers

Not every property turns out to be a winner. The dream portfolio doesn’t come from making the perfect purchase every time: it comes from cutting your losers and keeping your winners, until you’re happy with everything that remains.

Based on the findings from your review so far, are there any properties you’d be keen to get rid of if you could? Maybe now is the right time, and you can build that into your plans for the year ahead. Even if it’s not, it’s worth having in mind – so when circumstances change (such as a tenant leaving, or the market becoming particularly strong) you can be prepared and make your move.

Take a moment to be grateful

Yeah yeah, call the woo-woo police. But seriously: even if not every property is performing, you’ve had some irritating expenses and your mortgages are about to get more expensive… hey, you have a property portfolio! How many people would love to be in your position? How amazed would your 20-year-old self be with what you’ve achieved?

Constantly being dis-satisfied and striving for more is what’s got you to where you are today – but just once a year, taking a moment to celebrate your progress is not our bad idea in our opinion!