Diversification of BTL portfolio

[IceBoy]

Hi All,

I have a coupleof BTL properties in low yield areas within the home counties, which have had good capital appreciation over the last 10 years.

I now want to add a couple of cheaper high yielding properties, I guess in the north with little capital out lay (low deposits). So I have start to look at those areas with big universities.

So I have come up with:

Sunderland
Birmingham
Manchester
Huddersfield

Does anyone have any experience of this, in this market?

Are there areas to avoid?

There also seems to be lots of new "Halls" type new builds...what has this done to the market?

Help and advice aapreciated.
IceBoy

[Ade07]

My advice is to stay away from the student market, as you are correct in that lots of new build student halls are being built, and the demand for private landlord student accommodation has dropped.

You would be much better off buying family homes in Liverpool/Manchester areas. 10% gross yields are very achievable.

Drop me a message if you need any further info.

[technodup]

If you don't have a problem with even further north, i.e. Scotland, I'd be willing to bet your yield will be considerably greater than elsewhere. Especially if you have no payments, i.e your intended deposit actually buys outright.

Glasgow and Edinburgh also have three universities each if you are focused on that angle.

It's not my business but if you PM I can put you in touch with someone who is very well connected in the Scottish BTL market, who could source and manage etc.

[jonah35]

Avoid student properties as high turnover. Places like Huddersfield are good, a friend lives there. He gets them for c.£50-60k and gets c.£400pm but rents to people that stay long term. Dont put up the rent and they can often stay for years and years.

Students more demanding now re wifi and lots of new halls built.

Avoid flats with service charge.

He likes huddersfield as its 20 mins from leeds and 30 from manchester and n the motorway.

[Dick Dastardly]

I had a good look into this a few years back with a view to diversifying in exactly the same way. I checked out a number of houses in the South Wales valleys which could be had for £30-40K and would rent for £400 p/m. That's a return that is nigh on impossible to better. I was planning on buying a couple a year and building up a big portfolio but I didn't go for it in the end as I have other business commitments that grew and I reckon it would have been a real headache and time consuming dealing with the tenants. I'd still like to go for it at some point - probably when I have a team of reliable tradespeople on hand.

[twoblacklines]

Liverpool is your best bet, property is cheap and there are 3 major universities plus vetenery colleges on the outskirts as well as specialist places like SAE institute that offer 4 year BSC degrees. University of Chester have a campus just outside Warrington which is a 10 mile drive from Liverpool also.

That is where I will be investing when the time comes. Do your research though because there are parts of LP which are no no areas and they tend to run into each other. Wavertree is a big deal for university student housing.

[dazwalsh]

Avoid anywhere in Bradford or Halifax, I had to sell up the few I had there as they were jusy more hassle than it was worth.

High yields to be had in Leeds, the place is booming and although prices for the cheaper end of ths market have risen quite a lot over last few years there is still good value in the ex council stock. The back to back stuff I generally avoid but again good yields to be had here.

[oldnbold]

jonah35 said:

Avoid student properties as high turnover. Places like Huddersfield are good, a friend lives there. He gets them for c.£50-60k and gets c.£400pm but rents to people that stay long term. Dont put up the rent and they can often stay for years and years.

Students more demanding now re wifi and lots of new halls built.

I totally disagree regarding student properties, the yields are very good, if you provide good quality they look after it, and with a parental guarantee it's very rare to have non payer's. They sign a years contract but often stay for two if they like it because it's hassle to move again.

All my student houses were re let for the year starting July 17 before Christmas.

[BoRED S2upid]

Another vote here for Liverpool loads of cheap solid terrace houses large university population if that's your bag.

[POORCARDEALER]

Student house in the student area of leeds as an example will be £200K ++, the returns are not great

[Lynch91]

oldnbold said:

I totally disagree regarding student properties, the yields are very good, if you provide good quality they look after it, and with a parental guarantee it's very rare to have non payer's. They sign a years contract but often stay for two if they like it because it's hassle to move again.

All my student houses were re let for the year starting July 17 before Christmas.

I agree with this.

[Rangeroverover]

oldnbold said:

I totally disagree regarding student properties, the yields are very good, if you provide good quality they look after it, and with a parental guarantee it's very rare to have non payer's. They sign a years contract but often stay for two if they like it because it's hassle to move again.

All my student houses were re let for the year starting July 17 before Christmas.

I agree you know in jan 2017 that you have a tenant from sep 17 to end July 18, 48 week tenancies. gives you a month to do any work, gas safeties etc. No matter how many purpose built cluster flats or studios are built UK students prefer the shared terraced house idea

[SamR380]

Rangeroverover said:

I agree you know in jan 2017 that you have a tenant from sep 17 to end July 18, 48 week tenancies. gives you a month to do any work, gas safeties etc. No matter how many purpose built cluster flats or studios are built UK students prefer the shared terraced house idea

This isn't the case in Sheffield at least. It used to be the rule, first year in halls then out in houses, but plenty just stay in halls the whole way through now. It doesn't make financial sense but for a lot of them it's just a number they're never going to pay back unfortunately.

[oldnbold]

Rangeroverover said:

I agree you know in jan 2017 that you have a tenant from sep 17 to end July 18, 48 week tenancies. gives you a month to do any work, gas safeties etc. No matter how many purpose built cluster flats or studios are built UK students prefer the shared terraced house idea

Mine are all 52 week tenancies which run from 1st July to 1st July, and as I've said all reserved and contracts signed at least 6 months in advance. The new purpose built super halls have rents that are more than the student loans, so without parental help or working are unaffordable for many.

[Lynch91]

Rangeroverover said:

I agree you know in jan 2017 that you have a tenant from sep 17 to end July 18, 48 week tenancies. gives you a month to do any work, gas safeties etc. No matter how many purpose built cluster flats or studios are built UK students prefer the shared terraced house idea

You can put them on a 52 week contract, but put a clause in that you have a month / two to make the house good each year.

[Casa1862]

Kettering, Corby area still has decent prices, 3 beds for about £130 £140k rent out at £700.00. You'll get some capital appreciation as well, Kettering just less than 1 hour from London, I can think of worse areas.

[oldnbold]

Casa1862 said:

Kettering, Corby area still has decent prices, 3 beds for about £130 £140k rent out at £700.00. You'll get some capital appreciation as well, Kettering just less than 1 hour from London, I can think of worse areas.

Just sold a 3 bed ex LA terraced house in Corby for £118.5k. It was renting for £550 pcm, probably could have got £600 if I had decided to re rent instead of selling after evicting the latest non paying tenant just before Christmas.

But agree that £130k - £140k will get you a 3 bed on new private estates that will rent for £650 - £700 pcm. The fast rail line to London will come all the way to Corby by next year, my EA is forcasting a decent rise in values.

[Casa1862]

oldnbold said:

Just sold a 3 bed ex LA terraced house in Corby for £118.5k. It was renting for £550 pcm, probably could have got £600 if I had decided to re rent instead of selling after evicting the latest non paying tenant just before Christmas.

But agree that £130k - £140k will get you a 3 bed on new private estates that will rent for £650 - £700 pcm. The fast rail line to London will come all the way to Corby by next year, my EA is forcasting a decent rise in values.

It's an area which seems very cheap compared to places further up north. I picked up a 3 beds semi in Kettering in a very nice established tree lines road for £140k, rents for £700. I'm not sure why it is priced even less than some houses in west midlands area, surly half decent 3 beds cant get any lower than they already are. Seems to be good demand for rental property in the area as well.

[twoblacklines]

You could also try Plymouth, I have seen 8 bedroom houses near the University go for £200k (which is cheap in Plymouth) 8x£62 = £500 week / £2k a month / £24k a year in rental income.