Buy-to-let investors spending £1.2m to ‘bulk buy’ portfolios
Experienced buy-to-let (BTL) investors are spending an average of £1.2m on ready-made property portfolios, rather than focusing on single properties, new research has found.
For the selling investor, this provides an easy and fast way of offloading a number of properties, while the buying investor is able to rapidly scale up their portfolio.
Data from property lending specialist Octane Capital showed that the North East of England currently offers the best value for money, with investors paying a little over £1m for portfolios that contain an average of 9.7 bedrooms, which works out at £104,000 per room. It offers the highest yield for a ready-made investment portfolio at 4.5 per cent.
Yorkshire and Humber offered the second highest average yield at 4.4 per cent, with an average portfolio costing £1.1 million for 10.1 bedrooms, equating to a cost of £106,000 per bedroom.
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This compares with London, which is the most active area of the market accounting for 18 per cent of the national total, where portfolios contain an average of 3.6 bedrooms at an average price of £2m. This means that each bedroom costs £556,000. A ready-made investment portfolio within the capital comes with an average yield of only 1.4 per cent.
Octane Capital’s research showed that in the West Midlands, investment portfolios cost an average of £1m for 5.1 bedrooms, which works out as £201,000 per room. Meanwhile, in the South East, investors pay £1.4m for an average of 7.7 bedrooms, equivalent to £178,000 per room.
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Jonathan Samuels, chief executive of Octane Capital, said that portfolio investment offers advanced investors a far quicker path to scaling their portfolio but highlighted that due diligence is key.
“Of course, not all investment portfolios are created equally and investors should ensure they carry out the proper due diligence on each and every property to avoid purchasing a bad batch,” he said.
“Even a singular bad apple amongst an otherwise strong portfolio can tip the scales of profitability in the wrong direction.”
Octane Capital provides bridging, buy-to-let and development property finance lending for residential and commercial properties. Since the business launched in May 2017, it has lent £1.2bn.
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