The Power of Strategic Thinking to Create Capital for Your Portfolio
( 5 Min Read )
Building a property portfolio might seem like a big leap, especially when the initial investment can feel out of reach. But the truth is, you don’t need a large sum of savings to get started—what you really need is strategic thinking and the ability to leverage what you already have, particularly in your own home.
By using a little creativity and making thoughtful and intentional decisions, it’s possible to raise the capital needed to start your property journey, without waiting for savings to build up, salary increases or large bonuses.
Many people don’t realise that their primary residence can be a valuable asset to help build a property portfolio, especially since there are no capital gains taxes on profits made through selling your home, as long as you’re not doing it professionally. This makes your home an excellent tool for building equity, which can then be used to either move yourself up the property ladder or fund your next property investment project.
Our Director Emma has used a variety of strategies to build the capital she needed to fund her own property projects—and you can too.
— Emma’s top 5 creative ways to use your own home to start or grow your property portfolio.
1 — Buy in an Up-and-Coming Area & Consider Co-Buying
Emma’s journey into property began with her first home - a purchase in an area that was still affordable (just) but had strong potential for growth. She and her sister bought a 2-bed flat off-plan in Southeast London, an area that was not yet fully developed but showed promising signs of improvement due to planned urban developments and transport connections. Over the years, as the area grew and property prices increased, they sold the flat for a six figure profit only a couple years later—without needing to do any work on the property.
For first-time buyers or those with limited funds, it might be worth considering co-buying with a sibling or friend to share the costs and the risks just as Emma did.
While it might be harder to find opportunities like this today, focusing on areas with potential for growth still holds value. By researching areas that are being developed or regenerated, you can make a smart purchase that pays off in the long run.
2 — Downsize Your Home in Price, Upsize in Size and Free Up Capital
Another strategy Emma used involved selling her 1-bed flat in southwest London and buying a larger property in a more affordable area. She moved out of London to Earley, Reading, where she purchased a 2-bed semi-detached house. The price difference between the two properties allowed her to release equity, which she then used to fund her next investment which at the time paid for the deposit and renovation of a 5 bed HMO in Reading.
This approach may not seem like the typical route, but by downsizing in price and upsizing in space, you can free up a significant amount of capital. Moving to a less expensive area while increasing the size of your home can allow you to raise funds for future investments, while still providing a comfortable place to live and not feel like you are going backwards with your own home. This strategy can also help avoid relying on salary increases or bonuses to grow your wealth.
Emma renovating her SW London flat
3 — Buy a Doer-Upper to Build Equity
Purchasing a doer-upper—a property that requires renovation—can be one of the most straightforward ways to build equity in a home. Emma took this approach when she bought a 1 bed granny flat in southwest London that needed a full renovation. She decided to roll up her sleeves and complete most of the work herself, allowing her to increase the property’s value without spending too much money.
By investing time and energy into improving the property, Emma was able to build equity, increase the home’s value and realise a five figure profit. Once the renovations were done, the property was worth much more than she paid for it, providing her with the equity she needed to continue her property journey.
If you're willing to put in the work, a doer-upper can be an excellent way to build wealth through property. Whether you choose to handle the renovations yourself or pay contractors, this approach helps you add value quickly, giving you the capital to move forward with your investments.
Hip to gable & rear dormer loft and side extension
4 — Strategically Buy Your Next Home to Add Massive Value
Emma also focused on buying properties with great potential—ones that she could transform through strategic renovations. She purchased a 2-bed semi that was dated and in need of improvement. With the right vision, she was able to add a hip-to-gable loft conversion, creating a third bedroom and an additional bathroom in the loft. This change added a multiple six-figure increase in value to the home, turning it into a modern family space.
By purchasing homes that can be renovated to increase their value, you can build equity much faster. Look for properties with untapped potential, such as homes with outdated kitchens, unused spaces that could be converted into something more valuable and potential for extensions. This strategy requires some upfront effort, but it can be an effective way to boost the value of your home and raise the capital needed for further investments.
5 — Leverage the Equity in Your Home to Fund Future Investments
As your property increases in value, the equity you’ve built in it can be an incredibly useful tool for funding future property ventures as your personal mortgage rate is normally much cheaper than commercial loans and mortgages or development finance.
By remortgaging your own home, you can access the equity you’ve built over time and use it for your next property purchase. Since there are no capital gains taxes on profits made from your home, this becomes an attractive way to raise capital, provided you’re confident in your property’s value and the return on investment. It’s a strategy that allows you to grow your portfolio without relying solely on savings or salary increases.
— Final Thoughts
Your home can be one of the most valuable assets for building a property portfolio, and you don’t need to have a huge sum of money saved up to get started. By being strategic in how you use your existing property and by thinking outside the box, you can raise the capital needed to move up the property ladder, start or grow a property portfolio.
Whether you buy in an up-and-coming area, downsize to free up capital, take on a doer-upper, or leverage your home’s equity, these strategies can help you create the foundation for your property portfolio. And with the added benefit of no capital gains taxes on profits from your home (as long as you aren’t doing it professionally), the potential for growth is even greater.
With thoughtful decisions and a willingness to put in the work, you can use your existing home to generate the capital needed to achieve long-term financial success. The key is to be strategic, do your research, and think creatively about the opportunities available.
So, take the first step today and discover how you can start using your home to unlock the potential of your property portfolio. If you’d like some help with this, Emma would be more than happy to assist. We offer a 1-1 Design Surgery Zoom session, the perfect opportunity to discuss your ideas and gain valuable insights from Emma’s expertise on the subject.